The Episcopal Diocese of Spokane Clergy compensation and benefits policy

Transcription

1 About these Guidelines The Episcopal Diocese of Spokane Clergy compensation and benefits policy The Clergy Compensation Task Force (hereafter CCTF) was established by the Bishop during the spring of The task force was charged with the task to review, update and revise existing Diocesan policies concerning clergy compensation, and to address the need for any new policies. The CCTF undertook a review of other diocesan clergy compensation guidelines throughout the US, looking particularly for policies and practices which we found valuable, and paying less attention to exact dollar figures. It is noted that most diocese group congregations by some form of criteria. Most diocese have a clergy compensation plan based on congregational type and have compensation ranges based on years of ordained service and congregational type. Congregations are typically typed in accordance with two important and available criteria: Average Sunday Attendance (as defined by the Annual Parochial Report) and Total Operating Revenue (line A of the parochial report, excluding diocesan aid received). The CCTF had long conversations concerning the appropriateness of basing compensation on factors such as years since ordination and size and budget of the congregation. There is debate among the clergy community of the relative ease or difficulty in serving small versus larger congregations. It is believed not to be true that larger congregations require more work; in some of them more resources exist to share the workload. This diocese is blessed by many beautiful communities which however, are long distances from other congregations, isolating clergy from peers. We also have many of our clergy who are non-stipendiary and who serve faithfully. The CCTF also desire to differentiate between the various forms of compensation, such as salary and housing, from benefits, such as pension and health insurance, and clearly delineate these in our guidelines. In addition we desire to increase the understanding of our congregations about the costs of ministry that are present regardless of whether the cleric is stipendiary or non-stipendiary. It is hoped that the following values are expressed in this policy: Transparency It is very important that clergy and congregations alike have clear and transparent guidelines and expectations regarding compensation and financial policies. All congregations are reminded that financial records are to be open and audited on a yearly basis. Transparency in the Church is a key value, and will support the goals of the compensation policy. Fairness the compensation policy strives to be responsive to the realities of the work of the cleric, taking into account the need for regular cost of living raises, the differences among various congregations, the need for adequate compensation regardless of congregational size and the other variables. Clergy compensation and benefits policy, fall

2 Growth of clergy and congregations the compensation policy will support the growth of all members. The best interest of our diocesan family requires that we do our utmost to establish a healthy relationship between the clergy and lay leadership of each congregation. The establishment of fair, adequate and competitive compensation for clergy, together with a strong model for setting of goal and mission priorities and strengthening standards of accountability in our congregations will enhance the future of ministry in the Diocese of Spokane. Compensation Guidelines No current compensation or benefits may be eliminated or decreased based on these guidelines A. The following applies to full time clerics who have an earned M.Div. or the equivalent 1. The clergy compensation package consists of four distinct components of compensation: Cash Stipend, Housing, Social Security and Housing Equity Allowance. In addition there are Benefits which include pension, and insurance. Further are reimbursable expenses including continuing education and professional expenses. In addition each congregation is expected to take into consideration for the budget such items as supply clergy, discretionary funds and sabbatical funding. Each of these areas is explained below. 1. Cash Stipend: Compensation The minimum Cash Stipend is set for 2010 at $ 30,000 The cash stipend minimum is regardless of size of congregation or number of years of ordained service. 2. Housing: 1 M.Div. is a Masters of Divinity, the three year graduate degree standard at seminaries. Clergy compensation and benefits policy, fall

3 The Housing component for clergy compensation is explained here. Please feel free to contact the diocese for assistance. A. Clergy Housing Provided: If the clergy person lives in church provided housing the cash value of that housing must be established for Self-Employment tax calculations. This value is defined as the fair rental value of the housing (furnished) along with the utilities cost for the residence (utilities are usually paid for by the congregation), plus the amount paid as a housing equity allowance if paid directly to the clergy person. It is also possible to designate a portion of the cash stipend as a Housing Allowance to clergy residing in church provided housing, to the extent they pay for costs associated with maintaining the residence out of their own funds. This allowance must be designated in writing and in advance by the church vestry. B. Clergy Housing Not Provided: If there is no church provided housing, the clergy person receives a cash housing allowance. For 2010 the minimum cash housing allowance for a cleric not living in church provided housing is $ 10,000. Please note that there are important tax considerations for clergy in differentiating what portion of their cash compensation is cash stipend and what is housing allowance. An individual cleric may request that more of the cash stipend be designated as housing allowance, but the minimum actual cash paid by the congregation is the same and must equal $40,000 ($30,000 for those living in church provided housing). 3. Social Security Allowance Because clergy are considered self-employed for Social Security purposes the organizations for which they work do not pay Social Security Tax as they would for a non-clergy employee. To offset this situation congregations in the Diocese of Spokane are asked to pay 50% of the clergy person s Social Security tax calculated as follows: When Housing is provided: 7.65% of cash stipend, the Fair Rental Value (furnished, w/utilities) of the housing and any Housing Equity Allowance paid directly to the clergy person. When Housing is NOT provided: 7.65% of the combined amount of the cash stipend and the housing allowance. 4. Housing Equity Allowance Clergy compensation and benefits policy, fall

4 Since clergy who live in church provided housing will not benefit from the equity from that residence, the CCTF recommends that a Housing Equity Allowance be negotiated between vestries or Bishop s committees and clergy living in church provided housing. The Housing Equity Allowance should come in the form of some retirement instrument, not extra cash to the clergy person. Please feel free to call the diocese for assistance in determining a housing equity allowance. When payments are made directly to a clergy person s tax sheltered account, the payments are considered to be supplemental pension, not income. If, however, the payments are made directly to the clergy person, the payments are considered to be taxable income. Benefits Pension Assessments The Church Pension Fund assessment is 18% of the Clergy person s total compensation of Cash Stipend, Social Security Allowance, Utilities and Housing Value. The Church Pension Fund s method for determining housing value differs from the method for tax and social security allowance purposes, it is as follows: With Church Provided Housing: 30% of the total of the clergy person s cash stipend, Social Security allowance and utilities; plus 100% of any housing equity allowance (whether cash or supplemental pension payments to a tax sheltered retirement account). With Housing Allowance: the greater of: the actual cash housing allowance or 30% of the total cash stipend, Social Security allowance and utilities. If you have questions or a special situation please feel free to contact the diocese. Health insurance Health insurance is one of the greatest points of discrepancy in the cost of clergy with great differences in cost for single verses married with family coverage. The CCTF had long conversations about this reality. Health insurance questions also generated the most debate at the 2008 diocesan convention regarding clergy compensation. With the denomination health care plan approved at the 2009 General Convention, there is uncertainty in the diocesan office about exactly what will be offered in this diocese with respect to health insurance. Given these realities, the CCTF proposes the following be the policy regarding health insurance for 2010: Clergy compensation and benefits policy, fall

5 Congregations are required to offer health insurance. Individual clerics may and are encouraged to negotiate the health insurance coverage they believe is required for their own life situation. It is not permissible to convert the money designated for the benefit of health insurance to cash salary. Given the uncertainty about the implementation of the General Convention approved denominational plan, the task force has agreed to continue work on the issue of health insurance during the next year. Reimbursable expenses Reimbursable expenses are not considered taxable compensation, and must have documentation to substantiate the expense. The congregation will reimburse clergy for expenses incurred on behalf of the congregation during the discharge of church responsibilities, otherwise it could become an unfair burden to the clergy. Expense reimbursement is NOT compensation, but a cost to the congregation for ministry. Professional Expense allowance Included in this allowance can be such items as auto/travel expenses, work related expenses, books, vestments, professional meals, the cost of diocesan convention etc. The auto allowance is expected to be at the current applicable IRS rate per mile. This allowance should be a set budgeted amount agreed upon by the cleric and Vestry or Bishop s committee. Continuing education The reimbursable amount should be negotiated and included in the Letter of Agreement. A suggested minimum is $ per year which may upon agreement with the Vestry or Bishop s committee accumulate to a specified amount. 2. Regardless of the amount compensated, all clergy are required to undertake continuing education, and are allowed two weeks of continuing education per year. Any unused continuing Education money may not be sold back to the congregation. Additional ministry expenses and considerations Supply and Sabbatical: Supply provides Sunday coverage for four weeks of vacation (see below), two weeks of Continuing Education, and an annual reserve of $500 put in a dedicated sabbatical fund to provide supply coverage (supply clergy stipends and travel) for the Cleric s Sabbatical of three months allowed at the end of each five year 2 It should be noted that a $500 continuing education fund will not even cover the fees for most one-week conferences, and is considered by the CCTF as inadequate. However, a minimum needed to be suggested. Clergy compensation and benefits policy, fall

6 period of service. Any unused sabbatical and supply funds belong to the congregation and not the cleric. Discretionary funds: Discretionary funds are almoner funds and not to be used for unfunded annual budget items or random clergy expenses. These funds are covered by the same rules of audits that all other Church funds are governed by 3. Whether the discretionary funds are dispersed by the cleric or by the vestry or a group within the congregation, it is mandated that there be some way of designating funds for this use. While discretionary funds are normally administered by clergy, the funds are owned by the congregation or funding organization. Vacation: All clerics receive at a minimum 4 weeks of compensated vacation, plus four Sundays (the four Sundays not to include Sundays away from the congregation due to diocesan duties such as convention or serving at Camp Cross, also not to include Sundays away due to an approved continuing education) Holidays: all clergy are allowed to observe normal Federal Holidays as long as doing so does not interfere with normal church duties. Federal Holidays which conflict with normal Church duties or which fall on a clerics day off may be transferred to another day. Work week: The normal work week is defined to be a five day work week. Compensation increases Minimum mandated increases: All congregations are required to give at a minimum the Social Security Cost of Living increase every year. Merit increases: Merit increases should be considered as possible for compensation increases by the congregations 4. Because clergy often have difficulty in advocating for compensation increases in the budgeting process given increases in fixed expenses and often stable or declining revenue, the vestry or bishop s committee must be willing to take an open and honest look at the compensation provided for the cleric and the state of the congregation. While the CCTF has chosen not to recommend a policy with mandated increases for years of ordained service, we strongly encourage congregations to take seriously the reality that years of service with no compensation increases can lead to dissatisfaction. In addition, a congregation with a flat compensation policy will find it difficult to be competitive when it comes time to call a new priest. B. The following applies to part - time clerics who have an earned M.Div. or the equivalent. 3 See the business manual for churches for the rules of audit. It should be remembered that almoner funds are traditionally considered to be confidential. 4 See the Appendix for a discussion of standard ways of providing for compensation increases. Clergy compensation and benefits policy, fall

7 The clergy compensation package should reflect a percentage of the information provided above for full time clergy. A just housing allowance or church provided housing should be included. Normally, the benefits noted above apply to part time clergy, with the congregation picking up at a minimum the percentage that the cleric is working halftime coverage means at a minimum the congregation provides half of the cost of the benefits. Again, please contact the diocese to help with these situations. C. The following applies to all congregations with non-stipendiary Priests and for all Deacons With the changes to the Canons it is no longer to be assumed that local formation automatically implies non-stipendiary. However, in this diocese the custom has been that local formation clergy are assumed to be non-stipendiary. This might change in the future, and this report is not setting as policy that local formation clergy are by definition non-stipendiary. This is an issue for further work, and the Bishop has requested that the COM and the CCTF continue to consider this issue. While many of our congregations are served faithfully by non-stipendiary priests, this does not mean that there are not expenses associated with the ministry of the congregation. Deacons traditionally are non-stipendiary, but also have expenses and funds that are quite rightly to be considered appropriate for a congregation to include in the budget. The CCTF recommends the following be considered for all clergy: Reimbursable expenses Reimbursable expenses are not considered taxable compensation, and must have documentation to substantiate the expense. The congregation will reimburse clergy for expenses incurred on behalf of the congregation during the discharge of church responsibilities, otherwise it could become an unfair burden to the clergy. Expense reimbursement is NOT compensation, but a cost to the congregation for ministry. Congregations are encouraged to allow for church expense reimbursement for all who incurred them, lay and cleric alike. Professional Expense allowance Included in this allowance can be such items as auto/travel expenses, work related expenses, books, vestments, professional meals, the cost of diocesan convention etc. The auto allowance is expected to be at the current applicable IRS rate per mile. This allowance should be a set budgeted amount agreed upon by the cleric and Vestry or Bishop s committee. Continuing education Continuing education is required for all clergy, regardless of stipendiary status. In addition, many continuing education opportunities exist which would be of benefit for all Clergy compensation and benefits policy, fall

8 members of the congregation. It is recommended that all congregations have a continuing education account which could be used as a reimbursable account for any and all members of the congregation who undertake approved continuing education. It is required that all congregations offer some form of continuing education reimbursable account to the cleric. D. Supply Clergy Compensation Schedule for Supply Clergy, 2010 $ for one Service, plus mileage, plus out of pocket expenses $ for two Services, plus mileage, plus out of pocket expenses A Look Forward As the CCTF looked at the congregations and clergy that make up the Diocese of Spokane it was very clear to us that there is a wide disparity of resources and availability of clergy throughout the diocese. The health of the diocese depends on the health of its congregations and members. As the diocese looks to the future the CCTF proposes that we consider ways of partnering congregations and the diocese to provide for clergy coverage and congregational support and growth. A concrete strategy which takes into account mission and strategy, congregational development, deployment strategy and financial realities is needed. The Cliff-Notes version, 2010 compensation For full time clergy with an earned M.Div. or equivalent: Cash stipend minimum of $30,000 Housing provided, or minimum cash allowance of $10,000 Social security 7.65% of above Housing equity allowance negotiated Benefits pension and health insurance required No benefits may be converted into cash stipend Reimbursable expenses provided, amount negotiated, must be substantiated. Members of the Clergy Compensation Task Force The Rev d Patton Boyle (resigned as of August 2009) Clergy compensation and benefits policy, fall

9 The Rev d Margaret Fisher Catherine Rafferty The Rev d Gretchen Rehberg The Rev d Steven Woolley The Rev d Dave Walker August, 2009 Appendix compensation comparisons and standard compensation increases It is important for congregations to know what are some comparison compensation levels both nation wide and for comparable diocese to ours. In addition, while the CCTF did not specify benchmark compensation levels, many dioceses do mandate such levels, and we believe it necessary to offer what these criteria are in other diocese as a way of helping congregations consider what appropriate compensation benchmarks might be. The compensation comparison data is from the 2006 Church Compensation Report put out by the Church Pension Group. Compensation for purposes of this data includes cash salary, social security offset, housing and utilities. Median 5 compensation for all FT clergy, 2006: $ 62,793 Province 8: $ 61, 566 Overall average compensation by church size ASA all full-time clergy senior & solo clerics Province 8 Spokane (includes assistants) 0-75 $ 51,996 $ 51,994 $ 50, 491 $ 48, $ 61, 492 $ 61, 902 $ 61, 130 $ 59, $ 69, 017 $ 73, 498 $ 66, 350 $ 59, $ 73, 054 $ 84, 000 $ 74, 301 Median clergy compensation by years of experience 1-5 years $ 50, years $ 59, years $ 66, plus years $ 75, 930 Diocese of Spokane median compensation: $ 58, 159 Decile 6 : 7 5 The median is derived from arranging the values in order, then selecting the one in the middle. This is a type of average with is quite useful in cases where the distribution has extreme values which might otherwise skew the data. 6 Decile rank nationwide, from 1-10, with 1 being the highest compensated and 10 being the lowest. Clergy compensation and benefits policy, fall

10 Standard benchmarks often used by diocese in calculated clergy compensation often include years of service and size of the congregation. While the CCTF did not choose to mandate such benchmarks, they are legitimate ways of understanding how compensation is calculated. We would point out that many clergy are second career, and come to ordained ministry with experience in other fields, this experience is not somehow less valid than ordained ministry experience. It should be noted that the minimum clergy compensation required is significantly below the median compensation. This is the minimum allowed, not the recommended level! Clergy compensation and benefits policy, fall