Explanation of Parish Share

Transcription

1 Severn Vale Deanery Explanation of Parish Share Slide 1 Initial Welcome Screen displayed as people arrive. Welcome to this presentation that will attempt to explain how the new Parish Share system works and why it s like it is. Slide 2 To properly understand the new Parish Share system we need to put it in context. Our present situation can be traced back to the Middle Ages. Monasteries and cathedrals offered Christian worship and activities to the populace in a wide area around them, but feudal lords wanted their own church on their own estate for themselves and their workers, and consequently built them and retained a priest to run them. Many of those local churches have become our Parish Churches today. The priests wellbeing depended on the wealth and generosity of their lord and parishioners. The priests got their living from money given by their lord, from the collection plate, and the strip of land their lord gave them to produce their own food. Being at that time Roman Catholic, they called their strip of land by its Latin name, Glebe, which just means soil or land. If they had a miserly lord or his wealth was declining, many of those priests came to live in considerable poverty in a rundown parsonage. Before the Reformation, churches paid tax to Rome and afterwards that was diverted to the crown. Slide 3 In the 18 th century, good Queen Anne directed that the tax should be diverted to a fund that we now know as Queen Anne s Bounty, which was applied to improve the poorest priests income and to repair their parsonages. Slide 4 In the 19 th century there was a big growth in the size of towns and cities to cater for the huge migration of people from the countryside to the towns as a result of the Industrial Revolution. In 1818 parliament set-up The Church Building Commissioners to create new parishes and churches to serve this migration and to look after those new buildings. In 1836 parliament added the Ecclesiastical Commissioners to address some of the muddle in church affairs that had grown up over the centuries, including closing redundant parishes, and in 1856 they sensibly combined those two groups into one. Slide 5 We continued that way until the 20th century when Parliament combined those two sets of Commissioners with new Terms of Reference to create The Church Commissioners we know today. The Church Commissioners inherited the historical assets of the previous bodies, which are mainly invested in stocks and shares and property. At the end of 2012 this amounted to some 5.5 billion pounds. In case any of you are recalling that a few years ago the Commissioners lost a lot of money through bad investment, that s been recouped through astute management, which has given the Commissioners a better than average return on their fund, 7% above the Retail Price Index. The last relative figures I found were for 2010 when the Commissioners used the income from their investments to pay 18% of the church s running costs, 203m compared to a total running cost of 1.2billion. Greater than 750 million came from us, the parishioners.

2 Slide 6 It s argued whether priests are employed by the church or by God, so their income is not known as a salary but as a stipend a sort of living allowance but it amounts to the same thing. Under the Church Commissioners, priests stipends were standardised so all priests get a basic minimum, and priests are now entitled to retire at 65, like other workers in this country. Again like other workers, that ll be going up to 68 in the near future. Things came to a head in the 1990s when it was realised that a large part of the Commissioners' income was now going to pay for the pensions of retired clergy, and to find them a home when they had to vacate the vicarage for the new incumbent; and that this was unsustainable if they continued to give grants to all the parishes as before. General Synod and Parliament agreed that the Commissioners responsibility would be capped to pensions earned before 31 st Dec 1997, and all dioceses would have to pay into a new pension fund thereafter, as most other employers do. Where was that money to come from? The only place of course was us, the parishioners, via the Quota. Because so much is now diverted to retired priests, the Commissioners can no longer give a subsidy to every parish, but only to the poorest ones. Slide 7 So what was The Quota? Every parish was given a part or quota of the total cost of running their diocese. This was calculated slightly differently in many dioceses but it generally used a complicated formula that included the number on the Electoral Role as a way of determining a parish s ability to pay. This proved unsatisfactory. Using the number on the Electoral Role put off many parishes from recruiting new members, as that would only put the Quota up, and one person s assessment of relative wealth was not necessarily the same as another s. Slide 8 In 2004, over 10 years ago, this was recognised and the current, simplified system called Parish Share was introduced. Until recently this was calculated just on the number of priests we each have. It no longer matters how many we have on the Electoral Roll, it doesn t affect the amount we pay. Instead we were asked to pay a share of the total diocesan costs in proportion to the number of priests in our benefice. At the same time, it was recognised that a parish s ability to pay varies from time to time as circumstances change. For instance, in one year a parish may have large repair bills so needs to pay less, but in another year the work has finished so they can pay a bit more. A system of Mutual Support was therefore adopted. That assumes that we re responsible adults and caring Christians, so it allows each parish to offer what it can afford in any one year as a percentage of the Benefice total, but note that it's still up to the Benefice as a whole to make up the full amount. Under the Parish Share system, the diocese therefore no longer tells an individual parish how much they must pay, but only gives a total to the Benefice, leaving it up to each Benefice to share the total between their parishes according to their current ability to pay. That means that as Parish Treasurers, we should be getting together every year to discuss between ourselves how we re going to split the Benefice total for that year. The idea is extended beyond the Benefice. Benefices that can afford to pay a bit more in any one year are encouraged to do so to offset those that have to pay a bit less due to their current circumstances.

3 Slide 9 For we ve been using a 5 year plan based on the cost of a full-time priest in 2010, inflated by 3% per year. Every parish was allocated this cost equally irrespective of the size of their congregation or ability to pay. The new method for the 5 years from is a proportional cost calculated individually for each parish using common defined criteria but dependent on how many of each type priests you ve got and the size of your regular congregation averaged over the last 3 years. Slide 10 The 2010 Base Cost was created by dividing the total Diocesan Ministry cost by the total number of priests in the diocese at that time. Every parish was allocated equally this Base Cost for every full-time priest they had plus a smaller pro-rata rate for every part-time priest. The equivalent Base Allocation in 2015 is calculated as a proportional cost calculated individually for each parish using a ratio of how many priests you ve got compared to the diocesan total, plus the size of your regular congregation averaged over the last 3 years. This is seen as a fairer method of estimating your ability to pay. Slide 11 No method is perfect: The benefit of the Equal Share system is that it s simple to understand and calculate but it has the substantial drawback that it doesn t differentiate between large and small congregations. The result is that smaller congregations have to find more per head and the Parish Share can be a much bigger percentage of the outgoings, often leaving too little for properly discharging our other ministry and maintenance tasks. The benefit of the Proportional Share system is that it produces a more equal share per head but it has the disadvantage of being harder to understand and calculate. Slide 12 From 1948 the Church Commissioners provided a considerable subsidy to each parish towards our costs such that we in the pews got used to getting a full parish facility without having to pay too much. As we saw earlier, by the 1990s a big percentage of the Commissioner s income was diverted to supporting the retired clergy. Here s a breakdown of their expenditure for 2013 taken from their annual report. Slide 13 Our diocese gets an income from its commercial activities including the sale of courses and school assembly material through its trading companies Jumping Fish and Imaginor, as well as income from legacy funds, interest, rents from vacant properties etc, but by far its biggest income is from the Parish Share which it uses to pay our minister s stipends on our behalf. If the Diocese didn t provide these services for us, each parish would have to employ suitable experts and do it for ourselves, which would cost a whole lot more. Slide 14 Some ask What on earth is the Deanery for? It provides a useful interface between the diocese and parishes so the diocese doesn t have to consult or advise every parish themselves, which would take longer and cost more. Also the deanery staff know the needs of the smaller number of parishes in their deanery better than the diocese staff, so the Deanery can look out for us better. It provides support to the parishes; both to the ministers so they don t feel isolated, but also to the laity by providing meeting forums, liaison, advice, mutual help, etc. All this for just 10 per year to over administration, postage, hall hire and subsidy of selected training courses, etc.

4 Slide 15 Our Parochial Church Council is now responsible instead of the feudal lord for maintaining the church and its priest; and that s usually the biggest call on our finances to pay our ministers stipend, which as we ve seen, the diocese administers for us, but it s our responsibility to find the money to pay them. Slide 16 The Parish Share therefore isn t something we reluctantly pay once we ve paid our own costs; it s usually the main part of our own costs. The diocese had been making up any shortfall on our behalf from diocesan reserves, but these are getting exhausted, so there s now nowhere else where the money can come from. We need to provide 100% of the cost of paying our own minister(s). As a result, some parishes who can t afford this are no longer getting priests or curates replaced, some are being downgraded from full-time appointments to part-time, some parishes are being amalgamated and some posts have already been made redundant. As a parish church, we also have other costs, many of which are listed here. Slide 17 The old 5 year plan allocated an equal share of the total costs to every priest in an attempt to create an equal share of the costs. It considered the total diocesan ministry cost in 3 categories and then divided that between the number of priests in the diocese to give an equivalent cost per priest ; thereby creating the 2010 Base Cost. Firstly, the minimum priest s stipend in 2010 was 20,230 with an average of 22,250. When we add National Insurance and pension contributions, that gives a total for each full-time priest of 35,839, which is comparable to that of a Head teacher. Secondly, adding provision for the cost of housing, maintenance payments, Council Tax, removal grants and, in high risk areas, insurance premium subsidy, gives a further 10,035. That compares favourably with the national average of 12,380 (Source: Central Stipends Authority [CSA]) Thirdly, adding a share per priest of the other costs for running the diocese gives a total in 2010 of 50,813 per full-time priest, which again compares favourably with the average costs of employing a person in industry and commerce. House for Duty and 'Self-Supporting Ministers' (NSMs & OLMs) are charged at a smaller pro-rata rate to cover their administration and training, plus housing costs for House-for-Duty priests, so if you have any of them in your parish, your allocated Parish Share would have that amounted added too. The current 5 year plan assumed an annual inflation factor of 3% irrespective of the actual amount, so we could have a predictable value for each of the 5 years. In fact, that figure hasn t been wildly different from the actual RPI increase. Slide 18 Some people complain that our Parish Share is subsidising the cost of running the Diocesan Central Services, and if that wasn t so we would be paying a lot less. No, we can see the Centre s costs for the last 3 years are less than their income from their own sources separate from the Parish Share, leaving a profit of 500,000 per year which has been used to effectively subsidise the Parish Share, so the subsidy is from the Centre to us; not from us to them. Slide 19 There s 43 dioceses in the Church of England and Gloucester Diocese is reckoned to be in the top 10% when measured in terms of wealth per head in the diocese.

5 Slide 20 We should be sitting therefore somewhere between No. 4 and No 5 at the top of the scale but in fact, when it comes to total giving to PCCs in Gloucestershire, in 2006 we gave 6.95/week producing a total of 9.1m and putting us at No 31. The good news is that by 2010, that had gone up to an average of 9.27/week, producing a total of 12.1m, a 33% increase and moving us up to No 18 at least that s in the right direction. Slide 21 The bad news is that this increased PCC income hasn t been passed on to our Parish Share. In 2012 our PCC giving to Parish Share had reduced by 30%, dropping us to 39 th out of 43 in the bottom 10% of national giving, even lower than relatively poor dioceses like Newcastle and Liverpool. Why that is, isn t known. Is it because our other costs like maintenance, electricity and insurance have gone up at a higher rate than our minister s stipend, or because we re rebuilding our own reserves at the expense of the diocesan reserves, which have been depleted by making up our shortfall, or for some other reason? Slide 22 But it s even worse than that it s not getting better; in fact it s getting worse. In 2014 our level of giving to Parish Share to pay our priests stipends had gone down still further, putting us at 40 th out of 43 firmly in the bottom 5% of all dioceses. In case you wondering, over the 5 years of our current plan, our priests were awarded a 2% rise each year which is less than the 3% inflation included in the plan, so this worsening of position must be due to a lessening in the level of giving to Parish Share. Slide 23 Now we ve defined the context, we can understand the details of the proposed plan for the next 5 years. The previous attempt at an equal sharing of ministry costs has been replaced with a new, and hopefully fairer, proportional method. The diocese listened to our comments at the consultation to their first proposal in April and have simplified it. There s a new base cost that s calculated proportionally, which we ll look at in a moment, and that s now allocated to each parish in just two parts half directly and half mediated by the ratio of our average attendance over the last 3 years compared to the total diocesan average over that time. That gives a new proportional base cost for 2015 which has been termed the Base Allocation. That s initially been inflated at 1.5% per annum for each of the next 5 years (lower than the last plan s 3%) to give us an indication of what we can expect for each of the years ; although unlike the last 5 year plan which was fixed, this inflation rate will be changed as necessary to reflect the real rate, and our 3 yearly average attendance value will change as appropriate each year. What we re asked to pay will be mediated or capped to inflation + 4%. Even if your new calculation is higher than that, you won t be asked to pay more the difference is a continuation of the Mutual Share principle and will be funded from the central Diocesan Stipend Fund. Slide 24 So let s look at the calculation of the new proportional Base Allocation : For the last 5 years, the total diocesan ministry cost was simply considered in 3 categories and the result allocated equally to every priest. In the new system it s considered in 9 categories in a ratio of the number and type of priest you have divided by the diocesan total number of that type, to give a allocation proportional to your usage.

6 In addition, the first 2 categories, National and Diocesan shared services, the total number of priests is also weighted by the percentage of each resource that type of priest is deemed to use. Each full-time Priest and Curate x 1, each House for Duty (HfD) x 0.33, and each Self Supporting Minister (SSM - NSM & OLM) x The resultant factor is termed the Shared Service Ratio. As an example, in the case of the West of Severn Benefice, they only have 1 full-time minister and no others so the calculation is as shown, giving a Shared Service Ratio of Slide 25 For West of Severn, the Total Diocesan and National costs respectively are multiplied by the Shared Service Ratio to give an allocation of 2,121 and 3,857 respectively. Slide 26 The remaining Categories 3-9 are calculated without weighting in proportion to the type of priest; they re calculated just as a ratio of how many you have compared to the diocesan total. Again using West of Severn Benefice as an example, they only have 1 full-time minister but there are 101 diocesan full-time, 24 diocesan Curates, and 22 diocesan HfD, all of whom receive Grants and Housing Allowance (SSMs aren t included here as they don t generally receive Grants and Housing Allowance), which gives a Ratio for West of Severn of (other Benefices will have a different ratio dependent on the number of each type of priest they have). Multiplying the total Grants and On Costs (ie: Overheads) and the Housing Allocation by the Benefice s Ratio gives 3,622 and 8,242 respectively. Slide 27 The 9 separate factors identified in the Base Allocation are shown here. The cost of training and supporting Curates is shared across all benefices since everyone benefits from newly trained staff at some time when they need an new incumbent. However, those benefices currently training a Curate get a Curates Allowance deduction to offset the additional cost to their benefice of providing the training on our behalf. Slide 28 All the costs are then added up (deducted for the Curates Allowance) to give a Total termed the Parish Share Allocation. This is the total amount you would pay if there were no mediation. This total is then divided by 2: The first half is allocated directly to your benefice. The second half is mediated by the ratio of your average attendance over 3 years divided by the total diocesan average over that time to reflect your ability to pay larger congregations now pay more and smaller congregations pay less, which is fairer than the previous equal share method. The two halves are added together to give the new proportional Base Allocation. Slide 29 The Base Allocation is currently inflated at the reduced rate from the last plan of 1.5% to give an indication of the likely costs over the 5 years of the plan, but this will change to reflect any variation in inflation over that time. The result is then capped at inflation + 4% to limit the charge you may face at this time. The cap will be funded from the Diocesan Stipend Fund, a fund of legacy donations etc which currently returns around 800,000 per year income. In the last 5 year plan the Stipend Fund was shared equally by each benefice. In this new proportional plan, it s initially allocated as needed to cap individual benefice allocations. As that need is reduced, it s use will be re-focussed (as decided by a diocesan committee appointed for that purpose) to support benefices in need and those with potential for growth.

7 Slide 30 What you pay is mediated by the cap as shown. Slide 31 So here s the summary showing what the example benefice (West of Severn) will pay against each category with the full and mediated half totals to give their new proportional Base Allocation. Slide 32 Putting that into a summary table first shows the values (2015) of the present 5 year plan (under the head new headings): Base Allocation 58,906, Mediated Parish Share 44,500, Mutual Support 24%. We then show that the Base Allocation goes up in 2016 to 59,996 but the mediated Parish Share goes down by 19 to 44,481, giving a new Mutual Share compared to the Full Cost of 26%. Subsequent years ( ) are shown currently inflated at 1.5% to give an indication of likely costs over the life of the new 5 year plan (but remember that these figures may change if the actual rate of inflation changes significantly) and shows a reduction in the Mutual Share support needed year on year as it reduces towards the necessary zero to balance the budget. Slide 33 We started by looking at context and we end that way: Parish Treasurers are focused on parish finances but they are part of the PCC so have a wider remit too. Finance is part of a wider focus in the parish, it underwrites the ability to perform the other foci so it s right to ask What is the church for? 1. Worship, 2. Discipleship, 3. Outreach. If we get those foci right, it should lead to more members and hence more income and a better ability to meet the outgoings, including Parish Share. Slide 34 What s the diocese doing to help us correct the problem of our shortfall? It s created the Parish Giving Scheme which is showing, in those Benefices where it s been introduced, a meaningful increase in the weekly donations received. And there s a whole range of resources available from the various Diocesan Central Departments, summarised under the Journeying Together initiative and our associated Deanery Implementation Booklet, which should have already been shared with your PCCs via your Deanery Synod reps. In addition, the diocese has created three funds to help us undertake the necessary activities to increase our church life and hence income: 1. The established Stipend Fund, described earlier, to support parishes in paying for their priest through the Parish Share. 2. A new Development Fund created from the recent sale of the diocesan retreat centre Glenfall House. The house needed a lot of money spent to bring it up to current mandatory standards and it lost a significant contract, and hence income, from the Local Council in competition to local hotels, which made it financially unviable; so it had to close. The significant money from that sale will be used for activities that support discipleship and growth. 3. A new New Ministries Fund created from recently sold redundant Glebe land and properties that will be used as its name implies to support new ministry initiatives across the parishes.