Treasurer s Report to Convention

Transcription

1 Treasurer s Report to Convention At the end of 2011 the Diocese s chief financial officer, Jim Forsyth, retired and Tom Ferguson joined the Diocese as our new financial officer. However, Jim has continued to work on a part-time basis to assist in the transition of his responsibilities. Also at the end of 2011 the Diocese made a decision to transfer the management of its invested endowment funds to The Investment Fund for Foundations ( TIFF ), a management investment organization that serves only foundations, endowments and other nonprofit entities. Under the leadership of the Executive Council and its Finance Committee, the Diocese has continued to focus on improvements to the financial affairs of the Diocese during the current year. An overriding goal continues to be the achievement of increased transparency in all financial affairs and financial reporting of the Diocese. The financial statements of the Diocese have been audited by the audit firm of Hood & Strong. A copy of the complete financial statements and the independent auditors report are available on the website of the Diocese. In the pages following this letter I have included a summary of the financial statements of the Diocese for the year ended December 31, a small surplus for the 2011 year (excluding a transfer of real estate from the Endowment Fund to the Operating Fund). The primary sources of revenue for the Operating Fund are assessment income, gifts and the annual income distribution from the Endowment Fund Forecast and 2013 Budget The Operating Fund is expected to incur a small surplus in the current 2012 year, consistent with the approved 2012 operating budget. The proposed assessment rate for 2013 continues to be the lower assessment rate approved by Convention last year, with a top rate of 17% (versus a top rate of 20% in previous years). The Program & Budget Committee and the Executive Council have recommended a 2013 Operating Fund budget that will result in a balanced budget for the year with a small surplus. A copy of this proposed 2013 budget is included in the following pages. This budget reflects the Diocesan recommended salary increase of 3.0% for cost of living increases, and an expected increase of approximately 10%, depending on the plan, in the cost of medical and other required benefits. Financial Results for Calendar 2011 The Diocesan Corporation is composed of four separate funds: the Operating Fund, the Custodial Fund, the Endowment Fund and the Deferred Gifts Fund. The Diocesan Corporation in total experienced a decrease in total net assets of $1.1 million during This decrease was primarily the result of losses in the market value of investments in the Endowment Fund. The Operating Fund of the Diocese (which reflects the operating income and expenses of the Diocese) had Financial Policies and Procedures The Finance Committee of the Executive Council holds monthly teleconference meetings to review the financial affairs of the Diocese. Its monthly discussions include a review of the year to date operating financials, the ageing of receivables from the parishes and missions, and the line of credit loan facility available to parishes and other Diocesan institutions. A summary of these meetings is then presented at each month s Executive Council meeting. Three other committees of the Executive Council also Fi-1

2 Treasurer s Report to Convention have significant involvement in the financial affairs of the Diocese: The Program and Budget Committee prepares the recommended Operating Fund budget for the coming year, which is then presented to the full Executive Council and subsequently to Diocesan Convention. The Investment Committee has oversight responsibility for the investments of the Endowment Fund. The Audit Committee is charged with the responsibility of ensuring that the financial affairs of the Diocese are audited by an independent auditor and that appropriate accounting policies and internal controls are established and followed. Special recognition is due to the members of this year s Program & Budget Committee, who worked diligently to prepare the proposed budget for the coming year. Members of this year s committee were Gary Hunt, Joe Jennings, Clay Jones, Jay Luther, Lauran Pifke, Mauricio Wilson, Jim Forsyth, Tom Ferguson and Bob McCaskill. its fiduciary responsibilities for the financial welfare of the Diocese and all of its churches and missions. I want to again express my thanks to Jim Forsyth, Tom Ferguson and all of the staff at Diocesan House for their hard work and assistance over the past year. Respectfully submitted, Robert McCaskill, Treasurer Corporation Sole All of the assets of the Corporation Sole except for its real estate holdings were transferred to the Diocesan Corporation in December A separate report on the financial position of the Corporation Sole follows this report. Other Matters Both the Diocese and its member churches continued to experience financial constraints over the past year as a result of the continuing economic downturn. While there is some hope that these trends may reverse in the not too distant future, it is likely that we will continue to see many of our parish churches suffer from the strain of limited financial resources. This calls for the Diocese to be particularly mindful of Fi-2

3 Summary of the Financial Position of the Diocesan Corporation Summary of the Financial Position of the Diocesan Corporation Financial Position (Balance Sheet) All December ASSETS: Cash & cash equivalents 1,859,768 3,572,421 Receivables, net 1,764,200 1,782,913 Investments 36,018,552 32,475,372 Notes receivable 3,107,795 2,627,445 Notes receivable held for investment 120,424 2,300 Equity interests in real property 1,231,449 1,231,449 Property & equipment, net 4,239,334 4,198,086 Total Assets 48,341,522 45,889,986 LIABILITIES: Accounts payable & accrued expenses 842, ,958 Accounts payable, related party 203, ,519 Deferred revenue 163,936 12,966 Line of credit 3,107,795 2,718,945 Funds held in trust for beneficiaries 15,132,564 14,203,237 Total Liabilities 19,450,136 18,100,625 TOTAL NET ASSETS 28,891,386 27,789,361 Change Net Assets by Fund: for 2011 Operating & Property Fund 5,501,673 6,336, ,317 Custodial & Unexpended Income 469, , ,600 Endowment Fund 19,808,031 17,548,032-2,259,999 Deferred Gifts 3,112,380 2,908, ,943 Total All Funds 28,891,386 27,789,361-1,102,025 Fi-3

4 Summary of the Financial Position of the Diocesan Corporation Summary of the Financial Position of the Diocesan Corporation Financial Position (Balance Sheet) All December ASSETS: Cash & cash equivalents 1,859,768 3,572,421 Receivables, net 1,764,200 1,782,913 Investments 36,018,552 32,475,372 Notes receivable 3,107,795 2,627,445 Notes receivable held for investment 120,424 2,300 Equity interests in real property 1,231,449 1,231,449 Property & equipment, net 4,239,334 4,198,086 Total Assets 48,341,522 45,889,986 LIABILITIES: Accounts payable & accrued expenses 842, ,958 Accounts payable, related party 203, ,519 Deferred revenue 163,936 12,966 Line of credit 3,107,795 2,718,945 Funds held in trust for beneficiaries 15,132,564 14,203,237 Total Liabilities 19,450,136 18,100,625 TOTAL NET ASSETS 28,891,386 27,789,361 Change Net Assets by Fund: for 2011 Operating & Property Fund 5,501,673 6,336, ,317 Custodial & Unexpended Income 469, , ,600 Endowment Fund 19,808,031 17,548,032-2,259,999 Deferred Gifts 3,112,380 2,908, ,943 Total All Funds 28,891,386 27,789,361-1,102,025 Fi-4

5 Report on the Corporation Sole In May 2008 the Special Convention of the Diocese adopted governance revisions stipulating that the Corporation Sole be merged or otherwise incorporated into the Diocesan Corporation to the extent feasible by January 1, However, the convention resolution also provided that in the event that such a merger or other incorporation would result in a loss of assets to the combined entity, the Corporation Sole shall continue to survive to the extent necessary to preserve its assets. As previously reported to convention, a conclusion was reached that all of the assets and liabilities of the Corporation Sole could be transferred to the Diocesan Corporation without significant costs except for the real property holdings of the Corporation Sole. Transfers of real property in California are subject to significant real estate transfer taxes; religious and nonprofit entities are not exempt from these transfer taxes. In December 2009, all of the assets of the Corporation Sole other than its real estate properties were transferred to the Diocesan Corporation. During 2010 the former church property of a closed mission was sold by the Corporation Sole for $1.7 million. The net proceeds of this sale (after related selling costs) were transferred to the Diocesan Corporation subsequent to the sale of the property. During 2011 the Corporation Sole had no income or expenses. The balance sheet of the Corporation Sole as of December 31, 2011 (shown in the following pages), reflects only the 33 real estate properties which continue to be held by the Corporation Sole. Respectfully submitted, Robert McCaskill, Treasurer Fi-5

6 Summary of the Financial Position of Corporation Sole The Episcopal Bishop of California (Corporation Sole) (not audited) Financial Position (Balance Sheet) As of December ASSETS: Property 15,388,181 15,388,181 Total Assets 15,388,181 15,388,181 LIABILITIES: Total Liabilities 0 0 TOTAL NET ASSETS 15,388,181 15,388,181 Statement of Income and Expenses Support and Revenue: Gain on sale of property 1,488,158 0 Gifts, grants and other 0 0 Total support and revenue 1,488,158 0 Expenses: Total expenses 0 0 Change in Net Assets from Operations 0 0 Transfer to Diocese of California -1,596,658 0 Change in Total Net Assets -108,500 0 Fi-6

7 Summary of the Financial Position of Corporation Sole Properties Owned by the Corporation Sole (at cost) Missions: Antioch, St. George 146,565 Belmont, Good Shepherd 39,500 Bolinas, St. Aidan's 10,000 Brentwood, St. Alban's 16,000 Daly City, Holy Child and St. Martin 114,000 Half Moon Bay, Holy Family 578,479 Oakland, St. Cuthbert's 245,510 Pacifica, St. Edmund's 121,357 Pinole, Church of Christ the Lord 206,790 San Bruno, St. Andrew's 1,479,000 San Francisco, Christ Church 25,000 San Francisco, Holy Innocent 73,177 San Francisco, St. Cyprians 1,087,917 San Rafael, Redeemer 393,099 South San Francisco, St. Elizabeth's 82,640 Parishes: Castro Valley, Holy Cross 2,017,558 Clayton Valley, St. John's 214,029 Crockett, St. Mark's 26,500 Danville, St. Timothy's 962,325 Foster City, St. Ambrose 927,367 Fremont, St. Anne's 135,686 Livermore, St. Bartholomew's 179,170 Oakland, St. Augustine's 263,901 Pleasanton, St. Clare's 403,380 Ross, St. John's 124,858 San Francisco, St. Gregory's 548,408 Other Properties: Bishop Ranch Furia Properties 501,758 Brentwood 1,214,278 Community of St. Francis 69,500 El Rancho del Obispo 2,394,632 Family Link 341,936 Society of St. Francis 51,500 St. Dorothy's Rest 392,361 Total 15,388,181 Fi-7

8 2013 Proposed Operating Budget Proposed Budget Program and Budget Committee A G I J K L 2012 total budget 2013 salary & benefits 2013 fixed expense 2013 discretionary 2013 total budget REVENUE Assessment Income 3,061,000 3,077,834 Gift income for current operations - 150,000 Fundraising for Church Growth 150,000 Other Income 30,000 30,000 Endowment Income 487, ,000 Administrative Fees- Controller 150, ,000 Administrative Fees- Planned Giving 80,000 80,000 Payroll Fees 45,000 45,000 Total Revenue 3,853,000 4,169,834 EXPENDITURES Episcopate Bishop's Compensation 156, , ,824 Bishop's Benefits 56,254 61,879-61,879 Bishop's Assistant Compensation 77,568 79,895-79,895 Benefits 24,101 26,511-26,511 Bishop's Hospitality 20,000 20,000 20,000 Bishop's Entertainment 10,000 10,000 10,000 Bishop's Travel 15,000 15,000 15,000 House of Bishops Travel 4,000 4,000-4,000 Bishop IX Election Fund 15,000 15,000-15,000 Bishop's Residence- Maintenance 30,000 30,000-30,000 Clergy Conference 10,000 10,000 10,000 Commission on Ministry 21,000 21,000 21,000 School for Deacons 35,000 35,000 35,000 Ordination Process Support 2,600 2,600 2,600 Archdeacon Expense 17,000 17,000 17,000 Companion Diocese Initiative 10,000 5,000 5,000 Travel- General Convention 13,000 13,000-13,000 Travel- Lambeth 2,000 2,000-2,000 Travel- Province 3,500 3,500 3,500 Fi-8

9 2013 Proposed Operating Budget Proposed Budget Program and Budget Committee A G I J K L 2012 total budget 2013 salary & benefits 2013 fixed expense 2013 discretionary 2013 total budget Standing Committee 4,000 4,000 4,000 Executive Council 3,000 3,000 3,000 Deanery Program 15,000 15,000 15,000 Ecumenical & Interreligious Affairs 3,000 4,000 4,000 Total Episcopate 547, ,110 64, , ,210 Outside Diocese Support Episcopal Church Apportionment 690, , ,000 Provincial Assessment 21,000 21,000 21,000 Total Outside Support 711, , ,000 Diocese Outreach Millennium Project/Haiti Music Program 26,971 28,139 28,139 Haiti Music Program 22,500 - Intentional Communities - Interns 10,000 20,000 20,000 Hearst St. Tax & Maintenance 10,000 10,000-10,000 Total Diocese Outreach 69,471 38,139 20,000 58,139 Treasurer's Office CFO Compensation 100, , ,000 CFO Emeritus 40,000 25,000 25,000 Payroll & Benefits Coordinator 53,992 55,612 55,612 Accounting Manager 50,000 51,500 51,500 Accounting Consultant- Liz 11, Treasurer's Office Benefits 71,854 79,039 79,039 Bank & Payroll Fees 50,000 50,000 50,000 Outside Services 23,000 23,000 23,000 Travel & Entertainment 6,000 7,000 7,000 Miscellaneous 4,000 5,000 5,000 Audit of Diocese 60,000 60,000 60,000 Total Treasurer's Office 470, , ,000 12, ,151 Planned Giving/Development New development hire - 85,000 85,000 Fi-9

10 2013 Proposed Operating Budget Proposed Budget Program and Budget Committee A G I J K L 2012 total budget 2013 salary & benefits 2013 fixed expense 2013 discretionary 2013 total budget Benefits for new development hire - 28,050 28,050 Gift planning officer (new) - 85,000 85,000 Benefits for gift planning officer - 28,050 28,050 Gift planning officer (retiring) 103,343 34,000 34,000 Benefits for gift planning officer 49,671 - Planned Giving Assistant 33,243 45,000 45,000 Benefits planned giving assistant 14,850 14,850 Travel & Entertainment 3,800 3,800 3,800 Prog. Expenses - Development - 25,000 25,000 Prog. Expenses- Planned Giving 32,000 20,000 20,000 Total Planned Giving 222, ,950-48, ,750 Administration Temporary Assistants 10, Medical Premiums Retired Clergy 106,500 23,402 23,402 Chancellor's Fees 92,700 92,700 92,700 Building Maintenance 30,000 30,000 30,000 Telephone 12,500 12,500 12,500 Utilities 18,000 18,000 18,000 Supplies Office 19,000 19,000 19,000 Postage 24,000 20,000 20,000 Convention & Journal 15,000 15,000 15,000 Insurance 65,000 65,000 65,000 Real Estate Expense- Brentwood 16,000 16,000 16,000 Total Administration 408, ,200 23, ,602 Canon to the Ordinary's Office Canon to the Ordinary's Salary 103, , ,443 Canon to the Ordinary's Benefits 34,011 37,412-37,412 Associate for Congregational Ministries 30,000 65,294-65,294 Associate's Benefits 8,260 21,209-21,209 Assistant to the Canon to the Ordinary 51,712 61,412-61,412 Assistant's Benefits 11,112 13,196-13,196 Fi-10

11 2013 Proposed Operating Budget Proposed Budget Program and Budget Committee A G I J K L 2012 total budget 2013 salary & benefits 2013 fixed expense 2013 discretionary 2013 total budget Vocations coordinator 20,000 20,600-20,600 Archivist 6,000 6,000-6,000 Archivist benefits Travel & Entertainment 7,000 7,000 7,000 Mission church financial support 321, , ,641 Church Growth Matching Funds 150, ,000 Fresh Start 5,000 5,000 5,000 Living Stones Partnership 5,000 5,000 5,000 Vicars' Retreat & Training 4,000 4,000 4,000 Continuing Education clergy grants 13,000 13,000 13,000 Clergy Wellness 2,000 2,000 2,000 Stewardship and Ministry Developers 12,500 12,500 12,500 Ministry Evaluation 2,500 2,500 2,500 Anti- Racism Training 8,000 8,000 8,000 Healing of Memories program 10,000 10,000 10,000 Racial Reconciliation 2,600 2,600 2,600 Travel & entertainment 6, Total Canon to the Ordinary office expe 664, , , ,267 Discipleship Ministries Ministry Development Minister's Comp 87,040 89,651-89,651 MDM Benefits 35,930 39,523-39,523 Discipleship Ministries Associate 58,000 61,647-61,647 DMA benefits 18,840 20,025-20,025 Travel & Entertainment 6,500 7,000 7,000 Equipping the Beloved Community even 8, Diocese- wide training events 6,000 10,000 10,000 Resource Center 3,000 3,000 3,000 Education for Ministry (EFM) 2,000 2,000 2,000 Adult Curriculum Development 4,000 4,000 4,000 Specialized Lay training scholarhips 8,000 8,000 8,000 "Happening" 2,500 2,500 2,500 Diocesan youth events 5,000 5,000 5,000 Diocesan young adult events 2,000 2,000 2,000 Fi-11

12 2013 Proposed Operating Budget Proposed Budget Program and Budget Committee A G I J K L 2012 total budget 2013 salary & benefits 2013 fixed expense 2013 discretionary 2013 total budget Youth Communications/Curriculum 4,000 4,000 4,000 Youth/ Young Adults retreats 4,000 4,000 4,000 Mission trips and pilgrimages 4,000 4,000 4,000 Campus Ministries 83,000 83,000 83,000 Camp Ministries 48,000 48,000 48,000 California Pacific Camp - St. Dorothy's 3,000 3,000 3,000 Travel & Entertainment 5,000 5,000 5,000 Total Discipleship Ministries 397, , , ,346 Multicultural Commissions Afro- Anglican Commission 7,700 6,500 6,500 Asian Commission 10,000 10,000 10,000 Latino Commission 5,000 5,000 5,000 Migration & Immigration 2,000 2,000 2,000 Oasis 3,000 3,000 3,000 Women's Ministries (formerly Clericus) 1,000 3,000 3,000 Total Multicultural Commissions 28, ,500 29,500 Communications Communications Minister 89,466 90,000 90,000 Benefits 18,213 20,034 20,034 Communications Assistant (Pera) 48,742 50,204 50,204 Benefits 11,579 12,737 12,737 Database assistant (part- time) 25, Benefits 1, Communications Expenses 19,000 19,000 19,000 Communications Program 14,000 84,000 84,000 Social Networking/CRM/Database 14,500 14,500 Computer Training 1,000 1,000 1,000 Computer Equipment 3,000 6,000 6,000 Computer Maintenance Contract 45,000 60,000-60,000 Travel & Entertainment 3,000 3,000 3,000 Total Communications 279, ,975 60, , ,475 Fi-12

13 2013 Proposed Operating Budget Proposed Budget Program and Budget Committee A G I J K L 2012 total budget 2013 salary & benefits 2013 fixed expense 2013 discretionary 2013 total budget Justice, Peace, & Integrity of Creation Commission for the Environment - 1,500 1,500 Episcopal Chaplaincy- Stanford Hosp. 3,000 3,000 3,000 Ministry to Convalescent Hosp. 2,500 2,500 2,500 Peace, Justice and Homeless 2,500 3,400 3,400 Police Chaplaincy- Marin 2,500 2,500 2,500 Sojourn Chaplaincy at SF General 10,000 20,000 20,000 MDG Working Group 1,000 1,000 1,000 World Mission 1,250 2,500 2,500 Total Justice, Peace, & Integrity of Crea 22, ,400 36,400 Total Expenditures 3,821,999 1,679,058 1,284,339 1,200,443 4,163,840 Surplus (Deficit) 31,001 5,994 Fi-13

14 2013 Proposed Assessment Formula Assessment Formula for % assessment on the first $65,040 of a parish or mission s operating income for 2011 as defined on Line A of the 2011 parochial report 2. 17% assessment on all such income above $65,040 provided that, 3. No parish or mission shall have an increase over 2012 s initial assessment before appeals of more than 50% or $15,000, whichever is less Proposed Salary Resolution Resolved: That effective January 1, 2013, the minimum annual compensation for clergy employed full time by and by any parish or mission thereof shall be increased by 2.6% as reflected in the 2013 Mandatory Minimum Salary Schedule. Further Resolved: That Years of Experience be defined by Credited Service with The Church Pension Fund Mandatory Minimum Compensation Including Self Employment Tax Congregation Experience Experience Experience Classification 0-4 Years 5-9 Years 10+ Years A 65,040 68,653 72,266 B 67,208 71,183 75,156 C 69,401 73,711 78,047 D 72,266 78,047 83,829 E 79,493 86,719 94,019 Resolved: 1. That the minimum transportation allowance be $0.555/mile for congregation-related travel; to be adjusted in accordance with IRS published rates for That any deviation below these minimums will be permitted by the Bishop for serious cause, with the Bishop using the Personnel Practices Commission as a council of advice. 3. That employers of all clergy pay to each cleric 50% of the self-employment tax assessed on the cleric's base compensation as a portion of total compensation. ( 7.65% of base compensation) This amount is included in the above schedule. 4. The Personnel Practice Committee strongly urges all churches, wherever possible, to increase the clergy and lay staff compensation 2.6% for 2013 to accommodate for inflation. Note: Compensation increase is based on the Consumer Price Index for All Urban Consumers in San Francisco, Oakland and San Jose as of June 30th, Resolution as passed at the 1999 Diocesan Convention: Resolved: That the proposed salary standards for clergy in, as reflected in the joint report of the Personnel Practices Committee and the Clergy Compensation Task Force, are approved and shall be effective on a voluntary basis for the years and shall become mandatory for 2005 and later years. Fi-14

15 Congregational Grade Structure 1. Number of pledging units: Number Points above Average weekly attendance at Sunday services: Attendance Points above Total Annual Operating Income-Line A of Parochial Report: Amount Points $0 to $72,266 4 $72,267 to $138,705 8 $138,706 to $277, $277,193 to $554, $554,825-above 20 The points from these three categories are then added together and the congregation classification is determined from the following table: Total Points Salary Grade 0-10 A B C D 41++ E Schedule Adjusted to Reflect Cost of Living Increases Since Passage in Resolution as passed at the 1999 Diocesan Convention: Resolved: That the proposed salary standards for clergy in, as reflected in the joint report of the Personnel Practices Committee and the Clergy Compensation Task Force, are approved and shall be effective on a voluntary basis for the years and shall become mandatory for 2005 and later years. Fi-15

16 2013 Clergy Minimum Compensation Episcopal Diocese of California 2013 Clergy Mandatory Minimum Compensation 2013 Mandatory Minimum Compensation Including Self Employment Tax Congregation Experience Experience Experience Classification 0-4 Years 5-9 Years 10+ Years A 65,040 68,653 72,266 B 67,208 71,183 75,156 C 69,401 73,711 78,047 D 72,266 78,047 83,829 E 79,493 86,719 94, Mandatory Minimum Compensation Including Self Employment Tax Congregation Experience Experience Experience Classification 0-4 Years 5-9 Years 10+ Years A 63,392 66,913 70,435 B 65,505 69,379 73,252 C 67,642 71,843 76,069 D 70,435 76,069 81,705 E 77,479 84,522 91, Mandatory Minimum Compensation Including Self Employment Tax Congregation Experience Experience Experience Classification 0-4 Years 5-9 Years 10+ Years A 61,906 65,345 68,784 B 63,969 67,753 71,535 C 66,057 70,159 74,286 D 68,784 74,286 79,790 E 75,663 82,541 89,419 Compensation Figures Include SET Supplement Associates Are Compensated at 2 Classifications Below Rector 2013 Compensation Reflects 2.6% CPI Increase 2012 Compensation Reflects 2.4% CPI Increase 2011 Compensation Reflects 1.1% CPI Increase Fi-16