Portsmouth Diocesan Board of Finance Budget Year Plan

Transcription

1 Portsmouth Diocesan Board of Finance Budget Year Plan P a g e

2 CONTENTS Introduction & Highlights Page 3 1. Budget Summary Page 4 2. Diocesan Context Page Expenditure Detail Page Risk Analysis Page 29 2 P a g e

3 Introduction & Highlights This budget looks to invest in the following areas: Pioneer Ministry, both lay and ordained. A new Church in the centre of Portsmouth appealing particularly to younger people. A full-time Diocesan Director of Vocations and Ordinands. Increasing our number of curates. Raising the allowance for Isle of Wight ministers. Continuing the investment in our parsonages. We believe that these are exciting plans which by the grace of God will move the Diocese from numerical decline towards numerical growth by As well as prioritising the use of our core budget, this is also being enabled by the use of historic funds and the winning of a 929,000 five year grant from Church Commissioners. Parish Share will grow in line with forecast CPI at 1.9%, as agreed at the November 2015 Synod. Despite a reduction in our core grant from Church Commissioners, new core costs arising from various of the investments above and certain other cost increases, we are still planning to balance our core budget within that increase. This is being achieved through re-visiting various of our expectations on parish share recovery, clergy vacancy and reviewing other cost and income lines. Our financial picture is becoming more complex as we seek to increase our investments in mission, use historic funds and win new grants whilst balancing our overall finances over the long-term. This budget pack therefore looks to provide fuller information than in previous years both on the budget itself and the wider context it operates within. 3 P a g e

4 SECTION 1 BUDGET SUMMARY i. Summary ( 000s) and Composition (%) ii. Illustration of Resource allocation iii. Income 3 Year Plan & Assumptions iv. Expenditure 3 Year Plan & Assumptions v. Major Additional Costs & Funding vi. vii. viii. ix. Parish Share: History & Assumptions Clergy Vacancies: History & Assumption Curate Numbers Use of Reserves/Surpluses 4 P a g e

5 1.i. Summary ( 000s) and Composition (%) Actual Budget F'cast Budget Composition '000s '000s '000s '000s % INCOME Parish Share 4,754 4,815 4,718 4,906 68% Investment Income % National Church National Church - SDF % Property Income % Parochial Fees % Grants Programme Income % Reserves % 6,627 6,564 6,763 7, % EXPENDITURE Clergy Costs 4,519 4,852 4,780 5,072 70% Strategic Development % National Church & Ordinands % Mission & Discipleship % Mission & Education (net) % Mission & Society % Mission & Resources % 6,188 6,564 6,676 7, % Surplus/(Deficit) 439 (0) 87 (0) Please note that the above numbers are subject to rounding differences Key Assumptions Parish Share: Increase in line with forecast CPI at 1.9%. Recovery rate 98%. Clergy Costs: 1.5% increase in salary scales in April Vacancy rate will return to 2014 levels 12.8%. Curate numbers increase to 16.5 (from 14.0). 5 P a g e

6 1.ii. Illustration of Resource Allocation Income Rents, Grants & Other income Parochial Fees5% 5% National church 8% Reserves 6% Investment Income 8% Parish Share 68% Expenditure National Church 6% Resources Education Society 8% Discipleship 1% 1% 8% Strategic Development 5% Clergy Costs 71% 6 P a g e

7 1. iii. 3 Year Plan & Assumptions: Income INCOME Actual Budget F'cast Budget Budget '000s '000s '000s '000s '000s Parish Share 4,754 4,815 4,718 4,906 4,999 Investment Income National Church National Church - SDF Grants Property Income Parochial Fees Programme Income Reserves ,627 6,564 6,763 7,198 7,235 Area of Income Assumptions Parish Share Increases with CPI Investment Income Maintain 2015/2016 returns (3.8% average) National Church Main grant reduces by 32K in Strategic Development Funding to proceed as per plan. Grants CPI Property Income: Rentals Reduce from 2015 with sale of houses to fund refurbishment programme & reduction in clergy vacancies Fees Reduce from 2015 levels after increase in arrears collection both 2014 & 2015 Reserves 600,000 to be utilised for parsonages refurbishment programme. 270,000 to be utilised supporting additional curates. 218,000 to be utilised supporting strategic development. 7 P a g e

8 1. iv. 3 Year Plan & Assumptions: Expenditure EXPENDITURE Actual Budget F'cast Budget Budget '000s '000s '000s '000s '000s Clergy Costs 4,519 4,852 4,780 5,072 5,146 Strategic Development Fundin National church & Ordinands Mission & Discipleship Mission & education (net) Mission & Society Mission & resources ,188 6,564 6,676 7,198 7,235 Area Assumptions Stipends increase 1.5% p.a.. Maintain establishment number Clergy Costs Vacancies run at 12.7% from 2017 onwards Curates increase to 16.5 from Pension remains at 39.9% Strategic Development To proceed as per plan National Church Increase at 4.4% 2017 Ordinand training increasing by 10% p.a.. Central team Salary increases to mirror clergy Other costs CPI 8 P a g e

9 1.v Major Additional Costs & Funding Net Budget Forecast '000s '000s (87) Investments Full time DDVO Additional Curates IOW allowance 8 - Parsonages Strategic development Cost increases/grant reductions National Church IT 25 - Safeguarding Stipend & inflation increase Funded By Lay Pension Deficit (41) - Clergy vacancies/share shortf (40) 4 Investment & Rental Income (40) - Share increase (91) (91) Church Commissioners (255) (119) Reserves - Mission (97) (11) Reserves - Property (200) (200) Reserves - Curates (110) (110) (753) (531) 2017 net budget (0) (0) 9 P a g e

10 1.v Major Additional Costs & Funding (continued) 2017 Budget: Major Additional Costs Full time DDVO 24K Additional Curates 110K IOW allowance 8K Parsonages 200K Strategic development 352K/ 130K National Church 50K IT 25K Safeguarding 8K Stipend & inflation increase 98K v Budget v Forecast 2017 Budget: Funding of Cost Changes Lay Pension Deficit 41K Clergy vacancies/share shortfall 40K Investments & Rents 40K Share increase 91K Church Commissioners 255K/ 119K Reserves - Mission 97K/ 11K Reserves - Property 200K Reserves - Curates 110K (50) v Budget v Forecast Parsonages is a continuing investment compared to 2016 but is separately identified above because it remains a major investment decision. 10 P a g e

11 '000s '000s 1.vi. Parish Share History & Assumptions Parish Share History 6,000 5,500 5,000 4,500 4,000 3,500 3, RPI CPI Earnings Parish Share Parish share increases have kept below inflation using 2010 as the reference point. Parish Share: Requested & Received 5,100 5,000 4,900 4,800 4,700 4,600 4,500 4,400 4,300 4,200 4, Parish Share Request Cash Received We are assuming parish share recovery runs at 98% The contingency for this is built into clergy costs as for previous budgets. 11 P a g e

12 1.vii. Clergy Vacancies: History & Assumptions 25% Clergy Vacancy Rate: Monthly Actual 20% 15% 10% 5% 0% 01/14 03/14 05/14 07/14 09/14 11/14 01/15 03/15 05/15 07/15 09/15 11/15 01/16 03/16 05/16 We have been going through a period of increased vacancy rates in 2015 and 2016 as deanery plans were being agreed. However we are now seeing those reduce. We are assuming vacancy rates return to the levels of 2014 at 12.7%. Clergy Vacancy Rate: Annual 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2014 Actual 2015 Actual 2016 F'cast 2017 Budget 2018 Plan 12 P a g e

13 '000s Post Numbers 1.viii. Curate Numbers In response to the national objective to increase vocations and the increasing gap between numbers of clergy retiring and the numbers being ordained, we are seeking to increase our numbers of curates. Curate Stipend Costs and posts Actual 2015 Actual 2016 F'cast 2017 Budget 2018 Plan Costs Posts The budget includes raising our core number of curates from 14.0 to 16.5 posts. This is being funded through the use of surpluses from the higher than budgeted clergy vacancies in 2015 and However we need to be careful that we do not over-commit ourselves. Each curate is a potential four year commitment costing in excess of 150,000. The need to do this is the developing gap nationally between posts and available ministers as retirements exceed new ministers. The church has been training insufficient clergy. Nationally, 40% of clergy are due to retire over the next ten years. The national projections done in 2012 showed the gap between posts and available ministers growing by 2020 to c.1,700 (20% of posts) if trends did not change. Nationally Archbishops Council are positing that this might fund increased numbers of curates. But how this plays out at the local level is far more problematic. 13 P a g e

14 1.ix. Use of Reserves/Surpluses Use of Reserves Brought Carried forward forward '000s '000s '000s '000s '000s Property 600 (200) (200) (200) - Mission 330 (86) (97) (99) 48 Curates (116) (102) 74 1,135 (199) (413) (401) 122 Property The DBF has allocated 600,000 towards refurbishing parsonages. This is being funded from the sale of other properties so that we arrive at a slightly smaller property portfolio but one where all the properties are of a higher standard. It is planned to use this over Mission The DBF has designated 330,000 arising from surpluses in previous years towards developing mission initiatives. It formed a key part of the strategic development bid to Church Commissioners and is planned to be spent as set out in schedule 3.vi. Curate Support Of the 2015 surplus, 234,000 was used to pay off the lay pension deficit liability which has resulted in future budget savings of 40,000 p.a.. The remainder is being used as a reserve to support increased curate numbers; our forecast surplus for 2016 would also go towards this. 14 P a g e

15 SECTION 2. Diocesan Context i. Attendance Trends ii. iii. iv. Parish Income Trends Parish Giving Trends Parish Share Benchmarking v. Economic Forecasts 15 P a g e

16 2 i Attendance trends Average Weekly - Adults Average Sunday - Adults Average Sunday - C&YP Attendance in the Portsmouth diocese has been steadily declining. 16 P a g e

17 '000s/Nos 2 ii Parish Income Trends 14,000 Portsmouth Diocese PCC Income & Givers 12,000 10,000 8,000 6,000 4,000 2, Total Income Voluntary Income No. All Planned Givers Parish Share Requested Donor Income Despite the reduction in planned givers, which mirrors the attendance trends, overall PCC income has grown and share reduced as a % of PCC income 17 P a g e

18 2 iii Parish Giving Trends All Planned Giving All Planned Givers 8,769 8,748 8,467 8,257 8,080 7,722 All Planned Giving k 3,852 3,741 3,733 3,824 3,831 3,920 PG per Giver Per Week Rank (40 Dioceses) National Giving as Percentage of Estimated Average Income Portsmouth 3.2% 2.8% 2.8% 3.0% 3.1% 3.0% Rank (40 Dioceses) National Comparison 3.4% 3.3% 3.2% 3.3% 3.3% 3.5% Average incomes are estimated using inland revenue data for average income of tax payers, data on the number of tax payers and total adult population to estimate the percentage of the population who are taxpayers Planned giving as % of estimated average incomes ranked by diocese Sheffield Birmingham Bristol London Guildford Bath & Wells Southwell Coventry Leicester Canterbury Oxford Derby St. Eds. & Ips Ely Leeds Lichfield Exeter Salisbury Chichester Norwich Peterborough York Rochester Southwark Carlisle Winchester Worcester Liverpool St. Albans Blackburn Manchester Portsmouth Chelmsford Newcastle Hereford Lincoln Chester Gloucester Truro Durham 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 18 P a g e

19 2 iv Parish Share Benchmarking Norwich Peterborough St. Albans Canterbury Southwark Southwell & N Guildford Oxford Worcester Chelmsford Leeds Birmingham St. Eds. & Ips Rochester Bristol Bath & Wells Exeter Truro Hereford London Chester Lichfield Portsmouth Newcastle Chichester Coventry Leicester Derby Salisbury Blackburn Gloucester York Liverpool Manchester Ely Carlisle Winchester Sheffield Durham Lincoln Share per 'member' Truro St Eds & Ips Newcastle Peterborough Worcester Norwich Leeds Canterbury Blackburn Hereford Southwell Manchester St Albans Chelmsford Lichfield Carlisle Chichester Chester Exeter Durham Gloucester Liverpool Bath & Wells York Oxford Portsmouth Derby Salisbury Coventry Southwark Ely Leicester Winchester Birmingham Bristol Lincoln Rochester Guildford Sheffield London Share as % of PCC unrestricted income 20% 30% 40% 50% 60% 70% Members are calculated as a weighted average of Electoral Roll (1/3rd) and Average Sunday Adult Attendance (2/3rds). 19 P a g e

20 2 v Economic Forecasts The June 2016 summary of forecast published by the Office for National Statistics gave the following forecast for the UK economy: Actual Actual F'cast F'cast GDP RPI CPI Since then we have had the referendum vote to exit the EU. The July ONS report shows increasing inflation and decreasing GDP forecasts but also increasing divergence between forecasts. We have used the June 1.9% forecast for CPI growth in 2017 for the purposes of increasing parish share. 20 P a g e

21 SECTION 3 EXPENDITURE DETAIL i. Ministry & Clergy ii. iii. iv. National Church & Ordinand Training Mission & Discipleship Mission & Education v. Mission & Society vi. vii. Mission & Resources Strategic Development 21 P a g e

22 3 i Mission & Clergy MISSION & CLERGY Actual Budget F'cast Budget Budget '000s '000s '000s '000s '000s Stipends 2, , , , ,733.4 Employer's National Insuranc Pension Contributions Council Tax All housing Repairs and Insur Retired Lay Workers/Clergy Su (0.9) (3.0) Clergy Removal Expenses st Appointment Grants Clergy Posts: Interview expens Deanery Support Pastoral Care Services , , , , , P a g e

23 3 ii National Church & Ordinand Training Actual Budget F'cast Budget Budget '000s '000s '000s '000s '000s National Church Responsibilities & Training Training for Ministry (Vote 1) Central Church Activities (Vote 2&3) Mission Agencies - pensions (Vote Clergy retirement housing (Vote 5) Oridnation Training Support General Synod: Members' Expenses Synodical Expenses Lambeth Conference contribution P a g e

24 3 iii Mission & Discipleship Actual Budget F'cast Budget Budget '000s '000s '000s '000s '000s Staff Employment Costs Section Expenses Project Expenses Programme Expenses Mission & development Fund Apportioned Office Services / Staff C Church Commissioners Grants (87.0) (87.7) (87.0) (87.8) (88.6) Restricted Income (15.8) (12.8) (15.4) (15.6) (15.9) Designated Fund Income (36.7) (37.3) (37.3) (37.9) (38.5) P a g e

25 3 iv Mission & Education Actual Budget F'cast Budget F'cast '000s '000s '000s '000s '000s Staff Employment Costs Apportioned Building/services Costs Activity Costs Academies Costs 16.7 Income (Fees) (40.1) (41.8) (47.2) (47.9) (48.6) Recharges (359.6) (356.5) (393.0) (374.2) (380.7) P a g e

26 3 v Mission & Society Actual Budget F'cast Budget F'cast '000s '000s '000s '000s '000s Staff Employment Costs Apportioned Building Costs Activity Costs Gross Costs Income (141.8) (192.3) (121.8) (110.7) (111.9) Net Costs Communications Total P a g e

27 3 vi Mission & Resources Actual Budget F'cast Budget F'cast '000s '000s '000s '000s '000s Central Support Archdeacon Support Finance Safeguarding Registrar Apportioned Building Costs Other Activity Costs Income (18.8) (14.6) (24.2) (24.6) (24.9) Total Pension liability & Cathedral Grant P a g e

28 3 vii Strategic Development Total Initiative FTE Total '000s '000s '000s '000s '000s '000s Pioneer Posts ,645 Project Costs Small grant fund Harbour Church Church Plant Lay Pioneer Development Leadership & Monitoring ,720 Funding Within Core Budget ,465 Reserves Strategic Development Fund ,720 Funded from Reserves & National church FTE Total '000s '000s '000s '000s '000s '000s From Reserves & National Church Funding Pioneer Posts Project Costs Small grant fund Harbour Church Plant Lay Pioneer Development Leadership & Monitoring , P a g e

29 SECTION 4. Risk Analysis i. Parish Share ii. iii. iv. Clergy Vacancies Implementation of Strategic Development Funding Use of reserves/time-limited funding v. Economic Uncertainty 29 P a g e

30 '000s '000s 4.i Parish Share Changes in parish share receipts can have a significant impact on our results as it did, in a positive way, in The diocese continues to put resources into developing stewardship. The new viability initiative is a further development of that. Portsmouth has a history of very high recovery rates on our parish share request. The budget is based on a 98% recovery rate. Each 1% change in our recovery rate has a c. 50K impact on our results. 150 Effect of Parish Share Recovery Change (50) -2% -1% 0 1% 2% (100) (150) 4.ii Clergy Vacancies Changes in clergy vacancies can also have a significant impact on our results, again as it did in With the finalisation of deanery plans, our clergy vacancies are now reducing. Increasing retirements and the national shortage of clergy may put additional pressure on our numbers. However Portsmouth generally remains an attractive diocese for clergy Effect of Clergy Vacancy Rate Change - (20) -2% -1% 0 1% 2% (40) (60) (80) 30 P a g e

31 4.iii Implementation of strategic development funding The strategic development funding is very welcome but also places an additional challenge on the diocese to implement it well. The requirements on monitoring and evaluation will require the diocese to further develop those capacities. 4.iv. Use of reserves/time-limited funding Key parts of our budget are being sustained by reserves and time limited funding. The 600,000 being spent on parsonage refurbishment presents no real issues. The strategic development funding bid has included considering longer term sustainability. The initial funding for all the initiatives are all time limited and unless they produce the memberships able to sustain them in the long term will need to be brought to an end. Increasing curate numbers again will need to be sustained either by continued higher clergy vacancies or increasing parish share. In that each curate represents a substantial four year commitment we need to be careful we do not over-commit ourselves. 4.v. Economic Uncertainty The EU referendum has increased the economic uncertainty and how that might impact on underlying prosperity. 31 P a g e