Treasurer's Report to the 210th Annual Meeting (2009)

10/16/2009

Submitted by: Mr. Walter Kreil, Treasurer

The year 2008 was another year of financial challenges for the Massachusetts Conference of the United Church of Christ. While 2007 had shown some promising signs of growth in financial support from local churches for the Conference, general economic conditions dramatically reversed that promise in the fourth quarter of 2008. On the positive side was a strong improvement in conference center income. Also, we experienced expense savings in all areas, including personnel, programs, and overhead costs. Still, the Conference sustained a deficit for the year of $38,031, though the deficit was actually less than the $54,700 deficit that had been budgeted for the year. The Board of Directors then authorized the use of $24,331 of reserve funds to reduce the deficit to a level of $13,700, which had been approved by the prior Annual Meeting.

The following table summarizes the recent trend in the Conference’s income sources:

  2008 2007 2006
Basic Support (OCWM) $ 787,954 $ 810,966 $ 801,997
Fellowship Dues 1,034,587 1,086,512 1,060,904
Income from Endowment 132,500 123,902 121,188
Other Income 39,044 85,633 124,792
Conference Center Income 68,894 (53,078) 776
Total $2,062,979 $2,053,935 $2,109,657

Total income for 2008 increased over the prior year due entirely to the substantial increase in Conference Center net income which was up by $121,972 over 2007 and $68,894 over budget. This was due to Pilgrim Day Camp, where new marketing programs were adopted following the 2007 season and 2008 enrollments rebounded to 2005 levels. In addition, costs were restructured to reflect current operating realities.

Basic Support, better known as Our Church’s Wider Mission (OCWM), decreased by nearly 3% from the prior year. The decline was most dramatic in the fourth quarter, as churches pulled back on their contributions in light of their own local financial concerns related to the economy. These funds represent voluntary direct contributions from our local churches in support of the work of the Conference and the national setting of the United Church of Christ. Total OCWM receipts for 2008 were $1,969,885 (3% below the $2,027,000 budget for the year), of which the $787,954 in the chart reflects the 40% retained by the Conference The other 60% is sent on to the national setting of the United Church of Christ for national and global ministry and mission.

Fellowship Dues of $1,034,587, which churches pay on a per-member basis, decreased nearly 5% in 2008 from 2007, and was 8% below the budget of $1,125,000. Here again, the decline was most dramatic in the fourth quarter, as churches pulled back on their contributions in light of their own local financial concerns related to the economy. The decline is even more significant after considering the 2.5% dues rate increase that had been implemented. Also of concern is a decline in the collection rate (the amount of dues collected versus the amount of dues available to be collected) which was 79.4% in 2008 compared with 83.6% in 2007 and 93% in 2000. Conference staff continue to address how the collection rate can be improved, as well as collection of unpaid prior years’ dues. While our churches report increases in weekly attendance, the number of members continues to decline as many people no longer view formal membership necessary to meaningful participation in church life.

On the expense side, in 2008, we experienced $15,764 in savings in the personnel budget due to unused allocations for health insurance. Program and institutional costs were 14% and two percent under budget, r e s p e c t i v e l y, for a total savings of about $46,000. Thus, these under expenditures balanced the income shortfall and we ended the year, as noted, with a deficit of $13,700, after utilization of $24,331 in reserve funds.

Based on 2008 results, the Board modestly revised the 2009 budget by lowering Basic Support by $27,000 and Fellowship Dues by $109,600, and Endowment and other income by $14,300. On the other hand, anticipated Conference Center revenue was increased by $54,000. On the expense side, estimates in the personnel budget were revised for a reduction of $47,250; program and other costs were adjusted downward by $33,450 to maintain the overall $37,000 deficit approved by the Annual Meeting in 2008. This deficit will be covered by transfers from reserve funds.

The proposed 2010 budget, which may be found elsewhere in these Advance Materials, is balanced with income and expenses of $2,193,900, each. There is, however, one major change to the income side of the budget. Your Board of Directors is recommending a shift in the sharing ratio with the national setting of the United Church of Christ, which will result in more monies staying in the Massachusetts Conference. Currently we retain 40% of all Basic Support (OCWM) contributions for use in Massachusetts. A change in the sharing ratio has been discussed frequently in recent years. The Board is recommending, and this budget reflects, an increase in that retention to 45%. This will increase the amount of budgeted funds available to the Conference by $100,000. The current timing is driven by financial necessity to support our existing programs and staffing, without incurring growing deficits, for which reserve funds are being depleted, while at the same time, substantially honoring our covenant with the national setting of the United Church of Christ. We urge your support for this change.

Revenue projections reflect a mix of optimism and caution. We chose to budget 2010 OCWM at $2,000,000 (the same as the revised 2009 budget) or 1.5% over the actual level realized in 2008, in part due to a belief that, as the economic pictures becomes clearer, the ability of some local churches to increase or resume giving should exist. The Conference's other major source of income, Fellowship Dues, is challenging in that it assumes that our churches will more fully meet their covenantal responsibility to contribute per-member Dues than has generally been the case in recent years. The percentage of current dues owed, based on reported membership, which was actually paid in 2008 was about 79.4. As recently as the year 2000 it was 93%. The Board proposed that the Conference continue every effort to improve that rate for 2010, and the budget assumes a rate of 82%. Conference staff will be working with Association Treasurers to achieve this objective. The Dues rate recommended by the Board is $16.80 per member, an increase of only forty cents or 2.5% per member over 2009, which is consistent with dues increases in recent years. This increase is calculated in accordance with the vote of the 1993 Annual Meeting, which directs that the Dues rate can be increased by no greater percentage than the average percent increase in local church expenses reported to the Conference during the preceding three years. The average increase in reported local church expenses for the previous three years was about 2.5%; hence the comparable increase in the Dues rate recommended by the Board.

Other sources of income from the endowment, Conference Center revenue and miscellaneous sources are expected to remain flat in total with an increase in Conference Center revenue offsetting a decline in endowment income as the value of the market value of the endowment has declined along with the general financial markets.

The expense side of the proposed 2010 budget shows an overall increase of 1.7%. Of the total $38,300 increase in expenses, $28,700 is in the personnel budget, representing a proposed 2% increase in compensation costs, principally health insurance. There are no proposed changes to the current Conference staff structure. Program costs are increased $4,000 or 1.7%, while institutional costs are projected at a 1.2% increase or $5,600.

The net result is a balanced budget for 2010. The Board recommends approval of the proposed budget.

In keeping with the goals of A Still More Excellent Way, adopted by the Annual Meeting in September 2007, and in accordance with approval granted by the Annual Meeting in November 2008, the sale of Warner Farm was completed in March 2009 to a buyer whose stated intent is to update the facility and operate it as an independent Conference Center. After related transaction costs, the net proceeds from the sale were approximately $292,500. This money has been separately invested, and will be used in accordance with priorities e m e rging from a Listening Process which will begin at the upcoming Annual Meeting.

The Board’s Finance Committee (formerly the Resource Development and Management Committee) had been actively considering the potential use or sale of Conference properties located in Ashland, MA, adjacent to the Conference’s headquarters in Framingham. However, in light of current real estate market conditions, that process has been put on hold.

Your Board of Directors is always very grateful for the support it receives from local churches and from many individuals within the Conference. With the help of God, and through the guidance of the Holy Spirit, we are certain that the Conference, the churches, and the people of the Massachusetts Conference of the United Church of Christ will continue on the path of A Still More Excellent Way. We look to a future of growth in faith and covenant with each other.



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