2005 Compensation Guidelines for MACUCC Clergy

Approved by the 205th Annual Meeting, June 12, 2004

The 205th Annual Meeting of the Massachusetts Conference of the United Church of Christ, concerned with the growth of its churches and the compensation of its ordained leaders, recommends that all congregations meet the goals as outlined in Guidelines for Clergy Compensation. The guidelines apply to all full-time pastors, associates and assistants, both settled and interim.

Because the pastor of a church is required by the Associations of the Massachusetts Conference, United Church of Christ to be a highly educated and trained professional, the salary and housing package for pastors should be congruent with the compensation of other similarly trained professionals in the community. The total compensation package could be considered at least equal to that of professionals requiring three or more years of post graduate training such as school superintendents, secondary and middle school principals, engineers and other professionals in administrative positions, showing consideration for years of service, special skills and training, and natural aptitude. The federal tax structure is unique for clergy, and the compensation package should be designed in such a way as to maximize the pastor's income.

The work schedules and compensation packages of local pastors should be healthy for the pastor and for the church. That would require a balance of time spent in the church’s ministry and time spent with family and friends -- a balance of work and recreation, a balance of exercising the body and the mind, a balance of care of others and care for self.

Some churches, because of their smaller membership and/or financial constraints, may be unable to provide an adequate compensation package for full time pastoral service. They are encouraged to meet with the Area Minister and/or Stewardship and Financial Planning Consultants from the Conference to review their situation. They may consider creative options, such as calling a part-time, bi-vocational pastor or sharing a pastor with another congregation in the area in order to combine resources to offer adequate compensation. A congregation should not expect a pastor to work full time for part-time compensation.

Finally, in order to recognize both the changing nature of a clergyperson's financial and family situation, along with the dynamics of the overall economy, local churches should thoroughly review on a yearly basis all aspects of the salary and benefits package.

Be it resolved that the 205th Annual Meeting recommends:

1. Churches pay the minimum entry-level cash salary according to the following table for a full-time pastor;
2. Churches provide either
   a. a PARSONAGE or
   b. a CASH PACKAGE sufficient to allow the minister to buy or rent, furnish and maintain a median-priced house in the church's community.
3. Full benefits and professional expenses be provided, as listed below; benefits and professional expenses are not to be considered part of the cash salary, but are part of the cost of having an ordained minister;
4. Churches already at or above the minimum and also fully providing all benefits and professional expenses as outlined in below give at least a cost of living increase and consider a merit increase also;
5. The work schedule of local pastors be a maximum average of 40-50 hours per week with no more than 3 evenings in a given week; in addition, pastors take at least 1½ days off per week.
6. Massachusetts Conference of the United Church of Christ local churches be encouraged to complete the Annual Report forms provided by the Conference and the national setting of the United Church of Christ.

CASH SALARY RANGES

The cash salary ranges do NOT include housing, benefits, professional or any other expenses. In calculating years of ordained experience, churches may wish to include other relevant life and work experience.

HOUSING

Churches provide either:

1. a PARSONAGE with a furnishings allowance, all utilities, and an equity development plan which will ensure the pastor has housing assets in retirement; or
   
2. a CASH PACKAGE sufficient to allow the minister to buy or rent, furnish and maintain a median-priced house in the church's community; the minimum cash package should be no less than 1 percent per month of the value of a median-priced home in the community. This figure covers the costs for a 30-year, fixed rate mortgage, at 5 percent interest, with a five percent down payment, along with other associated housing costs: furnishings, property taxes, maintenance, insurance, etc.

   For example:
   *At the low end of the housing market, if a median-priced house in a community is $150,000, the church's minimum cash package for housing would be $1,500 per month, or $18,000 per annum.

   *At the mid-level of the housing market, if a median priced home in a community is $300,000, the church's minimum cash package for housing would be $3,000 per month, or $36,000 per annum.

   *At the high level of the housing market, if a median priced home in a community is $500,000, the church's minimum cash package for housing would be $5,000 per month, or $60,000 per annum.

BENEFITS AND PROFESSIONAL EXPENSES

A. SOCIAL SECURITY ALLOWANCE
Since clergy are treated as self-employed for social security purposes, pastors must pay the current 15.3% on the cash salary plus housing allowance or on cash salary plus the fair market rental value of the parsonage plus utilities. Therefore it is recommended that churches pay 7.65% of the pastor's salary plus housing allowance or, where a parsonage is provided, 7.65% of fair market rental value plus cost of utilities for social security. This is taxable income which must be reported on a clergy person’s tax returns.

B. BENEFITS

1. annuity - minimum of 14% of base salary plus housing allowance (or minimum of 14% of 130% of base salary if parsonage is provided) paid quarterly to the UCC Pension Board
   
2. life insurance and disability benefit plan - disability income insurance and decreasing term life insurance through UCC program; cost is 1 1/2% of base salary plus housing allowance or, where a parsonage is provided, of 130% of base salary
   
3. group life insurance - additional decreasing term life insurance available through the Pension Boards for $50 per year
   
4. medical/dental insurance - available through the UCC Pension Boards
   
5. holiday and vacation time - usual holidays ( or compensation time) and 4 weeks vacation per year
   
6. continuing education time
   
7. sabbatical time and funds
   
8. sick time
   
9. maternity/paternity leave, including for adoption
   For more detail, see Clergy Compensation Booklet

C. PROFESSIONAL COSTS
Tax law allows deduction of business expenses on Schedule A only after the minister has spent more than 2% of family adjusted gross income on such expenses. THEREFORE it is important that a church establish an “Accountable Reimbursement Plan” which will reimburse or pay directly all costs which the pastor incurs for "doing business" for the church, so that the pastor is not paying income tax for church expenses. These should include but not be limited to:

1. auto reimbursement - for use of personal car at current IRS rate plus tolls and parking, or an automobile provided by the church
2. professional expenses - all expenses allowed by the IRS
3. continuing education allowance
   For more detail see Clergy Compensation Booklet

For reference, the following is an illustration of what is needed to fund the POSITION of a pastor (salary, housing, AND benefits and professional expenses) for a minister with 12 years experience, receiving a mid-range salary, serving in a church with 150-300 members:

CHECK NUMBERS

It is understood that some churches may not be able to meet these guidelines immediately, and may need instead to institute them over a period of 3-5 years. It will be important in these instances to project a cost of living increase for each year and to make the necessary projection of total dollars above where the compensation package is at present. Then simply divide by the number of years it will take to reach the goal, and increase by that figure the annual compensation package over the 3-5 year period.

1 This is the standard formula recommended by the UCC Pension Boards for calculating the annual church contribution to a pastor’s annuity. However, in some specific situations where a pastor’s compensation package is heavily weighted toward a housing allowance, a tax accountant should be consulted to assure that the annuity payment does not exceed the maximum percent of taxable compensation allowed by the IRS for contribution to a 403(b) tax sheltered annuity.

2 This is taxable income which must be included with taxable wages on the W-2 form given to the pastor and reported on a clergyperson’s tax returns.