First Draft 2016 Diocesan Budget - Introduction
Tuesday, May 26th, 2015
To: Wardens, Treasurers and Convention Delegates
From: Budget Committee of Diocesan Council
CC: Diocesan Council, Trustees, Standing Committee, Commission on Ministry, District Deans, HR Committee
RE: First Draft 2016 Diocesan Budget
Attached is the FIRST DRAFT of our 2016 Diocesan Budget for your consideration and feedback. As we’ve done for the last three years, Diocesan Council distributes the first draft at this point in the annual budget process to encourage feedback before completing the final proposed budget in September. Please take a few minutes to review the annual budget process that was presented at District Meetings last month (EXHIBIT #1).
Similar to the first draft of the 2015 budget last year, we are working to close a significant operating deficit over the next three months. Sharing these budget plans, priorities and challenges at this stage allows the various stakeholders in our mission statement to help us direct our collective resources to “Grow and develop congregations spiritually, numerically and in missional leadership”.
The Congregational Development Partnership and Mission Partnership committees of Council are still working on reviewing grant requests. Specific grants for 2016 are added to the budget only after they are reviewed and approved by the appropriate body of Council. The Budget Committee of Council continues to work with the Bishop and Human Resources Committee to complete our Strategic Staffing Assessment and review recommendations from the Health Insurance Policy Task Force. We will review recommendations from both of these processes in June and incorporate recommendations that help focus our resources to support future growth, provide strong and equitable benefits for employees and retirees, while also helping us close the projected operating deficit for 2016.
INCOME FROM APPORTIONMENT is based on the Operating Income reported by all parishes in the 2014 Parochial Report and provides 46% of the funding for our Diocesan Budget. Parish Operating Income has remained flat at about $7.6 M. With no proposed changes to our apportionment rate structure (EXHIBIT #2), the projected average rate of apportionment remains at 12.8% of parish operating income.
Council continues to limit individual parish increases and decreases to no more than 5%, from one year to the next. As we did in 2015, Council has reduced apportionment for a handful of parishes where recent declines in operating income have far outpaced the reductions in apportionment. The effect of this “cap on effective rate” is detailed in EXHIBIT #3, along with a detailed list of parish apportionments in EXHIBIT #13.
INCOME FROM INVESTMENTS: The Trustees of the Diocese of Rochester have approved a draw from investments of $1,150,000 to fund 54% of our 2016 Diocesan Budget. This draw is equal to 5.7% of the audited trailing 5 year average balance and includes distributions form the Cutler Trusts and interest on our loan portfolio. While most financial markets have more than fully recovered their losses from the “Great Recession”, the recovery of our Diocesan investments has been limited due to higher draws, lower interest rates and reduced distributions from trust funds. We continue to stay on course to gradually reduce our draw to a more sustainable level over the next two years (EXHIBIT #4).
EXPENSES: The combined impact of “flat” apportionment and gradually reducing our “draw”, means that operating expenditures must be reduced by about 3.5% in 2016 ($77,000). Our first draft budget has a deficit of ~ $109,000, as cost reductions of over $30,000 were more than off-set by a projected increase in Congregational Development Partnership Grants (~ $39,000) and increased cost of benefits and staff ($21,000). A summary of the First Draft Budget, along with detail by expense category, are provided in EXHIBIT #5 – 12.
CONGREGATIONAL DEVELOPMENT: The Committee is still working with several parishes to complete their annual grant review process in June. These grants are currently noted as “To Be Determined” (TBD). Additional funds have been added to the “NEW Grants” line item to fund potential renewals of these grants, as well as additional NEW Grants in 2016.
MISSION GRANTS: The committee will be reviewing grant requests in July. Since all grants require new applications for 2016, the budget is currently allocated into these three categories (Parish Grants, Partnership Grants and District Grants) with no specific line item allocations, pending review of all applications.
COMMUNICATIONS & FEEDBACK: Please take some time to review the first draft budget and provide your thoughts by attending District meetings or by contacting your elected Council and committee members. A list of the Council, Task Force and Committee members is available on the Diocesan Website, as are all budget related documents. Updates will be announced via e-news and posted to our website.
This first draft budget is a “snap shot” of work in progress. As we move forward to include recommendations and feedback, there will be changes. Our plan is to have a final draft budget by September that is fair, balanced and focused on supporting congregational growth.
Thank you as always for your faithful commitment and support that empowers us to serve one another as a Diocese.
Diocesan Council Budget Committee
Congregational Development Partnership Committee
- The Rev. Chris Streeter, Chair
- The Rev. Lucy Alonzo
- The Rev. Lynne Sharp
- The Rev. Carol Stewart
- Dr. Deborah VanderBilt