an even more fair share…
the old model
13% of church adjusted income
Calculated monthly
Adjustments:
- rent/mortgage
- capital funds
- world missions
- pass thru funds
- bequests
- Bishops’ crisis response fund, ICCM, IYC, BQ
Included:
- Pension (38%)
- Denominational Operations (EPP – 34%)
- Conference Operations (19%)
- WAVE Operations (9%)
concerns in the old model
• Fair Share was based on different adjusted income calculation /
income year than denominational support
• Disconnect between what was being reported at year end report
and what was being reported monthly
• Monthly compensation reporting was inconsistent with
compensation reported to FMCUSA:HR
• Pension was bundled into the Fair Share and obscured the true
staffing expense for the local church
• Churches paying their fair share were subsidizing EPP and
Pension payments for churches not participating or underparticipating
• Sizable shortfalls in Pension and EPP due to these factor. At one
point Pension and EPP payables had grown to over $290,000 and
$300,000 respectively. Total obligation has been cut to $11K
pension and $233K EPP.
the new model
• Pension is being unbundled and directly billed to the local churches
on the basis of compensation reported to FMCUSA:HR
• Pension will be directly drawn from local church accounts.
• Fair Share is being reduced to 7.5% for all of the WAVE conferences
• Fair Share will provide an option for direct draw with a discount for
this approach
• No more monthly WAVE reports. Churches will now be invoiced
monthly. Churches, WAVE operations and Conference BOAs will
now know exactly where the church stands in regards to Fair Share.
• Fair Share will be based on the same adjusted income number as
denominational operations
• Fair Share will be more fairly allocated to all churches on the basis of
the adjusted income of the last completed FY. 2013 Fair Share will
be based on 2011 adjusted income. This information will be
available in advance for 2013 budgeting purposes for local churches
and conferences.
the new model: Potential Problems
• A church might neglect their responsibilities.
• Dramatic changes in income from 2011 to 2013 might result in
difficulty for the local church.
• A local church may see an increase in total outlay from projected
2012 outlay to 2013 Fair Share and Pension if it has:
― had inconsistencies between year-end income reporting and
monthly income/compensation reporting (under the old
system)
― been funding more non-FM World Missions than FM World
Mission budget ministries
― a significant mortgage and/or rent for facilities
― not been consistently reporting/paying Fair Share in 2012
the new model: Benefits
• We will now know monthly where a church stands with its pension
and Fair Share obligations. We can more accurately pinpoint and
more creatively respond to fluctuations in church income or
financial difficulty.
• The local church will now know accurately its total staffing expenses
and current obligations.
• The Fair Share will be based on the same underlying adjusted
income as denominational EPP. This will also help ensure that we
fully fund denominational, WAVE and conference operations.
• The system will be simplified dramatically. No more monthly
reporting is required. 2013 Fair Share and Pension will be known in
advance for budgeting purposes. Invoices will be generated for the
local church and direct draws will be offered as an option.