In 2009 General Convention passed two
resolutions which will dramatically impact
our churches and church-related
institutions.
This presentation will briefly review some of
the key provisions of these resolutions and
the response of the Diocese of Central
Florida.
Revisions to Canon I.8
A138 Establishing a Mandatory Lay
Employee Pension System
A177 Denominational Health Plan
After a year long study and debate the
Diocesan Board passed 3 resolutions on April
21, 2011 establishing policy for the Diocese of
Central Florida in reference to these Canonical
changes. Much of this will be outlined in this
presentation. For a detailed analysis please
consult the actual policies which will be
distributed in printed format.
There are at least 3 valid approaches to these
resolutions:
• Approach them as a justice issue. The matter of
parity between lay and clergy employees certainly
speaks to this.
• Approach them as a matter of stewardship. The
economic impact of these resolutions is not
insignificant.
• Approach them as a way to value our lay
employees and respect the contributions that
they make by providing them with a pension and
health insurance.
As Christians and also as fiduciaries, Vestry
members of congregations and Board members
of church related institutions may feel in a real
bind.
Some may be tempted to find ways to avoid the
mandate. The hope is however, that we can
struggle together to find ways to hold all 3
approaches in tension.
Lay Pensions
Lay Pensions
Since 1993 Episcopal Lay Employers have been expected
to provide pensions to many lay employees. By January
1, 2013 Canon I.8 will require that all lay employees
working 1,000 hours or more a year will be provided with
a pension.
The lay employee pension system shall be designed
and administered by the Trustees and officers of The
Church Pension Fund; the investment managers of the
system shall initially include, but not necessarily be
limited to, The Church Pension Fund and, in the case of
a defined contribution plan offered to school
employees, TIAA-CREF
Benefits shall (initially) include a defined benefit plan OR
a defined contribution plan
Defined Benefit Plan
minimum contribution = 9%
Existing defined benefit plans will be permitted to
continue as long as their plan design delivers pension
benefits not less than the pension benefits required
by General Convention Resolution A138
Defined Contribution Plan
minimum contribution =
5 % base + up to 4% matching
OR 9% with no match
For budget purposes it would be prudent for
congregations and institutions to use 9%
The deadline for enrollment is
December 31, 2012
DIOCESAN POLICY
effective no later than January 1, 2013
“In reference to General Convention Resolution
A138 adopted by the 76th General Convention of
The Episcopal Church and with Title I, Canon 8 of
the Episcopal Church, the Diocese of Central
Florida requires all Parishes, Missions or other
ecclesiastical organizations or bodies subject to
the authority of the Church, to adopt a lay
employee pension system for employees who
work a minimum of 1,000 hours annually”
Health Insurance
Denominational Health Plan
By January 1, 2013 Canon I.8 will require that all lay
employees working a minimum of 1,500 hours annually
participate in The Denominational Health Plan which
shall provide equal access to health care benefits for
eligible clergy and eligible lay employees
The Denominational Health Plan shall provide benefits
through The Episcopal Church Medical Trust, which shall
be the sole plan sponsor for such benefits
Each diocese has the right to make decisions as to plan
design options offered by the plan administrator,
minimum cost-sharing guidelines for parity between
clergy and lay employees, domestic partner benefits
and the participation of schools, day care facilities and
other diocesan institutions
Schools and other church related institutions may be in
a separate class regardless of how they are incorporated
or how employees are paid
It is possible to opt out only if an employee has other
coverage through through other approved sources
(i.e. spouse’s employer’s plan, former employer’s
plan, Tri-Care, etc.).
DIOCESAN POLICY
effective no later than January 1, 2013
“In reference to General Convention Resolution A177
adopted by the 76th General Convention of The
Episcopal Church and with Title I, Canon 8 of the
Episcopal Church, the Diocese of Central Florida and all
its congregations are required (except as noted below) to
obtain medical insurance coverage for their employees
through the Denominational Health Plan designed and
administered by the Trustees and officers of The Church
Pension Fund with benefits provided through The
Episcopal Church Medical Trust for all qualified
employees (those employees who work 1500 hours or
more per year)”.
Key issue:
 Parity between Lay and Clerical Employees
The minimum requirement in terms of the
Denominational Health Plan starting January 1, 2013 is
single coverage for everyone who qualifies (i.e. those
employees who work 1500 hours or more per year)
What about the existing Letter of Agreement with the
clergy and congregation?
From the “standard” Letter of Agreement
The Vestry shall pay the following benefits:
(a) Church Pension Fund assessment as required by canons which is 18% of the
Rector's annual compensation package.
(b) Health (and Dental) Insurance, equivalent to or better than the group plan
provided through the Diocese.
(c) Group Life and Accidental Death and Dismemberment Insurance through the
Diocese, or equivalent to or better than the group plan provided through the
Diocese.
(d) Workers' Compensation Insurance, as required by Florida State Law.
Clergy Compensation
Clergy Compensation
The Diocesan Board has also committed to make an
adjustment to the 2013 Compensation Guideline for
full time clergy. This adjustment will mean that that
base compensation will include an offset for medical
insurance at whatever level is currently offered.
This offset will be at 85% of the difference between
the single level of coverage and the employee
plus one and family level of coverage, as
applicable. This percentage is in recognition of the
fact that this increase would cost the congregation
18% in additional pension premiums).
For example the guideline will include a note such as:
In order to arrive at the diocesan minimum for a full time clergy
person add the following:
Clergy needing coverage Plus 1
Clergy needing family coverage
5,410
12,112
What about the financial impact on congregations?
At the adjustment of 85% there is no additional cost to
the congregation for clergy
The impact in terms of lay employees will depend
upon each unique staffing level
Let’s look at two examples of cost neutrality
(using actual data from 2010)
comparing two years with equal compensation
and costs:
one year (2012)
to another (2013)
Actual dollar figures are for comparison only and do
not represent the actual Compensation Guidelines
for 2012 and 2013
Diocese of Central Florida: A177 DHP Implementation – Health Ins Compensation Adjustment
Comparison: Clergy Package with Emp + 1 Level Health Ins Before & After DHP
Father Ingqvist’s Package – 2012
COMPENSATION:
Stipend
Housing
SE Tax Offset
Health Ins. Adjustment
Total Compensation
BENEFITS:
Pension
Health (HMO: Emp +1)
Total Benefits
$ 31,068
20,000
3,882
54,950
9,891
14,304
24,195
Total Comp + Benefits $ 79,145
This slide shows 2010 rates
EXPENSE
NEUTRAL
Father Ingqvist’s Package – 2013
COMPENSATION:
Stipend
Housing
SE Tax Offset
Health Ins. Adjustment*
Total Compensation
BENEFITS:
Pension
Health (HMO: Single)
Total Benefits
$ 31,068
20,000
3,882
5,410
60,360
10,865
7,920
18,785
Total Comp + Benefits $ 79,145
SE Tax Offset Calculations:
Gross SE Earnings – 7.65 % * 15.3% * ½
$54,950 – 4,204 = 50,746*.153 = 7,764 * ½ = 3,882
* RE: The health insurance adjustment:
• it would vary depending on the level (employee + 1 or family) of insurance needed by the clergyperson (this
example shows Employee +1 level);
• it should be deducted PRE-TAX from the clergyperson’s paycheck and will be used to pay a portion of the
group health insurance bill coming to the parish;
• This will necessitate that the parish adopt and the clergyperson sign up for the Diocesan Section 125
Plan (aka Cafeteria Plan) which costs $6 per person per month;
• since it would be deducted PRE-TAX the SE Tax Offset is showing no difference.
Diocese of Central Florida: A177 DHP Implementation – Health Ins Compensation Adjustment
Comparison: Clergy Package with Family Level Health Ins Before & After DHP
Father Ingqvist’s Package – 2012 Father Ingqvist’s Package – 2013
COMPENSATION:
Stipend
Housing
SE Tax Offset
Health Ins. Adjustment
Total Compensation
BENEFITS:
Pension
Health (HMO: Family)
Total Benefits
$ 31,068
20,000
3,882
54,950
9,891
22,212
32,103
Total Comp + Benefits $ 87,053
This slide shows 2010 rates
EXPENSE
NEUTRAL
COMPENSATION:
Stipend
Housing
SE Tax Offset
Health Ins. Adjustment*
Total Compensation
BENEFITS:
Pension
Health (HMO: Single)
Total Benefits
$ 31,068
20,000
3,882
12,112
67,062
12,071
7,920
19,991
Total Comp + Benefits $ 87,053
SE Tax Offset Calculations:
Gross SE Earnings – 7.65 % * 15.3% * ½
$54,950 – 4,204 = 50,746*.153 = 7,764 * ½ = 3,882
*RE: The health insurance adjustment:
• it would vary depending on the level (employee + 1 or family) of insurance needed by the clergyperson (this
example shows Family level);
• it should be deducted PRE-TAX from the clergyperson’s paycheck and will be used to pay a portion of the
group health insurance bill coming to the parish;
• This will necessitate that the parish adopt and the clergyperson sign up for the Diocesan Section 125
Plan (aka Cafeteria Plan) which costs $6 per person per month;
• since it would be deducted PRE-TAX the SE Tax Offset is showing no difference.
Benefit Registration System through the
Church Pension Fund
mid 2011
The deadline for Implementation is
January 1, 2013