MINISTERIAL COMPENSATION
FOR FULL TIME INSTALLED POSITIONS
A Plan and Guide for the Presbytery of Middle Tennessee
Adopted by the Presbytery of Middle Tennessee May 3, 2001
Revised by the Committee on Ministry September 6, 2001
Revised by the Committee on Ministry October 3, 2002
PREFACE
The plan is formulated on the premise that the TOTAL COMPENSATION paid and/or
furnished to a minister should appear reasonable, just, and fair to the leaders of a congregation, to
a majority of the members of a congregation, and to the minister. For the peace, unity and
effectiveness of the church, general acceptance by all of these is essential as the minister and
members work together to carry out the mission of the church.
Several principles underline the development of the plan:
1)
Scripture indicates in Luke 10:4-7 that one who labors for the gospel “deserves to be
paid.” 1 Corinthians 9:14 states “that those who proclaim the gospel should get their
living by the gospel.”
2)
As the life of the early church developed, it was suggested that those who served with
distinction should receive material rewards. “Let the elders who rule well be
considered worthy of double honor, especially those who labor in preaching and
teaching.” (1 Timothy 5:17)
3)
Remuneration for services rendered by the pastor should be in line with the income
levels of the area in which that service takes place.
4)
The pastor is a trained professional with responsibilities for which the Church has
required long years of preparation and training.
5)
Principles of Justice and Fairness are to be honored and emphasized. (Book of
Order G-14.0510a.(3))
It is hoped that each congregation in the Presbytery, through its Session, will enter into
dialogue with its minister(s) so the concerns of each can be aired and fair compensation can be
determined.
USING THIS GUIDE
This guide will assist in negotiating ministerial compensation.
Section 1
“Minimum Compensation” states the Presbytery approved minimum compensation
and the rationale.
Section 2
“Guidelines for Fair Compensation” provides a rationale and basis for clergy
compensation.
Section 3
“Salary Adjustments” lists a number of factors that should be considered in adjusting
ministerial compensation.
Section 4
“Avoiding Unnecessary Tax Liability” provides guidance (not legal advice ) on ways
churches can increase ministerial income simply by stating the Terms of Call in a way that avoids
certain tax issues.
Worksheet 1 is for calculating Fair Effective Salary based upon the “Guidelines for Fair
Compensation.”
Worksheet 2 is for calculating Housing and Utility allowances for use in Terms of Call.
Worksheet 3 delineates the Terms of Call and Continuation of Terms of Call.
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SECTION 1
MINIMUM EFFECTIVE SALARY1
The Presbytery fixes the Minimum Effective Salary requirements at 80% of the Churchwide
Median Salary as established annually by the Board of Pensions. “Effective Salary” is defined
as the combination of cash salary and housing.
For 2012, the Churchwide Median Salary is $53,300; therefore the Minimum Effective
Salary is $42,640. (Figuring allowances for housing, utilities, etc. is done on Worksheet 2.)
Other requirements include:
a.
Full dues to the Benefits Plan of the Board of Pensions (32.25% for 2012 of Effective Salary
as defined by the Board of Pensions);
b.
Salary supplement equal to no less than 50% of the Social Security Self-Employment Tax;
c.
Four weeks or one month paid vacation inclusive of Sundays;
d.
Professional Expense Reimbursement Plan - Presbytery has approved a minimum of $2500
for reimbursement of automobile expenses, books, continuing education and other professional
expenses when substantiated to the Church Treasurer or other person designated by the session;
e.
Annual Study Leave of two weeks;
f.
Annual review of the terms of call and covenant with an evaluation of the mutual
achievement of mission goals by minister and session with serious consideration given to the
current Effective Salary and Guidelines for Fair Compensation (explained in Section 2).
g.
A comprehensive evaluation of ministry every five years to consider a three month sabbatical
from church duties after six years of continuous full time service.
1These figures will be revised annually at the July presbytery meeting to be effective for the following calendar year.
SECTION 2
GUIDELINES FOR FAIR COMPENSATION
It is difficult to assess fair compensation for clergy because of comparing ministry with any
similar calling, profession, or job that is equivalent in necessary training, scope of responsibility,
hours of work, and emotional involvement. Every church should establish terms of call that provide
a comfortable standard of living for the minister and her or his family. Additionally, the Terms of
Call need to reflect years of experience, special training, additional education, or unusual
circumstances or skills required of the minister.
The Presbytery of Middle Tennessee has adopted the Median Family Income figure as the
fairest guideline for determining Fair Compensation. The median figure is a mid-point income
figure that takes into account both high and low incomes in the area.
The Percept Group, Inc., a demographic service, provides the Presbytery with a
median household income based upon the exact geographic boundaries of the Presbytery,
including our large cities and rural areas. The Presbytery sets Fair Effective Salary as equal
to the median household income figure at $46,596. Fair Compensation includes Fair
Effective Salary and other benefits as given in Section 1. The Guidelines for Fair
Compensation adopted by Presbytery are recommended to congregations and agencies of
Presbytery in the hope that they will be able to compensate their ministers at the level
recommended.
NOTE: The Guidelines for Fair Compensation are recommendations and ARE NOT TO BE
CONFUSED with Minimum Compensation required of each congregation.
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SECTION 3 - SALARY ADJUSTMENTS
Experience Factor
Since Ordination serving in a
Add to the
Church Related Vocation
Base Figure
0 - 2 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
3 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+ 2%
4 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+ 4%
5 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+ 6%
6 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+ 8%
7 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+ 10%
8 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+ 12%
9 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+ 14%
10 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + 16%
11 years to 20 years (maximum), 1% per year additional, up to a maximum of 26%.
Special Qualifications
This includes special talents expected of the minister and the possibility that a degree
beyond the basic theological degree should be considered for additional compensation.
SECTION 4 - AVOIDING UNNECESSARY TAX LIABILITY
(Guidance, Not Legal Advice)
Ministers are classified in an unusual tax category that can be confusing. If a church uses
care in preparing the Terms of Call the minister can avoid some unnecessary tax burdens.
According to the “Self-Employment Test” of the Internal Revenue Service most ministers
need to file as employees. (By a previous IRS test most ministers could file as self-employed.)
Certain allowances are exempt from Income Tax to the extent they are actually used.
By Social Security Statute ministers are self-employed. Certain allowances that are not
considered for Income Taxes must be included in figuring Social Security Self-Employment taxes.
Housing, Utilities, and Furnishings. Ministers do not pay Income Tax on amounts
designated for housing, including utilities, furnishings, maintenance, and appurtenances.
Social Security Supplement. This salary supplement covers the cost of Social Security
Self-Employment Tax. In order to calculate the amount of the tax, multiply the TOTAL ANNUAL
SALARY (which includes allowances for housing and utilities or the value of housing and/or utilities
provided) by 15.3% for 2012.
Professional Reimbursement Plan. Changes in tax laws make it beneficial for the
minister to substantiate professional expenses (auto usage, books, magazines, continuing
education, subscriptions, dues to professional organizations, etc.) and submit these to the church
for reimbursement. The recommended minimum figure for 2012 is $2,500.
Ministerial Compensation for Pulpit Supply
The Committee on Ministry commends to the church the following guidelines for
compensation of Sunday services by guest ministers.
∙
For congregations of less than 100 members--$100 plus round trip mileage
reimbursed at the current rate approved by the IRS.
∙
For congregations of 101 to 500 members--$150 plus round trip mileage reimbursed
at the current rate approved by the IRS.
∙
For congregations of 501or more members--$200 plus round trip mileage reimbursed
at the current rate approved by the IRS.
Congregations may vary from these guidelines only in extraordinary circumstances (i.e.
multiple worship services, congregation size, etc.) and with prior negotiation with the minister.
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WORKSHEET 1
CALCULATING FAIR EFFECTIVE SALARY PORTION
OF THE TOTAL COMPENSATION
USING THE GUIDELINES FOR FAIR COMPENSATION
Line
1.
Total Effective Salary
Area Adjusted Median Family Income
2.
Experience Factor
(See Section 2)
a.
Number of years since ordination ________
b.
Percent according to table
c.
Multiply % in Line 2.b times Base Figure in Line 1
3.
Add Lines 1 and 2c.
4.
Special Qualifications (List with figures)
$
%
_________________
$_________________
a.________________________________
$_______________
b.________________________________
$_______________
c.________________________________
$_______________
5.
Subtotal (Add Lines 4a., 4b., 4c.) $_______________
6.
Total (Add Line 3 and Line 5)
$
NOTE:
Line 6 is the TOTAL EFFECTIVE SALARY
according to the Guidelines for Fair Compensation.
To calculate for Housing, Utilities etc., use Worksheet 2.
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WORKSHEET 2
DETERMINING HOUSING AND UTILITY ALLOWANCES
Note whether the call to your pastor(s) falls into:
Category A: You do not provide a manse and utilities, but provide a designation or an allowance to
cover these.
Category B: You provide a manse, but have a designation or allowance for utilities.
Category C: You provide a manse and furnish the full cost of utilities.
Choose the correct category below, and ignore the other categories.
Please remember that for the purposes of calculating major medical and pension payments to the
Board of Pensions that the church must establish an Effective Salary, or the total of cash salary and
housing combined. The following paragraphs are intended to assist with this calculation.
CATEGORY A: MINISTERS WITH NO MANSE OR UTILITIES FURNISHED
A portion of the effective salary can be designated as a housing allowance. Under IRS
regulations, the housing allowance may be up to 49% of the effective salary. The effective salary
is the sum of cash paid and the amount designated as housing allowance. Please note that it is
the responsibility of the minister to substantiate the amount and use of funds spent for housing if
audited by the Internal Revenue Service.
CATEGORY B: MINISTERS WITH MANSE FURNISHED BUT NO UTILITIES
The effective salary will be the sum of cash paid, the assumed value of the manse, and the
amount designated as housing allowance for utilities, furnishings, and appurtenances paid as cash.
The assumed value of a manse will be at least 20% of the effective salary, or should correspond
with the local rental value of housing of a similar size and nature, whichever is the greater. The
allowance for utilities may be up to 20% of effective salary.
CATEGORY C: MINISTERS WITH MANSE AND UTILITIES FURNISHED
The effective salary will be the sum of cash paid, the assumed value of the manse, the
budgeted amount for manse utilities, and the amount designated for furnishings and appurtenances
paid as cash. The assumed value of the manse will be at least 20% of the effective salary, or
should correspond with the local rental value of housing of a similar size and nature, which ever is
the greater. The budgeted amount for manse utilities (minimum $1,200) should be adjusted
annually in relation to cost fluctuations. The amount designated for furnishings and appurtenances
may be up to 20% of the effective salary. An additional allowance for furnishings and
appurtenances may be designated as agreed upon by the minister and the church, and may be
adjusted annually.
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WORKSHEET 3
DELINEATING TERMS OF CALL
RECORDING OF SALARY AND HOUSING
CATEGORY A: MINISTERS WITH NO MANSE OR UTILITIES FURNISHED
SALARY AND HOUSING OF $______________ of which $_______________ is designated
for housing, utilities, furnishings and appurtenances.
CATEGORY B: MINISTERS WITH MANSE FURNISHED BUT NO UTILITIES
1.
Cash Salary of $______________ of which $________________ is designated for utilities,
furnishings, and appurtenances.
2.
Free use of a manse - Annual Value $_________ for SALARY AND HOUSING of
$_____________.
CATEGORY C: MINISTERS WITH MANSE AND UTILITIES FURNISHED
1.
Cash Salary of $______________ of which $______________ is designated for furnishings
and appurtenances.
2.
Free use of a manse - Annual Value $______________.
3.
Manse utilities provided - Annual Value $______________ for SALARY AND HOUSING of
$______________.
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Call Form (Initial)
The _________________ Presbyterian Church of (Location) _______________________,
Tennessee, belonging to The Presbytery of Middle Tennessee, being well satisfied with your
qualifications for ministry and confident that we have been led to you by the Holy Spirit as one
whose service will be profitable to the spiritual interests of our church and fruitful for the Kingdom of
our Lord, earnestly and solemnly calls you,
_____________________________________________________________
(Name)
to undertake the office of pastor (associate pastor) of this congregation, promising you in the
discharge of your duty all proper support, encouragement, and allegiance in the Lord.
That you may be free to devote yourself full time (part time) to the ministry of the Word and
Sacrament among us, we promise and obligate ourselves to pay you the following (those agreed
upon are to be filled in):
Annual salary
Use of the manse
Housing allowance
Utilities allowance
Other medical insurance
Professional expenses
$________ (in regular monthly or semi-monthly payments)
$________
$________
$________
$________
$________ (includes: automobile, continuing education,
books, and personal business expenses)
$________
$________
$________
Social Security Tax
Other (specify)
Moving costs
Vacation of (time period)
_______
Continuing Education (time period) _______
and we will pay regularly in advance to the board responsible for benefits a sum equal to that
requisite percent of your salary which may be fixed by the General Assembly of the Presbyterian
Church (U.S.A.) for participation in the Benefits Plan of the Presbyterian Church (U.S.A.), including
both pension and medical coverage, or any successor plan approved by the General Assembly,
during the time of your being and continuing in the pastoral relationship set forth in this call to this
church. We further promise and obligate ourselves to review with you annually the adequacy of
this compensation. In testimony where of we have subscribed our names this _______ day of
________, A.D. _________.
(Signatures)
Having moderated the congregational meeting which extended this call for ministerial services, I do
certify that the call has been made in all respect according to the rules laid down in the Form of
Government, and that the persons who signed the foregoing call were authorized to do so by vote
of the congregation.
(Signed) _______________________________
Moderator of the Congregational Meeting
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Annual Terms of Call Form (Continuing)
The _________________ Presbyterian Church of (Location) _______________________,
Tennessee, belonging to the Presbytery of Middle Tennessee, being well satisfied with your
qualifications for ministry and confident that we have been led to you by the Holy Spirit as one
whose service will be profitable to the spiritual interests of our church and fruitful for the Kingdom of
our Lord, earnestly and solemnly calls you,
_____________________________________________________________
(Name)
to continue the office of pastor (associate pastor) of this congregation, promising you in the
discharge of your duty all proper support, encouragement, and allegiance in the Lord.
That you may be free to continue to devote yourself full time (part time) to the ministry of the
Word and Sacrament among us, we promise and obligate ourselves to pay you the following (those
agreed upon are to be filled in):
Annual salary
Use of the manse
Housing allowance
Utilities allowance
Other medical insurance
Professional expenses
$________ (in regular monthly or semi-monthly payments)
$________
$________
$________
$________
$________ (includes: automobile, continuing education,
books, and personal business expenses)
$________
$________
Social Security Tax
Other (specify)
Vacation of (time period)
_______
Continuing Education (time period) _______
and we will pay regularly in advance to the board responsible for benefits a sum equal to that
requisite percent of your salary which may be fixed by the General Assembly of the Presbyterian
Church (U.S.A.) for participation in the Benefits Plan of the Presbyterian Church (U.S.A.), including
both pension and medical coverage, or any successor plan approved by the General Assembly,
during the time of your being and continuing in the pastoral relationship set forth in this call to this
church. We further promise and obligate ourselves to continue to review with you annually the
adequacy of this compensation. In testimony where of we have subscribed our names this
_______ day of ________, A.D. _________.
(Signatures)
Having moderated the congregational meeting which extended this call for ministerial services, I do
certify that the call has been made in all respect according to the rules laid down in the Form of
Government, and that the persons who signed the foregoing call were authorized to do so by vote
of the congregation.
(Signed) _______________________________
Moderator of the Congregational Meeting
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