Program Budget Committee

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Program Budget Committee

• Report to Deaneries on Proposed
• 2006 Program Budget
• September/October,2005

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Challenges Facing the Episcopal Church

• 44 (28) DIOPA congregations at risk
• Less than 70 in regular attendance and/or
  pledging 70,000 or less.
• Median age of parishioners is 60
• Average age of DIOPA priests is nearing 60
• 40 of people under age 40 are unchurched
• North America considered the new mission field
• Africa fastest growing churches
• Only 7 of Americans belong to mainline
  denominations down from 14 in the 1960s

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Membership in 5 Mainline Churches
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Percentage of US Population in 5 Mainline Churches
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Response of Previous Conventions

• The Holy Experiment The Four Cs
• Reinvigorate local congregations, plant new
  churches in emerging locales
• Target young adults through Campus Ministry and
  expanded youth programs
• Refurbish the Cathedral and use it as an asset
  for growth and leadership development
• Construct a camp and conference center for
  congregational use and to attract unchurched
  people
• Launch a 40 million capital campaign

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Program Budget Deficits in Previous Years
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Why These Deficits?

• Need to keep the Holy Experiment moving forward
• Slow start to the capital campaign (three
  different development heads in 4 years)
• Cost of capital campaign - 500K/yr.
• Continued support for distressed and urban
  congregations
• Need to size the Wapiti opportunity
• Congregations (large and small) with no pledge
  toward the Program Budget

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2006 Budget

• We began budget process fully understanding the
  growing uneasiness about funding ever increasing
  deficits from unrestricted net assets to support
  the previous Conventions vision of renewal
• We resolved to control spending and to reduce the
  use of unrestricted net assets but without
  sacrificing momentum

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What are Unrestricted Net Assets?

• The net worth of a not-for-profit is called net
  assets.
• A large part of our net worth is permanently
  restricted net assets, or endowment
• These are gifts in which the donors have
  restricted how the income can be used the
  principal can never be spent.

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What are Unrestricted Net Assets?

• Another portion of our net worth is temporarily
  restricted net assets
• These are gifts in which the donors have
  restricted how the income and principal can be
  used.
• It is permissible to spend the principal, but it
  must be spent for the purpose stated by the
  donor.

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What are Unrestricted Net Assets?

• The third portion of our net worth is
  unrestricted net assets
• These are gifts in which the donors placed no
  restrictions on how the income or principal may
  be used.
• Some funds that are unrestricted by the donor are
  designated by the Bishop, Standing Committee,
  and/or convention for a specific purpose.

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What Net Assets are Included in the Program
Budget?

• Only unrestricted net assets are in the Program
  Budget
• Funds with no internal designations
• Funds with internal designations that meet the
  use as defined in the designation
• No endowment funds (permanently or temporarily
  restricted) are in the Program Budget

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Budget Timing

• Developed budget during summer 2005 for approval
  by DC at Sept 2005 meeting
• Approval for 2005 budget was in June 2004
• By deferring approval, committee had the benefit
  of
• Actual 2004 results
• 7 months of actual 2005 results

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2006 Budget Process

• We requested strategic plans from every
  department and program to gage coordination and
  budgetary impact
• We reviewed staff budget requests against
  potential outcome scenarios.
• We resolved to produce a budget and rationale for
  spending that supported the visionary goals
  supported at previous conventions but made fiscal
  sense.

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2006 Revenue(No unrestricted net assets)
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Expenses 2005 and 2006
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Expenses 2005 and 2006
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Unrestricted Net Assets Used in Program Budget
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Our Money Gets Us

• Assisted Congregations and Programs
• 6 program/maintenance grants
• 17 salary benefits/salary assistance grants

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Our Money Gets Us

• Congregational Development
• 28 congregations will be part of Appreciative
  Inquiry, Natural Church Development, and
  Transformational Process
• 20 congregations will receive demographic studies
  and data
• 10 congregations participate in conflict mgmt.
• 30 priests attend Fresh Start/Refresh
• Latino church plant in Chester County

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Our Money Gets Us

• Education Training
• 30 Leadership Institute Offerings
• Includes 2-day stewardship conference
• Annual Under One Roof event
• Expanded deanery clericus seminars and
  congregational events
• Consultations with 12 NCD and 6 Transformational
  congregations

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Our Money Gets Us

• Division of Youth
• Continued youth involvement in
• Youth Council
• Happening Program
• Province III events
• Diocesan convention
• Diocesan youth initiatives
• Youth attendance at general convention
• Integration into CAT team
• Work with NCD and transformational congregations

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Our Money Gets Us

• Campus Ministry
• New peer ministers at U of Penn, Bryn Mawr,
  Haverford, and Swarthmore
• Seed money to start Vocare
• Temple Ministry
• 2 peer ministers
• Continued full time presence on main campus
• Camp Wapiti
• At least 225 youth attending camp, with at least
  half from urban congregations

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Our Money Gets Us

• Outreach
• Chaplaincy and home care for seniors grants to
  ECS
• Strong support for national church
• Millennium development goal

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Our Money Gets Us..

• Wapiti Retreat Center
• Cost effective retreat for all members of the
  Diocese
• New adult and youth programs and ministries
• Improved operational efficiency

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Our Money Gets Us..
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Projected Program Budget Deficits 2006 - 2009

• 2006 1.3 million
• 2007 800,000
• 2008 250,000
• 2009 0

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Unrestricted Net Asset Projection

• 6.5 million of unrestricted net assets at
  12/31/04
• 1.5 million remaining at 12/31/08
• Projection
• Assumes 4-Pillars continue
• Contains modest capital expenditures for Church
  House and Wapiti

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What if we use no UNA?

• Many possible scenarios
• Proforma is illustrative of significant impact on
  diocesan programs

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Proforma Budget - no UNA

• 2 DCMM vicars eliminated
• All Congregational Development stopped except new
  church plant
• Major youth initiatives/events eliminated
• Camp Wapiti program eliminated

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Proforma Budget - no UNA

• Campus Ministry eliminated
• Communications reduced to 1 staff person
• Development eliminated except for events and
  annual giving (2 staff)
• Wapiti Retreat Center closed 1 caretaker
  retained

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What if we use no UNA?

• Summary
• 3 of 4 Pillars eliminated
• 16 of 27 staff members laid off
• Extensive cutbacks in all programs not eliminated
• Capital campaign eliminated
• Does not support will and vision of prior
  conventions and current Diocesan Council

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Conclusion

• PBC believes that proposed budget is financially
  prudent given the remaining unrestricted net
  assets, and supports the vision, programs, and
  activities that have been consistently endorsed
  by convention.

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Program Budget Committee

• Questions or Comments?