wfn.org | [PCUSANEWS] More budget cuts loom

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Note #7507 from PCUSA NEWS to PRESBYNEWS:

More budget cuts loom
02448
November 7, 2002

More budget cuts loom

Unexpected expenses, investment income woes add up to $5 million

by Jerry L. Van Marter

LOUISVILLE - Unexpected expenses and a scaled back investment income formula
mean a total of at least $5 million is going to have to be trimmed from the
next two General Assembly mission budgets - at least $1 million in 2003 and
$4 million in 2004.

A similar reduction in the 2002 and 2003 budgets was made last April,
resulting in the elimination of more than 50 positions at the Presbyterian
Center. The 2003 mission budget approved by last June's General Assembly
totals just over $130 million. The 2004 cuts will be about 4 percent.

In messages to the General Assembly Council and national staff members last
week, GAC executive director John Detterick said, "This is obviously not good
news, but we are moving ahead to begin developing appropriate actions."      

In a Nov. 6 interview with the Presbyterian News Service, Detterick said,
"Because we budget so far out in advance, our figures aren't always clear -
they're our best estimates. For 2003 and 2004 there's a clear need for some
adjustments."

Four factors are contributing to a shortfall of somewhere between $1 million
and $1.5 million next year:

*   Increases of more than $400,000 in insurance premiums on the Presbyterian
Center in Louisville and the PC(USA)'s conference centers in New Mexico and
New York;

*   An increase in medical dues to the Board of Pensions - which rise 1
percent on July 1, 2003 - which will cost $100,000 next year and $200,000 in
2004 and beyond;

*   Systems maintenance costs for the computer systems at the Presbyterian
Center;

*  A slight reduction in shared (unrestricted ) mission giving from
congregations and presbyteries.

Detterick insisted that giving by Presbyterians to the work of the General 

Assembly is "not the culprit." On the contrary, he said, "Mission giving is
relatively stable and I continue to be impressed with Presbyterians'
commitment to mission. Mission giving is not the driving concern here."
	
Investment income - which accounts for about two-thirds of the General
Assembly's revenue - is, however. And in 2004, the formula by which money
flows from the church's investments - most of which are administered for the
denomination by the Presbyterian Church (USA) Foundation - is dropping from 6
percent of the average balance of funds to 5 percent. 
	
Two other changes in the formula will have a lesser financial impact:
calculating the payout on a rolling five-year average rather than a fixed
five year average (which Detterick said will make the payout more closely
follow market trends) and calculating the payout on June 30 rather than Dec.
31 each year (which will make budgeting more precise).
	
"The bottom line is that the new spending formula will mean that our revenues
for 2004 will be about $2.5 million less than in 2003," Detterick told the
GAC in his "weekly letter." He said the shortfall will be about equally
divided between the unrestricted and restricted portions of the budget and
"is entirely due to the impact of the drop in market values of investments."
	
Asked how the impending budget cuts stack up against last April's, Detterick
said "we realized significant savings from tightening up operations last
spring, so we won't be able to save that much this time." 
	
"In the past our tendency has been to simply spread existing work thinner,"
Detterick added. "That's not healthy. Last year and this year, we're striving
not to do that."
Detterick told GAC members he's planning to present a "detailed outline of
some alternative approaches" to the budget cuts at the council's January
meeting, with a final plan ready for a vote at the April 2-5 GAC meeting.

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