wfn.org | [PCUSANEWS] GAC to address more budget cuts

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Note #7559 from PCUSA NEWS to PRESBYNEWS:

GAC to address more budget cuts
03018
January 14, 2002

GAC to address more budget cuts

Looks to trim $1.5 million in 2003, $2.65 million in '04 

by Jerry L. Van Marter

LOUISVILLE - The General Assembly Council (GAC) took preliminary steps
Tuesday to overcome a $1.53 million shortfall in the 2003 General Assembly
mission budget and lay the groundwork for deciding by early April how to trim
$2.65 million from the 2004 mission budget.

	  2003 budget adjustments

John Detterick, the GAC's executive director, told the council's executive
committee that the 2003 shortfall can be made up without cutting programs or
staff at the Presbyterian Center.

Budget adjustments presented to the executive committee include a $450,000
net reduction in income and $1.08 million in previously unbudgeted expenses.

The income shortful resulted from two factors: receipt of $500,000 less than
anticipated from "shared mission support" (unrestricted giving by
congregations and presbyteries), and $450,000 less than expected from the
Jarvie Commonweal Fund, a New York-based charitable program managed by the
denomination.

The situation improved somewhat on the receipt of bequest that will
contribute $500,000 to the budget this year.

The added expenses include increases totaling $400,000 in property and
liability insurance premiums after the terrorism attacks of Sept. 9, 2001;
rises in medical dues totaling $100,000 because of a 1 percent increase by
the Board of Pensions; costs for computer purchase and maintenance at the
Presbyterian Center that were $90,000 higher than expected; and the estimated
$490,000 cost of implementing the recommendations of the Independent
Committee of Inquiry, which investigated sexual-abuse charges involving a
now-deceased missionary and proposed sweeping changes in policies and
procedures concerning sexual abuse.

The executive committee voted to recommend that the GAC, which meets
Wednesday through Saturday this week, to eliminate vacation accrual for
Center employees, beginning this year. Employees now can carry over as many
as 10 vacation days from year to year. Eliminating the privilege will save
$600,000 a year.

The rest of the shortfall will be covered by drawing $880,000 from the
Presbyterian Mission Program Fund (PMPF), the church's cash reserve. The PMPF
is required to carry a minimum balance equal to 30 percent of the
unrestricted portion of the General Assembly mission budget - now about $36
million.

Detterick said projections indicate that "the PMPF will have sufficient funds
beyond required reserves" to offset the deficit. The PC(USA)'s treasurer,
Joey Bailey, also the director of Mission Support Services, said an $880,000
draw on the reserve "is a fraction of what we've been drawing from PMPF since
I've been here (1998)."

	     2004 adjustments

Closing the income-expenditure gap for 2004 - projected expenses are $38.78
million, while projected unrestricted income is $36.13 million - will be much
tougher, almost certainly requiring program and staff cuts.

The 2004 financial picture includes a shortfall of $380,000 in net
unrestricted revenue, the most critical factor being a $1.25 million
reduction in mission-budget income from investments held for it by the
Presbyterian Foundation.

In addition to the increases for insurance and medical dues that kick in this
year, GAC will need to make a $750,000 contribution to its capital reserve
fund in 2004, Detterick said, and an additional $400,000 will be required to
pay 2 percent salary increases to Presbyterian Center staff.

Employees received a 3 percent increase this year. 

Detterick outlined six "funding alternatives" for overcoming the $2.65
million deficit, beginning with raising additional revenue. "We're going to
do our very best to do a better job of promoting and emphasizing shared
mission support," he said, acknowledging that such an effort is "a long-term
process that may not show significant results as early as 2004."

Other possibilities include the use of one-time bequests (as much as $3.2
million has been identified); establishing a 90-day waiting period before new
employees begin receiving benefits; and a further draw on the PMPF.

Another intriguing possibility raised by Detterick and Bailey is to charge
restricted funds for their administrative costs. For many years, the GAC and
Foundation have paid those costs from unrestricted funds. That has enabled
church officials to "guarantee" that the entirety of a restricted gift will
go to the project for which it is given.

While the administrative costs of restricted funds "is not a high
percentage," Bailey said, any funds used to pay them would reduce the amount
that would go to the designated mission. Such a change would probably be
controversial, he acknowledged. The denomination's four special offerings
would be most directly impacted. For several years their promotional costs
have been charged back to them, but administrative costs are still paid from
unrestricted funds.

"No one else practices this kind of (administrative cost) policy," Detterick
said, "and with the pressure on our unrestricted budget, it doesn't make much
sense for us to keep doing it." 

Bailey said a two to three year "phase-in" of such this change in
administrative-cost allocation could make up the entire budget deficit,
although not right away.

Kathy Leuckert, the GAC's deputy executive director, acknowledged to the
council that "we're going to have to stop doing some things" because there is
no money to pay for them. Decisions about what to stop doing will come during
the Council's April meeting.

To prepare the Council to grapple with these decisions, staff leaders have
identified 12 programs that are central to the four priorities established by
the 1993 General Assembly - evangelism, justice, mission partnership and
spiritual formation.

"Reductions or elimination of work will primarily come from areas other than
these," the staff said in its report to the executive committee. The 12
programs designated as central are (in order of importance within each
priority):  

* Evangelism --  Church development, mission program grants, denominational
awareness media campaign; 

*  Justice - Racial-ethnic ministries, women's ministries, social justice; 

*  Partnership - Ecumenical partnerships and mission personnel, Church
Leadership Connection (recruitment and placement of church personnel),
Committee on Theological Education; 
	
*  Spiritual Formation - Curriculum, youth and young adult ministries,
mission interpretation.

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