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)."
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.
By Jerry L. Van Marter