UPDATE: The tithe-based apportionment was approved by the Holston Annual Conference on June 14, 2010.
On Monday, June 14, at the Holston Annual Conference, members will make a historic decision. They will accept or reject a Council on Finance and Administration recommendation to adopt a tithe-based apportionment.
In other words, churches will give 10 percent of undesignated income as their apportionments, instead of paying apportionments determined by a complicated formula.
The recommendation has been explained in a supplement to the "Book of Reports" that was mailed to churches in early May, as well as in pre-conference briefings throughout Holston. If approved, the new apportionment plan goes into effect Jan. 1, 2011 --at the same time direct invoicing goes into effect. In 2009, the Holston Annual Conference approved direct invoicing, which removes the cost of health insurance and pensions from the budget and apportionment formula, instead allowing churches to directly pay for those staffing costs.
John Tate, conference treasurer, traveled more than 1,000 miles from early May to early June to explain the CFA recommendations and answer questions in 10 districts. Here are the five most common questions asked by Annual Conference members:
Q. Why is the conference making all these changes (direct invoicing and apportionment formula) at the same time?
John Tate: It seems natural to adopt a tithe-based apportionment formula at the same time that we begin direct invoicing. I anticipate there may be some difficult decisions related to staffing changes as a result of direct invoicing. With our current apportionment system, any of those changes won't be reflected in what a church has to pay in apportionments for two years. The tithe-based apportionment will immediately reflect what's happening financially in the local church, because the apportionment will be paid monthly based on the previous month's income, beginning in February 2011.
Albert Einstein reportedly said that the "definition of insanity is doing the same thing over and over and expecting different results." Since 1968, and perhaps since our formation, Holston Conference has never received 100 percent of apportionments. In 2009, the conference received a historically low 84.9 percent of the total amount apportioned, causing ministries to reduce their plans.
Each church is unique. One church may decide to invest their resources in staff and some in programs. The tithe-based apportionment allows each local church make their own decisions about how best to use their resources.
Q.What happens if a church just doesn't pay the apportionment or direct invoice?
John Tate: Here's what will happen. By the 10th of each month, each church's remittance form will be due to Holston Conference -- online, by mail, or by hand delivery. The proposed remittance form will show a church's income from the previous month, along with designated funds not required to be included in the tithe. Also on the 10th, Holston Conference will mail direct invoices with health insurance and pension costs to the local churches.
If apportionments are not received in the Holston Conference office, I will send a list of the non-paying churches to the appropriate district superintendents around the 15th of the month. Only 25 percent of our 900 churches do not pay their apportionments in full now.
Health insurance and pension amounts will be due to Holston Conference on the 25th of the month. If a church or charge doesn't pay its direct invoice, an assessment should be made by the district superintendent of whether a congregation can afford the current level of leadership. A plan should be developed if there are unique reasons why the apportionments are not paid.
Q. Before voting, can we compare our apportionments under the existing formula to the proposed formula, to see what's better for our church?
John Tate: Your apportionment now is based on the 2010 budget, which was the same amount passed in 2009. Since our current system is based upon a percentage of the adopted budget, we will not be able to provide an accurate apportionment number for each church until after the 2011 budget has been adopted.
Also, the proposed 2011 budget -- at $10.8 million -- is $4.3 million less than the approved 2010 budget of $15.1 million, since pensions and health insurance have been removed from the budget. In 2010, 30 percent of the conference budget pays for health insurance and pension costs. Therefore, the average church's apportionment will drop by 30 percent from 2010 to 2011. So any comparisons that are done using the existing formula will be based on numbers that are two years old, and they won't reflect the impacts of direct invoicing.
At some point, we have to deal with the issues. We had a $15.1 million budget last year and only collected $13.7 million. Our expenditures for 2009 were more than $14.4 million. We used $715,894 from conference reserves that had accumulated over past years. Unfortunately, when we receive a bill from the utility company or for property insurance, we can't pay only 85 percent of the amount due. During the past two years, we have used over $1.4 million from the reserves. This is not something that we can sustain for the long-term. We can either do the hard things now, or we can do the hard things later.
Q. How do you know the amount of money you will receive under a tithing apportionment?
John Tate: We don't know how much money will come in now under the existing formula, so I am not sure if the tithe formula will be much different.
However, I do anticipate that we will be able to predict our cash flow more effectively through the monthly remittance forms. Our current cash flow, from month to month, is not based on 1/12 of income. In fact, 15.7 percent of our conference income comes in during the month of December, which is very similar to the local church.
Q. What is a designated fund, and how do you know churches won't manipulate those funds to reduce their apportionments under the proposed formula?
John Tate: A designated fund is income that must be spent according to a donor's specifications. The most common ways that a donor designates a gift is by writing it on the memo line of the check. These items might include tuition-based income such as day care, pass-through donations sent to organizations such The Advance or UMCOR, and endowment gifts (principal gifts only).
In terms of manipulating, if a church wants to find loopholes to avoid paying their apportionments, they are going to find loopholes. I already know that in our current apportionment system, churches are excluding items through loopholes. Congregations can always come up with ways to spend their money other than paying their apportionments.
I often think of 2 Corinthians 8:8-9, which says: I am not commanding you, but I want to test the sincerity of your love by comparing it with the earnestness of others. For you know the grace of our Lord Jesus Christ, that though he was rich, yet for your sakes he became poor, so that you through his poverty might become rich.
To me, that fits the apportionment. We're not trying to order you against your will or to make churches give out of obligation, but out of celebration. This is not about arm-twisting. It's about faith, obedience, and giving in proportion to how you've been blessed.
If your church hasn't been blessed, then don't pay your apportionment. We will let someone else fulfill the purpose that God has planned for the Holston Conference.
If your church has been blessed, then "bring the whole tithe into the storehouse," and see if God doesn't bless you even more.*
For more information:
- CCFA Special Addendum Report
- Book of Reports (see pages 51-61 for CFA report)
- Pre-Conference PowerPoint Presentation
- Holston finance site