Budget cuts likely as Holston leaders adjust for shortfall

Budget cuts likely as Holston leaders adjust for shortfall

ALCOA, Tenn. (April 19, 2017) -- Holston Conference finished the 2016 financial year with a $30,422 deficit, after 612 of 894 local churches paid 100 percent of their tithes.

The deficit would have been closer to $400,000, but Holston reduced the budget shortfall by underpaying its 2016 apportionment commitment to the denomination, said Treasurer Rick Cherry.

Consequently, Holston’s Council on Finance and Administration has proposed cutting $400,000 out of the 2017 budget of $9.4 million, said the Rev. Jeff Lambert, CFA president.

A priority is to preserve reserve funds at no less than $3 million. Reserve funds currently stand at $3.1 million.

“If we wait to October to make spending adjustments, we’ve waited too long,” Lambert said. “We did not dip into our reserves in 2016, and we will not spend our reserves in 2017.”

The cut in this year’s spending will be needed even though the approved 2017 budget was 4 percent lower than the previous year’s budget of $9.7 million, Lambert said.

For 2018, the CFA proposed a budget that’s reduced to $9.07 million. The Annual Conference will vote on the 2018 budget at its June 11-14 meeting in Lake Junaluska, N.C.

“We don’t want the cuts to affect jobs or ministry, but we’ve got to balance it out,” Lambert said. “We’re going to have to live on what we bring in.”

The $400,000 cut in this year's spending will reduce staff travel and continuing education, Cherry said.



Holston Conference depends on "tithes" from local churches for income. Tithes are calculated at 10 percent of each church's "undesignated" income.

In 2016, 219 churches paid less than 96 percent of their tithes. Thirty-four churches paid $0 in tithes for 2016, for a total income loss of $77,572.

Holston churches reported a total $26.62 million in “designated income” in 2016, an increase from $26.38 million in 2015. Between 2010 and 2015, total designated income reported by Holston churches increased 32 percent. Churches do not have pay a tithe on designated income.

Designated income includes gifts to local churches tagged for tuition, pass-through gifts to unrelated organizations such as UMCOR or 5th Sunday offerings, endowment gifts, and donor-designated or capital-related gifts.

Lambert and Cherry said Holston Conference’s receipts decreased in 2016, even as the budget was reduced and spending was cut. In 2015, conference leaders slashed the budget by 10 percent when expenditures were $10.36 million, and receipts met 90 percent of the $10.46 budget.

“Budgets have been cut and in some cases, very necessary infrastructure and very vital programs have been postponed, ignored, or simply deleted for lack of funds,” Cherry wrote in his upcoming treasurer’s report for the 2017 Annual Conference “Book of Reports.”

The Holston Conference staff has decreased by six full-time members since 2011, Cherry said. Twenty staff members currently work on-site at the Alcoa Conference Center; an additional 26 staff are deployed (off-site), including district superintendents.

Conference staff received 2 percent raises in two of the last five years, no raises in the other three years. (The 2018 proposed budget does include 2 percent raises for conference staff and cabinet members, Lambert said.)

To compensate for the decrease in 2016 income, Holston Conference broke its five-year streak of paying the general-church apportionment in full by paying only 75 percent, or $2.31 million of the $3 million requested by the General Board of Finance and Administration.

“We had budgeted to pay 90 percent of our apportionment, but we balanced the 2016 budget on the back of the general church,” Cherry said.

General-church apportionments pay for global mission outreach; ministerial education; bishop salaries, travel and pensions; black college support; Africa University support; and general administration.



> While 612 churches paid 100 percent of their tithes in 2016, that’s 52 fewer than the 664 churches paying 100 percent in 2015.

Thirty-four churches (not including 26 preaching stations) paid $0 of their 2016 tithes, compared to 32 in 2015.

> If all 894 churches had paid 100 percent of their calculated tithes, Holston’s 2016 income would total nearly $10.1 million.

> Holston Conference has $11.18 million invested in Holston Conference Foundation funds, an increase from $10.8 million last year.

> Holston Conference has $33.28 million invested with the General Board of Pension and Health Benefits (now called Wespath Benefits and Investments), designated for pension and health liabilities. In 2016, the total invested was $36.3 million.

> The balance on a $1.25 million loan to Hiwassee College (at 1 percent accumulated interest) is $1.03 million. The five-year loan is due in full by the year 2020.

“The CFA is grateful to churches that are faithful in giving the full tithe to their conference,” Lambert said. “Those who are working to get to the full tithe -- they’re doing the best they can, and we greatly appreciate all their sacrifice and giving.” 

The proposed 2018 budget will be published in the "Book of Reports," available in May at AC.Holston.org.



See also:

Podcast above -- Jeff Lambert talks about Holston finance challenges (Wesleyan Connexion, 3/22/17) 

$9.4 million budget proposed for 2017 (The Call, 5/31/16)
Five questions about the tithe apportionment (The Call, 6/9/10)



Annette Spence

Annette Spence is editor of The Call, the Holston Conference newsletter.

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