Preparing for Annual Conference: $9.4 million budget proposed for 2017

Preparing for Annual Conference: $9.4 million budget proposed for 2017

Terry Muse, CFA president, presents the 2015 budget to the Holston Annual Conference in June 2014. Top of page: Stuart Auditorium, the site of Annual Conference at Lake Junaluska.


ALCOA, Tenn. (May 31, 2016) -- $9 million is an important number for Holston Annual Conference members to remember.

$9.47 million is the amount Holston Conference received in income in 2015.

$9.7 million was the amount the Annual Conference approved for the 2016 budget.

$9.4 million is the figure proposed by the Council on Finance and Administration (CFA) for the 2017 budget.

Terry Muse, CFA president, has been speaking to districts about Holston finances, prior to asking the Annual Conference to approve the proposed 2017 budget during its June 5-8 meeting in Lake Junaluska, N.C.

“It’s an absolute passion of mine,” Muse said of his 10-year volunteer stint on the CFA. “I would do anything I could to further the mission of the church and reach people for Christ.”

Muse is a member of Munsey Memorial United Methodist Church in Johnson City, Tenn.

The proposed 2017 budget is 4 percent less than the total amount requested by ministry teams and other groups, he said. It’s $1 million less than the $10.46 million budget approved two years ago.

That’s because last year, Holston Conference slashed the budget by 10 percent. The cut was a response to a deficit in 2015, when churches collectively gave 90 percent of their apportionments toward the $10.46 million budget. With $10.36 million in expenditures, the deficit for 2015 was $893,060, according to Rick Cherry, treasurer.

So far in 2016, Holston Conference receipts are good, Muse said. In the first quarter of this year, the treasurer’s office received $2.2 million in income from local-church offerings, based on the 10-percent tithe.

“We’re on track to do well, possibly meeting our budget this year,” Muse said. “But you never know. “

Typically, 20 percent of Holston’s total income is received in December, he said.



From April 18 to May 31, Muse spoke to seven out of 12 districts in Holston. Most of the meetings were pre-conference briefings attended by 50 to 60 people. Many of the questions he received concerned transparency and requests for improved communications about conference finances, he said.

Some questions concerned the selling of the episcopal residence or the leasing of the Sevierville facility now known as The Connexion. Neither of those properties or decisions fell under the CFA's direction, Muse said, and will not add any additional cost to the budget. 

Muse’s message to the districts was that Holston’s budget will suffer additional cuts if 100 percent of local churches do not pay the 10 percent tithe of income -- and if “designated income” continues to rise.

“Some churches have reported that 102 percent of their income was given to designated funds,” Muse said. “The bottom line is, that’s not right. It’s detrimental to the conference, and it’s impossible to fund a $9.4 million budget going in this direction.”

Holston churches reported a total $26.38 million as designated income in 2015, an increase of 32 percent since 2010, according to Cherry.

“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.

In 2010, Holston churches reported a total $20 million in designated income. In 2011, the first year the 10-percent tithe apportionment was enacted, designated income rose to $22.39 million.

Between 2012 and 2013, total designated income reported by churches shot up an additional $3.68 million, according to the treasurer's office.

Cherry also reported that while 664 churches paid 96 to 100 percent of their tithes, 230 churches paid less than 96 percent and 32 churches paid $0.

“It’s a stewardship issue and a heart issue,” said Muse. “If we don’t meet or exceed our budget completely, we’re going to have financial issues. We’re going to have to cut more, and we’re going to go into staff cuts.”



Holston Conference has a total $3 million in budget reserves. An additional $10.8 million is invested in Holston Conference Foundation funds, designated for purposes other than meeting the budget, Cherry said.

An amount of $36.3 million is invested with the General Board of Pensions of Health, designated for pension and health liabilities.

Deficits are covered by using the income earned on invested funds. CFA is committed to not allowing budget reserves to drop below $3 million, even if they have to break another commitment to pay 100 percent of apportionments to the denomination, Muse said.

In 2015, Holston paid 100 percent of its apportionment to the General Council on Finance and Administration, despite the deficit.

“We felt like we needed to lead by example, to show our conference is doing this in midst of struggling,” Muse said.

However, the 2016 approved budget and the proposed 2017 budget presents the possibility that -- for the first time since 2010 -- Holston will not pay 100 percent of its responsibility.

The 2016 budget shows that Holston will pay $2.8 million of its $3.1 million apportionment to the church, an underfunding of $313,777. The 2017 proposed budget shows an even larger underfunding of $564,318 for the general church.

"If the tithe is fully contributed by all of our local congregations, the budget will be surpassed and the General Church apportionment can once again be given in full," the CFA reported during this year's pre-conference briefings.

The 19-member CFA doesn’t want to make additional cuts to the budget, but will if required, Muse said.

“Our biggest dream is that we would have enough to fund all our ministries, but we need to have all cylinders going at the same time to do it,” he said. “We’re willing to do whatever we need to do to balance the budget.”

The CFA will present its budget proposal to the Holston Annual Conference on Monday, June 6 and ask for the approval vote on Tuesday, June 7. To invite questions, CFA members will wear green ribbons and will also offer a Monday chat room from 5 to 6 p.m. in the Terrace lobby.



The CFA report, including the 2017 proposed budget, appears on pages 79-117 of the "Book of Reports."



Annette Spence

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