Funding our Mission and Ministry in 2017 Parish Offer and Funding our Mission and Ministry in 2017 We recognise that historically we have fallen short in our communications with parishes. This presentation is part of our strategy to reconnect and re-engage with parishes to ensure they are better informed about how we together support and fund Mission and Ministry across the diocese as we seek to build the Kingdom of God in this place.

What is the Parish Pledged Offer ? It is based on the following principles: Freewill Offering Mutual commitment Shared responsibility for mission and ministry across the Diocese It recognises that all giving is a freewill response to the generosity of God, related to both opportunity and need The Diocese used to operate a formula-based system called Parish Share. This covered things like ministry and shared costs and excluded the stipend and associated cost for the parochial clergy which parishes paid separately. Inevitably some people felt that it was more like taxation. In common with a growing number of dioceses, we have recently moved towards seeking annual pledged offers from parishes. Guidance is given about how much parishes need to give to cover things like the costs of ministry and support costs. The Parish Pledged Offer is not based on a formula but on principles of relationship, trust, mutual commitment and freewill offering, coupled with the responsibility for ministry in one’s own place. It recognises that all giving is a freewill response to the generosity of God, related to both opportunity and need. But we recognise that not all parishes will be able to “pay their way”. There are great differences in each parish’s ability to do so and through the Parish Pledged Offer we are committing ourselves to mutual support.

What is the Diocesan Budget? Costs relating to: ordained ministry (including housing) and training for ministry, other than local expenses church building procedures safeguarding and other matters required by law lay training mission development, including support for work with children and young people across the diocese the national church The Diocesan Budget sits alongside the budgets of our PCCs and chaplaincies to give the total financial resources for mission, ministry and community engagement across our diocesan family. The pattern within the Church of England is that many costs are met at parish level, but others formally rest within the Diocesan Board of Finance (DBF). The Diocesan budget gives us the financial means to pay for everything which comes under the umbrella of our shared responsibility. Most significantly, the DBF holds responsibility for all costs relating to ordained ministry and training for ministry. This includes housing, which is a significant cost and excludes local expenses. The DBF also carries other financial obligations regarding church building procedures, safeguarding and other statutory matters required by law. There are those things which we chose to do at diocesan level, notably lay training and mission development, including support work with children and young people across the diocese.

What is the Diocesan Budget ? cont. Income relating to: Parish Pledged Offers Grants and Donations Professional Fees Dividends and Interest Rental Income Other Income On the income side , the Diocese of Rochester has some income from historic reserves, trusts and other assets though, despite being founded in 604, we have never been one of the financially well-endowed dioceses. This means that in order to meet its obligations, the DBF is very reliant upon contributions from parishes. We are always grateful for the contributions that are made.

What the Diocesan Budget doesn’t include. It does not include: the cost of the Bishop of Rochester and his office the stipend of the Suffragan Bishop the clergy pension provision prior to 1998, all of which are funded separately by the Church Commissioners. the Diocesan Board of Education’s schools work the cost of running Rochester Cathedral. Many will be surprised to learn that the cost of these specific items is not met by the Diocese. The Diocesan Board of Education is currently resourced through DBE Trust Funds (although in many dioceses the DBE schools work is funded by or supported by DBF contributions). In noting the above it is also important to acknowledge the unpaid contribution that the Diocese receives from 1000s of volunteers, retired priests etc.

Animation film is here The following animation has been commissioned by Bishop’s Council with financial support from the Church Commissioners. It seeks to set out the key income and expenditure areas of the diocesan budget, to emphasise the shared nature of mission, faith and finances. The film has been designed to compliment this series of archdeaconry meetings and is available online (via the diocesan Website) for use in churches and other meetings.

Who sets the Diocesan Budget? DBF Finance Committee – the draft budget is put together in the light of the Parish Pledged Offers made and other forecast income Bishop’s Council – considers and approves a budget for recommendation to Diocesan Synod Diocesan Synod – approves Budget and Authorises a level of Expenditure All three bodies have members elected by parishes.

2016 – Budget Income & Expenditure Training (including Curates) £1,840,800 Other Deployed Clergy Costs £7,034,200 Deployed Clergy Housing £1,138,300 Other Diocesan Expenditure £2,130,400 Total Expenditure £12,143,700 Income Contributions from Parishes (Parish Pledged Offers) £9,430,000 Income from Investments (including Glebe rentals) £1,019,700 Other Income/Transfers to Budget £1,136,500 Total Income £11,586,200 Net Deficit £557,500 This slide shows a summary of the Budget approved by Diocesan Synod in October 2015. As will be seen Synod approved a Budget with an anticipated net deficit of £557,500

2016 – Actual Income & Expenditure (May 2016 position – before corrective action) May 2016 Actual YTD Expenditure Training (including Curates) £747,400 Other Deployed Clergy Costs £2,931,500 Deployed Clergy Housing £519,500 Other Diocesan Expenditure £914,000 Total Expenditure £5.112,400 Income Contributions from Parishes (Parish Pledged Offers) £3,768,000 Income from Investments (including Glebe rentals) £381,100 Other Income/Transfers to Budget £410,100 Total Income £4,559,200 Net Deficit to end of May 2016 £553,200 Estimated Net Deficit assuming trend continued £1,327,200 However it was clear by May 2016 that without any action being taken and with the trend continuing the DBF could be facing a deficit of over £1 million. Challenges being faced – 20 more ordained clergy than we could afford as a diocese; parishes not willing/able to respond to the challenge of increasing their 2015 Parish Pledged Offer by 2.5%

Short Term Steps – Already Taken Moratorium on all spending unless contractually committed No lay vacancies to be filled without a critical review No pay increase for lay staff on 1 July 2016 The clergy stipend to be frozen until it falls in line with regional benchmarks Bishop’s Council agreed that action was required both in the short and longer term. Bishop and DBF Chair wrote to parishes explaining the situation on 7 July 2016.

2016 – Projections to end of Year Revised forecast following corrective action Projection 2016 Expenditure Training (including Curates) £1,922,300 Other Deployed Clergy Costs £7,005,000 Deployed Clergy Housing £861,100 Other Diocesan Expenditure £2,115,100 Total Estimated Expenditure £11,903,500 Income Contributions from Parishes (Parish Pledged Offers) £9,280,800 Income from Investments (including Glebe rentals) £1,212,000 Other Income/Transfers to Budget £937,600 Total Estimated Income £11,430,400 Estimated Net Deficit 31 December 2016 £473,100 The steps we have taken have enabled us to take control of the situation and on current forecasts we expect to end 2016 with a deficit of £437K approx.

Reserves Policy …The Trustees agreed to adopt a policy which is to hold a balance of readily realisable assets in the general fund equivalent to 3 months unrestricted expenditure for 2016 as based on the previous year. At 31 December 2015 the amount required totalled £2.8M, but actual free reserves totalled £368,000. The Trustees are aware of the deficit against the policy and have set aside funds in a specific designated fund to increase reserves until such time as the level of free reserves increase. In line with the changes in accounting practice and reflecting our move from Parish Share to Parish Pledged Offer, Bishop’s Council decided to increase it reserves policy from 3 months stipend payment to 3 months unrestricted expenditure . This has meant an increase in Reserves from £850K to £2.3m.

Long Term Steps Clergy Deployment Parsonages Strategic Plan, Parsonage Repairs and renting out vacant properties Focus on financial stewardship Consideration of the termination of the lay staff final salary pension scheme Sharing services with other dioceses and review of administration support Plan to break even by end of 2018 at latest Mention was made earlier of the Long Terms steps that we need to take. In taking steps to reduce the number of parish clergy by 20 over the next few years it is important that we do not have an ad hoc approach. We need to see the reduction within the context of the wider deployment of clergy across the diocese. Bishop’s Council is currently working up a methodology which takes account of both hard and soft data. Bishop’s Council will also be reviewing our approach to stewardship and how this can be taken forward in a cost effective way. This is likely to include the development of resource material and training both for clergy and laity; support and encouragement for stewardship campaigns and planned giving schemes.

Budget 2017 In October 2016 Diocesan Synod authorised a budget of £11.99m Budget formulated using known income as the starting point Expenditure budgets being reduced so that we live within our means A report and update to be made to Diocesan Synod in March 2017 In October 2017 Diocesan Synod authorised a budget of £11.99m The move to the Parish Pledged Offer has enabled us to forecast with reasonable accuracy the offers we will receive during the year. Something we did not know under the old Parish Share until the end of the year. So for the first time we are able to construct our budget on the basis of known income. Currently further scrutiny is being given to departmental budgets and our forecast income. We will be providing a detailed report to Diocesan Synod when it meets again on 1 March 2017.

2017 – Indicative Budget Budget 2017 Expenditure Training (including Curates) £1,952,000 Other Deployed Clergy Costs £6,714,400 Deployed Clergy Housing £700,000 Other Diocesan Expenditure £2,622,200 Total Expenditure £11,988,600 Income Contributions from Parishes (Parish Pledged Offers) £9,500,000 Income from Investments (including Glebe rentals) £1,285,000 Other Income/Transfers to Budget £1,203,600 Total Income Net Deficit £ nil

2017 Budget - Income

2017 Budget - Expenditure

Our expenditure explained The estimated average costs of deploying a full-time minister in our Diocese in 2017 are: * Repairs, improvements, insurance and admin, etc, are paid for by the DBF; other costs such as council tax and water rates are paid for by PCCs Stipend £26,060 National Insurance £2,085 Pension £9,335 Housing* £6,690 Training, Grants & Admin £2,200 Oversight £1,630 Total £48,000 We have been asked to provide parishes with an estimated average cost for deploying a full-time minister in our Diocese this works out as £48,000 per annum. This figure has remained fairly static for the last couple of years –with any increases in cost being balanced out by a reduction in the projected number of clergy.

Our expenditure explained cont. The estimated average cost of other support in our Diocese in 2017 is: Ordinands in Training 2,840 Mission and Ministry 1,875 Diocesan Advisory Cttee 555 Safeguarding 835 Communications and IT 1,370 Finance/Stewardship Synodical/Admin support Strategic Projects National Church 1,240 1,975 2,700 1,610 Total £15,000 Then if you add in the provision of support and services to parishes which we estimate as being £15,000 the total cost to parishes would be £63,000. Many other dioceses use a higher figure, often in excess of £70,000.

Budget 2017 – 2 Options If Parish Pledged Offers collectively rise to £9.5M in 2017 (a 2.5% increase), this will enable a break-even position to be achieved; Whilst a standstill on Parish Pledged Offers (i.e. no overall increase) is estimated to result in a deficit of £250,000 – the fall-back position The Budget 2017 as presented to Diocesan Synod includes provision for two scenarios. We believe it is realistic for Parishes to increase the Pledged Offer they made in 2016 by 2.5%.

2.5% increase in Parish Pledged Offers Increase in Parish Pledged Offer of £250,000 Assuming church attendances of 20,000 Is ONLY £12.50/attendee! Or 25p each week! (and less with Gift Aid) This is not insurmountable

What can we do? Pray Strive to be more generous Take the initiative We are all encouraged to give prayerful consideration to the financial contribution we make in support of mission and ministry across our Diocese. We need to strive to be more generous and realistic about the level of our giving. Through increased generosity we can begin to release energy for growth. Over the next thirty years it is estimated that the population in our Diocese will increase from 1.3 million to 1.8miilion. An increase of just under 40%! We need to stop comparing ourselves with others. Take the initiative – when did your parish last think about stewardship and giving – its not just the incumbent’s responsibility?

Resources The animation can be viewed at: http://rochester.anglican.org/video/parish-offer-explained.php This presentation and a series of Frequently Asked Questions and Answers are on the Diocesan Website. We will be updating the Q and As over the coming months. We are also producing a leaflet for PCCs and Church members which explain the Parish Pledged Offer. The animation can be viewed or downloaded via the diocesan website.

Questions?