11/15/2018 A NEW FINANCIAL MODEL - OVERVIEW The United Church of Canada L’Église Unie du Canada GC43 webinar - May 29, 2018 Cheryl Stadelbauer-Sampa Miriam Bowlby Erik Mathiesen Steve introduces participants and credentials Rev Miriam Bowlby - Minister, Cochrane Street United, St John's NL                              General Council Executive                             Member Permanent Committee on Finance   Rev Cheryl Stadelbauer-Sampa                             Executive Secretary, London Conference                             Provisional Region Executive Secretary Regions 7,8,9 Erik Mathiesen - Chief Financial Officer, General Council Office EHM -Finance

11/15/2018 Remit 4 – as approved The Question: Does the presbytery/pastoral charge agree to a new funding model for the United Church with the budgeting process guided by the following principles? (1) use Mission and Service to fund ministry and mission activities; (2) fund governance and support services of other courts/councils by assessing communities of faith/pastoral charges; (3) share assessments equitably across the whole church; (4) permit Conferences/presbyteries/regional councils to use additional resources for regional purposes; and (5) encourage sharing of all resources across the church. READ SLIDE EHM, The United Church of Canada EHM -Finance

Remit 4 – Background video 11/15/2018 Remit 4 – Background video Available at https://www.gc42.ca/remits https://www.youtube.com/watch?v=fKCoadt8B2c STEVE TO PLAY VIDEO EHM, The United Church of Canada EHM -Finance

11/15/2018 Summary Points The intent of all this reorganization is to create a sustainable and workable church structure in the face of a declining volunteer and financial resource base. SHARING the costs CLEARER ACCOUNTABILITY for the funds received ASSESSMENT INCREASES PHASE IN DIFFICULT DECISIONS. READ SLIDE ERIK TO EMPHASIZE THE DIFFICULT DECISIONS POINT. CANNOT DELIVER ALL THE THINGS WE USED TO DO. NEED TO DO DIFFERENTLY EHM, The United Church of Canada 4 4

PASTORAL CHARGE ASSESSMENT FOR 2019 11/15/2018 PASTORAL CHARGE ASSESSMENT FOR 2019 Calculator available on-line for those filing 2017 annual statistics electronically. TARGET assessment is 4.5% of adjusted total revenue. SUBTRACT: All outward revenues including M&S and refugee funds. Property sale proceeds Bequests Capital campaigns for building funds Government grants Restorative care and other insurance payouts HST payouts Reimbursement of shared ministry expense READ SLIDE Stress transparent and consistent Best for smaller and rural etc EHM, The United Church of Canada 5 5

2019 Budget Assumptions & Principles (1) 11/15/2018 2019 Budget Assumptions & Principles (1) “balance” 2019 Denomination Core budget Continued decline in M&S ( at $900,000 per year) 2019 COLA factor is 1.6% We will strive to maintain 2018 level grant programs subject to balancing the operating budget We will strive to keep the increasing the amount of M&S allocated to Embracing the Spirit, but will also seek to maximize the amount of M$&S available to regions. READ SLIDE QUICK RECAP OF GCE approved budget assumptions EHM, The United Church of Canada 6 6

2019 Budget Assumptions & Principles (2) 11/15/2018 2019 Budget Assumptions & Principles (2) We will work with the indigenous church in continuing our right relations journey while identifying and implementing cost reduction from current expenditure levels. one time project costs for remit implementation, will be funded from reserves. Assurance of assessment income to regions for 2019 and 2020. If income higher than expected, 100% of the increase would flow to regions. Reserves will fund any shortfalls. Assurance of M&S income for 2019 and 2020 to the regions despite anticipated decline. READ SLIDE EHM, The United Church of Canada 7 7

2019 Budget Assumptions & Principles (3) 11/15/2018 2019 Budget Assumptions & Principles (3) Denomination portion of assessment funds 50% of the cost of Region Executive Ministers and their one administrative staff. Indigenous governance allocation ($500,000); regionally deployed stewardship staff ($500,000) and full Office of Vocation cost ($1,250,000) of which 2/3 is regionally deployed. Region assessment to fund 50% of the cost of Region Executive Ministers and their one administrative staff. Each region to be allocated 1/16 of discretionary regional assessment allocation ($325,000) and Mission and Service allocation ($289,000) READ SLIDE EHM, The United Church of Canada 8 8

2019 Early Budget Outlook ($Millions) 11/15/2018 Resulting 2019 Budget Outlook 2019 Early Budget Outlook ($Millions) Denominational Council Regions Indigenous Total Governance & Shared Services 4.75 5.95 0.50 11.20 Mission & Ministry 17.44 4.59 4.25 26.28 Embracing the Spirit 1.75 - Total spend 23.94 10.54 39.23 Core Operating Surplus/Deficit (1.14) Note the budget is not yet balanced EHM, The United Church of Canada 9 EHM -Finance

2019 Early Budget Outlook ($Millions) 11/15/2018 Resulting 2019 Budget Outlook 2019 Early Budget Outlook ($Millions) Denominational Council Regions Indigenous Total Governance & Shared Services 4.75 5.95 0.50 11.20 Mission & Ministry 17.44 4.59 4.25 26.28 Embracing the Spirit 1.75 - Total spend 23.94 10.54 39.23 Core Operating Surplus/Deficit (1.14) Notes (1) Excludes supplemental regional revenue where available (2) Embracing the Spirit moving towards 10% of M&S target and potentially available to Regions (3) Denomination portion of assessment funds Office of Vocation and Stewardship ($1.75) (4) Denomination budget still to be set to nil deficit excluding one-time restructuring costs (5) 2019-2020 Region core revenues will not be impacted by any shortfalls overall (6) Denomination assessment funds 50% of 6 Regional Executive Ministers and 6 admin positions (7) Each Region is allocated $325,000 discretionary assessment funds and $289,000 M&S funds (8) 16 equal shares of assessment revenue to cover 16 Regions plus $150,000 contingency (9) Overall Regional assessment to pay for 50% roles above $600,000 off the top. (10) Shared services to be paid for as utilized (11) Still work to do to balance core budget! exhibit with the assumptions EHM, The United Church of Canada 10 EHM -Finance

Mission & Service in the Regions 11/15/2018 Mission & Service in the Regions There will be a block grant of Mission & Service Funds to each region to be used to: Fund previous Presbytery /Conference grants; Fund Mission Support grants; Fund mission and ministry regional staff; Applications to be submitted by September. Region Commissions to make decisions this fall. Indigenous granting will be separate CHERYL – ANN CES AND SPEAKER WORKED TOGETHER TO DEVELOP THE SHARING MODEL FOR BOTH ASSESSMENT AND MISSION AND SERVICE A KEY DESIGN PRINCIPLE WAS TO PROVIDE REGIONS WITH AS MUCH FLEXIBILITY AS POSSIBLE IN ALLOCATING MISSION AND SERVICE MONIES. EHM, The United Church of Canada EHM -Finance

ALLOCATION OF REGION MONIES 11/15/2018 ALLOCATION OF REGION MONIES excludes supplemental regional resources 2019-2020 region discretionary core revenue $325,000 + $289,000 = $614,000 will not be impacted by shortfalls – upside only denomination portion of assessment funds regionally deployed staff for office of vocation, stewardship and 50% of REMs and one support staff. Denomination portion is 42% of total assessment including funding for regionally deployed staff. CHERY ANN or erik EHM, The United Church of Canada EHM -Finance

ALLOCATION OF INDIGENOUS FUNDING 11/15/2018 ALLOCATION OF INDIGENOUS FUNDING $500,000 from assessment $4,250,000 Mission & Service funded programming in keeping with “Calls to the Church” mission support applications will be reviewed by Aboriginal Ministries Council (applications for both 2019 and 2020). EHM, The United Church of Canada EHM -Finance

LONGER TERM - ALLOCATION OF CORE RESOURCES 11/15/2018 LONGER TERM - ALLOCATION OF CORE RESOURCES will need to migrate to a percentage approach over time % of assessment and % M&S indigenous regions denomination participate in a fair and transparent manner in managing declining revenue (or sharing in increase) EHM, The United Church of Canada EHM -Finance

11/15/2018 The fortunes of every level of the church are now more directly linked to congregational capacity to fund. Through the assessment, all congregations participate in funding the national church and the indigenous church EHM, The United Church of Canada 15 EHM -Finance

THIS IS ACTUALLY A GOOD NEWS SLIDE. 11/15/2018 MIRIAM THIS IS ACTUALLY A GOOD NEWS SLIDE. WE HAVE MORE CAPACITY TO FUND TRANSITION THAN WE THOUGHT WE WOULD HAVE. TWO MAIN REASONS. OVER THE LAST 5 YEARS, INVESTMENT RETURNS HAVE AVERAGED 9.5 PERCENT WHICH IS MORE THAN DOUBLE OUR PLANNING ASSUMPTION. OF COURSE MARKETS CAN GO DOWN TOO. THE DECLINE IN MISSION AND SERVICE REVENUES HAS SLOWED SOMEWHAT IN RECENT YEARS. EHM, The United Church of Canada 16 EHM -Finance

Governance recommendations – General Council 11/15/2018 Governance recommendations – General Council Proposal GCE 19 General Council will confirm assessment rate. Will set “catch-up” mechanism so that all pastoral charges at 4.5% target by 2025. Might ratify funding definitions Has already made provision for review EHM, The United Church of Canada EHM -Finance

Governance – Denominational Council Executive 11/15/2018 Governance – Denominational Council Executive Will set annual operating budgets including triennial allocation of revenues to indigenous church, regions & denomination Executive to provide updates to Denominational Council through annual electronic meeting of Council. EHM, The United Church of Canada EHM -Finance

Discussion READ SLIDE 11/15/2018 EHM, The United Church of Canada 19