1. Council on Finance & Administration 2016 PreCon Sessions April 30, 2016

2. 22 Agenda 2015 Year End Performance 2017 Budget Proposal CFA Updates Equitable Compensation Recommendations

3. 2015 Was Amazing! We celebrate that the net income for the Conference in 2015 was ZERO*. We hit the goal of all good non-profits: -We donated what we budgeted to spend on ministries -And we spent on ministries what was donated/budgeted Apportionment income Up 1.8% or $245K Total income Up 0.9% or $158K Expenses Down 0.6% or $111K Treasurer’s Note! * Unaudited net income was actually ($2,067) or (0.01%) 3

4. There is Even Better News! The apportionment collection rate was the best in 15 years at 91.7%. 83% of local churches once again confirmed their strong commitment to our connection by giving 100% toward our joint ministry apportionments Cumberland-Hagerstown 97% of churches gave 100% (CR=98.4%) Greater Washington 8 new churches reached 100%, Best ever CR at 91.9% & hit their forecast Baltimore Metro 27% of churches gave more than 2014 Baltimore Suburban Collection rate up 7.2% to 96.3% Annapolis Hit their forecast of 97.2% collection rate Central MD Hit their forecast of 95.9% collection rate 4

5. 2015 Financial Performance 5 The improved apportionments drove the net income improvements. Key: Increased donations and a lower collection rate budget.

6. Short-term Collection Rate History 6 This marks 3 straight years of increases in the collection rate The combination of the increased collection rate and the slightly lower goal helped the apportionment collection to be close to budget

7. 7 Expense Analysis Analysis of 2015 Performance Significant expenses over budget: Salaries - $39K Benefits - $93K Annual Conf Session - $87K (net) Significant expenses under budget: Moving – $62K Legal Fees - $40K Deaf Ministries - $58K Retiree Medical Premiums - $293K Retreat and Camping Ministry Operating Net Income was positive $19,000 4 of the last 5 years have operated a positive net income!

8. 88 2017 Budget CFA Recommendations

9. 9 2017 Budget Assumptions Apportionment Base X Benevolence Factor X Collection Rate = 2017 Apportionment Income $87.1M X 17.75% X 92.0% = $14.2M The 2014 statistical data showed an decrease of 0.8% in the apportionment base to $87.1M Benevolence Factor was held steady at 17.75% Collection Rate was held steady at 92.0% Results in an apportionment income decrease of $112K to $14.2M (0.8% decrease)

10. 2017 Budget Discussion This is the 5 th straight year with Apportionment Income set at $14.1 to 14.3 million. 10

11. Statistical Trends Little Change Observed in the Base & Income 11

12. This is NOT our Typical Budget Conference Board of Pensions decision to fund $1.5 million in Retiree Medical expenses from non-apportionment sources is a strategic shift for the Conference This comes at a time in which local church income and the apportionment base is flat At the same time, we celebrate that we are NOT in a time period of declining local church income with a declining apportionment base We simply find ourselves currently in a period of uncertainty. What should be our focus? 12

13. Budget Focus Think long-term: What will best support future generations in our Conference? 1.Minimize long-term debts & obligations 2.Replenish exhausted reserves 3.Keep cost controls in place 13

14. 2017 Budget Highlights Long-term Sustainability Focus - $1.0 million $700,000 for debt reduction $200,000 to replenish legal reserves $100,000 to replenish the apportionment reserve (10% of appt. budget) 14

15. Long-Term Obligations Mission Center and the West River Dining Hall have a combined debt of $5.3 million Current payments are $600K/yr in P&I Current payoff date is 10/1/2029 13 years with $1.6 million in interest remaining AVAILABLE DEBT REDUCTION 4 years of $700K/yr debt reduction payments will shorten the payoff to 6 years (10/1/2022) Will save $1.0 million in interest P& I payments will be stopped in 6 years 15

16. Long-Term Advantages Conference apportionment expenses can be reduced by $2.1 million or 15% in 6 years. $1.5 million currently for Retiree Medical $0.6 million currently for mortgage Reserves will be properly funded Better able to accommodate downturns in the apportionment base or local church income Improved long-term sustainability 16

17. 2017 Budget Highlights Funds a new position requested by the Board of Ordained Ministry - Director of the Center for Clergy Excellence - Full-time position at the Mission Center - Reports to BOOM - Focus is on identifying, developing, and supporting effective clergy leadership - Position is modeled after successes found in other Conferences - Will provide a home for clergy records outside of the Episcopal Office in accordance with Judicial Council rulings 17

18. 2017 Budget Highlights Includes salary increase of 2.5% and benefit increase of 5% General Conference apportionments are increased by 2.4% Mission programs increased by 3.0% $56,000 in savings are offered by the new IT Service Contract with GCFA. 18

19. Proposed 2017 Budget 19 The total budget increases by the $1.5 million in non- apportionment income that is new funding for the Retiree Medical. At the same time, the apportionment income will decrease by 0.8% as the benevolence factor and the collection rate assumptions are held steady. Adopts the long-term strategy of debt reduction and takes advantage of the opportunity to proactively replenish some high priority reserves.

20. 20 CFA Updates

21. Misc. Highlights 21 The CFA is thankful for the efforts by Rev. Daryl Williams who chaired the efforts to revise the policies for both the Conference and guidelines for our local churches that govern our focus on Socially Responsible Investing. The Finance Staff has been well received by local churches as the new audit guidelines have been a priority for training sessions throughout the Conference. We will soon celebrate one full year since Gateway was turned off. The Finance Staff is especially thankful for everyone’s patience during the transition period and we believe the new system is providing good support of our ministries.

22. 22 Equitable Compensation Recommendations

23. Commission on Equitable Compensation Recommendations: In consultation with the cabinet, the COEC recommends that the minimum salary for 2017 be increased by 2% or $829 to $42,303. We are recommending the housing allowance remain unchanged at $19,866. 23

24. THANK YOU 24