1. PRESENTATION BY DAVID BURGESS
Diocese of Liverpool
DBF FINANCE REPORT
2017 Accounts
2018 Progress Report
2019 Budget
PRESENTATION BY DAVID BURGESS
D.B.F. VICE CHAIR
This presentation aim to do 3 things:
Comment on the key aspects of the 2017 report and accounts;
Bring Synod up-to-date with the current state of financial play;
Look ahead to 2019 and beyond.
I will then ask Synod to receive formally the 2017 report and accounts (which have already been approved by the DBF Finance Committee) and to endorse the overall budget for 2019 and the Parish Share increase it proposes.

2. STRUCTURAL BALANCE Our aim remains to balance the accounts
Missional leadership costs
SJH Services
Missional Leadership
Parish share + Central monies
DBF Income + -
St James’
House
We aim to bring structural balance to our budget through two linked overarching budget headings – missional leadership and St James House. Each overall budget heading looks to break even.
Missional leadership is funded by Parish Share and National Church Income. The budget pays for Missional Leadership costs (the costs of stipends, pensions, housing and supporting church schools).
St James House is funded by various DBF income lines (investments, fees, earned income) and pays for St James’ House Services + -

3. 2017 A MIXED RESULT Goal (15,537) Achieved (293,475)
Goal % Parish Share
Achieved % (98.9% net)
Net Movement in Funds = +£104,146
In 2017 our financial performance was mixed. Our operational budget ended the year with a deficit of £293,475. Our Parish Share collection rate fell to 97.3% (or 98.9% after off-setting non-payment against Deanery Mission and Growth Funds). But there were 3 main reasons why we failed to meet budget:
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4. 2017 Performance Other Issues: Missional Leadership costs = (58,206)
Clergy Moves = (31,203)
Funeral Fees = (112,285)
Clergy Housing met budget
Net Movement in Funds = + £104,146
(of which +532,000 related to pensions)
(of which +571,000 related to investment gain)
On the negative side - Missional Leadership costs were over budget by £58,206 (the equivalent of just under 1.5 clergy posts), Clergy moves expenditure was over budget by £31,203 and Funeral Fee income fell short of budget by £112,285.
On the positive side – Clergy Housing met budget, our investments grew in value and the overall results for the year was an increase in funds of £104,146.

5. 2018: Progress Report Parish Share collection to 98.9%
(99.89% after withholding DMGF funding)
Funeral and Wedding fees down further
Missional Leadership costs up (major investment in curacies)
Pressure on clergy Housing
In 2018 we have so far seen an increase in Parish Share collection to 98.9% (or 99.89% after off-setting DMGF funding). On the negative side, we have also seen an overspend on Missional Leadership resulting from our investment in curacies to ensure future leadership capacity (an overspend equivalent to four clergy posts). We have record numbers of Diocese of Liverpool ordinands entering training, which is great for creating a pipeline of good, talented, trained future incumbents in the diocese. But it also creates a short-term financial pressure. On the financially negative side there has also been a further fall in income from funeral fees and greater pressure on the Clergy Housing budget.

6. 2019 Budget 1st Budget set within Fiscal Rules framework
Three year breakeven cycle
Structural balance remains
Surplus or deficit to be distributed or recovered within three year cycle
Strict budget discipline in all areas
Minimum reserves of 4 months operating expenditure
In 2019 we are setting a budget within the framework of new fiscal rules set by the Finance Committee. These five rules aim to bring balance to our financial activities and ensure that our finances are sustainable. These rules appear in full in the 2019 budget commentary but in summary: 1. Our budgets will be prepared within a three year breakeven cycle. 2. We retain the established structural balance to our budgets. 3. Any surplus or deficit over the triennium will be distributed or recovered. 4. Strict budget discipline will apply 5. We will retain a minimum reserve of 4 months operating expenditure

7. 2019 Budget Budget Deficit - £5,000 Parish Share +2 pct
DMGF – no change
SJH costs restructured and fully aligned to strategy
Breakeven budget cycle
The 2019 budget shows a deficit of £5,000. Parish Share is to increase by 2% in line with Missional Leadership cost increases. Deanery Mission and Growth Funding will be as at 2018 levels. St James’ House central costs have been restructured and will be fully aligned to our strategy for a Bigger Church to Make a Bigger Difference. We will breakeven over the three year budget cycle from 2019 to 2021.

8. Pressure Points Missional Leadership Costs (investment in curacies)
Achievable through careful vacancy management
Parish Share Collection
DMGF Offset
Clergy Housing
Medium term investment strategy under development
Funeral Fees Income
Good Funerals Company
There are several areas of financial pressure which we aim to mitigate. 1. Missional Leadership Costs (our investment in new curates) – we are mitigating against the financial impact through careful management of vacancies. 2. Parish Share collection – we mitigate the impact of non-payment by off-setting against Deanery Mission and Growth Funds 3. Clergy Housing – we are responding to the pressure by developing a significant medium term investment strategy which we aim to bring back to the next Synod 4. We aim to increase funeral fee income through the work of the newly established Good Funerals Company.
I hope this presentation has helpfully navigated Synod through the complexities of the 2017 report & accounts, the current financial pressure and the budget for 2019.

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Motion
This Synod receives the report & accounts for 2017 and approves the budget for 2019
I am pleased to propose the motion standing in my name.
18/02/2019
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