Treasurer
Peter Koch

From a financial perspective, 2005 was a sobering year for the Board of Directors. We have long been aware that many of our local churches are struggling with rising insurance and energy costs, deficit budgets and, in some cases, diminishing membership. In 2005, those difficulties translated clearly into reduced support of the wider United Church of Christ.

The Conference’s two principal sources of income – accounting for more than 85% of the operating budget –are known as Our Church’s Wider Mission Basic Support and Fellowship Dues. These represent direct contributions from our local churches. Both of these sources decreased in 2005 relative to 2004.

Basic Support contributions are made by local churches, often through mission or outreach budgets, to support the work of the wider United Church of Christ. Basic Suport was budgeted at $2,162,000 for 2005, and fell short of this goal by over $92,000. Because 60% of Basic Support is sent to the National United Church of Christ for national and global ministry and mission, this shortfall represented a loss of $55,200 to the National setting and $36,800 to the Massachusetts Conference. Receipts of Fellowship Dues, which churches pay on a per-member basis, were likewise disappointing, falling about $24,000 short of the projected total of $1,066,100.

The Conference also receives smaller amounts of income from the operation of Pilgrim Day Camp in Framingham, and from endowments and invested cash. Day camp net income was about $20,000 less than anticipated in 2005, due to lower-than-expected enrollments. On the other hand, income from invested cash exceeded expectations due to rising interest rates during 2005. Overall, income fell $62,000 short of budget for 2005.

As income lagged throughout the latter part of the year, staff were able to make some adjustments in personnel and program costs in anticipation of lower revenues. Support staff turnover allowed for some reduction in staff hours, and budgets in some program areas were underspent. Also, high participation in mission trips brought additional income to support the program area of the budget.

The result was an operating deficit of $31,750, somewhat less than the projected deficit of $44,500 voted by the Annual Meeting in 2004. Though this modest deficit can be covered by funds set aside for budget stablization, the longer-term implications of a revenue shortfall totalling $116,000 are challenging.

Those of us who serve as your Board of Directors have been struggling to come to terms with trends affecting all mainline religious organizations in the past several decades. 2005 Basic Support contributions of $2,069,700 were at their lowest level since 1996. This area of giving has decreased by an average of 2% per year for each of the past five years. Taken together and adjusted for inflation, Fellowship Dues and retained Basic Support were lower in 2005 than they were in 1990. This is not surprising when one considers that we are a significantly smaller Conference of churches than we were in 1990. Clearly, however, we need to respond to this changing reality in a way that is both faithful and fiscally responsible.

In response to 2005 results, the Board adjusted Basic Support retention and Dues projections for 2006 downward by $118,000. We reduced program budgets by over $50,000 and the personnel budget by $20,000. We identified funds which may be used to cover the remaining projected deficit, should it materialize. And we accelerated our work to bring Conference expenses into better alignment with our resources, and, more importantly, to better align those resources with our mission of nurturing local church vitality and the covenant among our churches.

The work of clarifying the mission of the Conference and better aligning resources to support it has been ongoing at least since the development of the Conference’s strategic plan, known as the Vision for Renewal and Growth, in 1999. It will continue in the coming years, with broad input to be sought from clergy and lay members throughout the Conference. The Chair of the Board and the Minister and President will report more fully to the Annual Meeting on this wider project, while this report focuses more specifically on budgetary matters.

The proposed 2007 budget found in the Advance Reports shows significant changes from prior years. Revenue projections are quite conservative. While we will work and pray for an increase in Basic Support contributions, we have not counted on such an increase in the budget. Rather, we assume that the challenges faced by our local churches may result in another decrease of 3% for 2007, corresponding with the annual decrease in each of the past two years. With regard to the Conference’s other major source of income, Fellowship Dues, the Board recommends a per-member rate of $15.50 for 2007. This represents an increase of fifty cents per member over the 2006 Dues rate. Increases in the Dues rate are capped by a formula adopted by the 1993 Annual Meeting, which links Dues increases to increases in reported local church expenses averaged over a three-year period. This year the formula would allow an increase of sixty-three cents per member. We believe, however, fifty cents will be less burdensome to our churches and less cumbersome for accounting purposes. This rate yields anticipated Dues income of $1,116,800 for 2007, as shown on page 14 of the Advance Reports.

The expense side of the proposed budget shows significant change as well, in order to fulfill the Board’s promise, made to the 2005 Annual Meeting, to present a plan for bringing expenses and income into better balance.

Proposed personnel costs show an 8% decrease. This reflects the elimination of a total of four staff positions. The Board made this decision with deep regret, but in the awareness that, with personnel costs representing approximately 75% of the operating budget, there was no way to significantly reduce costs without eliminating staff positions. The recommended personnel budget allows for the addition of a social security offset to the compensation packages of ordained Associate Conference Ministers, as well as a 3% cost of living increase for all staff.

Proposed institutional costs show an increase of 2%. Included in this net figure are several significant changes:

• The closure of Conference offices in Haverhill and Worcester. The Board determined that the maintenance of six separate offices is neither essential to our service to local churches nor affordable given our current membership.
  
• An increase in professional development funds from $300 per year to $1000 per year for each Associate Conference Minister and the Minister & President.
  
• An accrual of $10,000 per year to allow some replacement coverage and maximize continuity of service to churches during staff sabbaticals.
  
• An annual allowance of $3000 to make use of new technologies to help us serve churches in ways that are less driven by geography.

Proposed program expenses are held steady at a relatively low level of $1,477,000, as a matter of necessity. However, it is the Board’s intention to ask staff to continue to experiment with programming that may bring in additional revenue, stretching what can be accomplished with this relatively small pool of program funds.

The Board is aware that, if voted, the implementation of this proposed budget will mean changes for local churches, clergy, Association boards, staff, and the Board of Directors itself. We will need to learn how to communicate and to serve one another in new ways. We are confident, however, that God is with us in this time of change and uncertainty. We are hopeful that together we can discover how to be Christ’s church in a new era, learning how a Conference of churches can best work together to help each congregation thrive.

As with every other institution with which we are associated, inevitable change must occur. Your Board of Directors has chosen to steer these changes in ways we believe will help the Conference serve our churches in a most effective and efficient way. Change is rarely easy, or welcomed, but we must recognize the changing needs of our congregations all across the Commonwealth and respond accordingly. I strongly urge adoption of the 2007 budget as presented.