Down They Go - Episcopal Dioceses, Cathedrals, Parishes Face Financial Losses

News Analysis

By David W. Virtue
www.virtueonline.org
11/26/2008

The Episcopal Church is imploding as dioceses, cathedrals and parishes face huge financial losses as the stock market reels and aging parishioners on fixed incomes rein in their giving. Large well-heeled cardinal parishes have taken tens of thousands of parishioners and their money with them to orthodox Anglican jurisdictions leaving liberal dioceses scrambling for money. At least two dioceses are living mainly on endowments.

It was recently revealed that the Episcopal Church's endowment funds have decreased by 30 percent this year. Treasurer Kurt Barnes told the Executive Council recently that every 5 percent decline in the value of the church's endowments equals $87,000 less revenue for the budget. Ironically, as the overall budget of TEC sinks, millions of dollars in legal fees are being spent to keep parish properties. To date, that figure is $2 million, but it is expected to rise to more than $5 million with coast- to- coast lawsuits in several dioceses.

National Episcopal documents show large differences in all dioceses between total operating revenue verses total pledge revenue. Many are living off endowments, and many have been hurt by market declines because of heavy investments in the stock market.

Another official church document shows a decline in numbers of pledging units from 2006-2007. In a number of dioceses, they are going down quicker than attendance indicating that people are not committed. Furthermore, these dioceses will probably see a large Average Sunday Attendances (ASA) declines over the next few years. Also, the large declines in the dioceses that are leaving TEC indicate people are diverting their giving elsewhere, years ahead of those dioceses leaving.

Across the country, diocesan attendance figures show massive decline. Latest statistics for attendance in 2007 reveal that almost 100,000 fewer people are attending domestic dioceses than in 2003. Many dioceses are down 20%+ since 2003. In short, at least 1 in 5 Episcopalians has left The Episcopal Church.

The following is a sample of diocesan budgets around the country.

Recently, it was announced that the Diocese of Eau Claire was in "juncture" talks with the Diocese of Fond du Lac. One of the besetting issues is that Eau Claire doesn't have enough money to hire a bishop following the departure of the Rt. Rev. Keith Whitmore to Atlanta. One of the diocese's options includes fully dissolving the diocese. If the diocese were to dissolve, the 22 congregations and all other assets would be absorbed by the dioceses of Milwaukee and Fond du Lac, which would then revert to their 1927 boundaries.

The Diocese of Pennsylvania is in crisis mode. Giving has dropped so dramatically that more parishes are expected to close. An $11 million diocesan camp is a financial albatross around the dioceses' neck following the disastrous episcopacy of Charles E. Bennison. 2009 will see diocesan programs cut by as much as 50% with pledges to the national church declining by 43%, Millennium Development Goals payments dropping by 37%, and with investment income to the diocese dropping by 11%. The diocese passed a budget of $1,089,392, but recognized this was a "stretch goal" with no Unrestricted Net Assets (UNA's,). Leaders said the diocese must be prepared for a less than favorable cash flow by as much as $500,000 which would cause a "serious shortfall" and "discomfort."

Even as delegates boosted salaries and bonus compensation for clergy in 2009 by 5.1%, one delegate told VOL that the parish guidelines are still based on false assumptions that the money will be turned in. "I don't think this budget has a prayer."

Recently, Washington National Cathedral, the Episcopal Church's flagship cathedral, announced dramatic cuts to its budget, programs and staff. It will slash its budget by 40 percent next year, from $24 million to $14.4 million. More than 40 staffers will be laid off, retail operations at the cathedral's gift shop will be outsourced and the Cathedral College's residential course offerings will cease as of March 31, 2009, according to the cathedral. The cathedral's endowment was valued at $66 million last spring, but has since declined by about 25 percent, according to Michael Hill, executive director for external relations. In May, the cathedral cut $3.5 million from its budget by firing 33 employees and closing its greenhouse.

The Diocese of Washington lives primarily off of the income from the Ruth Gregory Soper Memorial Trust, (valued in excess of $27 million) the Bishop's Appeal, and other interest and investment income. Parishes, which form the base of diocesan giving, are in decline. Parish giving has not risen as anticipated. The diocese has needed to use more than $1 million each year from the available income to balance its budget, an independent report revealed.

The Diocese of Michigan recently approved withdrawing as much as $600,000 in principal from the Extended Ministries Fund (EMF) to directly support its budget. Alarmed at what might come in 2009, the dean of St. Paul's Cathedral in Detroit, the Very Rev. Scott Hunter proposed a special convention before May 31 to evaluate their "sustainable budget".

The Diocese of West Virginia, at its recent convention, approved a $1.8 million 2009 budget, unchanged from 2008. However, there are rumors that Peterkin Camp and Conference center might go on the chopping block.

The Diocese of the Rio Grande approved a budget of $1.4 million, an increase of $40,300 over the previous year, However, contributions decreased by $135,000 from the previous year, primarily due to the departure of St. Clement's Church. The absence of a full time bishop in 2008 offset congregational defections.

This year the Diocese of Rhode Island has a projected deficit of $100,000. Robert L.G. Batchelor, treasurer for the diocese, said that in normal times the diocese derives "several hundred thousand dollars a year" - about 30 percent of its budget - from its diocesan investment trust. It also derives revenue from each parish equivalent to 17.5 percent of that parish's income from two years before.

But this year, he told a local newspaper, is "not a happy situation," with the portfolio down by at least 30 percent. He fears that some parishes among the diocese's 50-plus churches have been less conservative with their investments and have lost more.

"It's very likely we will have to pull our horns in," he said, suggesting there could be reductions in grants to college chaplains and to diocesan music programs, to name a few.

If there is one bright spot, says the Rev. Robert Brooks, rector of Providence's Grace Episcopal Church, it is that the price of oil has gone down, too. "Earlier this year I was worried about the ability of some of our smaller congregations to pay their fuel bills."

The budget of the faux Episcopal Diocese of San Joaquin under Bishop Jerry Lamb in 2009 has set aside the sum of $360,000.00 for legal fees. This equates to approximately the total amount of assessments plus about $100,000.00. Don't look for any new parish development. There isn't any money.

In the Diocese of Minnesota where 90% of the budget for the diocese comes from just 10% of the parishes, the 2009 budget is down $193,000 from $2.636 million (2008) to $2.443 million attributed to the fact that 11 churches are three months or more behind in payments to the diocese.

The Diocese of Lexington showed a drop in income of $30,000.00 in 2007. 2008 figures were not available, but it is expected to be worse with the growing discontent in the diocese under the stewardship of Bishop Stacy Sauls.

In the Diocese of Eastern Oregon, a budget of $619,.500 in 2006 had dropped to a proposed budget of $563,800 in 2009.

In the Diocese of Newark, pledged income dropped by $200,000 in 2007. No figures were given for 2008 or projected for 2009. Giving to the National Church took the biggest hit going from $673,000 to $521,000 during that period.

In the Diocese of Oregon (where Bishop Itty hurriedly retired), the budget is down $75,000 from a high of $2,193,000 to less than $2,107,000 million. It is expected to drop further in 2009.

In the Diocese of New Hampshire where the budget is $1.7 million, salaries for the bishop and staff total $700,000. The 2008 budget experienced a net loss of almost $10,000. A proposed budget for 2009 is looking for an extra $116,000 to operate the diocese, but no one seems to know where the extra money is going to come from. The diocese also cut back on its assessment to the National Church.

The Diocese of Virginia had a budget of $4.8 million in 2008, but there was no line item for lawsuits and legal costs.

In the Diocese of Los Angeles which is expecting a slight increase of its budget from $6.493 million to $6.877 million the bishops salaries are pegged at $700,000 but no line item for lawsuits.

In the Diocese of El Camino Real, a budget in 2008 brought in $1.385 million, but the requested budget for 2009 is $1.514 million. To date, the budget shows a shortfall of $168,000.

In the Diocese of New York, delegates to their recent convention approved a budget of $13.3 million, an increase of more than $880,000 over 2008 only after the Rt. Rev. Mark Sisk, Bishop of New York, spoke in favor of it. The budget was written before the Wall Street financial meltdown. Some convention delegates wanted to go through the budget line-by-line, but Sisk urged against a floor fight. He promised that the trustees would carefully monitor expenses in light of the new financial situation facing most parishes. Bishop Sisk also promised that the diocese would not take excessively punitive measures against congregations which are unable to meet their assessment due to financial hardship.

In the Diocese of Central New York, the financial hemorrhaging has been significant. Bishop Gladstone "Skip" Adams has seen his diocesan income go from over $2.4 million (2007) to barely $1.841 million in 2009. In a note to the diocese , he blames a lack of population growth, a global financial crisis and changing employment opportunities, "impacting the financial lives of our congregations." He says diocesan revenue over previous years has resulted in reduced assessment and lower pledge and investment income. Diocesan layoffs included a Property and Benefits Administrator, Canon on for Youth and Family Ministries and the Director of Diocesan Formation.

A spokesman in the Diocese of Central Florida told VOL that the Diocese is anticipating a "flat" budget for 2009 -- no anticipated changes in income or expenses over 2008. This diocese has seen a number of large parishes leave TEC over the authority of Scripture and pansexuality.

The Diocese of Montana finances continue to decline as a result of the stock market's poor performance, with a current loss in investments at approximately $700,000.00. As a result, the Finance Department investigated the possibility of the Diocese obtaining a bank loan or line of credit to pay bills instead of continuing to draw down Diocesan investments and savings. The Finance Department said it was not comfortable making such a decision, and deferred the matter to Diocesan Council.

The Diocese of South Dakota projects a deficit budget in 2009. A block grant from the General Convention of the Episcopal Church will be reduced from $567,648 (2008) to $539,266 (2009). Meanwhile, the Diocese will ask its congregations to increase giving from $307,072 this year to $325,717 in '09. Endowment money placed in the operating budget will go from $308,675 up to $316,648. Total projected expenses are $1,653,913. Total projected income is $1,380,181 - revealing a budget deficit of nearly $240,000. On Nov. 30, the Rt. Rev. Creighton L. Robertson, announced he will close nine parishes on the Pine Ridge Reservation, causing anger and frustration among some Native Americans who argue that the National Church is spending millions on lawsuits while neglecting poor parishes. The churches in question will be closed and the property disposed of according to Diocesan Policy, said a Diocesan spokesman. Poor attendance has been blamed for the closures.

The Diocese of North Dakota is in a financial free fall. At its meeting in February, the Executive Council approved a revised 2008 Episcopal Church budget that included reductions to several programs, including a five-percent cut in block grant programs to the dioceses of South Dakota, the dioceses of Alaska, North Dakota, the Navajoland Area Mission and the Indigenous Theological Training Institute.

The Diocese of California experienced a modest decline in giving. Their 2008 budget was $4.229 million, but a proposed budget for 2009 is $4.247 million, a drop of $18,000.

Some dioceses like Texas, Massachusetts and Connecticut are holding up with large parishes giving millions to the diocese, but they are the exception rather than the rule. The Diocese of Ct. shows revenue of $5,630,963 over expenses of $5,727,594 a shortfall of $96,000 in 2009, but this will not make much of a dent in their day-to-day operations. In the Diocese of Texas there are reports of discontent among parishioners at St. John the Divine in Houston with many wanting the parish to pull out of The Episcopal Church over its departure from the faith. If this happens, it will be a loss running into the millions for the diocese.

Proposed vs Actual Budgets

It should be noted that a Proposed Budget is not an Actual Budget. Whatever a diocese proposes in December of 2008 or earlier in the year does not necessarily mean it will play out like that throughout the year. As more and more Episcopalians leave the Episcopal Church (now conservatively estimated at 1,000 a week, though that figure dramatically rose with 17,000 Episcopalians leaving TEC last week in the Diocese of Ft. Worth), diocesan budgets will decline. How dramatically, one cannot say. Some dioceses will re-assess the damage mid-year 2009.

Furthermore, endowments, many of which have declined because of Wall Street collapse, are being tapped to keep dioceses afloat.

A large number of Episcopal cathedrals across the country are in trouble because old time Episcopalians are dying off, endowment funds are drying up and no new generations of Episcopalians are following because they are not hearing anything that distinguishes the message of liberal deans from the local newspaper. Ultimately, pansexuality will not sell. Only time will tell how these cathedrals will weather the recession.

Also, consider the aging population of many of the churches, many of whom are on a fixed incomes and who have been hit hard by recent stock market declines. Up until now, a smaller number of attendees have been paying more each month keeping the financial figures fairly healthy, but predictions are that they will start to turn down in the next 2-3 years. There will have to be mass church and diocesan mergers in order to balance the books.

A source in the Church Pension Fund told VOL that total investments are down about $2 billion, but are still well in excess of liabilities for pensions and health care. "Our investments are extremely well managed - of course, fixed income securities don't fall as much in recessions, but do much worse over time - our approach is a very good one," VOL was told.

OH CANADA!

In Canada things are considerably worse financially. The Anglican Journal revealed that, faced with declining revenue and recurring budget deficits in recent years, the General Synod of the Anglican Church of Canada recently announced the termination of seven positions at its national office in Toronto. The terminations are part of a plan to cut the 2009 budget by CAN$1.3 million (US$1.06 million) and reduce the deficit to CAN$800,000 (US$652.586).

"I want to emphasize that all these decisions were due to structural changes we are forced to make as a result of financial constraints we are facing. None were due to performance issues," said an internal memo sent to staff by Archdeacon Michael Pollesel, the national church's general secretary. "Each of these seven individuals contributed to the ongoing life of church house and we thank them for their time with us."

Perhaps Episcopal Church officials will reconsider their "mission" of pursuing Millennium Development Goals and suing churches. Throwing former members out on the street with nothing, is not really what Jesus would do, and it's time to re-evaluate their approach.

At a deeper level, the decline indicates that theological liberalism is a cancer that is eating away at the Episcopal body politic and that no amount of money will ultimately keep it together. The Episcopal Church's "respectable unbelief" - Jesus is "a way" not "the way" ...truth and the life, touted by the Presiding Bishop will only lead more people to leave. After all, if you don't know what you really stand for, why should anyone follow what you fall for?

END