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Episcopal Dioceses and Parishes Face Worst Financial Crisis since Depression- II

Episcopal Dioceses and Parishes Face Worst Financial Crisis since Depression - Part II
"I need to ask you for money to keep the church open," says one Rector

News Analysis

By David W. Virtue

Dioceses and parishes with a decidedly liberal bent are facing huge budget deficits and shortfalls. Many are cutting back services and staff as rectors and vestries face declining and aging congregations, an economy in free fall, and emptying endowments. Some parishes are even admitting that the crisis might actually be about what the church is teaching or failing to teach.

The tragedy is that the accounts of failing parishes are just the tip of the iceberg. Reading vestry minutes from dozens of parishes, it becomes clear that many 2009 parish budgets, with large endowments, were decided before the really large market declines. No attempt has been made to adjust them to reflect the fact that their endowments are 30-40% down on the year.

What this means is that these cardinal parishes are continuing to spend in 2009 as though the decline had not happened. This will translate into an even bigger bust in their 2010/2011 budgets.

If the markets continue to stay down for the next 2-3 years, we will be seeing hundreds of churches closing. The next 5 years will see the remainder of their endowments spent and churches no longer being able afford to pay their staff.

The years 2003 to 2008 marked the season for hundreds of orthodox Episcopal parishes to choose to leave TEC. The years 2009 to 2013 will be the season for churches and dioceses to close, as they are no longer financially viable.

Future historians will point to 2003 (Gene Robinson's consecration) as the turning point when the serious declines really began. History will not be kind to the current leadership of the church. VOL believes this period in the history of the Episcopal Church will be studied by students, from generations to come, as lessons on how not to run a church.

Hopefully, 2014 to 2019 will mark a turning point as a season of restoration and return to traditional, historic Christianity for those parishes that have survived the current period of divine judgment.

The following is a sampling from across the country.

169 people who pledged $50,000 last year have failed to return their pledges. As a result, Christ Church Cathedral, in the heart of Houston, has announced they will be cutting their support for the Diocese unless these folk have a change of heart.

On the progress of their Every Member Canvass, Dean Joe Reynolds wrote, "2008 has been a tough year financially for a variety of reasons. As of this writing we have received 442 pledges of financial support in 2009 totaling about $1,920,000. There are 169 pledges for 2008 that have not yet been renewed for 2009 representing about $500,000 in support for the ministry of the Cathedral. The proposed budget for 2009 has been reduced to 'bare bones' with a virtual freeze in compensation and leaving some staff vacancies unfilled. Support for the ministry of the Diocese of Texas has been reduced along with most program budgets."

From the flagship socialite St. Thomas Fifth Avenue Church in New York City, there will be no salary increases for the staff of the Church and Choir School in 2009. Fr. Andrew Meade wrote, "As we are all acutely aware, the world's economies are in the midst of a recession and financial crisis that is expected to last well into 2009. The Every Member Canvass is about 16% lower than it was this time last year. The church's endowment, which underwrites the vast majority of our operating budget, has declined by over 30%." Meade put the finishing touch on his speech by saying,"We must bring Saint Thomas through this financial crisis 'whole'. To this end, we are making significant budget reductions in 2009."

The church will no longer advertise in the Gray Lady ("New York Times") or on WQXR, a savings of over $100,000. The church will cut its flower budget by half. They will also seek ways to reduce the cost of the Choir. For Easter Day 2009, the church lacks sufficient funds for brass and instrumental music. The Leslie Lang Memorial Fund offsets some of what the church needs, but it is still $6,000 short. Even the Rector's Chronicle is being mailed to only a list of recorded contributors.

From the Episcopal Church of the Ascension in Buffalo in the Diocese of Western New York comes word from the rector, The Rev. Armand John Kreft, "Most of us are scared at this point. These are very hard economic times. Unemployment is beyond comprehension, our pensions are shaky, food costs are high. I need to ask you for money to keep the church open. Unlike other denominations, we do not get financial aid from the diocese or national church. Every parish in the Episcopal Church must be self-sustaining. And we have a modest budget for 2009 of $172,000. We were left a small legacy by Margaret Bittner. The vestry voted to shoot the wad by calling me as their full time rector. At present we have received only 14 pledges. Last year we had 30 pledges. Some we can count on coming in later, others we just don't know. "

A flood insurance settlement gave the church $180,000 to replace an organ. It will now go to keep the parish afloat. Attendance has declined from 53 to 22 with a budget of $27,000. The church needs $30,000 with an annual budget of $172,000. Pledge units are down for next year. The endowment will be gone in less than 3 years. The chances of this parish surviving are slim.

From the Episcopal Diocese of San Diego, we learn that St Margaret's in Palm Desert is going through a tough time. Its priest, The Rev. Dr. Roger Douglas (interim), says the church has such a bad leaky roof that priests, when moving towards the altar area of the sanctuary, were forced to get a rag and a pail in order to contain all the water let into the Church during a brief shower last summer.

The rector admits that the church has more outgo than income. Given the money pledged for 2009, there is no money to fix the roof. The church is some $2,000,000 in debt. So the church has a leaky roof and needs to come up with a balanced budget. To balance the budget, 5 staff positions were eliminated.

From St. Mark's Episcopal Church in Evanston, IL, in the Diocese of Chicago, comes word that their endowment has fallen below its principal so they cannot draw from it. They will have to find somewhere else to fund their deficit. The parish has a history of deficit budgets so the Vestry and Interim Priest have been working to create a balanced budget where expenses are in line with anticipated income.

Some vacant staff positions went unfilled. At the Annual Meeting in January, a 2008 Budget called for $40,000 in income from the Endowment Fund (AKA the 1930 Trust Fund). However, in the wake of the recent market crash and subsequent volatility, the fund fell below the level of inviolable principal, which means the church is not able to receive money from the Trust and will therefore not receive $40,000 in income, as originally planned.

The Church of the Holy Comforter in Drexel Hill, PA, saw its endowment decline by 36%. To balance the budget next year, they have reduced their pledge to the diocese. This is the diocese of the now deposed Bishop of Pennsylvania Charles E. Bennison.

The Rev. Jonathan A. Mitchican, Rector, said staff members will receive small raises in 2009, but not the rector. The Vestry also raised rent to the day care to equal the increased cost of utilities. For 2009, only forty-two percent or $138,950 has been pledged thus far. The church needs $327,000 total.

From All Saints in Hilton Head, SC, comes this word from the senior warden. "The downturn in the economy has made it necessary for many families to adjust how they spend their money. All Saints will have to make similar changes due to a shortfall in 2008 pledge receipts and the expectation that 2009 pledges may fall $60,000 below our budgeted expenses. We will only spend money that has been pledged or received. The Vestry prioritized the 2009 budget items to help in making adjustments if pledges fell short of estimated. Not all pledges have been received and the 2009 budget is not yet finalized, we anticipate the need to economize most everywhere and church programs will need to be more modest in 2009. We will have used up our cash cushions to make up for the shortfall in 2008 pledge receipts and will need to carefully operate within the budget in 2009."

The Diocese of Northern Indiana and Gethsemane Episcopal Church in Marion, Indiana, states that attendance has dropped from 100 to 75 people and that giving has gone from $150,000 in 2002 to $105,000 in 2007. A chart shows steady losses in attendance from 2002 to 2007. In 2008, attendance dropped to half. However, an unexpected legacy of $76,000 means they can balance their budget of $185,000 for another year. But the church still needs pledges. After 2009, it will be anybody's guess how things will shape up.

From St. Luke's in the Diocese of Newark, which has programs in 2009 totaling nearly $570,000, the anticipated income will be far less than that. The church will run a deficit of nearly $70,000 in 2009. That is down from a budgeted deficit in 2008 of $100,000. "We need to increase our giving in 2008 to offset the $484,000 expense of operations. Assuming a 10% increase in existing pledges, St. Luke's will have a nearly $100,000 deficit in 2008. The Vestry is working on a plan to eliminate the deficit by 2012," said The Rev. John E. Mennell.

News came in from one of the biggest churches in TEC in terms of attendance: Major cutbacks were announced at St. Columba's, which like the Washington National Cathedral and so many other churches, is deep in recession. At a recent parish forum, Andrew Hullinger presented the details of their financial struggles. The budget in 2009 will be trimmed. The church won't be filling an open clergy position. The position of the music program librarian who is departing will go unfilled. A part-time musician position will be eliminated. The Rev. George Timberlake's position will be eliminated as well. Another post will also remain unfilled. More work will be done by volunteers. "It's not too late to pitch in and pledge," cried the rector From Trinity Episcopal in Danville, KY, comes word from the rector that pledging there is barely sustaining the church. If they do not receive more than 62 pledges, the church will fall into Mission status.

From the Diocese of Arkansas and Christ Church, Little Rock, AK, comes word that the church finances are in shambles. A review of Christ Church's finances show that the Vestal Account has suffered significant loss in value because of the downturn in the stock market. For the foreseeable future, the church will borrow from its bank accounts instead of its Endowment funds in order to avoid a loss when cashing in stock from those funds. Since the Vestal Endowment has lost value and has been moved from the Little Rock Regions Bank to an out of state location, there was a discussion as to whether or not the vestry should move this account to Stephens. The Endowment Committee will consult on The Vestal Account and make recommendations. A 2009 budget conversation allows for a full time curate, but this would require additional salary and benefits of $34,000. If this expense is incurred, together with others projected for 2009, it would give the church a 2009 deficit of $154,000.


Episcopal Dioceses & Parishes Face Worst Financial Crisis sinceDepression : An On-going Series from VirtueOnline.org

Parts 1, 3 and 4 can be viewed here:

Part 1 - http://www.virtueonline.org/portal/modules/news/article.php?storyid=9638

Part 3 - http://www.virtueonline.org/portal/modules/news/article.php?storyid=9983

Part 4 - http://www.virtueonline.org/portal/modules/news/article.php?storyid=10242

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