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

Episcopal Dioceses and Parishes Face Worst Financial Crisis since Depression - Part III

News Analysis

By David W. Virtue

Investments and collection plates are getting lighter at Episcopal Churches across the U.S. There is little evidence that the trend of declining attendance and shrinking revenues will reverse in these tough economic times.

The effects of the economic downturn are reaching into the collection plates and endowment funds of America's Episcopal churches at alarming levels. Bishops and parish priests are watching with horror as donations dwindle and investments decline. Unemployment is beginning to hit the collection plate hard. Usually when times are tough, more people go to church. That does not seem to be happening in the Episcopal Church. Churches that depend on the collection plate for the majority of their income are also worried about the effect of declining employment rates on their weekly plates.

The bishop of the Diocese of East Carolina, Clifton Daniel III, said in his annual convention address that he is looking to close some parishes. "As one effect of the economic recession, giving from parish to diocese has suffered somewhat, and our Executive Council and Finance Committee have made the difficult adjustments to our budget. Further adjustments and changes in staffing configuration may be needed as well." The bishop said he had accepted the recommendation of the Finance Committee to delay filling the position of Canon Missioner for at least six months.

The bishop then said that a handful of parishes appear to have reached or are nearing the end of their effective congregational life and mission. He cited All Saints, Fairfield, and St. Barnabas, Snow Hill, for closing, as neither has had an active congregation for many years. Other churches will undoubtedly fold in the coming months and years. The bishop cited stewardship of resources, as well as matters of insurance and liability. The bishop said he wanted each congregation to assess its strength, vitality and general health, clearly code that if you can't pay your assessment, watch for the axe to fall.

Across the nation the news is the same.

The Episcopal Diocese of Chicago reported that the members of St. Hilary's Episcopal Church in Prospect Heights chose to end their ministry in the face of financial constraints and difficulty in increasing membership enough to support ordained leadership and meet the expense of program and building. With the assistance of The Rev. Gina Volpe, the members are in discernment on their options for continuing their witness collectively or individually with neighboring Episcopal congregations. Bishop Jeffrey Lee, Elgin Dean, and The Very Rev. Robert Dekker, met with the members to discuss their decision and their opportunities to share in the life and ministry of the deanery and larger diocesan community. Their final service to celebrate 45 years as a diocesan congregation was held on Sunday, February 15.

The Diocese of Newark, the former ecclesiastical home of Bishop Jack Spong, reported that 60% of its congregations were reducing their pledge for 2009. Bishop Mark Beckwith said that while there were few changes in percentages pledged for 2009, the pledge dollars were significant. Approximately $140,000 less in dollars was pledged this year, he said. "Nearly 60% of the pledges fell between the 5% to 10% range." Many have not yet paid their 2008 pledges. Richard Graham, diocesan treasurer, said the year was ending with a $590,000 deficit. "The correlation between a shortfall in income and the deficit was clear. Income was $550,000 below projections. Also, some of this deficit will be covered by uncollected 2008 income received in 2009. Pledge income received for the month was $32,000 (15%) over budget, but did not clear the other past due receivables. Year to date pledge income was currently over $380,000 (17%) below budget. In addition approximately $100, 000 remained uncollected from 2007 and will likely be uncollectible over the near term, if at all."

At its annual convention, the bishop of the Diocese of Tennessee, The Rt. Rev. John C. Bauerschmidt told his people that the diocese is the co-borrower or guarantor for a number of significant bank loans made to parishes, intended to help them grow and expand the ministry of the Diocese as a whole. "This is appropriate work for the Diocese, but it has had some consequences. Our indebtedness now is significant and serious in relation to our ability through unrestricted assets to meet those commitments. The same economic challenges that have had an impact on our annual budget have also had an impact here. As a Diocese, we are going to have to dig deep within the resources that our common life affords in order to continue to move forward. There are no quick fixes here, and we will need to be in this for the long haul."

From the parish of St. Anne's in the Diocese of Fond Du Lac, Wisconsin, comes this word. "This year, we are facing a large deficit and our own financial crisis. We have a budgeted sixty thousand dollar deficit and we currently do not know where the funds will come from to cover it. There are two primary reasons for the large deficit presented in the budget. First, our expected revenue is down by $33,000 from the 2008 budget, and the second, there is no provision for a draw from the endowment. The recent market adjustment has reduced the value of the endowment to a point where we are not able to draw any funds in 2009."

From Trinity Cathedral, Cleveland, the home of The Very Rev. Tracey Lind, a lesbian priest comes this, "In response to the economy, the Cathedral has trimmed our operating budget by almost five percent ($100,000) and reduced our endowment draw by almost one percent ($170,000). Without a generous 3 1⁄2% increase in congregational pledge income, we would have had to cut even more. Like so many, we are doing more with less in 2009."

The Rev. Daniel C. Gunn, rector of St. Stephen's, the pro-cathedral in Wilkes Barre in the Diocese of Bethlehem, says his budget for 2009 will be tight. "Expenses are beyond where we would like it to be in spite of our efforts to reduce them by 20% over the past three years. We still depend too heavily on the endowment, and not enough on contributions. Our leadership has worked diligently to reduce expenses, but the reality is that we are down to bare minimum. We have budgeted for nothing but staff for the most part. Put plainly, to reduce the budget any further means that staff cuts would be necessary. Reducing our staff reduces our ability to offer the very ministries that we appreciate about St. Stephen's ministries I believe will become more important as the difficulties in our society likely worsen. We are exploring opportunities to lease part of the parish house, but that has not materialized yet. There is no substitute for simply asking you to help us more financially than you have in years past." From St. John the Evangelist in Spokane, Washington, comes word that economic conditions are having an effect on the budget of that cathedral. "In order to balance the 2009 budget, I have recommended to Chapter across the board cuts in both staff pay and benefits - starting with the dean - and we are taking a number of other measures to make sure that every single dollar goes as far as it can," proclaimed The Rt. Rev. James E. Waggoner, Jr., Bishop of the Diocese of Spokane.

In the tony suburb of Brookline, Mass., St. Paul's Episcopal Church is feeling the pain. The Vestry wrote to say that due to the impact the financial downturn is having on the parish, plans for renovating the parish house will be scaled back. They also noted that they would be looking for ways to cut operating expenses. The position of Parish Administrator has been eliminated.

The rector of St. Paul's Episcopal Church in Clarence, New York, in the Episcopal Diocese of Western New York, came right out and said, "What is the future of St. Paul's? I see two choices at this crossroads. We can stay on our current path and let the parish slowly slide down a slippery slope. Then, like so many other Episcopal parishes in Western New York, we will be a church of chronic scarcity, hanging on with a part-time priest or perhaps a supply priest for a service on Sunday, with a small committed core of workers Although a large majority of people increased their pledge this year, the number of pledge units is down. A deficit budget was approved last year, which is something we do not want to do this year. Therefore, at present income levels, it will likely be necessary to offer a salary compensation package for the new rector that may be considered by the Diocese to place St. Paul's into Group Two."

Fr. Paul Bresnahan of St. Peter's in Salem, Mass., wrote that his congregation had an endowment worth around half a million dollars at the beginning of the year. "We had to take around $50,000 to pay for mandated building improvements according to city codes, and then we had a significant shortfall in weekly income. In addition, stock market reversals have taken yet another toll on the value of our investment...we don't even know how much yet...but I wouldn't be surprised if we've lost yet another $50,000 in market value from our endowment. That means our portfolio is now worth something in the $300,000 range."

The priest noted that week after week, he would deposit anywhere from $800--$1300...and week after week, the church would be spending $1600-$1800. "You can see that we are hemorrhaging rather significantly from the life blood of our financial well being. What is going on is that we are depleting our resources at a rate that puts the continuing existence of St. Peter's at risk. It is time to say so right out loud. At the rate we are going, we will not be able to continue at our present rate...we will have to cut the priest out of the budget within a year or two...and then perhaps at best have a supply priest. That is not what I would like to see happen."

Christ Church in New Brunswick, NJ, reported that they will not have an endowment left very soon. Said The Rev. Dr. Deborah Meister, "What is not healthy is the state of the parish finances. Income to date is $258,000 which is roughly what was budgeted. If trends continue, we will finish with a budget deficit of $279,000. This amount represents a draw against the Investment Account of about 15% of the last 3 years rolling average of the Investment Account (before the recent economic downturn). A 2009 budget assumes a pledge income of $250,000. It also includes a salary adjustment for all staff, but without increases for paid choristers. Even so the deficit next year will be $114000, less than this year."

The rector of Grace Episcopal Church in Norwood, Mass., told parishioners at their recent Annual Meeting that the church's financial challenges have not gone away. He bluntly told the congregation that the vestry had two major ideas: growing the parish by inviting people "not like us" to Grace Church, or joining forces with another parish in a cluster or shared ministry. The projected deficit budget of $50,000 for 2009, the largest ever, cannot be met. Now, the church must face going out of business or "juncturing" with another parish. He said there are two other Episcopal churches within three miles of Grace, and several others in the area that are experiencing similar struggles. The full time clergyperson would have to go and a part-time rotating priest with other parishes is the only way forward.

The Rev. De Freeman, Jr., vicar of Epiphany Church in Crestview, Florida, told his congregation that the budget was $90,000 when he first came and is now at $120,000. As it now stands, the current budget will lead to a deficit of $50,000 by the end of the fiscal year. If this happens, the Bishop (Philip Duncan II) will re-assign the vicar to another parish. Freeman gave the parish two plans of action. The first he called conservative, "We cut back on every possible part of the budget and hold back on our resources." This was declared defeatism and a recipe for disaster. The second he called aggressive, "We challenge the church and community and raise the money necessary and control cost and development."

St. Barnabas Episcopal Church in Florissant in the Diocese of Missouri faces a crisis. The church is $21,000 short in pledges and cannot find a new rector. The Vestry determined that it could not afford an interim priest and continued to use supply priests. The Church Deployment Officer, The Rev. Canon Dan Smith said that normally he would not recommend this particular plan of action, however, the church has been able to maintain a healthy Sunday attendance number and pledge receipts for 2008 are about 95% of the budgeted amount, which is better than most churches in the Diocese. Smith feels like the church is moving in a positive direction.

St. Luke's Episcopal Church in Auburn, California, acknowledged that while they had a balanced budget for 2009, they did so by eliminating the paid secretarial position and reducing the rector's salary and time by 10% with no COLA for any staff members. The budget will be reviewed at the end of each quarter in 2009.

St. Paul's in Duluth, Minnesota, faces serious retrenchment. Recently, the parish had 16 paid staff positions, not including nursery attendants. Today it has four full time equivalents. The Vestry approved staff changes that included eliminating the Assistant Priest as a paid position with The Rev. Margaret Thomas agreeing to serve as a regular supply priest, for emergencies and funerals when the rector is away. The Sunday Sexton position was also eliminated. The Secretary position was reduced to 20 hours per week. "We need to think and do things differently. I have no doubt God is calling us to a new thing. I do not know what it is," said The Rev. Bill Van Oss. This parish recently had John Shelby Spong speak to it.

Parishioners at St. Francis Episcopal Church in Indiana Springs, Alabama, got the bad news from The Rev. Neil Kaminski. He told them the Parish Administrator, who had been at the church for 11 years, had been let go after the position was eliminated. The decision to eliminate the position was driven by budget considerations, he said. The church has been drawing upon reserve funds and the hope was that the parish would grow enough in pledges in 2008 to absorb those added expenses in 2009. It never happened. "The last half of 2008 has also had an unfortunate impact on giving." He said the parish would look to hiring temporary help to keep the doors open during the week. The position of Director of Religious Education will continue through the end of May. When the school year ends, it will be revisited.

At St. James Episcopal Church in Bowie, MD, The Rev. Anne-Marie Jeffery told her dying congregation that the 2009 budget meant only one thing - explore merging with St. George's (a nearby parish), working at the same time on marketing and growth. "We face this challenge - the challenge of whether we grow, we merge with another congregation or we close," she told the parish. "What is God wanting me to do? What is God wanting us to do as a congregation? I don't know. I don't know the future of St. James church," she cried. "We may give away our spirit by closing. Maybe the energy of our people is needed desperately by God elsewhere."

St. David's in Austin, Texas, a wealthy congregation with a budgeted revenue, learned that contributions in 2009 were $1,562,000 vs. 2008 when budgeted revenue contributions were $1,760,884, a drop of 12.5%. Said the rector, David A. Boyd, "At this point, most ministry needs remain unfunded, and the lay staff has been forced to take across-the-board pay cuts. While we have been able to preserve all but one permanent position, the staff is severely limited in many areas that have yet to be funded. Your prayers are needed as we try to find solutions to the effects of this world-wide economic situation, and its effects on our programs."

St. Stephen's in Ridgefield, CT, issued their annual report with the treasurer announcing that the parish income for 2008 fell short of budget by $33,600, due primarily to a shortfall in total amounts pledged as well as the actual collection of amounts pledged. Total income for 2008 reflected a decline of about 4.4% over 2007. The drop in Outreach expense was due almost entirely to the reduction in the commitment (pledge) made to the Diocese ($90,000 was pledged, $45,000 was paid). He said the operating deficit for 2008 was $223,228.00. The collected pledge income was $485,000 for the year, compared with $551,170 for 2008, an overall drop of some 12%. Staff reductions are pending. He said the 2009 deficit will fully deplete the Operating Reserve by mid-year. "Without a major increase in pledge income, the parish will have to consider making additional, substantial cost reductions. Without a significant combination of increased pledge income and further expense reduction, the unrestricted endowment will ultimately be fully depleted, and a more drastic reconfiguration of St. Stephen's will be required."

St. Mary's Episcopal Church in Newton, Mass., is an example of a parish relying on endowments while ignoring economic reality. Pledge budget for 2009 declined from $261,000 in 2008 to $245,000 in 2009. The church ate into its endowment fund contribution and increased its pull down from $69,588 in 2008 to 73,176 in 2009. The endowment fund was worth $2.1million in Dec. 2007. By Dec. 2008, it was worth only $1.5million. The endowment balance dropped by $600,000 in a year. Despite that, they are increasing the amount they draw from it next year. The church said it could therefore maintain all its programs.

St. Nicholas's in the Diocese of Washington heard some good news and some sad news from its vestry. The good news is that the parish experienced exceptionally strong membership and financial growth in the latter half of 2008 - growth that, if present trends continue, would take them into the black sometime in the latter half of 2009. The bad news is that, as strong as the financial growth rate was, entering black ink in the latter half of 2009 would not be soon enough to maintain staff at its current level. The Vestry decided to fire the part-time assistant rector. The Vestry blamed dramatically increased fixed costs including carrying costs of $2,000 on a construction loan. The vestry noted that its operating reserves were also dwindling.

The Rt. Rev. Kenneth L. Price Jr., bishop suffragan of Southern Ohio, captured the situation well when he said, "There is not a week goes by that I do not hear how one or another of our congregations is being challenged by its economic situation. Giving is scaled back, income from endowments is down, resulting in some cases in reductions in staff, programs and outreach. I think there is a parallel between the situation in our nation and in our church. Yes, we are in hard times. Yes, this is a long-term problem without a quick fix. Yes, such a situation evokes a measure of fear. Yes, we all feel the pinch. We also must learn how to do more with less and benefit from sharing the resources we have."

Price said that in Dayton, the clergy are in conversation about pooling the talents of their ordained leadership as well as exploring how they might purchase supplies in bulk to benefit from an economy of scale. The clergy of the Hocking Valley deanery also are viewing their ministry differently as they seek to combine their talents so the congregations can be better served. Such has been the case in the East Central Ohio Area Ministry and the Northern Miami Valley Episcopal Cluster for several years. Now Good Shepherd in Clermont County is rediscovering how, by better utilizing the talents of all their members, they can be less dependent on paid, ordained leadership and share the ministry among all the baptized.

"As essential as clergy are to an apostolic and sacramental church, there also are high costs associated when every congregation has its own clergyperson. Although finances may be the initial reason congregations might seek to explore new ways of cooperation, that search can open the door to new and exciting ways of being the church in the 21st century.

"Our diocese has likewise eliminated one of its canons and duties are being redistributed. Diocesan Council is currently preparing the 2010 budget with the reality that there may be less money to work with. And yet at the same time we are excited about some new areas of ministry that will better enable us to be the church God is calling us to be in the 21st century and new ways of doing that ministry that will broaden the participation of us all."

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

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

Part 2 - http://www.virtueonline.org/portal/modules/news/article.php?storyid=9804

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

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