Treasurer’s Report

Summary

The year ending June 30, 2004 appears as if it will end on budget or possibly with a small surplus.  The budget was a tight one, with expense cuts of approximately 20% in much of our budget.  The staff and committees have done a good job of controlling spending to stay within this reduced budget.  The proposed budget for next year is 7% higher, with most of the increase coming from three areas: cost of living adjustments for our staff, increases in insurance and utilities, and an increase in our outreach giving to reach a targeted 20% of operating expenses.  Our stewardship campaign, though still short of its goal, appears on track to raise the funds necessary to cover these increases. 

2002/03

The annual report is written before the fiscal year closes.  So, I have yet to report on the final numbers for last year, ending June 30, 2003.  For that year, we ended with a surplus of $33,237.42.  However, included in our income that year was a planned subsidy from our Operating Reserves of $26,502, so our true surplus was $6,735.42.  The Parish Committee voted to apply this surplus to increasing our Operating Reserves, a fund that the treasurer maintains as a cushion against unexpected financial problems. 

2003/04 Income

The year looked challenging at the outset, because despite a strong effort from the Stewardship Committee (the “Ferns” – remember them?), we fell short of our goal of $360,000.  Many parishioners really stretched to allow us to raise the amount that we ultimately did raise.  That amount was $335,000, up slightly from the previous year but down from $338,000 in 2001-02.

As I write this report in May, we have collected 79% of the amount pledged.  That leaves about $70,000 that we still hope to receive.  This is typical for this time of year, so I think we’ll collect what we had budgeted.  Reminder letters will go out in early June.

The Investment Committee will discuss its activities and results in its report.  However, since it is the second largest source of our funding, I should report that the earnings from our endowment and trusts have met the budgeted amount.  Thank you to the Investment Committee, including Jack Pugh, Bob Lemire, John Keller, David Ogden, and Kenton Ide.  John Keller’s investment firm, Long Wharf Investors, contributes its services to the church.

Rental and cost-sharing income from the Lincoln Nursery School and other outside parties will somewhat exceed the budgeted amount.  Thanks to Gert McDermott, who coordinates and keeps track of the activities of many of these outside groups.  We also had a successful Touch of Christmas fund-raiser.  Despite a huge snowstorm on that day, we raised almost $9,000.  Thank you to Sarah Andrysiak (chair) and the over 100 parishioners who contributed in some way to that effort. 

Expenses for the Year Ending June 30, 2004

Our expenses for the year were budgeted to rise 1% over the previous year’s amount.  However, since some of our larger expense items, such as compensation, insurance, and utilities increased much more than 1%, we had to make large cuts in other areas in order to limit the overall increase to 1%.  As examples, please consider the following budgets and the amounts that they were cut: Flower Committee (20%), Hospitality (20%), Religious Education (14%), and Music (29%).  We also were forced to cut our Social Concerns/Faith in Action budget by 19% and our Denominational Dues by 22%.  Given these large cuts, it was reasonable to expect that the committees and staff might run into budget trouble during the year.  But, that hasn’t been the case.  Through creativity and resourcefulness, as well as some good old-fashioned belt-tightening, we seem to be getting through it well enough.  Since the year isn’t done and many expenses come in at the end of the year, I can’t say for sure, but at this point it appears that we will finish the year having spent less than our budget.  I should note that several of the committee chairs and staff have said to me, “Please, no further cuts for next year.”

The biggest area of trouble has been in insurance and utilities.  Last year we exceeded our budget for gas.  So, we increased the budget for this year by about 40%.  Unfortunately, we will exceed even this much higher budget.  Our cost for gas has doubled, more or less, over the last four years – we’ve had cold winters and prices for energy have been up.  We will also exceed our budget for property and liability insurance, which was increased by 15% over the previous year.  But, I expect that these overruns will be offset by some of the savings in other areas mentioned above.

Accomplishments during the Last Year

There are two areas of accomplishment I’d like to highlight.  The first is that we have reached a new agreement with the Lincoln Nursery School.  The LNS has for many years used the classroom space in the Parish House during the week.  We have had an agreement in place by which the LNS reimbursed us for a share of the costs of operating our facilities.  This has helped us offset some of our costs, and has provided space to the LNS at a rate somewhat below market.  There is a lot of overlap between the families of the First Parish and the families of the LNS, and the relationship has been a good one.  However, there were a few problems that we needed to discuss, and both parties decided that this year would be a good year to do it.  I am pleased to report that we reached a new seven-year agreement that both parties feel good about.  As a part of the agreement, we will expand our cost-sharing arrangement such that LNS will contribute to our capital costs – the costs of maintaining our buildings long-term.  Thanks to the following officers of LNS for their efforts: Pam Dickinson (Treasurer), Nancy Fincke (Director), and Nancy Wilcox (President).  Thanks also to Jeff Eaton, Barbara Sampson, Buzz Constable, and Gert McDermott for their contributions to this effort.

The second accomplishment to highlight is the start of a long-term plan for addressing our capital needs.  This involves determining how much, on an annual basis, we should be setting aside into a capital fund such that we’ll have the funds to pay for capital repairs when they are required.  In past years, we have used our Capital Fund to pay for these items.  However, we have depleted the Capital Fund, raised through a capital drive more than ten years ago.  Our Master Plan Committee, chaired by Mary Helen Lorenz, has identified dozens of maintenance projects to keep our historic buildings in good condition.  We don’t currently have the money to pay for all these projects (some of them can be paid for with our various trust funds).  We also know that large expenses can come up unexpectedly.  For instance, during the past year we paid almost $45,000 to replace the septic system for the Parish House.  We need to methodically survey all of our buildings to determine the age and cost of the various elements of the building, so we can plan for the future.  This is a big job, but we got a good start on it by completing an assessment of the Parish House office/school wing and our parking lot.  Joe Hallstein contributed his time to helping me with this effort.  What we know is that in current dollars, we should be contributing about $12,000 per year towards a fund for these two parts of our property.  We need to complete similar efforts related to the Church, Parish House, and Parsonage.  Given the size and age of these buildings, it is easy to imagine that we should be putting aside $40,000 - $50,000 per year overall.  I hope that we can complete this effort over the coming year.  This year, our first year of “saving” for the capital fund, we will put aside $7,300.  Clearly, we have a ways to go.

Looking Forward to 2004/05

At meetings in April and May, the Parish Committee set its priorities for the budget.  Those were, in order, to (1) provide a budget for cost-of-living increases for our staff; (2) increase our Outreach giving such that it equals 20% of our operating budget [1] ; (3) increase our contribution to a capital reserve fund to at least $18,000 [2] ; and (4) keep spending of the various committees at their 2003/04 levels. 

In order to accomplish this, we needed an increase in stewardship pledges from $335,000 to about $353,000.  As of late May, we had raised $344,000.  Given that pledges continue to trickle in, I am optimistic that we will reach this goal, and so I have built the budget at this level of stewardship and to meet these goals.  To the extent that we raise more than the budgeted amount through stewardship, it is the Parish Committee’s intention that we provide additional compensation flexibility to the Personnel Committee first and apply any other funds to increasing our Capital Reserve Fund. 

There are a few things to mention in the budget for 2004/05.  With some improvement in the economy, our investment portfolio is generating more income.  The budget includes an increase in this income of about $6,000.  There is also an increase of about $11,000 for staff compensation, our student minister, and related taxes and benefits.  Insurance and utilities are budgeted to increase by $3,000.  Outreach has been increased by about $5,000 to get us to the 20% figure mentioned above.  And finally, there are miscellaneous increases and decreases that collectively add up to about $2,000.  All in all, the budget is up 7% this year, after increasing 1% last year.  This is a balanced budget.

All of the church’s money comes from the parishioners; we get no money from outside sources.  It’s my job to make sure we are very careful and responsible with the church’s money.  As such, there are a few things I’d like to point out about this 7% increase.  Much of the increase comes from increases in staff compensation.  Let me assure you that no one is getting wealthy working at the First Parish.  We are committed to paying market rates to our staff, and cost-of-living type adjustments are a part of this.  We have excellent employees and the Parish Committee would like to be sure that they feel good about working at the First Parish.  The second largest component of the increase is for insurance and utilities.  There is not much we can do about these costs.  The third important component is our Outreach giving.  Giving is an important part of the First Parish and has been for decades.

Some Final Thoughts

If pledges came in earlier, it would save the Stewardship Committee time and aggravation, it would save me from having to build multiple budget scenarios to reflect possible stewardship levels, and it would save the Parish Committee from having to debate my multiple budget scenarios. 

Expenses go up every year – inflation happens.  So, just “staying even” costs us more each year.  Yet, most people give the same amount every year.  We need to change the mindset, such that the “same amount” really means an increase of 2%-3%.

It’s interesting to think of our church not as a charity, but as a cooperative.

The Stewardship Committee and Rosemary Lloyd should be congratulated for this year’s very successful campaign.  We may not hit our goal, but we have already passed our previous high (previously 2001-02).  Given what I said above about expenses, this is what we need to do every year.  Thanks also to the parishioners that have made a pledge.  Every little bit counts and is appreciated.  Many parishioners really stepped it up this year, with increases of $1,000 over last year and in some cases much more than that. 

Thanks to Ginny Lemire for her help again this year as Assistant Treasurer.  Ginny helps with many of the critical, yet unsung aspects of the Treasurer’s job.  Doug Swain, our bookkeeper, has also done an excellent job this year.  Thanks also to Jeff Eaton, chair of the Parish Committee, for acting as a sounding board for me on many treasury issues.  Finally, thanks to Gert McDermott, who handles questions and other tasks related to our finances almost every day.

Respectfully submitted,

Chris Andrysiak, Treasurer