At our Annual Congregational Business Meeting this past June, two significant things were approved – we voted to change the church’s fiscal year and we passed a budget following a rather difficult budget cycle. In response to problems that surfaced during this past spring’s budget cycle, the Board’s Policy and Governance (P&G) Committee undertook a thorough evaluation of our budgeting process. In this article let’s look at what these changes are and how they affect our 2023 budget and beyond.
Fiscal Year Change
Formerly our fiscal year matched our program year (July – June) and now matches the calendar year (January- December) beginning January 1, 2023. Many of the technical changes this shift requires have already been accomplished by our able staff. With the fiscal year change, the Board of Trustees needs to present a budget covering all of 2023 before the end of 2022.
Our Budget Process
Those involved agree that the budgeting process this past spring was awkward. A look at our process, starting with the policies and bylaws that govern how our budget is built, was initiated by the P&G Committee. A P&G Task Force comprised of Grace Colton, Lori Saccardi and Mary Anderson met through the summer with the goal of forming a more inclusive and transparent budget process as described in a newly created interim charter. Five areas of concern were identified:
- Per the church bylaws, the Board of Trustees (BOT) holds the fiscal responsibility of the congregation/church. Therefore, the group that creates the budget should be a “committee” under the direction of the BOT.
An interim charter, ratifying an Interim Budget Committee, was passed by the Board to cover a shortened budget cycle (September 2022-December 2022).
- A church’s budget is a moral document and reflection of its mission, not simply a financial plan. It should be created through a collaborative process which includes mission centric as well as financially-focused constituencies and representation.
The Interim Budget Committee Charter lists a six-member BOT Committee comprised of the Minister, Director of Finance Operations, Board Treasurer, Financial Stewardship Committee Chair, a second Board Member, and member of the newly formed Committee on Ministry. This group has been meeting regularly since September and has held two Town Halls to present progress to date, answer questions, and receive your input. More Town Halls are planned.
- It is recognized that Budget Committee members may have conflicts of interest when making budgeting decisions.
The Interim Budget Committee Charter outlines how to deal with a conflict of interest, and how to address issues that are not resolved within the Budget Committee (such as a tie vote).
- Continuity of constituency representation on the Committee needs to be assured.
Budget Committee members are required to attend all meetings. If a member misses two meetings, the Board will appoint a permanent replacement from within the constituency that member represents (e.g., Board member to be replaced by Board member, SLT by SLT, etc). This will help keep communications clear and the process transparent.
- Due to the recommended changes described above, an Interim Budget Committee and Charter were created. However, they do not comply with existing East Shore policy 2.10 (no bylaws are affected by the interim changes). This policy was suspended by the BOT for this interim period as allowed in policy 7.6 when there are crucial time-sensitive circumstances.
This suspension was done as the time to complete a full 2023 budget was brief and the budget process needed the revisions noted above. Please be assured that the adopted interim charter contains most elements of policy 2.10. Most importantly, this newly created Budget Committee, its charter, and policy 2.10 will be fully evaluated early in 2023, resulting in an updated policy and charter in time for the 2024 budget cycle to take place in late 2023.
For a full look at Policy 2.10 click here. Take a look at the Interim Budget Committee Charter here.
What Happens Next?
Funding the proposed 2023 budget. As you will recall, we made pledges to cover the first half of 2023. These pledges do not cover the second half of 2023. Early in 2023, an abbreviated Mission Fund Drive will be held to provide for the second half of the year, which is how we will contribute toward the entire fiscal year 2023. (We will continue to depend on other revenue sources.) Toward the end of next year, the Mission Fund Drive will align with the new fiscal year.
Your feedback will continue to be crucial as we move forward. The Budget Committee is using an “extended replacement” strategy to fund all of 2023. The budget we approved in June of this year (covering the first half of 2023 as approved by the congregation) is foundational to the full 2023 budget. Town Halls have already been held for your comments. With your feedback, a second round of Budget Town Halls is scheduled for November 6 and 7. Please check the church calendar for details.
Look for more on goal-setting and long-term planning in the coming months. Our annual church budget must reflect the needs and long-term goals of our congregation. It is important that ALL areas of our church engage in long-term planning and goal setting. This will allow us to look 5-10 years into the future and then fund the annual “bites” that will allow us to attain those goals.
Budget constraints will continue to be a challenge. Due to our generosity, we can fund current needs without deep dives into our Endowment Fund as in the recent past (again, we will continue to rely on some endowment funding). This was due not only to increased pledges (thank you!), but also to one-time-only gifts. Our financial picture was not changed in the long term. Again, look for more on goal-setting and long-term planning.
If you have questions about anything you’ve read, please contact a member of the P&G Task Force: Grace Colton, Lori Saccardi, or Mary Anderson.
by Mary Anderson, Policy & Governance Committee