Conference Financial Status | April 2020

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(April 22, 2020 letter from John Pearce, president of the TNUMC Council on Finance & Administration)

Greetings Tennessee Conference employees, pastors and committee chairs:

This is John Pearce President of your Council on Finance and Administration (CFA), hoping you had a great Easter in this very unusual time.  Despite all the hurt and suffering, sickness, tornado damage,  loss of jobs, social distancing, quarantine, and too much computer screen time for meetings,  there is good news.   God is still in Charge and Christ has risen!!  Alleluia!!

Your CFA met (via Zoom) April 8 and evaluated the financial status of the Conference.

  • Jim Allen, our Treasurer, reported that as of Year to Date March 31, 2020, the Conference had received 97.36% of Direct Billed health and pension benefits, and 16.9% of apportionments for a total of 21.76% of our annual expected amount.  That compares to 16.31% this time last year and in fact (because of direct billing) is the highest percentage collected in the last 14 years.
  • The Conference is blessed to be in a good spot with cash on hand and adequate reserves, even after taking into consideration the decline in our investment balances during the month of March.
  • As we all know, now just a few weeks past the end of March, so much has changed or is changing.  I cited headwinds that we are facing consisting of:  Coronavirus continuing impacts, Issues related to the General United Methodist Church, upcoming recession, recent crash of the stock market, increasing unemployment, and the impact on our local churches of direct billing of benefits.
  • We expect that these headwinds will begin to challenge the financial position of many of our local churches as well as the Conference.  We understand that every dollar the Conference as well as our local churches has to spend, comes from our generous and faithful Methodist brothers and sisters contributions to the church.
  • With thanks to Jim Allen for a lot of hard work, CFA, as well as the Board of Trustees, approved the application of a loan request to the Small Business Administration under the Paycheck Protection Program (PPP) of the recently passed federal Cares Act.  This is a federal program with the policy intent to help small businesses (yes that includes the Conference and our churches) continue to pay their employees.   The Conference was successful with that application and on Tuesday the 21st, a significant SBA loan amount was deposited into our account.  We expect to use this loan for payroll and benefits over the next eight weeks and anticipate that a large portion of the loan will be forgivable.  The portion that is not forgiven will be paid back over 24 months at 1% interest.  This cash infusion will help the Conference to continue to pay our employees and serve the local churches in our connection.  Give Jim a “big high-five” next time you see him for getting this done, but stay six feet away from him, please.
  • We also looked at the Conference collection rate for apportionments each year back to 2007.  We noted that during the Great Recession of 2008/2009 we dipped as low as about 82% for the collection of apportionments.  We ended last year ( 2019 ) at 86.53%.  We don’t yet know how bad the impending recession will be, but we do know that so far, the decline in the stock market is about half as bad as 2008/2009 but unemployment seems to be much worse.  So we expect that we need to be prepared for a reduced collection rate, but hopefully not below 80%.

As a result of this analysis, the obvious question is what should we do to prepare for the financial health of the Conference and local churches at this time?  We concluded that this was not a time for panic or rash action, but was a time for Financial Prudence.  We also want to make sure that we are doing all that we can to help our local churches manage their financial affairs successfully over the coming weeks and months.  So we are asking each of you to help us put in place the following plan which will be in effect until we feel it is safe to change it:

  • Hiring of new employees:  It is our current plan that we will do all we can to protect the jobs of our employees and clergy, but we want to implement an extra requirement for the hiring of any new conference employee.  The normal approval processes for your particular area will continue to apply, with the added requirement that no new person may be hired onto the Conference payroll without the approval of the CFA Executive committee.  That committee includes our Treasurer and three officers of CFA.  Their role will be limited to considering the financial aspects of the proposed hiring.
  • We are asking everyone to carefully consider how they are spending Conference money and do all you can to eliminate discretionary spending and asking our Treasurer Jim Allen to continue to monitor all expenses.
  • We ask that out of state travel, including plane tickets, be eliminated.  We also ask that in-state travel and mileage be restricted to cases where it is essential for Conference business, such as Cabinet meetings, new Conference guide, and advisory team meetings, and ministry group meetings where relationship building or ministry strategy is important.  Try to avoid hotel room expenses and use your judgment to eliminate costs where possible.  Of course,  all travel needs to comply with travel and meeting restrictions placed on us by the Covid-19 rules for social distancing as long as those rules are in place.
  • We are asking staff and leaders of all committees and program areas to provide a response as to how they would suggest adjusting their budgets to reduce expenses.
  • We will re-activate our CFA sub-committee on Contingency Planning to evaluate our options and strategy if collections fall 20% or even more.
  • We will do what I call “close monitoring”.  CFA will meet monthly, via zoom, to evaluate our financial situation and determine if we need to adjust our strategy or take further action.
  • The Conference is committed to helping our local churches manage their financial affairs successfully and get through this difficult period.  We are asking church pastors to share financial issues with their District Superintendent (DS).  The DSs are the “point of access” for information about resources available from CFA and other sources, and are best equipped to identify what help is available for the churches in their District.

We are confident that God is good and has blessed us greatly with the resources we need to make it through times like this.  We need to communicate with each other and work together to help meet the needs that will surface during this time.  Thank you for your ongoing support of the Conference and our mission and please help us at CFA understand how we can help you with your financial issues at the local church level or with programs and ministry of the conference.

Very Truly Yours,

John Pearce, President CFA