The council needs to cut nearly $10 million from its 2009 budget and plans to inform affected staff members of layoffs the afternoon of March 27. And the Office of the General Assembly, also facing a shortfall, is asking its workers to consider taking voluntary separations, because of a shortfall in the per capita budget.
Most of the discussions about the budget difficulties and potential layoffs are taking place in a series of closed-door meetings. But Linda Valentine, the council’s executive director, provided an overview of the 2009 budget scenario to the council’s Executive Committee – presenting the changes she’s proposing as both linked to the economic downturn affecting so many companies and institutions, and as a natural extension of changes already underway before the economy began to plummet.
As Valentine put it, the current financial climate is causing the General Assembly Council to accelerate things they’d be doing “even if we had a windfall.”
Here are some of the talking points she and her team are using in their budget presentations.
Strategic decisions. The decisions about what programs and staff to cut and what to keep doing are part of a process of reconfiguring the council’s work which stretches back to the time Valentine came to work for the PC(USA) in the spring of 2006, right after the last major budget cut of $9.6 million, which resulted in the loss of 75 jobs.
Tom Taylor, deputy executive director for mission, described a series of conversations and retreats held to determine guiding principles, a common vision, and priorities in ministry.
Among some of the conclusions – which could hold hints of what’s coming later this week – were that “repeatedly you told us to cease work” that duplicates what congregations and middle governing bodies are doing. And the council must follow directives of the General Assembly, including placing an emphasis on world mission and re-establishing an environmental ministry, lost in an earlier budget cut.
$10 million shortfall. The council faces a shortfall of nearly $10 million for the 2009 mission budget, and likely will come back in September with more cuts for the 2010 budget, Valentine said.
Some adjustments in revenue projections have had to be made since the budget originally was presented. Among them: unrestricted giving is $1.7 million less than originally budgeted and church-wide special offerings have raised $1.4 million less than expected – including $1.2 million less than had been projected from the One Great Hour of Sharing offering.
Because of the poor investment climate, changes also are being made in how much budget officials feel safely can be taken from reserves.
While the original budget called for drawing $3.45 million from the denomination’s unrestricted reserves in 2009, that’s being adjusted down to pulling only about $500,000 out. That’s because losses in the financial markets have reduced the value of those investments – so pulling more would draw the reserves down too low, said Joey Bailey, the PC(USA)’s chief financial officer.
A “minor tweak” of the 2010 budget also would reduce the amount pulled from unrestricted reserves that year from a budgeted $3.5 million to no more than $2 million, Bailey said. He is predicting the unrestricted reserves will stand at about $10 million at the end of 2009 – or $1.5 million more than is required – and that another $1.5 million could be added back in in 2010.
To balance the budget – in other words, to make up for the $10 million shortfall – expenses paid for with unrestricted funds would be cut by $4.67 million, although restricted expenses would be about $680,000 higher than originally anticipated. So there will be a net reduction in expenses of about $4 million. One change already announced: nearly all the General Assembly Council’s staff will be required to take a week of furlough from May 17-23, for a savings of $450,000.
And an additional $5.42 million in revenue would be pulled from prior years’ accumulations of restricted funds (money not yet spent from endowment funds, the mission initiative and mission challenge and other sources, Bailey said) and about $500,000 from unrestricted reserves – for a total taken from reserves of $5.93 million.
The original budget the council approved in Sept. 2008 totaled $110.8 million. Now a shortfall of $9.92 million is expected – with the difference being made up for with the $4 million reduction in expenses and by pulling $5.93 million from reserves. That leaves an adjusted 2009 mission budget of $106.9 million.
The staff will have to wait until after the council meets in closed session Friday to learn the rest of the budget details – including who will lose their jobs to layoffs.