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Presbyterian Mission Agency board committees discuss unaudited year-end financial report for 2015

 

The unaudited year-end financial report for the Presbyterian Church (U.S.A.) shows that revenue came in just under expected levels – but expenses fell about $7.9 million less than budgeted levels, in part because of staff vacancies.

That left the denomination with a change in net assets of $3.36 million and the PC(USA) had to pull less from its unrestricted reserve funds to balance the budget than it originally had planned to spend.

Tony De La Rosa, executive director of the Presbyterian Mission Agency board, told the board’s finance and audit committees that ministry directors had held off on hiring for some vacancies in anticipation of staff cuts which may come in April. He described that as “careful planning and accommodation of where we’re going in the future.”

At its meeting in Louisville April 27-30, the board is expected to approve mission budgets for 2017 and 2018 that could include significant program and staff cuts. Earlier this year, 26 employees from the Presbyterian Mission Agency took voluntary separation packages offered to workers who were 60 years or older and had at least five years of continuous service with the denomination.

The unaudited budget for Dec. 31, 2015 included these details:

Expenses and receipts. Receipts at the end of the year totaled $72.1 million, about $1.2 million less than budgeted. Expenses totaled $68.7 million, or about $7.9 million less than budgeted. Those 2015 expenses included $881,922 more than had been expected in legal fees, and $82,296 for changing One Great Hour of Sharing marketing materials after some criticized the original marketing campaign as promoting racial stereotypes.

Congregational giving. Congregational giving for 2015 came in nearly $700,000 (or 7.4 percent) over budget – with $5.7 million being unrestricted giving and $4.1 million in restricted donations.

Special offerings. Receipts from the denomination’s four Special Offerings fell 7.2 percent under budget for 2015 (or $883,527). Giving was below budget for all four of the offerings, with Christmas Joy being 11 percent under budget and Pentecost being 20.8 percent under budget.

Special Offerings unaudited figures for 2015

Extra commitment opportunities. Extra Commitment Opportunities (ECO) giving was over budget by $680,534 or 8.1 percent, primarily because of gifts for projects in South Sudan, Egypt and Nicaragua. Disaster project receipts include $1.8 million for Nepal in 2015 and $631,000 for relief in the Philippines.

Reserves. The denomination’s unrestricted reserve fund, known as the Presbyterian Mission Program Fund or PMPF, stood at $7.32 million on Dec. 31, or $2 million over the required minimum. Denise Hampton, the PC(USA)’s controller, said underspending of unrestricted reserves by $1.4 million will allow the denomination to add money back into those reserves – as it spent $3.52 million from unrestricted reserves rather than the $4.96 million originally budgeted.  Because of underspending, another $6.89 million was added back in to restricted reserves.

Questions have been raised, however, as to how liquid the unrestricted reserves actually are – with audit committee member Ellen Cason pointing out the unrestricted reserves include about $3 million that Ghost Ranch center owes the PC(USA). The PC(USA)’s financial team has moved out of the PMPF category about $2 million in debts that the Stony Point Center owes the PC(USA), putting that receivable into another spot in the budget, Hampton said. With that change, “we’re not overinflating the amount we have available” in the unrestricted reserves,  “because it may be uncollectable,” Hampton said.

Unrestricted receipts from congregations and presbyteries (unaudited figures for 2015)

Investment returns. Financial reports presented at the meeting state that in 2015 “income from investments was under budget by $964,552 or 59.0%” – bringing in only $669,448 of the $1.634 million that had been expected. The report states “this variance was primarily due to receiving less than the amounts budgeted for short-term investments that are held in bond funds. Income from funds held by others was over budget by $553,006 or 45.6%. This was a result of additional amounts received from funds held by outside trusts and oil and gas payments. Restricted endowments, interest and dividends were over budget by $847,196 or 10.6%. This represents new restricted expendable gifts that were received and not budgeted.”

Some board members expressed concern about the performance of invested funds held by the Presbyterian Foundation.

Cason said the denomination’s net equity fell 8 percent in one year, and the denomination experienced a 6 percent unrealized loss in investments. She asked why that was – and what message board members should provide when asked about it.

“An underperforming stock market would be an appropriate talking point,” De La Rosa said.

“People have their own experience with the stock market,” Cason responded, and “they generally know they haven’t lost 6 percent of everything in the last year, or not even close to that. … When we always fall back on that, it’s less and less credible. It feels less and less transparent to people when it doesn’t match their experience.”

De La Rosa pointed out that the Presbyterian Foundation’s investment strategy must take into account the socially responsible investment parameters the denomination requires, so “we are not a typical investor.” And Chad Herring, chair of the finance committee, said that committee continues to have ongoing conversations with Foundation officials about how the funds are invested and managed, and whether the strategies are appropriate or need adjustment.

The audited financial report for 2015 is expected to be complete by the board’s meeting in April.

 

 

 

 

 

 

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