Financial uncertainty leads to adoption of a unified budget at General Assembly

In the uncertainty and unpredictability brought on by the COVID-19 pandemic, the Office of the General Assembly, the Presbyterian Mission Agency and the PC(USA), A Corporation presented to the 224th General Assembly – meeting online because of the pandemic – a unified budget and a request to have the flexibility to make mid-stream adjustments in the next two years as the situation develops.

Usually, the budget is divided into two parts:

  • The per capita budget is funded by an assessment based on a fixed amount for each member of a church and it funds the ecclesial work of the church, mostly in the Office of the General Assembly (OGA).
  • The mission budget, funded from mission giving and other resources, mostly supports the Presbyterian Mission Agency (PMA).

Since the last General Assembly, the Administrative Services Group (ASG) has been created as a part of the PC(USA), A Corporation — and has its own budget, which is roughly the size of the OGA budget at about $16 million with an income of about $2 million from per capita and the rest from PMA and service agreements.

As the COVID-19 pandemic spread, it became clear that budgets that had been developed were not tenable in the current environment. A cross-agency team was formed to study available data, conduct research and suggest budget revisions. In the budget orientation early on June 26, the Committee on the Office of the General Assembly (COGA) reported that income in the first quarter was strong, but as COVID-19 began to impact the country, in April income was down 62% from the previous year and down 25% in May. The deficit was covered by short-term investments.

The team emphasized that significant financial challenges and uncertainty are anticipated at all levels of the PC(USA) as they look ahead. At the national level, the team expects a significant decrease in income through 2022.

In April – as the breadth of the pandemic was still unfolding – a preliminary proposal recommended a General Assembly per capita rate of $9.99 per member for 2021 and $10.50 per member for 2022, compared with $8.95 per member currently. But just a month later the COVID-19 Financial Team determined that wasn’t feasible, projecting income declines across the PC(USA) of 25% in 2020 and 2021 and stating that uncollectible per capita also is likely to rise, as some congregations struggle for survival.

In a supplemental report approved June 18, the Moving Forward Implementation Commission directed the PC(USA) stated clerk, the president and executive director of PMA, and the president of the A Corporation to create a coordination table for discernment and collaboration that would include “the development of a unified budget process which results in a single budget for the three entities.”

“We shouldn’t kid ourselves,” Marco Grimaldo, co-moderator of Moving Forwward, said during a June 16 meeting via Zoom. “Really only emergencies have been the impetus for sharing funds.”

Kathy Lueckert, president of the PC(USA), A Corporation, said during an A Corp board meeting June 22 that the Moving Forward Implementation Commission is “saying what we have done this year is a first step, but it’s not where we need to be.  I don’t disagree with that at all. … We keep finding opportunities for broader collaboration and cooperation across the three agencies,” but “having a truly combined budget is a much tougher nut to crack.”

Kerry Rice responded to commissioner questions on the budget

During the 224th General Assembly budget orientation, Wayne McCoy, a ruling elder from Beaver-Butler Presbytery, ask about the savings related to holding a virtual GA. Kerry Rice, deputy stated clerk, reported that there was a savings of about $2.4 million. Similarly, it was reported that there have been savings from employees working from home and in other areas (such as limited travel and in-person meeting expenses). However, Rice emphasized, these savings are less than the decrease in income.

In her responses to questions, Lueckert noted that the analysis of lost income has been the focus so far; most of the decisions on expense reduction have not been made yet. The only staff reductions are at Stony Point Conference Center, which closed due to the pandemic.  Other staff reductions will be determined later in the year, and there is a long list of actions that can be considered before reductions in staff.

Responding to a proposed amendment that would have prohibited staff reduction, she reiterated that staff reductions are a last resort — but she did not want that eliminated as an option. The amendment was not adopted.

In presentations to the assembly ahead of the budget vote on June 27, each of the three agencies outlined their budgets, the major programs they support and the financial challenges in the year ahead. ASG highlighted that they want to expand their Office of Global Languages Resources to provide translation services in additional languages beyond the three that are regularly done now (English, Spanish and Korean). PMA talked about how most of their work areas are components of the Matthew 25 initiative. And the presentation for OGA discussed how the per capita rate is artificially low and, for a number of GA cycles, has not kept pace with the OGA’s expenses. While they are recommending that the per capita rate be left unchanged, it will be a problem as the reserves that have been supplementing the OGA budget are effectively gone.

In response to questions about the budget, Lueckert pointed out that they are all balanced budgets, but each one is balanced using a line item called “unallocated reductions” where the agency will allocate those reductions to other lines in the weeks following the adjournment of the GA.

As the assembly was considering the unified budget a concern was raised about giving the agencies the flexibility to amend the budgets as the COVID-19 situation develops. A participant asked if GA could meet again to review and approve those changes. Tammy Wiens, a minister commissioner from Pittsburgh Presbytery, moved to amend the item to hold a special meeting of the General Assembly in 2021 to review the budget modifications. Kerry Rice informed the assembly that the financial implications would probably be around $200,000, which would add 15 cents to the per capita rate. The motion was not approved by the commissioners, but the Young Adult Advisory Delegates did support the amendment.

Another amendment from Maurice Caskey, a ruling elder from San Diego Presbytery, was approved: It changed the language so that rather than letting the agencies amend the budget, it would give them flexibility in spending within their approved total budget.

With that amendment, the assembly approved the unified budget of $80.2 million for 2021 and $83.4 million for 2022 — down about $10.4 million for 2021 and $9.1 million for 2022 from what had been suggested in April. In their next action, the assembly approved a per capita rate of $8.98 per member for 2021 and 2022. The three-cent increase above the recommendation from COGA reflects the financial implications of assembly actions.

In addition to the budget and per capita business, the assembly also took action on theJohn C. Lord and Edmund P. Dwight Funds. This is a recurring action. Every General Assembly is asked to confirm the use of the annual income from these funds, about $20,000, for the work of PMA.

So in this year of unique challenges and an equally unique General Assembly, a new form of the budget was adopted. Balancing the budget with reduced income will require belt-tightening — but hopes persist that there will be no staff reductions. Looking ahead, a Special Committee report referred to the next General Assembly may lead to new funding models and some internal restructuring with the PC(USA). But for the next two years, the challenge will be to work with the budget as it is.