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Questions Regarding Conference Financial Reports Answered

by Keith Clark

Keith Clark  Recently, one of our delegates to the Annual Gathering responded to the reports that the Board Chair and I prepared for the Annual Gathering.  This delegate asked several good questions about the Financials for period ending December 31, 2009 and the Proposed 2011 Budget.  The following is a listing of those questions and my responses.  We both felt this would be helpful information for all delegates and our Board Chair and Treasurer agree.

Do you have any narratives that simply explain the different categories? For example, on the Balance Sheet, what are the long term assets, current liabilities and long term liabilities? By that I mean, illustrations of what are in each of those sections for our Conference at this time? By adopting deficit budgets, we should see a prediction of what’s going to happen to which asset over the next few years.
 
Answer: As you review our Balance Sheet for period ending December 31, 2009 here is a description of each line item:

Question:

Current Assets ($1,177,781): Our Current Assets include the cash in our checking account, cash invested in CDs at The Cornerstone Fund, and Prepaid expenses (Insurance, Employee Benefits).

Accounts Receivable ($3,945): These are short term receivables that were collected in early 2010.

Fixed Assets ($2,613,758) This includes properties owned and in use by the Conference, furniture, equipment, less Accumulated Depreciation.

Long Term Assets ($2,593,758): This includes our investments in United Church Funds, Equity Sharing Agreements, Real Estate Held for Sale and long term Notes Receivable.

Current Liabilities ($114,651.86) The current liabilities listed at December 31, 2009 included such items as the amount of 2009 OCWM, Special Offerings & National Directed Gifts that were collected during December and the last week of January (designated for 2009) that were not sent to the National Setting until after our books closed in early January, various donations from our local churches to be sent to other ministries such as Pilgrim Place, Pilgrim Pines and PSR.  These funds were sent on in January after the books closed.

Long Term Liabilities ($600,000): This is a loan the Conference obtained from The Cornerstone Fund. This is a mortgage on the former La Mesa Church property in Santa Barbara (unrelated to the active UCC La Mesa near San Diego). It will be paid from the proceeds of the sale of that property. We are currently negotiating a sale at a price of approximately $2.5 million.

 
Question: On the budget, I have several questions.  The incomes called National Directed Gifts, Special Offerings and Miscellaneous are often comprised of monies which “pass through” to National UCC and other needs.  It’s not clear, because of the generality of the expense categories, where that “pass through” goes. 

Answer:  The monies which “pass through” to the National Setting are not in our expense categories.  Those monies (and 40% of OCWM that we send to them) are all included in the subtraction from revenue on the line “Due to National.”  The OCWM contribution presumably goes into unrestricted contributions at national.  The other pass throughs are identified with how they were raised (e.g. Haiti Earthquake Relief, One Great Hour of Sharing, Strengthen the Church) when they are sent to National.
 

Question: On Other Program Funds, what is “Contributions Income” and what strategy is going to make it increase three-fold?  What does it mean to eliminate “Core Programs”?  Why are Miscellaneous expenses going up?

Answer: The “Other Program Funds” portion of our budget reflects activities beyond the normal basic conference operations.  The Contributions Income line reflects two sources: Grants from Local Church Ministries & Local Church Offerings taken in our New Church starts.  The reason the budget reflects such a large increase in this income line is that Local Church Ministries has approved a grant for $200,000 to be received over a two year period.  You can see the announcement of this in Connecting Voices.  Read Ann Feaver and Bruce Jones’ article, SCNC and Local Church Ministries funds $425,000 Church Development Plan

The “Core Programs” was a board designated fund that is no longer is used.  It was used to provide staffing assistance for the Conference Minister.  Those positions were cut in 2009 and any new positions that are created for this purpose would be shown within the “Basic Conference Operations” portion of the budget.

The “Miscellaneous” in the “Other Program Funds” portion of the budget is mainly the budgeting for Mission Grants.  Although we budget for approximately $14-15,000, we only had requests for $2,750 in 2009.  Our board is working on a process to help promote the availability of these grants. The grants are paid from restricted funds.
 
 
Question: On a broader note, the Chair of the Board of Directors stated in her report that the objective is to present a balanced budget by 2013. I would suggest that it would be very helpful if the delegates to the Annual Gathering had a narrative that explained the strategies and expected results that are intended to accomplish that objective and where we stand in the meantime.

Answer: I also mention this in my report to the Annual Gathering.  I would first like to point out that this is a reference to the “Basic Conference Operations” portion of the budget.  This part of the budget derives income from Our Churches Wider Mission, Per Capita Dues and gifts of the “Friends of the Conference.”  The expenses in the portion of the budget are those related to the ongoing day-to-day operations of the Conference.

The “Other Program Funds” portion of the budget will always reflect a net loss.  The reason for this is that the majority of the revenue for this portion of the budget is derived from the sale of properties the Conference has received in past years.  Property sales do not occur every year and we do not budget for them because we cannot predict when they will occur. In a year when a property sale occurs, we generally have a significant net profit in the program funds portion of our actual results. After Santa Barbara, we have very little other property to sell. A significant part of our strategic planning process will be to address how the Conference will fund these mission priorities in the future.

This will be discussed in my presentation to the Annual Gathering. 
Question: By the way, does the Conference have a “five-year financial plan” that would give the delegates a “road map” to follow when trying to understand the “big picture”? It would have to be in narrative form to ease the understanding.

Answer: The 5-year plan is the one that gets us to a balanced “Basic Conference Operations” budget in 2013.  We have not rolled it forward because the timing and amount of the Santa Barbara property sale and the strategic planning process that will follow the installation of the new Conference Minister will likely have a significant impact on our vision for the out years. 

Additional questions can be addressed during the budget hearing on Friday night at 7:00 pm  I look forward to seeing you all in Santa Ana!

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