Minutes
Finance Council Meeting
Church of the Resurrection
April 6, 2005

 

Overview of Key Issues

Dennis Bodziony provided a series of schedules and financial data to support our discussion of key financial issues including:

  • Permanent debt financing for the capital project
  • Possible debt reduction campaign – timing and approach
  • Current level of offertory and approaches to increase giving

Information from these schedules is referred to in this report; copies of the schedules can be obtained from Dennis or any member of Finance Council.

 

Permanent Debt Financing

At this point,  National City, Huntington and the Knights of Columbus have expressed an interest in providing permanent, long-term financing for our capital project.  National City had provided the construction financing.  The advantage of pursuing financing through the Knights is that we could prepay at any time without penalty.  Over the long term, this could save us quite a bit of money (current estimates are that we would pay more than $1,000,000 in interest over the anticipated twenty year debt period) if we could retire the debt early, especially if we were to undertake a debt reduction campaign at some point in the future.

A package of materials has been prepared for the Knights, and this will be sent to them in the next few weeks.  These materials include:

  • A copy of the capital campaign brochure
  • A five year projection of revenue and expense
  • Financial statements for the years ended June 30, 2004 and 2003
  • Interim financial statements for the nine months ended March 31, 2005 and 2004
  • Status of pledges outstanding as of March 28, 2005
  • Construction expenditures to date compared to budget as of February 28, 2005
  • Application and certification for payment dated January 31, 2005
  • Range of contribution for calendar year 2004 and 2003
  • Summary of survey to determine willingness to increase contributions (June 7, 2003 pledge cards)

Key Assumptions used to develop projections

  • Contributions were assumed to increase by 4% for FY 2005, by 10% in 2006 and 2007 and 5% thereafter.  It is important to note that actual collections from July 1, 2004 to March 31, 2005 are up less than 1% (.4% actual).  On the other hand, we have collected 92% of pledges to date ($2,904,974) -- $699,100 of this was collected during calendar year 2004.
  • The unpaid portion of original pledges will be paid over the next 20 months, and a debt reduction campaign will be implemented no later than 2010.
  • Salary increases will be less than 5% overall each year.
  • Utilities – this was the only expense projected to increase significantly over the projected period – tripling between 2004 ($32,000) and 2010.
  • Diocesan assessments will remain at 17.5% of the preceding year’s contributions.  Pledge payments and other contributions to project costs and debt service would not be subject to this assessment.
  • Debt service on an assumed loan amount of $2.4 million would be payable over 20 years at 6.2%.  It was noted that total project costs exceeded budget by approximately $200,000, much of which related to an underestimation of the costs for art and furnishings.  It was also noted that if we were to apply all resources, including $350,000 in unpaid pledges, required debt would total $1,783,511.  The proposed debt of $2.4 million provides us with a cushion and cover unpaid pledges, but again, we would hope to reduce this debt load through a debt reduction campaign.

 

Debt Reduction Campaign

Debt service is projected to be approximately $210,000 per year, given debt size and projected interest rate.  Although we hope to be able to increase the weekly offertory, the size of this annual debt load prompted discussion over the timing for a debt reduction campaign.  Some members of Council felt we should initiate such a campaign within the next couple of years, once the capital pledge period is over.  Others felt we needed to wait longer, focusing first on the offertory.  It was pointed out that 520 families have already paid their pledges in full (70% of total families) and might be willing to extend their pledge, even if at a lower amount, to support debt reduction. 

After much discussion, council members felt it would make sense to consult with capital campaign experts to obtain a professional, outside opinion on what would be acceptable, from a timing perspective.  Fr. Mark thought we should contact the individual who is currently with the Trinity Company (he was formerly with Moran but left before we initiated our campaign).  His opinion, along with other considerations, would help us determine an appropriate start date for a debt reduction campaign.

We also discussed briefly whether to utilize outside resources for such a campaign.  Although the preliminary judgment is that we now have the expertise to do so, that decision will also be deferred until we decide on timing.

 

Current and Projected Offertory

As was noted earlier, the weekly offertory has not increased as we had hoped, despite information provided in the Bulletin and a request to do so.  On the other hand, we have not been as clear and definite as we may need to be, and many parishioners are still making payments on their pledges.  Council does feel, however, that the time has come to clearly educate parishioners on the need to increase their weekly offertory.  Currently, average weekly contributions total approximately $14, considering all parishioners who use their envelopes at least once during the year. 

There are a fair number of individuals who come regularly to Resurrection but who rarely, if at all, contribute to the offertory.  Essentially, 20% of our parishioners contribute 80% of the financial requirements of the parish.  Fr. Mark shared a flyer from a company that guarantees it will increase offertory amounts by 1/3rd by focusing on  individuals who currently do not contribute, and not on parishioners who regularly contribute to the offertory.  There was some discussion over whether this result would occur at Resurrection.  Regardless, using these consultants is risk free, since they guarantee that amounts collected will exceed their fees – if not, they will limit fees to what was collected.  The assumption, also, is that this increased offertory will continue annually.

In additional discussion, it was pointed out that if each of our 800 active families contributed an additional $25 per month, we would have enough to cover our debt service.  It would be important for this additional contribution to be earmarked for debt service or the capital project (possibly through the use of the special envelope), otherwise the diocesan assessment of 17.5% would apply.   The diocese does not apply the assessment to money collected to support capital projects.  

After quite a bit of discussion, Council felt we need a two-pronged approach to the offertory – a debt reduction component as well and an increase in envelope use and amount.  The debt reduction component could be in the form of a monthly increase in offertory using the building fund envelope or a new or continued pledge to be directed to debt repayment.  Members felt strongly that we need to be clear and specific with parishioners and that a general letter outlining needs and requirements will not suffice.  A subcommittee of Council will meet to discuss this issue, developing a draft proposal and plan to be reviewed with Council.  Members of that committee include Dennis Bodziony, Ann O’Brien and Catherine Mazanec.

 

Next Meeting

The next regular meeting of Finance Council is scheduled for Wednesday, June 1, 2005 at 7:30 p.m.