Finance Council Minutes Wednesday, September 6, 2006 Church of the Resurrection Update on Vibrant Parish Life Catherine Mazanec provided an update of the Vibrant Parish Life (VPL) process. The VPL committee is charged with identifying three “clusters” of parishes with whom our parish could possibly work in future. These clustering possibilities will be submitted to the diocese for review by the bishop. These clusters could potentially share programs, services or staff. One cluster that has been defined includes those churches with whom Resurrection currently shares programs and services. The include St. Rita/Solon, St. Joan of Arc/Chagrin Falls and Holy Angels/Bainbridge. It was noted that Resurrection intends to continue its current relationship with other parishes, including Epiphany and St. Cecelia’s, even though they will not be considered as part of one of the clusters. Father Mark received a letter from the pastors of four inner ring churches (St. Wenceslas, St. Pius, St. Mary and Holy Trinity) asking that we consider them as we develop our proposals. At the next VPL meeting, the committee will discuss and consider developing a cluster to include one or more of the inner ring churches, possibly in partnership with one of the Chagrin Valley churches. We do not know, at this point, whether any/all of the clusters that are developed will be formalized in partnering relationships with Resurrection. Finance Council will be kept informed, especially since one or more of these relationships, if executed, could involve a sharing of staff or have some other financial impact. No financial obligation will be incurred without going through Finance Council first. Capital Campaign It was pointed out that the Diocese does not tax special envelopes, including debt reduction and maintenance. Given our long term debt burden, it is hoped that parishioners will continue to use and, in fact, increase their use of the debt reduction envelope. The committee felt that we should continue to report the amount of unpaid pledges but discontinue reporting the total amount collected in the capital campaign. At this time, there is $170,940 (gross) in pledges still outstanding. This includes between $60-80,000 in five year pledges that are collectible. It was recommended that, prior to year end, those who still have outstanding balances receive a letter thanking them for their support and expressing the hope that they can meet their remaining obligation. The letter will ask them to let Fr. Mark know if there are extenuating circumstances that will require a delay or elimination of this obligation. Debt Reduction Fund After netting out other requirements (e.g., painting parish center, maintenance reserve) and adding off- balance sheet stock holdings of $89,000, there is currently $271,800 in the debt retirement fund, or 17.4 months of debt service. Dennis Bodziony pointed out that we originally borrowed $200,000 more than we needed as a reserve. In addition to payments on pledges and debt reduction contributions made through the use of the debt reduction envelopes, half of the Christmas and Easter collections are being put into the debt reduction fund (for a total of $54,351 in the last fiscal year).. Funds from these sources have been adequate to cover debt service. In addition, Finance Council had approved an additional monthly debt service payment of $10,000, to come from the debt service reserve, with the understanding that this fund would not go lower than $200,000. We have made payments of at least an additional $10,000 each month through the end of August. Thus far, this approach has reduced the debt term by 26 months and the interest to be paid by $276,000. The recommendation was made, and approved, that the current excess of $71,000 be reduced by making an additional $5,000 per month payment until the fund reaches $200,000. The amount of this additional payment could be reconsidered at year end if additional pledge and debt reserve payments come in. With the current interest rate at 5% on funds held in the debt reduction fund, the net cost of holding the money is less than 1%. Financial Statement and Budget Review The committee reviewed the July 1-2005-June 30, 2006 financial statements. The balance sheet shows current assets at $294,358, $264,256 of which is in the Debt Retirement Fund. Some discussion ensued about the availability of these funds, should we have unanticipated operating needs that exceed other cash available. Dennis Bodziony made it clear that the $54,351 from the Christmas and Easter collections was designated for the Debt Retirement Fund by Finance Council and, thus, could be released for operations if needed. This amount is not legally restricted to debt service. There is approximately $70,000 in stock held at Lincoln National Bank that is off balance sheet. The diocese is aware of this. Last year’s interest was stripped out of this account in order to obtain a better return. It was added to the debt reduction fund. The Revenue and Expense Statement is separated into Operating and Building Funds. There were some issues in comparing last year’s results with this year’s. This appears to be, primarily, an allocation issue. For example, household expenses are approximately $26,000 this year compared with $9,000 last year. Apparently, some expenses last year were considered office/maintenance expense. This year’s expenses include approximately $3,000 in taxes, which was not in household expenses last year. Nancy Brown will review these and other expense categories and attempt to better reconcile between the two years. Another example is funeral lunches, which should not have an effect on the financial statement. The cost of food ordered for these lunches is paid for by the families, with Resurrection simply acting as a conduit. To the extent that the payment for these lunches shows up as revenue, it could be considered unrelated business income. Since we do not charge for the use of the facility, it is not likely that the money collected will be considered unrelated business income. We will record these transactions on a net basis, that is, the cash received will be used to offset the expense incurred. Nancy Brown shared the Diocesan Annual Report with the committee, and committee members signed off on this report. The annual budget was also reviewed. Based on the estimate of annual expenses, a weekly revenue goal of approximately $13,500 to cover operating expenses was set, which is the same goal as last year. Reportable Employee Income Any individual who receives more than $600 a year should be included on the payroll and should receive a W-2. In the past, a number of individuals, including students, were considered independent contractors, and were paid on an hourly basis at the rate of $7 an hour. Including all of these individuals as employees will ensure that they are covered by workers’ compensation. There will be a small incremental cost for payroll services, and a 7.6% payroll deduction for FICA taxes will result. Current practice is for these individuals, the custodian and students, to punch a time clock. Additionally, they meet other tests of employment—they work under the supervision of staff who determines their work load. Therefore, as of January 1, 2006, all individuals who earn $600 or more will be considered employees and will receive a W-2. Finance Council approved increasing salaries to compensate for the FICA deduction. Exterior Painting The issue of painting the exterior of the original building has been tabled for another meeting. The Maintenance and Building Committee is developing a five year plan for building maintenance, and this issue should be part of that plan. Next Meeting The next meeting of this committee will be held on Wednesday, December 6, 2006.
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