Stewardship & Budget 2022

BUDGET ASSUMPTIONS

Benevolence Factor – Proposed 2023:  17.550%
The benevolence factor is the percentage churches are apportioned based on their operating expenditures less exclusions.  The percentage for 2023 is the same as the percentage used in 2022 (17.550%). 

Mission Shares Collection Rate - Proposed 2023:  90.0%
The projected collection of the amount apportioned to churches in the 2023 Budget is 90.0%.  The percentage for 2023 is 1.0% more than the budgeted Collection Rate for 2022 (89.0%).

REVENUE 

Mission Shares:  $12,484,383
A church’s share of the local and global mission work and operating expenses of the Annual Conference as determined by the mission shares formula.      

Grants:  $253,470
This represents grants given directly to the conference for ministry and mission. For example, General Church grants to operate the Episcopal Office and residence.

Event Registration:  $2,399,027
This includes Annual Conference registration, workshop registrations, Retreat and Camping Ministries registrations (majority of line item) and other conference events. 

Publications:  $3,500
This includes sales or rentals of publications, DVDs, paid UMConnection subscriptions, and other materials. 

Individual Gifts: 
Gifts from individuals for specific programs. These are for the conference, specifically, rather than for ministries outside of the conference.  No such gifts are anticipated in 2023. 

Reimbursements:  $229,181
The conference receives reimbursements from denominational agencies for specific operating programs.  The Mission Center tenant leases are also captured in this revenue category.

Other Income/Sources of Funds:  $2,786,945
Miscellaneous income or sources of funds, such as the funding from agency reserve funds.  For example, Retiree Medical expenses (majority of line item) are 100% paid from the Board of Pension Reserves.  The funds from the sale of discontinued churches are used to fund a portion of the New Faith Expressions. Starting in 2023, the Conference Center mortgage payments in the Operations budget are fully paid from the debt reserves established during the accelerated debt payoff initiative.   

Interest:  $66,500
An estimate of the interest the conference will earn on operating funds in investment vehicles. 

TOTAL OPERATING REVENUE:  $ 18,223,006 

EXPENSES

I. DISCIPLESHIP EXPENSES

Regional Ministry Teams:  $2,343,199
Funds to operate the ministries and administrative support of the Regions.  The Regional Teams include:

a. Southern Region (Annapolis and Washington East Districts)
b. Baltimore Region (Baltimore Metro and Baltimore Suburban Districts)
c. Washington Region (Greater Washington and Central Maryland Districts)
d. Western Region (Frederick and Cumberland-Hagerstown Districts)         

Discipleship Ministry Teams

Discipleship Ministries

a. Discipleship Ministries: $1,373,983
Funds to operate the ministries and administrative aspects of the Discipleship Ministries and Congregation/Leadership Development Teams. Funds are also allocated for Discipleship Council, Connectional Table and Board of Laity.

b. General and Jurisdictional Missional Shares: $2,861,380
The funds that the General Church and Northeast Jurisdiction request for ministry and programs from each conference.  The conference celebrates its track record of paying 100% of these missional shares since 1998.  General Church funds include:

World Service
To help our denomination strengthen its evangelism efforts, stimulate church growth, expand Bible studies, and enrich spiritual commitment.  This fund allows us to share in a worldwide ministry, including support for missionaries.

Interdenominational Cooperation
This fund allows United Methodists to have an effective presence in the activities of ecumenical organizations.

Africa University
This fund supports the further development of the first private university for men and women in Africa.

Black College Fund
This fund represents the denomination’s support of the operation and capital funding of historically black colleges and medical schools.

Ministerial Education Fund
This fund provides our church support for the recruitment and education of future pastors and bishops.

Episcopal Fund
This fund pays the salaries and benefits of active bishops in the denomination and supports retired bishops.

General Administration
This fund supports administrative areas of the church, such as the General Council on Finance and Administration, the General Conference session, and Archives and History.

Jurisdictional Administration
This fund supports mission and ministry through the Northeastern Jurisdiction. 

Leadership Development and New Faith Expressions: $1,579,753

a. Grants to local churches and ministries to grow congregations and expand ministry in the community.
b. Start new churches
c. Board of Ordained Ministry
d. Certified Lay Ministry 

Young People's Ministry: $2,446,427
Ministries funded by Young People's Ministry include Children, Youth, Young Adults, Campus Ministries, and Retreat and Camping ministries.

a. Youth Ministries engage and support young disciples of Jesus Christ.
b. Retreat and Camping Ministries provide opportunities for spiritual growth and formation for children and adults.
c. Campus Ministries support staffing and programs on four area college campuses.

Advocacy & Action; Abundant Health: $922,320
Social Justice Ministries such as Justice for our Neighbors, NEJ Call to Action, and Hope for the City are funded through Advocacy and Action.  Funds are also devoted to Deaf Ministries.  Abundant Health includes funds for our partnership ministries with other conferences, such as Zimbabwe, South Korea, Latin America, and Eurasia.

Total Discipleship Ministry Teams:  $9,183,863

TOTAL DISCIPLESHIP EXPENSES:  $11,527,062

II. STEWARDSHIP EXPENSES

Communications:  $469,929
The publications produced by this area are tools for implementing the ministries of the Conference, such as the UMConnection newspaper, the Web site and e-connection. 

Operations:  $2,987,745
This area is responsible for overall operations of the conference facilities, and IT systems and infrastructure.                   

Property Ministries
The Conference Trustees oversee all property owned by the conference, to include the Conference Mission Center, three Retreat and Camping facilities, the Episcopal Residence and the leased offices in Frederick and on Capitol Hill. 

Archives and History
The conference provides support for the preservation of our United Methodist Heritage. 

Conference Chancellor
Provides legal resources to the Trustees and other conference leadership. 

Annual Conference – Commission on Sessions
The commission prepares all aspects of the annual conference session including program and logistics. 

Finance:  $572,935
This area is responsible for maintaining and administering comprehensive fiscal and administrative policies and services. The office of the treasurer provides support and information for clergy and laity in local churches.

HR/Benefits Administration:  $2,033,595
This office administers all active and retired benefit plans for clergy and laity.  They also provide personnel and HR support for Conference staff. 

TOTAL STEWARDSHIP EXPENSES:  $6,064,204

Episcopal Leadership Ministry:  $631,740
Ministries that lead our mission and develop the leadership to lead congregations, ministries, and staff.  

TOTAL OPERATING EXPENSES:  $18,223,006

OPERATING NET:  $0

STEWARDSHIP MINISTRIES

Recommendations from the Council on Finance and Administration

1. The proposed budget of $18,223,006 shall be adopted for 2023, including a mission share income budget of $12,484,383. This represents a decrease of $621,000 or 4.7% in the mission share asking compared to the 2022 budget. 
2. The Benevolence Factor (BF) for 2023 remains unchanged at 17.55%. The collection rate assumption for 2023 is set at 90.0%, which is 1.0% higher than the 2022 rate.
3. As required by The Book of Discipline, the ratio for World Service and Conference Benevolences shall be set as follows: 33% for World Services and 67% for Conference Benevolences.
4. The firm of Ellin & Tucker is approved as independent auditors to audit the Conference Treasurer’s financial records for 2022.
5. The date for closing the 2022 Conference financial books shall be set at January 10, 2023, with all payments to be received by the Treasurer’s Office no later than that date.
6. The Baltimore-Washington Conference grants authority to the Council on Finance and Administration, in consultation with the Bishop, the Cabinet, and the Discipleship Council to act on financial matters between sessions of the Annual Conference.

Submitted by:
Phil Potter, President
Paul J. Eichelberger, Chief Financial Office and Treasurer

The Board of Pensions and Health Benefits continues to pursue its goal of enabling clergy and lay staff to accomplish their ministries without concern for their long-term financial or medical protection. We continue to position ourselves to face the challenges that lie ahead and to assist clergy and staff in their mission.

Pensions: 

• Pre-82 Service Funding: The 2022 Past Service Rate (PSR) is confirmed at $787.  We recommend that the PSR for 2023 be set at $807.  ¶1506.7 (2016 Discipline) confers authority upon the annual conference to review the annuity rate for Pre-82 service and to adjust the PSR rate as appropriate taking into consideration the changes in the economy. Such annuity rate may remain the same or be increased without restriction.  Wespath Benefits and Investments actuarial valuation for Pre-82 Annuities as of January 1, 2021, showed a more than fully funded plan, requiring no monies to be paid by BWC.  The pre-82 plan surplus results from increases in valuation of the securities in the account.  Wespath has authorized a mechanism by which we have been able to employ some of the excess Pre-82 funds to indirectly fund our Retiree Medical Plan reserve.  Pre-82 is the pension plan in place prior to 1982.
• Ministerial Pension Plan (MPP) Funding:  Wespath Benefits and Investments’ actuarial valuation for MPP Annuities as of January 1, 2021, showed that it is also a fully funded plan, requiring no monies to be paid by BWC. Monies previously contributed to MPP continue to be held in individual participant accounts. MPP is the pension plan in place from 1982 through 2006.
• Clergy Retirement Security Program (CRSP) Funding:  The Baltimore-Washington Conference funds the program as follows:

• CRSP Defined Contribution (DC) - BWC continues to collect 3% of participant’s plan compensation (Salary plus housing) to fund the Defined Contribution (DC). 2% goes directly to the participant’s DC account.  The participant is now required to enroll in the United Methodist Personal Investment Plan (UMPIP) with a contribution of at least 1% of plan compensation to receive a match of up to 1%.
• CRSP Defined Benefit (DB) – BWC continues to collect 11% of the participant’s plan compensation, limited by the DAC (Denominational Average Compensation) to fund the Defined Benefit portion of CRSP.

Comprehensive Protection Plan (CPP):

• BWC continues to collect 3% of a clergy participant’s plan compensation (salary plus housing) for the Comprehensive Protection Plan (CPP). The CPP provides death and disability benefits for all eligible participants.  As of the last General Conference, Wespath Benefits and Investments revised their policies to treat clergy mental illness in the same fashion as any other illness for CPP purposes.  The Conference Board of Pensions and Health Benefits has voted to provide the necessary funds to eliminate anti-mental illness discrimination for lay employees as well.  

UMLifeOptions:

• Active ordained clergy appointed to ½ or ¼ time are now enrolled in UMLifeOptions, BWC will collect 3% of clergy participant’s plan compensation (salary plus housing) to cover the premiums.

Health:  

• HealthFlex: All eligible participants have been successfully enrolled in the Wespath HealthFlex Exchange Plans. The HealthFlex Exchange brings more plan options; more flexibility for enrollees to select the HealthFlex plan that best fits each individual need. The HealthFlex Exchange is not a public exchange and is not associated with government agencies.  It is a multiple-option group health plan designed for United Methodist Church clergy, lay employees and their families.   
• Retirees:  Retirees who are over age 65 will continue to work with Via Benefits, to choose policies better suited to their individual needs.  Retirees are offered an HRA based on years of service.  For 2023, the HRA for clergy with 30 years of service will be increased by 5.0% to $3,909.  Retirees who are under age 65 or any future participants who retire before age 65 will remain on the HealthFlex Exchange plan until the month they turn 65.

Social Security:  Your Board strongly recommends that all clergy of the Conference participate in Social Security, and not exercise any conscience clauses to opt out of Social Security.  Eligibility for Medical benefits through Via Benefits in retirement and Disability benefits through the CPP program, are both dependent on participation in Social Security and Medicare.  Thus, one’s irrevocable decision to opt out of Social Security is a decision to be excluded from these Conference programs as well.

Arrearage:  In order to assure that nothing interferes with clergy continued medical and pension coverage, BWC first makes the necessary payments to Wespath when due and then collects the premiums from individual churches.  There is a continuing problem with a small number of churches which fall behind in this pastoral compensation commitment.  The Bishop’s Task Force on Arrearages, comprised of two District Superintendents, the Chair of the Board of Pensions, and Conference staff, has developed approaches to more intensive management of churches which are in arrears, for medical and pension arrearages often are symptomatic of other challenges to ministry and finances the church is facing.  A Church in arrears may be offered a forbearance program where collection of the arrearage is forborne for three years while the church focuses its efforts on greater effectiveness in ministry.  Churches successfully completing this program may have the arrearage converted to a contingent liability, effective only in the event that the church property is sold. 

Final Comments:  The CBOPHB thanks Francess Tagoe, Director, Human Resources and Benefits for her enthusiastic and professional work on behalf of our participants and the Board.  She effectively communicates and administers the benefits based on Plan rules and regulations, the Book of Discipline, the Conference's policies and procedures, and all applicable state and federal laws so that there is an understanding of the benefits for our clergy and lay employees.  It is her goal and the Board's goal to continue to provide the best possible benefits package for our plan participants, while maintaining the utmost care for and fiduciary responsibility to you, the Plan participants, and those in the Baltimore-Washington Conference for whom we owe the same.  We wish to also give thanks to Karen Conroy, HR & Benefits Associate, Pier McPayten, Controller, and the District Superintendents who all support the work we do. 

Cary James, Chair
Paul J. Eichelberger, Treasurer

The Conference Board of Pensions and Health Benefits requests that the Annual Conference adopt the following recommendations:

1. That BWC continue to provide retiree medical to all eligible participants.
2. That in accordance with paragraph (e) of Supplement One (Pre-1982), the surviving spouse pension benefit shall continue to be 85% of the participant’s formula.
3. Pre-1982 Service – Past Service Rate (PSR):   That the Annual Conference shall approve the following pre-1982 prior service funding plan in compliance with the Disciplinary requirement listed in ¶1506.8:  The Past Service Rate (PSR) for 2022 is confirmed at $787.  The PSR for 2023 will be set at $807.
4. That the Annual Conference shall approve the following funding plans based on the receipt of a favorable opinion from Wespath Benefits and Investments in compliance with the Disciplinary requirement listed in ¶1506.6.

Funded status and contributions are based on actuarial valuations as of January 1, 2021, 

Pre-82 Plan:  Baltimore-Washington Conference is fully funded, with its Pre-82 Plan assets equal to 116% of its liabilities.

Corridor Funding:  Clergy Retirement Security Program (CRSP-DB) and Ministerial Pension Plan (MPP) annuities.  The funded Ratio for this funding is the same for all Conferences

Post-Retirement Medical:  Based on the biennial actuarial report received in April 2022, the Post-Retirement Medical plan is reported to have a current view funding ratio of 106.7%.  The ongoing view funding ratio is 174.8%.  These funding ratios are lower than the 146.6% and 214.4 values that were respectively reported in the previous report.  An increased liability in the valuation caused the change as the assumed annual increase in the HRA was increased from 2%/yr to a new value of 4%/yr.  The 4%/yr assumption is more consistent with the actual increases in recent years and the new funding ratio of 106.7% is a good indication that the fund is properly funded to support that new assumption.  The next actuarial report will be based on December 31, 2023 funding levels.

The funding plan as of December 31, 2021 is summarized below.

5. That the following resolution, as required for IRS compliance, shall be approved:

Resolutions Relating to Rental/Housing Allowances for Retired or Disabled Clergypersons of the Baltimore-Washington Conference

The Baltimore-Washington Conference (the “Conference”) adopts the following resolutions relating to rental/housing allowances for active, retired, or disabled clergypersons of the Conference:

WHEREAS, the religious denomination known as The United Methodist Church (the “Church”), of which this Conference is a part, has in the past functioned and continues to function through ministers of the gospel (within the meaning of Internal Revenue Code section 107) who were or are duly ordained, commissioned or licensed ministers of the Church (“Clergypersons”);

WHEREAS, the practice of the Church and of this Conference was and is to provide active

Clergypersons with a parsonage or a rental/housing allowance as part of their gross compensation;

WHEREAS, pensions or other amounts paid to active, retired and disabled Clergypersons are considered to be deferred compensation and are paid to active, retired and disabled Clergypersons in consideration of previous active service; and

WHEREAS, the Internal Revenue Service has recognized the Conference (or its predecessors) as the appropriate organization to designate a rental/housing allowance for Clergypersons who are or were members of this Conference and are eligible to receive such deferred compensation;

NOW, THEREFORE, BE IT RESOLVED:

THAT an amount equal to 100% of the pension or disability payments received from plans authorized under The Book of Discipline of The United Methodist Church (the Discipline), which includes all such payments from the General Board of Pension and Health Benefits ("GBOPHB"), during the years 2022-2023 by each active, retired, or disabled Clergyperson who is or was a member of the Conference, or its predecessors, be and hereby is designated as a rental/housing allowance for each such Clergyperson; and

THAT the pension or disability payments to which this rental/housing allowance applies will be any

pension or disability payments from plans, annuities or funds authorized under the Discipline, including such payments from the GBOPHB and from a commercial annuity company that provides an annuity arising from benefits accrued under a GBOPHB plan, annuity or fund authorized under the Discipline, that result from any service a Clergyperson rendered to this Conference or that an active, retired or disabled Clergyperson of this Conference rendered to any local church, annual conference of the Church, general agency of the Church, other institution of the Church, former denomination that is now a part of the Church, or any other employer that employed the Clergyperson to perform services related to the ministry of the Church or its predecessors, and that elected to make contributions to, or accrue a benefit under, such a plan, annuity or fund for such active, retired, or disabled Clergyperson's pension or disability as part of his or her gross compensation.

NOTE: The rental/housing allowance that may be excluded from a Clergyperson's gross income in any year for federal income tax purposes is limited under Internal Revenue Code section 107(2) and regulations there under to the least of: (1) the amount of the rental/housing allowance designated by the Clergyperson's employer or other appropriate body of the Church (such as this Conference in the foregoing resolutions) for such year; (2) the amount actually expended by the Clergyperson to rent or provide a home in such year; or (3) the fair rental value of the home, including furnishings and appurtenances (such as a garage), plus the cost of utilities in such year.

STEWARDSHIP MINISTRIES

Recommendations from the Commission on Equitable Compensation

The Commission on Equitable Compensation is recommending that the base salary for the 2023 Clergy Salary Table be increased 3.0%, or $1,398, which will make the base salary $47,990.  The Commission is also proposing an increase in the recommended housing allowance of 3.0% or $623, which will make the recommended housing allowance $21,394.

Submitted by:
Kim Ayres, Chair, Commission on Equitable Compensation

The Board of Trustees of the Baltimore Washington Conference continues to carry out its responsibilities on behalf of the body of Christ as it relates to all conference properties within the bounds of our Conference. Much was accomplished and all necessary work took place despite restrictions caused by the ongoing pandemic. We give thanks to all who served this year for their faithfulness and expertise as we navigated through uncertain and occasionally unexpected waters. We would be remiss if we did not extend our gratefulness to Chair John Strawbridge who led us in 2021. During his tenure he led with grace and steadfastness, steering us in our mission to make disciples of Jesus Christ for the transformation of the world through excellence in property management.

Our work in 2021 included but was not limited to the following:

• We continued to fund new church starts from the proceeds obtained from the sale of closed churches. The funding plan provides 5% of the accumulated sale proceeds each year towards new church starts and new ministry grants.  This funding strategy is intended to treat the proceeds similar to that of an endowment by supporting the long-term needs of these ministry areas.  $250,000 was approved under this plan for spending in the 2022 budget.
• The Trustees worked with the Council on Finance and Administration and Conference leadership to follow the guidance of the UMC Ad Hoc Committee that was organized to review the developments in the Boy Scouts of America (BSA) bankruptcy proceedings. It is anticipated that the bankruptcy court will complete their deliberations and make a ruling on the proposed BSA reorganization plan in mid-2022.  Prior to the bankruptcy hearing, the UMC Ad Hoc Committee reached a tentative settlement agreement with the court that commits the denomination to pay into the survivor trust fund.  The final terms of that settlement will be determined by the court.
• The Annual Conference approved a Trustee resolution that supports the creation of a Conference Cemetery Foundation that will oversee and fund the care of the historic cemeteries within the Conference. These cemeteries include Mt. Auburn Cemetery in Baltimore; Mt. Olivet Cemetery  in Baltimore, and Mt. Hebron Cemetery  in Keedysville, MD.
• The Trustees signed a 10-year lease with the non-profit organization Center for Watershed Protection, LLC for the smaller tenant space at the Mission Center. Modifications to the space are in progress and are expected to be completed in June 2022.
• The Conference Staff supported training for many local churches that applied for the FEMA Security Grants. This will be an ongoing effort by the staff.
• We worked closely with the Retreat and Camping Ministry staff as they pursued the West River Living Shoreline Project, the West River driveway paving and main walkway repairs and upgrades at Camp Manidokan to their IT network and Internet access.
• The Conference’s Loan Endowment that provides financial loans to support local church capital projects now has an available balance of $2.3 million. Current loan rates are 4.5%.  A combination of market gains and reduced loan requests during the pandemic have contributed to the significant growth of the available funds.

As we move forward in what may be the one of the most challenging seasons in the life of the

Denomination, we are ready to work for what we believe is in the best interests of all.

Submitted by:
Rev. Sheridan B. Allmond, Chair