ON APPORTIONMENT REFORM

What is the story on Medical Insurance?
Starting January 1, 2010, medical insurance, workers comp, and other insurance paid in the past by the diocese on behalf of congregations will be billed directly to each congregation. This procedure will not be effected by the apportionment formula or system the convention agrees to. If the resolution to revise the apportionment method is passed, the new apportionment rates are lowered to take into account that parishes will be paying the insurance costs directly.

Most congregations will find that the new apportionment calculation plus the insurance costs are lower than the apportionment paid under the current method. If the total cost of insurance plus apportionment is greater than you paid in 2008, it is because in the past the diocese has subsidized the cost of insurance for your congregation. As noted below, if this is the case, the congregation will automatically receive a subsidy for the difference in 2010 and may apply for additional subsidies in future years.

Billing the insurance directly will give all congregations a clearer picture of the costs involved in supporting a congregation.

Is there really any reduction to the budget in addition to taking insurance out of it?
Yes. The 2010 budget has not yet been finalized but Diocesan Council is committed to significant reductions. In order for the proposed apportionment rates to be sufficient, the expenses need to be reduced by about 10%.

Why did I only get information about how the proposed system will effect my congregation?
Primarily the committee wanted you to focus on the impact on your congregation. We believed that was most important to you. Also, the committee wanted to save paper. Around the first of October the Diocesan website will post a PDF document showing information for all congregations. This will allow you to see how other congregations are effected.

What if our congregation needs a subsidy?
In 2010 the diocesan office will automatically send out checks to all congregations that will pay more for apportionment and insurance combined in 2010 than they did in 2008 based upon the committee’s calculation. These checks will generally go out at the beginning of each quarter. Some churches that require only a small subsidy may get a single check for the entire year.

Late in 2010 congregations that need continued subsidies will need to apply to the diocese for a subsidy for 2011. To qualify, you must have completed an audit for the current year. Details and application forms will be available sometime in 2010.

How long will subsidies be available?
The committee has recommended to the Board that subsidies be included in the budget for up to three years. Some congregations will receive an automatic subsidy in 2010, but all congregations must apply and qualify to receive subsidies in subsequent years. (See prior question.)

What is the next step?
This is phase I. The Apportionment percentage is dependent upon the budget. The Budget committee plans to reduce the budget significantly over the subsequent 5 years. We believe that each year the Mission Apportionment percentage will be reduced.

Why did you decide against having a base income not subject to apportionment?
We believe that, in order to have a sense of belonging, all churches need to contribute to the support of the diocese. We are, after all, an Episcopal Church. Medium and large congregations would bear the burden of supporting the diocese and would find it difficult to grow. Small congregations would have a disincentive to grow as it would mean paying apportionment.

Why did you pick the percentages in the proposed canon?
The 10/17.5/25% rates in the proposed Canon were designed to be as close as possible to an approximation of the current apportionment calculations after deducting the insurance costs which will be paid directly by each congregation. We wanted to set a cap that was as close as possible to the current system so that, if something did happen that required the Board to increase the apportionment level back up to the current rates, there was some room in the resolution to do so rather than having the rates be fixed in the Canons without the ability to make changes without vote of convention.

What percentage are you proposing for 2010?
10% of the first $60,000 of Net Disposable Income (NDI); 16% of NDI between $60,000.01 and $120,000; and 22% of NDI over $120,000.

What happens if the committee’s proposal does not pass?
We will continue with the present range system. Because under the current system, the apportionment percentages are fixed in the canons, congregations would continue to pay the same amount that they are currently paying even though the diocese is working on reducing its budget. The diocese would probably have more than it needs to cover the budget and would build up reserves.

Will you have to change the TMR again?
No. The format of the TMR will not change. You will need to use the 2010 version which will have a different formula for calculating the apportionment due. The changes should be transparent to the person filling out the TMR.

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