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Where Has All the Money Gone?
Diocesan Budget Challenges Continue
By David Catron
Most people know, only if anecdotally, that, with the sale of St. Mark’s Hospital in 1987, the Diocese of Utah went from penury to affluence almost overnight. Logically, then, many want to know, “Why has the diocesan budget been cut? Where has all the money gone?”
The proceeds from the sale of the hospital were placed in several trusts, the largest of which, the Perpetual Trust of St. Peter and St. Paul, had $102,367,112 in assets as of December 31, 2003, up 2% from $100,348,226 at the end of 2002, but still more than 8% below assets of $111,461,790 at the end of 2001.
Under the somewhat complicated terms of the Trust Agreement, the Trust is able to distribute about 5% of its assets to the diocese in any one calendar year. In 2003, this distribution amounted to $5,521,603. In 2004, the budgeted distribution is $5,267,655, a drop of just under five percent. Combined with other revenue shortfalls, total diocesan income in 2004 is projected to decline six percent from 2003. (Currently we project a Trust distribution between $5.0 and 5.1 million for 2005, a drop of 3-5% from 2004.)
Why a 5% decline in trust revenue if trust assets rose 2%? Because the allowable distribution percent is calculated on a rolling 48-month average. This means a big drop in Trust assets in one year, say 10% from 2001 to 2002, is softened by gains in previous years. That’s the good news.
The bad news is if the assets grow with improved market performance, say 2% from 2002 to 2003, the allowable distribution is dragged down by the underperformance of preceding years. This system is designed to avoid abrupt changes, and it is working well. Trouble is, if markets go up, people want distributions to keep pace, and they don’t.
The budgeted $5.3 million distribution for 2004 from the Perpetual Trust constitutes 94% of the operating income of the diocese. By any measure, both of these are big numbers. They attest to the incredible abundance we have to support the work of the diocese and its congregations, work that would be impossible under any other conditions.
In addition, a significant portion of the annual distribution from the Trust is restricted for parish support and community outreach. Of the $5,267,655 coming from the Trust in 2004, $2,338,317 is restricted and “passes through” the diocesan budget specifically for parishes and outreach.
About $1.5 million of diocesan revenue in 2004 will go directly to congregations in the form of diocesan grants. This amount represents an increase of 3% in budgeted congregational support from 2003, so we have found a way to absorb the revenue decline in other areas.
For example, personnel expense (largely diocesan staff) has been cut by 10%, and Communications (which produces this newspaper) by 9%. Other cuts have occurred in much-needed ministries: Camp Tuttle has been cut by 6%, Latino ministries by 12%, and Episcopal Community Services by 15%.
Still, given the millions in the Trust, people want to know:
Why, if we have a budget shortfall, can’t we just make it up from the Trust? Well, we actually do. As stated above, trust assets declined by 10%, but the distribution declined by only 5%.
Why can’t we take more? Because the framers of the Trust envisioned it as a perpetual trust, to be forever available to the people of the Diocese of Utah. They feared if we started down the slippery slope of spending what we wanted, the Trust would eventually disappear. A decent compromise allows us to take more in distributions than the trust has gained in assets in bad times, but only up to a point.
Also, Trust framers operated from a theology of stewardship. Not only was the diocese to be a responsible steward, but congregations were to be encouraged to provide a measure of support as well— currently about 4% of the diocesan budget. This seems modest enough when compared with other dioceses.
Congregations are welcome to become more self-sufficient if they like. Using the oft-cited number of 6,000 communicants, someone observed that if each were to contribute an additional $5 per week, total congregational revenue would increase by $1.5 million! Coincidentally, that is the same amount given this year in parish grants.
When I became a candidate for this office, I stated in my profile that my goal was to see congregations as owners, willing to share out of abundance. I cited an example from The Active Life by Parker Palmer in which the author imagines the miracle of the loaves and fishes came about because people were willing to share in community.
I believe we are on the verge of seeing this happen in the Diocese of Utah with our new governance and emphasis on improved communication. There is new energy, renewed commitment to ministry, heartfelt willingness to share. For example, two congregations gave up any claim to diocesan support this year. And congregations have repaid a remarkable $260,800 to the diocese for Project Jubilee grants since 1999!
David Catron is Diocesan Treasurer for the Diocese of Utah
