2016 Adjustment Memo


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MEMORANDUM



DATE:

January 1, 2016

TO:

All Rectors, Vicars, Priests-in-Charge, Wardens, Treasurers and Business Managers

FROM:

Tom Graves, Treasurer

COPIES:

Bishop Sumner, Members of the Executive Council, Chancellor, Controller and Missioner for Diocesan Services

SUBJECT:

Assessment Adjustment Procedures – 2016 Fiscal Year

Note: Except where otherwise indicated, the terms parish, mission, mission station and congregation are used interchangeably in this memorandum and, only for the purposes of this discussion, they are presumed to be synonymous.

Dear Brothers and Sisters in Christ, In keeping with past practice, this memorandum is a description of the procedures that the Finance Committee will employ to evaluate requests for adjustments to Diocesan Assessments received in budget year 2016. It is our policy that this information be distributed to all members of the Diocesan family at the beginning of each new fiscal year. General Diocesan Financial Policy for 2016: 1.

If a mission or parish believes that an error was made in the compilation of the 2014 Parochial Report (the basis of the 2016 Assessment calculation) and asserts that the error would affect the 2016 Diocesan Assessment amount, contact the Treasurer at [email protected]. If a determination is made that the claim is correct, an adjustment will be made to the congregation’s Diocesan Assessment.

2.

The Annual Budget for 2016 adopted by the Annual Convention on November 13, 2015 is final, including the assessments for each parish or mission. Every budget approved by the Vestry and adopted at the annual Parish Meeting, if that be the case, will include the Diocesan Assessment amount approved at the Annual Convention. a. Please remember that each congregation must notify Diocesan House of the date of their Annual Meeting. (Please email to [email protected].) This information should have been transmitted no later than December 31, 2015. 1630 N. Garrett Avenue Ÿ Dallas, Texas 75206-7702

Telephone 214/826-8310 Ÿ Facsimile 214/826-5968

Assessment Adjustment Program January 1, 2016 Page 2 of 6

The Canons of the Diocese of Dallas Section 13.1 The Annual Meeting of each of the Parishes of this Diocese shall be held not later than the last day of February. Due notice of said meeting, and its time and place, shall be given by the Rector or, if there be no Rector, by the Wardens.

b. Each congregation will deliver a copy of the annual budget adopted by the Vestry and/or Annual Meeting to Diocesan House, to the attention of the Treasurer, within five business days after the Annual Meeting. (If by email, [email protected].) 3.

Parochial Reports must be completed and filed by March 1, 2016. If the report is filed electronically, a copy must be delivered to Diocesan House, to the attention of the Treasurer, as the designated representative of the Bishop, within five business days of its filing. (Remember, the date of filing determines seating at Annual Diocesan Convention.) The Canons of the Diocese of Dallas Section 28.1 A report from every Parish and Mission shall be prepared annually for the year ending December 31st proceeding upon the form provided by the Executive Council of the Episcopal Church in the United States of America. This report shall be sent in duplicate not later than March 1st to the Bishop of the Diocese. The Customary of the Diocese of Dallas Section II.A.7.c. Annual Parochial Reports. Annual Parochial Reports must be completed and received by the Office of the Bishop not later than 1 March of each year. The clergy in charge of congregations are reminded that the Canons place the responsibility for delivering this report on them, as well as the Vestry. Please note that seating at the Diocesan Convention is based upon when the Parochial Report is received in the Bishop’s office. The Canons of the General Convention of The Episcopal Church Canon I 6. Sec.1 A report of every Parish and other Congregation of this Church shall be prepared annually for the year ending December 31 preceding, in the form authorized by the Executive Council and approved by the Committee on the State of the Church, and shall be filed not later than March 1 with the Bishop of the Diocese.

4.

Annual Audits or Annual Self Audits should begin at the earliest practical opportunity. The deadline for completion of the audit is September 1 of each year. The Annual Audit must be delivered to Diocesan House, to the attention of the Treasurer or, if electronically, to [email protected]. The Canons of the Diocese of Dallas Section 29.4 All accounts of the Diocese and Diocesan Entities shall be audited annually by an independent certified public accountant or such audit committee as shall be provided in the Business Policy Manual. The audited financial statements, including but not limited to, the report of the auditors or audit committee, statement of financial position (balance sheet) and statement of activities (operations) shall be filed with the Bishop, the Treasurer, and the Executive Council not later than September 1 of each year, covering the preceding calendar year.

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The Customary of the Diocese of Dallas I.A.7.d. Annual Audits. An audit of the books of the congregation is required annually by Canon, and must be submitted by September 1 of each year. Audits need not be made by a CPA. A syllabus for use by congregational audit committees is available from the diocesan office. The clergy in charge of congregations are reminded that these audits protect them, as well as the congregation itself. The Canons of the General Convention of The Episcopal Church I. 7. Sec. 1 (f) All accounts of Parishes, Missions or other institutions shall be audited annually by an independent Certified Public Accountant, or independent Licensed Public Accountant, or such audit committee as shall be authorized by the Finance Committee, Department of Finance, or other appropriate diocesan authority.

Assessment Review Program for Fiscal Year 2016: 1.

On May 1, 2016 (approximately 30 days after the close of the 1st quarter and the first business day in May), any parish or mission not current on their Diocesan Assessment must deliver a copy of the congregation’s first quarter financial statements to Diocesan House, to the attention of the Treasurer. The financial statement must include: a. Operating Statement reporting the three months of January, February and March individually and consolidated as the 1st Quarter and compared to budget for YTD and the full year. b. Balance Sheet as of March 31, 2016, fully expanded so as to show all sub-accounts. c. Cash Flow Statement, if one is available. d. A separate schedule of all restricted funds and accounts that provides the balance of the funds as of 1/31/2016, 2/28/2016 and 3/31/2016 along with a list of disbursements during the 1st Quarter of 2016. e. A copy of the congregation’s most recently completed Annual Audit and 2015 Parochial Report. The congregation must be current on the reporting requirements set out in Items 3 and 4 above to be considered for an adjustment to the Diocesan Assessment.

The following material must be included in support of the financial statements: a. A written discussion and analysis of the 1st Quarter’s financial events sufficient to explain in detail the congregation’s inability to pay the full amount of its Diocesan Assessment. b. The written analysis should include the congregation’s projections regarding payment of the Diocesan Assessment for the balance of the fiscal year. c. If the congregation proposes that an adjustment should be made to its 2016 Diocesan Assessment, this request must be included in this written analysis. The amount of the proposed reduction must be specifically set out. d. The congregation should use attendance statistics, stewardship data, information on ongoing capital expenditures, details of extraordinary repairs and other such information to support their request for a reduction.

Assessment Adjustment Program January 1, 2016 Page 4 of 6 e. The congregation must commit to its willingness to make “catch-up” payments in the event their financial circumstances change prior to the end of the fiscal year. f. The congregation should conclude a request for an adjustment with an honest reflection on their ability to meet their Diocesan giving obligation in 2016 (if adjusted) and in 2017 and subsequent years (with no adjustment). g. The congregation must also submit the same information requested to fulfill Items 1.a. through 1.c. for any affiliated institutions whose financial records are not consolidated with the financial statements of the congregation. These entities might include, book stores, exchanges, corporations to hold real estate, foundations, schools controlled by the congregation and other entities that impact the financial health of the congregation. 2.

Any mission or parish that is current with its Diocesan Assessment that desires to make application for an adjustment in its Diocesan Assessment must submit the same materials required from those congregations that are in arrears on their Assessments on the same time schedule.

3.

The Finance Committee will arrange a meeting with the representatives of the congregation, if that is required, to clarify the financial information submitted.

4.

The Finance Committee will make a recommendation to the Executive Council at the Council’s June 14, 2016 meeting regarding allowances for adjustments to Assessments. If the Committee determines that it cannot make a favorable recommendation, the parish or mission will be notified at the earliest practical time. Any assessment reduction granted will be retroactive to January 1, 2016.

5.

If a congregation, after receiving an assessment reduction, does not remain current with their revised obligation, they will be required to meet with the Bishop, the Treasurer and three representatives of the Finance Committee. The Rector (or Vicar, Priest-inCharge), the Wardens and the Treasurer will attend to represent the congregation. This meeting will be held in the month following the triggering non-payment or partial payment. The purpose of the meeting will be to determine the cause of the shortfall in payment and to agree upon a solution. The goal is to enable the Bishop to become involved with financial problems before the problems become too difficult to handle.

6.

During 2016, if at any time, whether an assessment reduction was granted or not, a congregation falls 90 days in arrears on the payment of their Diocesan Assessment, a meeting will be held during the month following the triggering non-payment or partial payment at the regularly scheduled meeting of the Executive Council. Attendance by the congregation will be as described in the previous item. The congregation will make a presentation to the Executive Council explaining the cause of the ongoing shortfall in its assessment payment and propose a solution to cure the arrearage. The Executive Council will meet in executive session with the Bishop to determine a recommendation.

Assessment Adjustment Program January 1, 2016 Page 5 of 6 The Treasurer may request a preliminary meeting with the congregation prior to the one with the Executive Council. In conclusion, your Finance Committee believes it is worthwhile to continue to use this methodology for assessment reviews and financial oversight. We have confirmed the following benefits from this approach: 1. Assessment reviews and resulting decisions can be made with better information. a. The prior fiscal year is complete and at least unaudited financials are available. b. The Parochial Report is complete. c. Congregation budgets are complete and approved by the Vestry and the Parish meeting. d. There are three to four months of operations to review in the new budget year. 2. The overall Assessment Review Process has been improved. a. The congregation is required to approve an operating budget with the assessment approved at the Annual Convention included, in full, in the budget. Priorities will have to be established in order to pass a balanced budget. b. As a result of the former, missions and parishes have started to focus more clearly on the Diocesan budget submitted for approval at the Annual Convention. During our work sessions and Convocation meetings, we had more input on the budget. c. This new approach has slowed the “Assessment Reduction Lottery.” The vestry has to make a cogent case for relief that will stand up in written form. d. It has eliminated all-day Assessment Reduction Hearings. By first reducing a congregation’s request to writing, the Financial Committee has the benefit of understanding more of the priorities and strategic thinking of the parishes’ leadership than could be conveyed in a 20-minute meeting. As a result, the Assessment reduction process now requires only a handful of face-to-face meetings with congregations. Thank you all for your continued assistance and cooperation with the implementation of this procedure as we move into its fourth year. Your Finance Committee always welcomes your comment, input and prayerful support. Addendum: This policy for the Diocese of Dallas Assessment Adjustment Program was approved by the Executive Council on December 11, 2010 by a unanimous vote.

Assessment Adjustment Program January 1, 2016 Page 6 of 6 SUMMARY OF KEY DATES FOR 2016: December 31, 2015 – Deadline to report date of Annual Parish Meeting to the Office of the Bishop. ([email protected]) February 28, 2016 – Last day to hold the Annual Parish Meeting. March 1, 2016 – Filing deadline for 2015 Parochial Reports. March 7, 2016 – Last day to submit a copy of the Annual Parish Budget adopted at the Annual Parish Meeting. ([email protected]) March 31, 2016 – Deadline to provide an unaudited copy of congregation Balance Sheet as of December 31, 2015. ([email protected]) May 1, 2016 – All requests for adjustments to Diocesan Assessments must be submitted to the Diocesan office. No requests will be accepted after this date. ([email protected]) June 14, 2016 – Missions and parishes will be notified of the decision of the Finance Committee and the Executive Council regarding their requests for Assessment adjustments. September 1, 2016 – Deadline for completing and submitting annual audit for fiscal year 2015. ([email protected])