1. Annual Conference PreCon Council on Finance and Administration May 4, 2013

2. 22 Agenda 2014 Budget Proposal Equitable Compensation Recommendations CFA Projects -Capital Campaign Feasibility Study -Review of the Be The Change and BWC Relationship

3. 33 2014 Budget CFA Recommendations

4. 2012 Apportionments 4 Apportionment giving was more regular 3 rd year with steady income Number of 100% churches is growing Churches < 100% have goals to improve Combined efforts reached 92.63% 2012 budget was 91.0%

5. 2012 Financial Performance 5 3 rd year with steady total income Expenses were 4.6% less than budget Staff reductions occurred in July 2012 Reduced expenses and the improved collection rate raised net income

6. 6 Local Church Statistical Data Local Church Expenses Local Church Income

7. Proposed 2014 Budget 7 Proposed budget is 7.0% less than 2012(A) Apportionment income is held steady Benevolence factor is held steady Collection Rate is increased to 92.5%

8. 2014 Budget Details Budget structure follows denomination’s Four Areas of Focus. Guiding Ministry -Reduced from 2 to 1.5 full-time equivalent positions per region -Will continue to report to the Region Leaders -Will also be a resource for youth ministry within the regions Young Adult/Campus Ministry Director Added -Located at the Mission Center -Resource for local church young adult ministry 8

9. 2014 Budget Proposal Proposed Expense Increases -Salary and benefits increase of 2.5% -Missions funding increase of 3% -$213,000 added to Strategic Growth Initiative -$60,000 added for Congregation Development -Increases Deaf Ministries funding by $23,900 Proposed Expense Reductions -Conference insurance reduced $75,060 -Legal expenses reduced $30,000 -IT System expenses reduced $42,837 -Moving expenses reduced $69,000 9

10. 10 Equitable Compensation Recommendations

11. Commission on Equitable Compensation Recommendations: In consultation with the cabinet, the COEC recommends that the minimum salary for 2014 be increased by 2% to $39,728. No change is recommended in the housing allowance of $19,534. 11

12. 12 Capital Campaign Feasibility Study

13. Background: -The funding of the approved Vision 2020 at the last Annual Conference was referred to the Council on Finance and Administration (CFA) -The CFA hired CCS to conduct a comprehensive study with 389 annual conference leaders, staff and members. Findings: -Strong commitment to the connectional system -Strong desire among local church leaders for comprehensive stewardship resources -Reservations were expressed about the proposed campaign 1. Lack of clarity about the purpose and timing 2. The financial climate in many local churches 13

14. Taskforce Recommendations Recommended that the Baltimore-Washington Conference not pursue a capital campaign at this time. Recommended that the Discipleship Council put together a team to examine, in a holistic manner, the Vision 2020 and the Conference's path forward. 14

15. Looking Forward The Conference is still confident in our desire to raise $2.1M for Imagine No Malaria by 2015. We’ve already raised 1/3 of this amount. The Development of Stewardship Resources is important to our future. -Local Church Stewardship -Local Church Campaigns -Foundation Endowment Funds -Planned Giving Resources 15

16. 16 Be The Change Relationship Taskforce

17. Background The 2012 Annual Conference requested an audit of the relationship between Be The Change and the Baltimore- Washington Conference, including an examination of any conflict of interest involving the conference treasurer also being the treasurer of Be The Change. Be The Change Relationship Taskforce was established The Novak Consulting Group (NCG) was engaged to conduct an independent audit. The Conference Chancellor also addressed questions regarding the conference's authority to enter into certain transactions under our Discipline and State law, and questions concerning overlapping board membership and conference staffing. 17

18. Taskforce Findings The conference's Board of Trustees loan of $800,000 to Be The Change was within the trustees’ authority and was permissible. The conference treasurer resigned as treasurer of Be The Change, although he still serves on the Be The Change board of directors. According to the chancellor and the NCG independent audit, his serving as treasurer of both entities was not a conflict. The conference was requested by Be The Change to provide guarantees with the construction of the North Capitol Project. The NCG independent audit made it clear that there is no official nor formal conference-approved relationship between the Baltimore-Washington Conference and Be The Change, beyond that of creditor/debtor. 18

19. Taskforce Recommendations The conference declined Be The Change's request for guarantees of the North Capital Project, believing those guarantees would expose the conference to too much risk The Discipleship Council create a team from a variety of disciplines to develop specific, formalized guidelines and procedures for any independent entity wishing to enter into a partnership/relationship with the Baltimore-Washington Conference A study group be formed to fully evaluate a cohesive program of support for various ministries with the homeless 19