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Shepherd of the Lake Lutheran Church Annual Congregation Meeting January 31, 2010 1.

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Presentation on theme: "Shepherd of the Lake Lutheran Church Annual Congregation Meeting January 31, 2010 1."— Presentation transcript:

1 Shepherd of the Lake Lutheran Church Annual Congregation Meeting January 31, 2010 1

2 1.Quick review of what we said we’d do in 2009 2.Review of 2009 financial performance. 3.The 2010 budget 4.Questions and Answers 5.Next Steps Overview 2

3 What we said we would do in 2009 1.Transparency 2.This is not a year to be increasing expenses 3.Assumptions are particularly difficult to pin down in this environment. 4.Mid-year adjustments may be needed. Review of 2009 meeting 3

4 Seven Q&A financial presentations between Worship Services January (3), Feb (2), April, July Update at worship by Pastor Peter - October Multiple “Shepherd’s Voice” newsletter articles throughout the year Letters written by Pastor Peter mailed to homes along with giving statements. Monthly Financial snapshots – they are published on the SOLLC web site each month immediately following council meetings. Council minutes – on website for each of the 12 months in 2009. The church council has always operated as an open forum. Any member is invited to attend our meetings (2 nd Thursday). Member attendance in 2009 totaled one person. Transparency was delivered 4

5 2009 Attendance / Offerings 5

6 2009 Operating Expenses Proactive Financial Management In January 2009, this congregation approved a $1,475,000 operating budget. Actual spending in 2009 was $1,317,000. A 10.7% reduction from the budget (and previous year’s spending) equating to a savings of $158,000. 6

7 2009 Cash Flows This results in a $148,000 negative cash run rate 2009 (we spent more than we got in). We projected to use $325,000 in cash. This is about a $175,000 savings!! How did we do it? + Proactive expense management (described on previous chart) + Interest only mortgage payments for a portion of 2009 - McKenna Crossing performance (we expected $75,000 and received zero). 7

8 2010 Budget - Offerings 8

9 9

10 NOTE: 2009 Mortgage Fund actuals include $11,200 of land lease income and 2010 budget includes $22,200 of lease income. 10

11 2010 Budget – Operating Expenses Goal is to obviously hold expenses as low as possible while not severely impairing the ministries. A challenge when utilities, health insurance and other costs have risen. Significant funds come in through tuition, registration fees, etc. Maintain outreach Proper staffing levels Lay Leadership 11

12 2010 Budget - Cash For 2010, this budget assumes a cash shortfall of about $570,000. This is a result of: Expected decrease in giving of $230,000. Our interest only agreement with Thrivent expires in March. Higher operating expense budget of $60,000. Unlike 2007, 2008 and 2009, we believe we will see up to$15,000 cash as a return of investment from our partnership with Presbyterian Homes ( we received $5k in January 2010 already) 12

13 Debt Financing review We have $300,000 of available capacity via a Thrivent line of credit. We currently do not have a balance owed on this line. It matures in May and we intend to renew it (if the lender so approves). We have a long term mortgage with Thrivent with the following: Interest Rate is 5.7% Outstanding balance owed is $11,164,000 Monthly payment is about $78,000 (53k in interest and 25k in principal). We have been making interest only payments via an agreement with Thrivent since 4/09. That expires in March. 13

14 Partner Performance Summary Note: while the YMCA opened several months ago, the lease agreement does not require them to begin lease payments until 1/2010. 14

15 McKenna Crossings audited F/S Estimated that additional phases/projects will not begin until 2014. Source: Actual financial data supplied via audited financial statements from Larson Allen LLP. 2009 budgeted data and estimates referenced above provided by Presbyterian Homes. 15

16 Future Cash Flow Projections 16

17 Where do we go from here? Let’s recap: There was execution on transparency Worship attendance has been flat relative to previous years Financial performance (cash preservation, expense mgmt, etc.) was strong relative to budget in 2009. 2010 Pledging is down (mortgage fund pledging is of particular concern) McKenna Crossings has underperformed financially with significant cash flows and additional phases many years away. Our ‘house’ is most likely worth less than our mortgage today Our ability to borrow more money is limited due to no further unencumbered assets. We are staring at a 570,000 cash shortfall in 2010. 17

18 Where do we go from here The next three months will require creative problem solving using traditional and non-traditional solutions that may include: Negotiating new terms with our lenders Negotiating new terms with our partners Engaging our current base of members Expanding our footprint in the community to broaden our existing member base. 18

19 Next Steps 1.Understand all of our options. What legal rights do we have in our agreements? What leverage do we have with our partners/lenders? 2.Review those options carefully We are working with an outside consulting team that is experienced with situations like ours. Solicit member feedback/recommendations. 3.Bring the feedback and recommendations to the members of this church in the next few months to engage them with thoughts, options and recommendations. 19

20 SOLLC Finance Committee Pastor Peter Strommen Pastor Hal Weldin Katy Hallberg Kermit Mahlum Patrice Sturm Jon Taxdahl Ken Unruh 20

21 Shepherd of the Lake Lutheran Church Personnel Team Report January 31, 2010 21

22 1.Engaging 2.Caring Community 3.Effective Christian Education 4.Evangelism and Mission Emphasis 5.Inspiring Worship 6.Support for Families 7.A Clear Vision 8. Empowering Lay Leadership Vision to Action 22

23 Interim Process 1.An interim period is less about calling a pastor and more about the congregation being readied as soil willing and able to receive much that will be new when the appropriate time for planting comes. 2.The focus must be on the congregation: its vision for mission and its need to come to terms with its history, to rediscover its identity apart from its former pastor,…to allow needed leadership change within, and to make a commitment to new leadership and directions in ministry. The Lutheran, Dec 2009 PRESENT 23

24 Personnel Team Goals 1.Re-design organizational structure which matches ministries to the vision of the Path/SOLLC’s mission. (Apply V2A) 2.Re-visit pastoral models and implementation thereof. 3.Full staff review beginning with pastoral staff followed thereafter with: A.Full HR re-design and implementation of policies, procedures, language, expectations of a large church construct. B.Staff for vision centric, exemplary ministries with strong vertical and horizontal alignments which embrace a very high level of lay staff involvement. 4.Encourage congregation to commit to lay ministries and re- ignite passion to Grow in Faith, Live to Serve. Future 24

25 Conclusion Leadership focuses on "What's right, not "Who's right." 25

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