1. John Pearce, President TN Conference CF&A
Tennessee Conference United Methodist Church District Meetings January 2018
Financial Considerations of Potential Unification/Combination of Tennessee and Memphis Annual Conferences
John Pearce, President TN Conference CF&A

2. The United Methodist Church is Changing
Special Session of General Conference
February 23-26, in St. Louis Missouri
Pew Research
Millennials 36% Religiously Unaffiliated vs. 17% of Baby Boomers
GCFA Statistics:
“Stable Decline” 1 of 57 conferences grew
Tennessee #4, Memphis #16
Catholics, Southern Baptist, United Methodist (by size in USA)

3. Change Is Coming Whether We Like it or Not
How does this change impact us in the Tennessee Conference?
What should we be doing now to be prepared for this change?
How do we lead through this Change in order to accomplish our mission?

4. Southeastern Jurisdiction Conferences Membership 12/31/2016
1) North Georgia ,771
2) Virginia ,931
3) West North Carolina - 279,996
4) Florida ,148
5) North Carolina ,323
6) South Carolina ,270
7) Mississippi ,292
8) Holston ,288
9) Kentucky ,656
10) Alabama-W Florida - 137,614
11) North Alabama ,993
12) Tennessee ,740
13) South Georgia ,229
14) Memphis ,320
15) Red Bird Missionary ,357
Tennessee/Memphis ,060
7 of 14

5. Joint Meeting of CFA Executive Committees of the Memphis and Tennessee Annual Conferences Regarding Financial Issues Associated With A Potential Unification/Combination of the Two Conferences August 25, Camden United Methodist Church
Tennessee Conference:
John Pearce, President
Terry Hundley, Vice President
Paul Purdue, Secretary
Jim Allen, Treasurer
Memphis Conference:
Bill Milliken, President
David Hayes, Vice President
Ed White, Secretary
Larry Davis, Treasurer (absent)

6. Purpose of Joint CFA Group:
Understand relevant issues/opportunities and find solutions.
Report back to conferences with accuracy and transparency.
Ensure a potential unified/combined conference will operate financially successful for many years.

7. HEADLINE:
While there is much Financial Due Diligence work that needs to be done before this potential unification/combination occurs, we do believe that, unlike conversations a few years ago, there are no financial issues that would prevent the potential unification/combination.

8. Financial Perspective/Magnitude
MEMPHIS CONFERENCE
2018 Budget $6,058,671
2016 Membership ,320
2016 # of Churches
2016 Average Size
2018 # of Districts
2017 Appointed Clergy
= 40% of Budget, appointed clergy & Membership
TENNESSEE CONFERENCE
2018 Budget $8,870,698
2016 Membership ,740
2016 # of Churches
2016 Average Size
2018 # of Districts
2017 Appointed Clergy
=60% of Budget , appointed clergy & Membership

9. Critical Issue #1:
Memphis Conference must fund & defease their post retirement clergy health plan
Plan Liability at 1/1/17 $29 million
Plan terminated 7/1/16 and now only clergy over age 60 at 7/1/16 have a benefit
Liability reduced to $11 million
Plan to use excess pension reserves to fund this liability. (Done 9/12/17)

10. Critical Issue #2:
The two Conferences must agree on a consistent method to pay for Clergy Health and Pension Costs
Tennessee Conference Apportions Clergy Health and Pension Costs
CFA agreed to report to 2018 Conference with recommendations
Memphis Conference Direct Bills Clergy Health and Pension Costs
Direct Billing is a recent change in Memphis and is very important to them

11. Average Cost Health & Pension for 1 Clergy 2017 (Tennessee Conference)
Average Salary $66,205
Health Cost $8,640
Average Pension Cost $10,526
Total Cost/Clergy $19,166
464 churches Paid < $19,166
120 churches Paid > $19,166
Total Pension & Health Costs =
48% of Total Expenses
Conference Ministries =
52% of Total Expenses
If 48% equals $19,166 for one clergy then 100% equals $39,929
63 Churches Paid > $39,929
521 Churches Paid < $39,929

12. Critical Issue #3:
The two Conferences must agree on a methodology used to pay for the Conference Budget.
Memphis significantly reduced their budget such that they could ask local churches for a “10% tithe” of local church revenue.
Tennessee apportions budget based on local church expenditures.
Tennessee would need to reduce its (non-health and pension) budget by $1.3 million ( 22% of $5.9 million ) to achieve a “10% tithe” Budget is “11.5% tithe”

13. Tennessee Conference United Methodist Church
2018 Budget
Category:
Apportioned Amount
Budget Amount
Other Income
Use of Reserves
Actual Total Cost
% of Total
10% Tithe Goal
Pensions:
900,000
810,000
38,000
2,790,693
3,638,693
19.56%
363,869
Clergy Health:
4,325,000
3,892,500
455,000
(5,836)
4,341,664
23.34%
434,166
General Church:
2,718,048
2,410,092
12.96%
TN Conference Items:
6,514,503
5,891,986
1,752,213
568,620
8,212,819
44.15%
Un-collected
865,152
Needed ADJ
(1,313,745)
TOTAL BUDGET
14,457,551
13,004,578
2,245,213
3,353,477
18,603,268
8,651,521

14. Difficult Issues:
Consistent Clergy Health Plan Benefits ( Family coverage, deductible, co-pay, part time etc.)
Conference camp and retreat assets and deferred maintenance
Consolidation of Conference offices and personnel
Realization of Cost Savings
Plan for potential loss of Apportionment Revenue
Ongoing use of Conference Reserves
Maintain/Increase 90% collection of Apportionments
Control costs and maximize revenue

15. Not So Hard Issues:
Clergy Pension plans: Same plans, all over funded, excess reserves
Accounting and record keeping
Use of and management of closed church assets
Equalization of District budgets and DS & Conference staff pay

16. CFA Plan, (So Far): Met November 28th
First Mtg for 2019 Budget February 12, 2018
Due Diligence CFA Exec. Cmt with Jim Allen and Larry Davis
Special task force to focus on consistent Health Plan Benefits
CFA Exec. Cmt focus on direct bill of Clergy Health and Pension Costs
Special task force to focus on Wesley Foundations
Consolidation of: Miriam’s Promise, Martin Methodist College, Camp and Retreat Ministries, Higher Education & Campus Ministry, Congregational Development, Board of Laity & Archives&History with/into the Connectional Ministries Budget