an even more fair share… the old model 13% of church adjusted income Calculated monthly Adjustments: - rent/mortgage - capital funds - world missions - pass thru funds - bequests - Bishops’ crisis response fund, ICCM, IYC, BQ Included: - Pension (38%) - Denominational Operations (EPP – 34%) - Conference Operations (19%) - WAVE Operations (9%) concerns in the old model • Fair Share was based on different adjusted income calculation / income year than denominational support • Disconnect between what was being reported at year end report and what was being reported monthly • Monthly compensation reporting was inconsistent with compensation reported to FMCUSA:HR • Pension was bundled into the Fair Share and obscured the true staffing expense for the local church • Churches paying their fair share were subsidizing EPP and Pension payments for churches not participating or underparticipating • Sizable shortfalls in Pension and EPP due to these factor. At one point Pension and EPP payables had grown to over $290,000 and $300,000 respectively. Total obligation has been cut to $11K pension and $233K EPP. the new model • Pension is being unbundled and directly billed to the local churches on the basis of compensation reported to FMCUSA:HR • Pension will be directly drawn from local church accounts. • Fair Share is being reduced to 7.5% for all of the WAVE conferences • Fair Share will provide an option for direct draw with a discount for this approach • No more monthly WAVE reports. Churches will now be invoiced monthly. Churches, WAVE operations and Conference BOAs will now know exactly where the church stands in regards to Fair Share. • Fair Share will be based on the same adjusted income number as denominational operations • Fair Share will be more fairly allocated to all churches on the basis of the adjusted income of the last completed FY. 2013 Fair Share will be based on 2011 adjusted income. This information will be available in advance for 2013 budgeting purposes for local churches and conferences. the new model: Potential Problems • A church might neglect their responsibilities. • Dramatic changes in income from 2011 to 2013 might result in difficulty for the local church. • A local church may see an increase in total outlay from projected 2012 outlay to 2013 Fair Share and Pension if it has: ― had inconsistencies between year-end income reporting and monthly income/compensation reporting (under the old system) ― been funding more non-FM World Missions than FM World Mission budget ministries ― a significant mortgage and/or rent for facilities ― not been consistently reporting/paying Fair Share in 2012 the new model: Benefits • We will now know monthly where a church stands with its pension and Fair Share obligations. We can more accurately pinpoint and more creatively respond to fluctuations in church income or financial difficulty. • The local church will now know accurately its total staffing expenses and current obligations. • The Fair Share will be based on the same underlying adjusted income as denominational EPP. This will also help ensure that we fully fund denominational, WAVE and conference operations. • The system will be simplified dramatically. No more monthly reporting is required. 2013 Fair Share and Pension will be known in advance for budgeting purposes. Invoices will be generated for the local church and direct draws will be offered as an option.