I hope that everyone is safe and healthy, and that you all stay that way. (Forever!)
I am writing to give you news of the most recent vestry meetings. We had a special meeting—that is, not one of our regular monthly meetings—on April 5 and another on April 19, both via Zoom. We met because the church was dangerously close to running out of money. Pledge collection is drastically down now that the church is closed because of the pandemic. The vestry needed to solve that immediate challenge, and also needed to try to take some steps to begin addressing the fact that we have a deficit of about $100,000 in our budget.
At the April 5 meeting, Kate and I described the process the church and school had been going through to apply to our bank for a Paycheck Protection Program (PPP) loan. As you probably know from the news, a PPP loan is a loan through the Small Business Administration and through the borrower’s own bank. It provides a loan of about twice the borrower’s monthly payroll costs. The idea is to give entities the ability to retain and to pay their employees for the next couple of months. If an entity gets a loan, the government might forgive it, if during the closure the business has not laid off any employees and has not reduced its workers’ salaries by more than 25%. The vestry approved the decision to apply for a PPP loan.
The other issue we discussed on April 5 was a recommendation we had received from the church’s Investment Committee. The committee recommended acting on a provision in the budget for taking a 4% distribution from each of three endowments the church owns. This is a practice many non-profits follow to get a dependable, though often small, amount of income each year. The committee also suggested that the church take the return that a portion of the money from the sale of the rectory has yielded. (No money we received from the rectory sale would be touched; we would be using only interest and investment return from that money, not the principal itself.) The vestry decided to gather more information about these measures and to vote on them at another special meeting scheduled for April 19.
Before adjourning, the vestry did one delightful thing. We unanimously elected Jack Pitts to be your new junior warden. We also decided to try something that a lot of Episcopal churches do: have the junior warden focus on buildings and grounds issues. Watch for more news on that front!
By the April 19 meeting, the church had received the good news that it had received a PPP loan, though the money had not yet arrived. A donor also had accelerated a large pledge. For the next six or eight weeks, therefore, it appeared that St. James’ had enough money to pay its bills. The vestry recognized, though, that after that we soon would be back in financial danger again. One way to address that looming challenge was to urge the congregation to please, please keep its pledge payments current. The vestry approved that message. Another approach would be to follow the Investment Committee’s recommendation that, as the budget contemplated, we take some returns from our endowment accounts. The vestry voted unanimously to do that as well.
A more painful topic was whether and how to cut our budget. A small group had met after the April 5 meeting and had come up with some possible budget cuts. Some small cuts flow automatically from the fact that the church building is closed. For example, heating and air conditioning costs are down, and we do not need extra security for Sunday services. It is possible that we could reduce the cost of our yearly audit. But, given that almost 70% of the church’s budget is made up of the wages and benefits of our employees, any large cut would have to come from personnel expenses. We talked about eliminating one or two positions or cutting the salaries of all employees, either by identical percentages for all or by varying percentages depending on the position. The vestry felt bad about the hardship that all these ideas would cause, but recognized that there is a chance we will have to consider them. We decided to enact the small budget cuts for now and to wait until our May meeting to decide on the audit costs and the personnel ideas.
The last action the vestry took on April 19 was to review the parochial report. The parochial report is due to the diocese once a year. It provides all sorts of information about our parish—numbers of parishioners, attendance at services, budget amounts, and types of outreach ministries. The vestry approved the report for filing with the diocese.
The vestry is just one part of solving the church’s financial problems, but you should know that we take our part very seriously. We are trying to balance all the different interests presented to us, and to come up with realistic plans to get St. James’ back on a solid financial footing. If you have questions or ideas, please contact me or any other vestry members.