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Wednesday, July 4, 2012

Statement from PB&F

At its first working meeting on July 4, the Joint Standing Committee on Program, Budget and Finance decided to utilize the Five Marks of Mission budget proposal here or http://www.episcopalchurch.org/sites/default/files/pbf_budget_template_5_marks_of_mission.pdf as its working template for the 2013-15 triennial budget. Program, Budget and Finance made that decision without commitment to any of the specific line items within the Five Marks of Mission proposal.

Program, Budget and Finance made its decision because the Five Marks of Mission budget provides a clear missionary framework for budgeting and is based on updated information regarding income.  Program, Budget and Finance will continue its work of building and amending income and expense lines for the final budget presentation on Tuesday, July 10.

Diane Pollard, Diocese of New York, Chair of Program, Budget and Finance, and Bishop Steven Lane, Diocese of Maine, Vice chair, on behalf of the members of Program, Budget and Finance

Monday, July 2, 2012

Guidelines for Meetings and Hearings

The Joint Standing Committee on Program, Budget and Finance
Guidelines for Invited Guests, Witnesses, and Visitors


We welcome you to the Committee meetings and Hearings of the Joint Standing Committee on Program, Budget and Finance (JSCPBF). We are thankful for your presence and participation with us.  We hope you will give us the benefit of your knowledge and experience.

In order that JSCPBF may perform the tasks assigned to it by the House of Bishops and the House of Deputies these guidelines will assist you in knowing when and how to give your testimony, counsel and advice.  These guidelines will also help us  by ensuring that input from guests, witnesses, and visitors is obtained in a form and manner that will best serve the General Convention while also offering those who wish to speak the freedom to express their views as time and good order permit.

The Joint Standing Committee on Program, Budget and Finance will sponsor three open hearings. 

The first hearing is scheduled for Wednesday, July 4 from 12:30 – 1:30 PM the exact location of the hearing will be announced).  The topic of this hearing will be a discussion on the Five Marks of Mission. 

The second hearing is scheduled for Friday, July 6 from 7:30 – 9:00 PM (the exact location of the hearing will be announced).  The topic of this hearing will be the Funding of the Budget.

 The third hearing is scheduled for Saturday, July 7 from 7:30 -- 9:00 PM (the exact location of the hearing will be announced). The topic of this hearing will be the Expense (Program) side of the budget

Each witness will be given two minutes unless with advance notice, it becomes necessary to reduce this time in order to hear from more witnesses at a specific hearing. Time limits will be strictly enforced and follow-up testimony is not permissible. Witnesses must address the Chair, confining their remarks to the matter under discussion   

In order to make the most efficient use of time and to allow for maximum participation, we will apply the following rules:  The Chair will determine the order of testimony, most likely – first to sign, first to testify, however, there may be others whom the Chair or Committee particularly wants to hear from so the Chair will reserve the right to take persons out of order.  

Those witnesses desiring or invited to testify before the Committee must register with the Legislative Aide by signing the Witness Registration Form before the hearing begins. Witnesses will indicate where they are from and what their status (role) is at the General Convention. They will also identify the specific matter they wish to address. Witness who are testifying on the same topic and representing the same position are encouraged to consult with each other and coordinate  your testimony, this will allow the maximum number of witnesses to appear before the committee.

Agenda of JSCPBF Meetings

The meetings of the committee will open with prayer and guests and visitors are invited to participate.  The committee will meet in the Convention center and the primary meeting rooms designated for this purpose is room 205.   In order to complete the work of  gathering information and testimony and the preparation of a draft budget for approval by both houses of  the General Convention JSCPBF works in sections:  Canonical (which includes Corporate); Funding, Program and Presentation.  There are breakout rooms adjacent to the main meeting room designated for this purpose.  Visitors are welcome to observe both the section meetings and the plenary meetings but may speak in Committee or Subcommittee meetings only if invited by the Chair. Please note that meeting space in breakout rooms is limited.

If a visitor has a question regarding any matter to come before the Committee or the Committee’s procedures, the visitor should contact the Secretary, the Vice Chair, or the Chair and seek a response.  Such question normally cannot be entertained during Committee meetings so they should be asked either before or after meetings

Saturday, June 23, 2012

Open Hearings


During the past three months, members of the Joint Standing Committee on Program Budget and Finance have been attending provincial synod meetings in order to present the Draft Budget of the Executive Council.  During our presentations we announced the process for conducting hearings at the General Convention.  We indicated that two of the three hearings would be conducted in a conversational form -- with individuals seated at round tables and engaging in conversation with members of the PB&F committee.  At a recent Provincial Synod meeting concerns were voiced questioning if this form would satisfy the definition of an Open Hearing. We have looked into this and decided that all three of the hearings will be conducted in the form of individual testimony. 

We appreciate the input that has caused us to decide on this change in our process.  We hope that all who plan to attend the hearings will come prepared with statements that are clear and concise. Because of time constraints, we anticipate limiting individual comments to two minutes.  I look forward to seeing you in Indianapolis.  Yours in Christ,

Diane Pollard, Chair
PB&F

Thursday, June 21, 2012

Presiding Bishop's Budget Released Today

The Draft Proposed Budget of the Executive Council was received by
Program Budget and Finance  in late January and since that time the
members of the Program Budget and Finance Committee have been reaching
out to the Church for comments.

Our members have conducted numerous interviews with a diverse group of
individuals including both staff and representatives of programs served.
We have attended Synod meetings and have received a wide variety of
comments and ideas about the various items that we should include in the
Proposed Budget presented to the General Convention in July.  We
continue to receive comments through the various official and unofficial
forms of communication in our Church.  We welcome them all.

The budget submitted today by the Presiding Bishop is yet another form
of information for the Program Budget and Finance Committee.  The
process for shaping the final draft document will begin with the
hearings held at our upcoming General Convention.

As chair of PB&F, my thanks to all of you for your support and input as
we continue the work of our Church.


Diane B. Pollard,  Chair
Joint Standing Committee Program Budget and Finance

Thursday, June 7, 2012

Commentary Prepared by PB's Staff

This is a commentary that was produced by the staff of the Presiding Bishop. This was prepared in response to questions asked at our recent Province gatherings.

CommentaryontheDraft2013-2015TriennialBudget_2_

Tuesday, May 29, 2012

The Question of Debt

The question of debt has been mentioned at a number of forums. The Joint Committee on Program Budget and Finance would like to respond to questions that are being asked in a variety of circles. We realize that we cannot work on the budget prior to the upcoming General Convention, however, the more information that we make available the more likely, we hope, to expedite our process. The current debt of the Domestic and Foreign Missionary Society is a question that we have heard and below is a narrative along with a chart supplied by the Finance Office of The Church Center that gives information on the current situation. We hope that this information will respond to some of the questions.

Faithfully yours,
Diane Pollard, Chair
Stephen Lane, Vice Chair
Joint Committee on Program Budget and Finance

The Episcopal Church has two loans with a current indebtedness of 43.4 million dollars.

The Church Center Building - 815 Second Avenue New York, NY 37 million at origination, 34 million as of 12/31/2011
The initial debt associated with the renovation of the Church Center Building at 815 Second building was 37 million. The loan had a variable interest rate and matured in December 2010. We primarily paid interest only. In June 2010, in anticipation of refinancing that loan to avoid a balloon repayment, Executive Council adopted a resolution mandating payments of both principal and interest. The loan was refinanced in January 2011 with a fixed interest rate and mandatory principal payments. During 2011, mandatory and optional repayments were made, reducing the principal to $34 million at year-end. The current loan matures in January, 2016 and must either be paid in full or refinanced. Based on a continuation of the current interest rates, term and conditions, the loan would be paid off in 23 years.

Future Potential Site for the Archives of the Episcopal Church - Austin, Texas
A parcel of land, currently operated as a parking lot, was purchased as the potential site for the Archives; the property was acquired for 9.5 million plus closing and related costs and was financed with a 10 million line-of-credit 5-year balloon payment loan using the endowment as pledged collateral. The loan requires payments of interest only and has a variable interest (currently about 1.5%). We currently pay loan interest and real estate taxes due (the property is subject to tax because it is not used for religious or other exempt purposes). The current income from the parking lot exceeds the interest on the loan and the taxes. Any excess has been used to reduce the principal outstanding. The disposition of the property and the loan will be influenced by future decisions about the relocation of the Archives.

Additional Debt Data


DFMS Credit Facilities
$ unless otherwise noted




US Bank Term Loan
US Bank Revolving Credit
Bank of America Revolving Credit
Purpose
 General purposes; primarily building renovation
 General corporate purposes; short-term cash needs
 Archives Austin site; short-term cash needs
Original/maximum facility amount
37,000,000
5,000,000
20,000,000
Outstanding at 12/31/2011
34,122,800
n/a
9,340,000
Interest rate basis
Fixed
LIBOR + 0.75% determined at time of draw
LIBOR + 1.0% determined at time of draw
Interest rate
3.69%
 1.22% if drawn on 5/8/12
1.58% currently
Annual mandatory principal repayment
1,480,000
n/a
n/a
Annual debt service (principal and interest)
2,739,131
n/a
147,572
2013-2015 draft budget line 285
8,700,000
n/a
See note below
Termination date
January 2016
January 2012
April 2016
Commitment fee
n/a
0.25%
0.15%
Pledges
Securities
Unsecured
Securities
Notes
No penalty for prepayment
 n/a
Excess revenue after debt interest and real estate taxes is used to reduce principal

Additional Notes

US Bank
·         Principal repayment is based on a 25-year schedule.  The loan is renegotiable in 2016; and US Bank expects to renew unless the credit worthiness of the DFMS evaporates. 
·         There are two main financial covenants attached to the debt obligations.  The tests are based on DFMS consolidated financials (which are only produced on an annual basis).  However, based on the more conservative analysis of the unaudited, unconsolidated “parent only”, the DFMS exceeded both tests.   The Society’s debt to net assets ratio (i.e., debt/ (debt + net assets) is 14.6% -- a ratio that would rank among the best in a corporate environment.

Bank of America
·         The loan is interest only.
·         The property acquisition and closing costs totaled $10 million in June 2009.
·         Financed through the DFMS Line of Credit. The DFMS is the owner and borrower, however, as Archives is not independently incorporated – nor could it qualify as a borrower.
·         Gross revenue from operating a parking lot (approximately $510K annually and continues to increase) provides payments of interest and real estate taxes.  Excess revenue after interest and real estate taxes is used to reduce principal.
·         Independent appraisal completed in October 2011 valued the property at $10.950 million. 
  • These revenues and charges are separate from the operating budget because it is not a “primary activity" of the society.