2006/2007 General Assembly Budget

he 2006/07 budget builds on the 2005/06 budget, which has been used as a baseline. It continues some key themes, namely: producing a balanced budget where expenditure doesn’t exceed income and a continuing focus on expenditure constraint.

The prudent approach to last year’s budget and prevailing interest rate conditions together with the Assembly’s focus on constraining costs have all contributed to a 5 percent reduction in Assembly Assessment in comparison to last year.

General Assembly 2004 was clear in its call for a balanced budget, and this was foremost in our consideration of how available funds should be used. This approach ensures the Church’s financial position is sustainable and puts in place a platform from which future initiatives can be undertaken. Please take the time to read the information in this pack that outlines how the General Assembly will spend its funds during 2006/07.

In this report, budget figures for 2005/06 are used for comparison rather than year-to-date figures. Provisional results (projected to upcoming 30 June 2006 ) indicate General Assembly is on target to meet the 2005/06 budget.

Council wishes to acknowledge the efforts of the Church’s Finance team and the Resource Sub-committee in pulling together the budget. As always, we welcome your questions and comments about the budget, which can be addressed to the conveners of the Resource Sub-committee, John Trainor and Ian Watson.

On behalf of Council of Assembly and the Resource Sub-committee

Kerry Stotter & Helen Beaumont
Convener & Acting Deputy Convener
Council of Assembly

John Trainor & Ian Watson
Co-Conveners Resource Sub-committee

2006/07 budget highlights

  • Assembly Assessment has reduced by 5 percent from the level set in 2005/06
  • The operating surplus is expected to be a modest $60,000 ($60k). A change in policy around how interest income from trusts is handled means that there will be an actual all-up surplus of $293k (refer note 9 - pg 5)
  • Excluding the effect of this year’s General Assembly, operating expenditure is at similar levels to 2005/06

Comparison between 2006/07 and 2005/06

The information below is set out in two different formats to facilitate better clarity and transparency around how General Assembly funds will be used during 2006/07.

Table 1 compares the budget of last year with 2006/07 for key budgeted income (eg. Assembly Assessment) and expenditure items (eg. staff costs, grants paid) in a “profit and loss” statement format.

Table 2 shows the 2006/07 budget information in a different way. It is presented by function (eg. communications, administration, School of Ministry ) rather than by expenditure type (staff, travel etc).

Explanatory notes follow the tables to aid interpretation of the information presented.

Table 1: Comparison between 2006/07 and 2005/06 budget

Income ($000's) 05/06 Budget 06/07 Budget Variance $ Variance % Notes
C/V Contributions 320 373 53 17%  
Assembly Assessment (AA) 4,292 4,081 (211) -5% 10
Administration Levies 320 173 (148) -46% 3
Misc Revenue 113 138 25 22%  
General Assembly Meeting   225 0 100%  
Grants Received 295 458 163 55%  
Donations Received   155 155    
Investment income 541 1,102 561 104% 9
Property Income 362 121 (241) -67% 11
Total Income 6,243 6,826 583 9%  
           
Expenditure ($000's)          
Staff Costs 1,736 1,710 (26) -2%  
Beneficiary Fund Contrib 1,067 1,111 44 4%  
Seniority Allowance 360 409 49 14%  
Travel Costs 260 268 8 3%  
Property Costs 607 514 (93) -15%  
Communication Costs 348 301 (47) -14%  
Provision for unpaid AA 532 537 5 1% 10
Grants Paid 608 767 159 26%  
General Assembly Meeting   225 0 100%  
Miscellaneous Costs 725 693 (32) -4%  
Total Expenses 6,243 6,533 290 5%  
           
Surplus 0 293 293   9

Table 2: 2006/07 budgeted income and expenditure by function

Governance Expense Income Net Note
Council of Assembly 37   -37  
Moderator 65   -65  
General Assembly meeting 225 225 - 1
Subcommittees/Workgroups 17   -17  
  344 225 -119  
Support services        
Archives 145 50 -95  
Assembly exec secretary & legal 316   -316 2
Finance 755 232 -523 3
Communications 320 126 -194  
Human Resources 227   -227  
  1,763 408 -1,355  
Mission        
National Mission Enabler 293 115 -178 4
Youth 140   -140  
Asian 28   -28  
Te Aka Puaho/ Amorangi Training 173 38 -135 5
Other Grants 284   -284 6
Pacific Island Synod 66   -66  
  984 153 -831  
Leadership        
School of Ministry 926 405 -521 7
School of Ministry Houses 129 109 -20  
  1,055 514 -541  
Global Mission 339 359 20 8
Subtotal 4,484 1,659 -2,825  
         
Beneficiary Fund 1,111   -1,111  
Seniority Allowance 357   -357  
Co-op ventures Seniority Allowance 45 45 -1  
Presbyterian Foundation   203 203  
Other Interest Received   465 465 9
Assembly Assessment 537 4,081 3,544 10
Coop Ventures   373 373  
  2,049 5,167 3,118  
         
Total 6,533 6,826 293  

Explanatory information

The notes on pages 4-6 of this information pack should be read in conjunction with the tables on pages 2 and 3 of this report.

In this report, budget figures for 2005/06 are used for comparison rather than provisional year-to-date figures. Provisional actual results indicate General Assembly is on target to meet the 2005/06 budget. The financial results for 2005/06 will be published as soon as possible after the audit has been completed ahead of General Assembly in September.

General Assembly Meeting
The estimated cost of holding the General Assembly meeting in September is $225k. It is planned that the gathering will be fully self-funded through registration fees.

Assembly Executive Secretary team and legal
A major part of the budgeted increase in expenditure between 2006/07 and 2005/06 relates to the number of sexual misconduct cases being processed, for which the Assembly pays the legal expenses. Legal costs in 2006/07 are budgeted at $110k.

Finance
Income from levies charged to Church Property Trustees (CPT) for services provided by the Church's Financial Services Team declines from $320k to $172k. This is driven mainly by the CPT's decision to outsource administration of the Presbyterian Investment Fund ($107k) and a $35k reduction in insurance levy. Other main components of expenditure in the Finance area include staff costs, audit fees and central administration costs such as office rental, depreciation, insurance and information technology services.

National Mission Enabler
Budgeted income and expense both increase because of the Kids Friendly project (funded by Council for World Mission funds, a donation from PSDS and contributions from Presbyteries).

Te Aka Puaho
In consultation with Te Aka Puaho, it has been agreed to increase General Assembly’s contribution to their ministry from $100k to $135k in 2006/07. Te Aka Puaho is increasing the number of persons being trained as Amorangi. Budgeted expenditure is funded by Council for World Mission funds.

Other Grants
Interest income on Presbyterian Foundation funds of $2.8m is estimated at $203k and this has been set aside for grants as per the Assembly policy. Other grants include the Presbyterian contribution to Uniting Congregations of Aotearoa New Zealand ($40k), Interchurch Bioethics Council ($3K) and Churches' Agency on Social Issues ($37.5k).

School of Ministry
The main components of this cost are bursaries, allowances, student grants and staff costs (including an allowance for a new Principal). Income is mainly comprised of grants received and interest from investments. The proposed changes to the School of Ministry have not been taken into account as they have not been approved by Assembly.

Global Mission
Donations to Global Mission have been increasing as activity has grown. Total grants expense for GM projects is budgeted at $142k and there is an additional provision for membership fees to international ecumenical agencies. Global Mission is fully self-funding with their income coming from donations and interest on investments only.

Effect of Interest Received on Operating Surplus
Interest received that is not allocated to a specific budget purpose amounts to $465k (total interest income is $1.1m). Of that projected income, $233k will be earned on specific purpose trusts and deposits that are not accessible to the General Assembly. For this reason it should be noted that the overall budgeted surplus of $293k should be considered as including $233k inaccessible interest income and $60k as a usable operating surplus.

Assembly Assessment
The 2006/07 calculation allows for a 5 percent reduction over the 2005/06 year despite expense increases of 4 percent in the Beneficiary Fund and 3 percent on Seniority Allowance (see Table 1 below).

Table 1: Assembly Assessment calculation

  2006/07 2005/06 Variance  
Assembly Operations 2,608,400 2,760,291 -151,891 -6%
Beneficiary Fund 1,109,000 1,064,875 44,125 4%
Seniority Allowance Levy 360,000 350,000 10,000 3%
Increase of 2.8% CPI - 116,834 -116,834  
Total to be recovered 4,077,400 4,292,000 -214,600 -5%
Membership Recovery (50%) 2,038,700 2,146,000 -107,300 -5%
Income Recovery (50%) 2,038,700 2,146,000 -107,300 -5%
  4,077,400 4,292,000 -214,600 -5%

Current year financial performance indicates that the General Assembly can absorb a reduction in Assembly Assessment by 5 percent or $215k to $4.08m. The 50/50 split between collection and membership remains, and the levy per member reduces to $70 and percentage of assessable income reduces to 6.5 percent (see Table 2 below). This is despite expense for Beneficiary Fund rising by 4 percent and Seniority Allowance by 3 percent.

Table 2: Assembly Assessment Breakdown

  2006/07 2005/06 Variance  
AA per member (excl TAP) $70.07 $71.14 -$1.07 -2%
AA as % of Income 6.5% 7.1% -1% -10%
Charging Range (Total AA / Assessable Income)        
Minimum 11.50% 12.75% -1.25% -10.87%
Maximum 15.50% 16.75% -1.25% -8.06%

Parish statistics to 30 June 2005 indicate a continuation of the trend of 4 percent decline in membership and 4 percent increase in parish income.

  1. Property Income
    Budgeted income from properties reduces by $241k (in comparison to 2005/06) due to discontinued rental income resulting from the sale of Laughton House. Income is generated primarily from rentals of Dunedin properties.

 

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