2019 Annual Meeting
March 10, 2019
Please find attached to this treasurer’s report, the 2018 summary financial reports and 2019 budgets for the operating divisions. A detailed Treasurer’s Report will be presented at a special finance meeting on March 24th at the forum hour.
The church’s Endowment consists of several components. The Keck/Cleaver Fund is managed by the church’s endowment committee as described in the church bylaws and is a board restricted fund. Annually the endowment committee recommends a draw from the Keck/Cleaver Fund for distribution.
In addition, in 2017, the Vestry approved a new component of our endowment titled the Legacy Fund. The Legacy Fund is a true endowment, the principal of Legacy Fund gifts is not available for distribution per the gift agreements.
The endowment committee also manages a Restricted Fund that consists of perpetual care gifts given for the maintenance of the Stained-Glass Windows, the Columbarium and several smaller projects. These funds are used when their restricted purposes are activated.
The endowment committee uses the Shadden Group of Morgan Stanley to manage the above three funds.
Through 2018, the endowment committee, through Morgan Stanley, managed the Building for Tomorrow construction loan. The loan was fully paid off in January of 2018. In addition, the Morgan Stanley investment funds are used as collateral for access to an operating Line of Credit.
The Kirk Fund is administered outside the church endowment by Bank of America’s Trust Management division. The Kirk Fund distributes up to 5% of its fiscal year-end (October 30) value annually to the church.
For 2018, the endowment committee recommended a Keck/Cleaver Fund draw of $287,000. The Actual draw for 2018: Church Operations $270,000, Our Saviour Center Operations $205,000, Building for Tomorrow Final Loan payoff $100,000, total $575,000. For 2019, the endowment committee recommended a Keck/Cleaver Fund draw of $260,000. Actual budgeted draw for 2019: Church Operations $248,000, Our Saviour Center Operations $245,000, Rector Search $25,000, total $518,000.
The Kirk Fund Distribution for 2018 is $238,000 and for 2019 is estimated at $240,000.
Please see the attached the endowment fund report for description of 2018 activity of the church’s investment funds and the loan accounts held against the investments.
Church Operating Fund
In 2018, the church operating fund spent approximately $1,152,000. The operating fund received $660,000 in revenue and was allocated $508,000 from the two endowment funds for a total source of funds of $1,168,000. This resulted in a year-end net surplus of approximately $16,000.
However, pledge and plate felt short of budget by slightly more than $18,000. Kirk Fund transfer also came in $15,000 less than budgeted. Fortunately, these shortfalls were more than offset by revenue from two filming projects that netted the church $50,000.
For 2019, the Vestry passed a budget that reduced expense by $48,000. This was necessitated by declining pledge revenue, expected smaller allocation from the Kirk Fund and the need to reduce the draw from the Keck/Cleaver.
The 2019 budget implements personnel reductions of approximately $30,000 (scheduled to go into effect as of 7/1/19), program expense reductions of $8,000 and administrative and property budget reductions of $9,000.
A Child’s Garden School
ACGS expense for the 2017/18 school year was approximately $693,000. The school’s revenue for the period was approximately $698,000 resulting in an approximately $5,000 net surplus.
The school revenue exceeded budget projections by $17,000. Contributions and fundraisers surpassed budget by about $5000 and tuition fees exceeded budget by $12,000. The school’s summer program enrollment exceeded expectations.
Total expense was on budget. Personnel was over $3,000, primarily due to staffing for the higher than expected summer enrollment. This was more than offset by tuition revenue.
The expense budget was higher than revenue by $11,000, the Vestry authorized expensing prior year surplus from fundraising efforts.
Our Saviour Center
In 2018, the Center spent approximately $1,192,000. The Center received $967,000 in revenue and was allocated $210,000 from the Keck/Cleaver endowment fund for a total source of funds of $1,177,000. This resulted in a year-end net shortfall of approximately $15,000.
For 2019, the Center’s budget is increased by approximately $30,000 from 2018 expenses. The 2019 Keck/Cleaver Draw for Center Operations is set at $245,000.
Our Saviour Center
(Cleaver Family Wellness Clinic)
In 2018, the clinic’s total operating expense was approximately $673,000. The clinic’s revenue for the period was approximately $732,000 resulting in an approximately $59,000 net surplus. The surplus was driven by the Health Plan Incentives line which exceeded the annual budget by $86,000, due to the late payment of health plan incentives earned in 2015 and 2016 but paid out in 2018.
The clinic’s primary IPA (who pays 80% of the clinic’s healthcare incentives) changed their formula for allocating incentives to its member clinics. This change resulted in the clinic receiving no healthcare incentive for 2017, with little expectation that the clinic will earn incentives in the future. Based on this information, the clinic’s 2019 budget projected a revenue shortfall of $215,900. The clinic is not able to find other sources of revenue to make up this shortfall.
The Vestry approved the Clinic’s budget for the first 6 months of 2019 and asked clinic management to identify options to fund the clinic including partnerships or an outright sale to another community clinic. Clinic management is engaged in this process.
Our Saviour Center
(Soccer for Success)
In 2018, the Soccer for Success spent approximately $142,000 and received $217,000 in revenue resulting in a surplus of approximately $75,000. The SfS program is supported by the City of El Monte, El Monte City School District and the Mountain View School District.
The surplus dollars are ear-marked for the Spring version of the SfS program.
Center management is working to secure re-funding by the city and school districts for the 2019/20 cycle. The budget for 2019 is set at $231,100.
The housing program expense for 2018 was $177,000. Additional $63,000 was paid toward the mortgage principal bringing the total outflow for 2018 to $240,000. The housing program revenue was approximately $277,000 which generated a net cash flow of $37,000 at the end of 2018.
Revenue exceeded budget by $26,000, contributions from generous donors exceeded budget by $20,000.
For 2019, the housing program projects an outflow of $228,000, which is $12,000 less than 2018. The final outstanding loan balance of $16,500 will be paid off during the first 6 months of the year. The housing program is increasing personnel expense by $35,000 which includes a p/t assistant to the Director.
The program budget anticipates a net cash flow surplus of $23,300 at the end of fiscal 2019.
Li Tim-Oi Center
Li Tim Oi Center’s revenue for 2018 was $29,000 and expenses were $21,000. Revenue includes the first 1/3 installment of a three-year $50,000 grant from TEC. The 2019 budget is pending as we work with the Diocese of LA to develop plans for 2019.