Overture 04-20. On Directing the Board of Pensions to Revise Their Rules for the Calculation of Salary for Churches with a Clergy Couple Installed to One Position—From the Presbytery of Southeastern Illinois.

The Presbytery of Southeastern Illinois respectfully overtures the 216th General Assembly (2004) to direct the Board of Pensions to revise their rules concerning the calculation of the “full-time equivalent annual salary,” for churches with a clergy couple, married to each other, installed to one position, to use the combined “total” effective annual salary for the one position, at any given church, where the “total” includes the sum of the clergy couple’s effective annual salaries for the couple installed to one position; permitting one of the pastors to receive medical coverage as dependent/family member of the other spouse. This revision includes the following limitations and clarification:

1. Limit this exclusion/exception to clergy couples installed to one position as verified by the church and the presbytery, married to each other, jointly serving the equivalent of one, full-time position.

2. Permit one member of the clergy couple to receive medical/healthcare coverage as the spouse dependent/family member of the other, with the total cost of the medical dues not to exceed those calculated by the total effective annual salary of the combination of the two pastors (as if it was one pastor installed to the same one position); in accordance with the current Board of Pension guidelines for medical dues calculations (including the greater of the combined effective annual salary for one position or the minimum salary participation basis for one position).

3. This change would only apply to the medical dues and would not affect the current method of calculating the pension or the death and disability coverage or the dues thereof.

Rationale

Due to an apparent unanticipated impact from the substantial changes in the Board of Pension (BOP) Medical Dues calculation, the amount a church will pay for a clergy couple, married to each other, installed to one position will have the following effect; assuming a combined full-time equivalent annual salary equal to the churchwide median of $44,200: In January 2003, the total this church paid for the medical dues was $3,920 for each of the pastors, totaling $7,840 (2 x $22,100 x 16.5%). In January 2004, this church will pay $7,155 for each of the pastors, totaling $14,310 (2 x $22,100 x 18.5% x 35/20). A couple with one spouse serving full-time as a pastor installed to this same one position would have the same healthcare coverage, with the other spouse as a dependent—this church will pay medical dues of only $8,177 ($44,200 x 18.5%). Obviously, the impact of $6,133 ($14,310-$8,177) is a gross inequity for a clergy couple installed to one position, and the church that they serve—usually a small church. [Note: It is stipulated that the use of the words “clergy couple” in this document only applies to a “clergy couple married to each other.”]

Clergy couples installed to one position have answered God’s call, as they have discerned it, to serve Christ together by filling one installed position in the church because, as a couple, they feel the call to share in a common ministry as they grow together in marriage and career, usually including family responsibilities to children at the same time, as well. Generally these are couples with young families and are serving in small churches, each of which has limited financial resources; therefore, the church they serve should not be penalized by treating them as part-time pastors.

The Board of Pensions has adopted a 12 percent increase in the medical dues for all plan members by increasing the rate from 16.5 percent in January 2003 to 18.5 percent in January 2004. However, the medical dues will increase from 18.5 percent to more than 32 percent for a church with a clergy couple installed to one position.

The situation for a church with a clergy couple installed to one position is exacerbated in 2004 by

1. the 21 percent ($23,600 to $28,730) increase in the minimum salary participation basis,

2. the new calculation of the “full-time equivalent annual salary” prorated for the part-time salary based on the number of hours worked compared to 35 hours, and

3. then using the greater of the “full-time equivalent annual salary” and “minimum salary participation basis” as the “effective annual salary for medical dues calculation.

For a clergy couple installed to one position making a combined total equal to the churchwide full-time median salary of $44,200, the total increase in medical dues from January 2003 of $3,920 for each to January 2004 of $7,155 for each is a $3,235 increase for each of the pastors totaling a $6,470 increase for the church. This is an 82.5 percent increase in a period of twelve months with the church paying on a full-time equivalent annual salary of $77,350 ($44,200 x 35/20).

If one member of a clergy couple served the same church full-time in the same one position, the spouse would be covered under the medical portion of the plan as a dependent; but if this couple is called for both of them to fill the same single position, they and the church are penalized by an amount of $6,133.

If the actual effective salary for each member of the clergy couple installed to one position is $25,257 or greater, the church will pay on a full-time equivalent annual salary of $88,400 (2 x $25,257 x 35/20 x 18.5%)—this is the maximum any church will pay for one full-time position even if the pastor made $200,000 or more, while this clergy couple is only making a total of $50,514 combined. In both cases, the church will be paying $16,354 just for medical dues.

It is understandable why the Board of Pensions added the “full-time equivalent annual salary” calculation for most part-time members since part-time members are receiving full medical coverage and benefits under the medical portion of the plan, thus making it reasonable that most of those members should be paying a prorated amount based on their part-time salary. But it is not understandable why the Board of Pensions calculates salaries for a clergy couple installed to one, full-time position as two, full-time equivalent annual salaries.

For a clergy couple installed to one position, the “full-time equivalent salary” should be the sum of the two effective annual salaries and each part-time salary, individually, should not be subject to the “minimum salary participation basis.” The maximum this church should pay for medical dues should be based on the greater of the combined effective annual salary for one position or the minimum salary participation basis for one position; not two positions.

Due to the community nature of the Board of Pensions plan, we are not requesting a change for clergy couples who serve different churches or separate entities even though they also feel the pinch of each spouse having to pay full medical dues. The difference being that each entity does need to fulfill the obligation to the total community by paying a share of the cost of the benefits received; and recognizing that part-time members receive full benefits under the pension and death and disability part of the plan, no change in this portion of the benefits plan is requested.

Due to the unique aspects involved for a clergy couple installed to one position, we submit this overture petitioning the Board of Pensions to exempt this one classification of members from the calculation based on the part-time effective annual salary of each member individually with the minimum salary participation basis and the full-time equivalent annual salary. Instead, it is more reasonable to use the current Board of Pensions medical dues calculations for the combined total effective annual salary of both members of the clergy couple. The Board of Pensions has informed us there are not many clergy couples installed to one position. Therefore, this will have a minimal effect on the total income to the Board of Pensions; but it is a gross inequity for the clergy couple installed to one position, and for the church that they serve—generally a small church with limited resources.

Concurrence to Overture 04-20 from the Presbytery of Palisades.