Direct billing deficiencies: S.C. dialogues how to address church unpaid pension, insurance bills

By Jessica Connor

A 4 percent deficiency rate for church unpaid pension and insurance bills might not sound so bad. But when that 4 percent translates to about $400,000, it has some in the S.C. Conference concerned.

We re not in a crisis situation, but we need to develop a policy to be able to write off all or some of the unpaid funds, and the Cabinet needs to start looking at nonpayment as an appointment issue, said the Rev. David Anderson, conference pensions and health benefits officer.

As part of their service as a pastor, S.C. United Methodist clergy are entitled to insurance and pension coverage, and the church they serve is supposed to pay for this. The conference pays the bill, then in what is termed direct billing, sends the church a bill for its share of the pastor s coverage.

But sometimes, churches don t pay their bill, leaving the conference to pay for it “ and a balance at the end of the year that must be covered through conference reserve funds.

As a collections rate, 4 percent is not so bad, said Conference Treasurer Tony Prestipino.

Anderson put it in perspective, If we collected our apportionments at the same rate as we do our direct billing, then we d have a lot more ministry.

But it is money owed to the conference, Prestipino and Anderson said, and there is currently no long-term plan to address it other than asking district superintendents to address it with the church. Drawing from the reserve year after year is not sustainable long-term, Anderson said.

Agreed Prestipino, Six years in, what does it mean?

While as a rate, 4 percent is not so bad, Prestipino added that it is concerning when you consider it is about $400,000 and we don t account for unmet obligations.

While we hope there is not an immediate need for the funds it also could be a reality where the General Board of Pensions is requesting a few million dollars from our conference due to changes in the market, Prestipino said. In that situation, we either rely on the reserves to manage the situation, or we would have to go back to the churches with a significant increase to meet the funding needs.

If a church does not pay for its pastor s insurance and pension bill, the pastor does not suffer, Anderson noted. Conference policy prohibits cancellation of the pastor s insurance policy if the church does not pay its share, and federal law prohibits pension cancellation.

A lot of churches develop a funding plan to address the back fall. A lot of effort is being made, Anderson said. Yet we re caught between a rock and a hard place because ministry is going on out there, and yet some churches don t see the importance of paying this bill.

The Rev. Bob Huggins, who pastors St. John United Methodist Church, Sumter, thinks the conference should take this issue very seriously.

We are taking about over a million dollars in monies that have had to be paid out of reserves. These funds need to be replaced, Huggins said.

Huggins said several steps need to be taken: 1) All churches and pastors with unpaid bills meet with the bishop, conference treasurer and head of pension and insurance to explain why they did not pay; 2) Churches with deficits of more than six months should be listed in a report to the annual conference each year; 3) As is done in the North Georgia Conference, the conference should not pay for dependents of any delinquent account; and 4) with the help of the cabinet and Conference Council on Finance and Administration, put together a payment plan and do not allow any further delinquencies without the district office addressing them immediately.

Anderson said there are a couple things on the horizon that could alleviate the unpaid funds, in addition to developing a policy about writing off some of the unpaid funds, and making nonpayment of insurance/pension bills an appointment issue similar to nonpayment of apportionments.

The S.C. Board of Pension and Health Benefits is exploring whether to recommend that part-time pastors pay a small amount toward any pension offered by the conference “ or even whether to offer them a pension at all, which would be a cost savings to churches.

And starting in 2014, the General Board of Pension and Health Benefits is implementing a 20 percent reduction in the formula used to calculate pension benefits for pastors who retire after Jan. 1, 2014. This also should make things more affordable for churches, Anderson said “ and help make it more possible for churches to pay back the conference for past-due pension/insurance bills.

In the meantime, dialogue continues, and the issue is expected to be debated at Annual Conference 2013, set for June 9-12 in Florence.

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