Compensation Guidelines for Rostered Leaders
Central/Southern Illinois Synod, ELCA
2007
Presented by the Committee for Professional and Lay Ministry
and approved by the Synod Council of the
Central/Southern Illinois Synod
of the Evangelical Lutheran Church in America
Approval Date: Synod Council, June 8, 2006
Contents:
I. Rationale page 1
II. Annual Update page 2
III. Explanation of the Components of Compensation page 2
IV. Worksheet of Compensation and Benefits page 5
V. Tables of Compensation and Benefits page 6
I. RATIONALE
This report on compensation contains a revision of the 2007 guidelines, “Compensation and Benefits for Pastors, Associates in Ministry and Diaconal Ministers for the Central/Southern Illinois Synod.” It is suggested that those who are responsible for the compensation of Pastors, Associates in Ministry and Diaconal Ministers use this report as an aid in determining what is fair and equitable compensation for church workers. In addition to this report congregations may wish to consult other publications on compensation for church workers. Highly recommended are: “Compensation Planning” by Manfred Holck, Jr. and “Staff Support Committee” by George E. Keck. Both publications are available from Augsburg Fortress.
As congregations and church workers prepare their budgets for the coming new year, this subcommittee would offer a few suggestions or principles that have guided this report. They are:
1. The Mutual Ministry Principle: Lutheran theology affirms that ministry belongs to the whole body of Christ. It is recommended that each congregation establish a Mutual Ministry Committee to review and appraise the congregation's ministry. This committee can make salary recommendations to the congregation and advocate the needs and concerns of the church worker. In addition, members of this committee can relate and share the needs and concerns of the parish to the Pastor, Associate in Ministry or Diaconal Minister.
When it comes to compensation everyone worries about money! Pastors and church workers worry about their finances in the same way that church boards worry about funding their budgets. Should matters of compensation become irritants, it is important to seek qualified help. When problems arise, either for the congregation or the church worker, consult the Bishop's Office for help and guidance.
Congregations believe and trust in their pastors and church workers. Pastors and church workers love their ministries and congregations. Matters of compensation should never become adversarial and harm the good relationship that exists in most parishes.
2. The Information Principle: Guidelines or recommendations can be useful only if they are understood. Those responsible for compensation in the parish need good, reliable information. Hopefully, this report can fulfill such a need. As congregations work through this report, they will learn more about what is expected and necessary for good compensation planning. It is also recommended that congregations stay current with the tax laws and recent changes in the tax laws. Sound tax strategies and planning can maximize the compensation of church workers.
3. The Cost of Ministry Principle: It costs money, time, and effort for a congregation to carry on an effective ministry. The cost of ministry is not the same as the remuneration given to the Pastor, Associate in Ministry or Diaconal Minister. Remuneration or compensation is that amount of money that is paid to the church worker. This generally would include the basic salary and housing allowance. These items accrue to the benefit of the worker. The cost of ministry includes all costs that a congregation incurs by virtue of having a church worker. This generally would include professional expenses, worker compensation insurance, car reimbursement, medical and pension plans. The cost of ministry is substantially higher than the compensation that church workers receive.
When preparing a budget, congregations are urged to separate the cost of ministry from the compensation paid to church workers.
All guidelines have limitations. Every issue of salary and compensation cannot be determined or settled in this report. Congregations, Pastors, Associates in Ministry, Diaconal Ministers and church workers are encouraged to talk and negotiate with each other as mature Christian brothers and sisters. It is hoped that these guidelines will serve as an aid for such dialogue.
4. Due to the complex nature of the tax code as it relates to clergy and lay professionals, the subcommittee for leadership support strongly recommends the use of a tax professional who is knowledgeable about such matters in the preparation of tax returns.
II. ANNUAL UPDATE
For 2007 the base salary has been increased approximately 3%.
III. EXPLANATION OF THE COMPONENTS OF COMPENSATION
Note: All components apply to Pastors and other rostered leaders, unless indicated otherwise.
1. Base (Basic Salary)
Direct monetary compensation or salary has been divided into five levels, based on experience or years in the ministry. Each level provides a range of salary, allowing flexibility for the congregation to consider other factors, which affect compensation. Such factors might include:
a. Two point parish - add 3% to 5% of base.
b. Senior Pastor with staff - add 3% to 5% of base.
c. Advanced degree - add 3% to 5% of base.
d. Merit - for exceptional work add 3% to 5% of base.
e. Second career experience - Congregations are encouraged to recognize the previous work experience of second career church workers. Congregations may fully or partially recognize previous experience in determining the base salary, but some credit should be given in computing salary.
f. Size or work load - Some congregations have special situations which merit increased salary. Some church workers carry heavy workloads which merit increased compensation. Normally, however, a congregation should increase the staff, rather than the compensation when the workload becomes too great for an individual.
Congregations are free to determine which of the above factors merit increases in the base salary. There may be other factors, which have not been considered in this report. The range in each level allows for flexibility, within the parameters established by years of service in the ministry.
2. Social Security Allowance
This report recommends that congregations pay one half of the Social Security SE Tax for Pastors, Associates in Ministry and Diaconal Ministers. In the case of AIMs and Diaconal Ministers some congregations are required by law to pay the normal employer Social Security taxes. Pastors who receive a Social Security Allowance must declare the allowance as income on their 1040 form.
Should a congregation choose to pay all the Social Security taxes, the above rules apply. Congregations should not designate a portion of base salary as a Social Security Allowance in an effort to avoid income on the 1040 form. Because the Social Security contribution rate changes each year, adjustments need to be made annually.
3. Housing
Note: Associates in Ministry, Diaconal Ministers, and Deaconesses are not to be included in this component.
Three housing alternatives are considered below:
a. Parsonage: When a parsonage is provided, the congregation should pay for utilities and maintenance. In addition, the ELCA suggests that congregations provide the pastor with an "equity" allowance. An equity allowance is placed in escrow for the pastor who may use this money for a down payment on a house at a later time. This provision makes home ownership possible for pastors who are retiring or moving to a new call where a parsonage is not provided. The equity allowance can also provide a down payment to the widow or widower of a pastor who needs to vacate the parsonage, due to the arrival of the new pastor.
The ELCA recommends that either 3% of the pastor's total compensation or 5% to 10% of the base salary be designated and set aside as an equity allowance. Regardless of which figure is chosen the congregation and Pastor need to negotiate a figure that is mutually acceptable to both. Housing equity allowances, unless invested in a tax-sheltered annuity, are considered taxable income and should be reported to the IRS.
b. Housing Allowance: Some congregations provide their pastor with a housing allowance in place of a parsonage. This figure should reflect the realistic fair rental value of a home in the community, and would normally include such costs as insurance, utilities, taxes, maintenance, improvements, and furnishings. This figure needs to be reviewed and adjusted annually.
A housing allowance provides a special tax benefit for the pastor. A housing allowance is exempted from 1040 income, (but NOT exempted from SE income), and interest paid on a mortgage is deductible on Schedule A.
Some congregations loan a down payment to the pastor, so that he or she may purchase a home. It is highly recommended that when the pastor sells his or her home, the loan be repaid to the congregation as soon as possible.
c. Clergy Couple Housing Compensation: Each person of a clergy couple is entitled to the same housing allowance ordinarily provided a pastor who is not married to a pastor. Both pastors in a clergy couple are to receive a housing allowance. Each pastor's pension and benefit contributions are based on base salary, plus self-employed Social Security offset, plus 30% when a parsonage is provided. When cash housing allowances are provided, the contributions for each pastor are based on the total of base salary plus housing allowance(s).
This guidance relating to Clergy Couple Housing Compensation is offered to assist congregations and clergy couples at arriving at an equitable solution to compensation for both parties of a clergy couple and the congregation or congregations involved. It represents current ELCA policy and practice as expressed by the ELCA Vocation and Education Unit, and as endorsed by the Conference of Bishops and this synod. Individual circumstances relating to Clergy Couple Housing Allowance will vary from time to time. It is important that congregations extending a call or calls to clergy couples develop a compensation package, including a housing allowance for each member of the clergy couple, in consultation with the Office of the Bishop, the clergy couple involved, and the appropriate representatives of the congregation or congregations involved. Congregations presently served by a clergy couple may wish to seek guidance and counseling in matters relating to housing allowance from the Office of the Bishop as part of its annual compensation review practice.
4. The ELCA Pension and Benefits Plan
a. Basic plan: The ELCA Basic Plan includes medical, dental, and pension coverage. The ELCA Board of Pensions determines the rates annually. It is expected that congregations will include coverage for both pastors and their families. In some cases pastors may elect to unbundle coverage for a working spouse who is covered by another medical plan.
Congregations are permitted to contribute extra monies to the pension portion of the ELCA Plans. These contributions are tax sheltered and can be used to enhance salary without encumbering increased tax liability. The Professional Leadership Committee of our synod encourages our congregations to fund pensions at 12%.
b. Clergy Couple Medical: You will want to note that there has been a revision relative to medical coverage for clergy couples. When both members of a clergy couple are sponsored in the program (by the same of different congregations or organizations) each employer will make contributions to the ELCA Pension and other Benefits Program.
5. Professional Expenses Reimbursement
a. Automobile Reimbursement: It is usual for a congregation to set an actual cost-per-mile reimbursement, using the IRS mileage figure. (e.g. .445 per mile for 2007 or current IRS rate.) Some congregations may lease or own a car, which the church worker uses for congregational business. Still other congregations set a fixed annual rate for an "automobile allowance".
For tax purposes this report recommends that congregations use the reimbursement method. Allowances are taxable income; straight reimbursements of costs are not. Professional expenses which are not reimbursed are normally deductible on Schedule A where they are subject to the 2% rule, i.e. only the amount that exceeds 2% of one's adjusted gross income (1040, line 31) is deductible.
b. Books and Other Published Resources: It is appropriate for the congregation to reimburse the church worker for books, magazines, professional journals, and other published materials.
c. Malpractice-Liability Insurance: Congregations are encouraged to provide this coverage for all church workers.
d. Other Professional Expenses: Congregations should reimburse the pastor and all church workers for expenses incurred in the performance of their duties. Some examples would include the fees charged for the Professional Leadership Conference, parking costs, dues for professional associations, telephone, etc.
6. Continuing Education.
The congregation should negotiate allotted time for a pastor to continue his/her education. The ELCA Vocation and Education Unit recommends twenty-five classroom hours per year. This report recommends that pastors and Congregation Councils work out a mutually agreed upon plan of study and file a covenant with the Bishop's office. It is expected that the congregation, the church worker, and the church all share in the cost of continuing education.
If a congregation grants a sabbatical to its pastor, then the congregation must budget for a replacement.
7. Leave Time
It is suggested that pastors, Associates in Ministry, and Diaconal Ministers be allowed four weeks vacation each year. These weeks include Sundays. Congregations may give additional Sundays as time off for personal leave, continuing education, and other reasons mutually determined by the congregation and the church worker.
Concerning sickness or disability, congregations need to consult the Pastor's “Letter of Call” or the Associate In Ministry's or Diaconal Ministers “Letter of Appointment.” These letters determine the conditions of compensation during illness or disability.
Regarding parental leave this report recommends that mothers be granted six weeks leave with full pay, and that fathers be granted two weeks leave with full pay. Parents who are adopting children should be granted the same amount of leave time. Parental leave may also be granted at other times, e.g. during times of severe illness, trauma, or death. Congregations are encouraged to establish a policy of emergency leave, before an emergency arises.
IV. WORKSHEET OF COMPENSATION AND BENEFITS
(Pastorally vacant congregations calling a pastor are asked to use Exhibit C in the Mission/Ministry Study materials when calculating the Compensation Package for a new pastor.)
Year Year
Compensation
1. Basic Salary $ _____ _____
2. Social Security _____ _____
3. Housing
a. Parsonage _____ _____
Equity _____ _____
Utilities _____ _____
Other _____ _____
b. Housing Allowance _____ _____
Total salary & housing _____ _____
ELCA Plans
1. Pension & Benefits _____ _____
2. Other _____ _____
Total _____ _____
Expenses
1. Automobile
a. Reimbursement _____ _____
b. Lease/own _____ _____
2. Continuing education _____ _____
3. Books, journals, etc. _____ _____
4. Insurance _____ _____
5. Other _____ _____
Total reimbursements _____ _____
Leave Time
1. Continuing Education _____ _____
2. Regular vacation _____ _____
3. Sick leave _____ _____
4. Parental leave _____ _____
5. Personal leave _____ _____
V. TABLES FOR COMPENSATION AND BENEFITS
5. THE YEAR 2007 COMPENSATION FOR ROSTERED LEADERSHIP
Base salary is determined by years of service in the ministry. The local congregation should give serious consideration to any other experience. Please view the present base salary and make appropriate adjustments with prayerful Christian deliberation.
NOTE: Figures in this column are figured at a 3% increase over the respective “06 Guidelines.”
Clergy Associates in Ministry Diaconal
Years of
Service Guidelines
for 2006 2007 Guidelines Guidelines
for 2006 2007 Guidelines Guidelines
for 2006 2007 Guidelines
0 $29,417 $30,299 $28,156 $29,001 $28,839 $29,704
1 $30,042 $30,943 $28,723 $29,585 $29,464 $30,348
2 $30,667 $31,587 $29,291 $30,169 $30,089 $30,992
3 $31,292 $32,231 $29,858 $30,754 $30,714 $31,636
4 $31,917 $32,875 $30,425 $31,338 $31,339 $32,280
5 $32,542 $33,519 $30,993 $31,922 $31,965 $32,923
6 $33,167 $34,162 $31,560 $32,507 $32,590 $33,567
7 $33,793 $34,806 $32,127 $33,091 $33,215 $34,211
8 $34,418 $35,450 $32,695 $33,676 $33,840 $34,855
9 $35,043 $36,094 $33,262 $34,260 $34,465 $35,499
10 $35,668 $36,738 $33,829 $34,844 $35,090 $36,143
11 $36,293 $37,382 $34,397 $35,429 $35,715 $36,787
12 $36,918 $38,026 $34,964 $36,013 $36,340 $37,430
13 $37,543 $38,669 $35,531 $36,597 $36,965 $38,074
14 $38,168 $39,313 $36,099 $37,182 $37,590 $38,718
15 $38,793 $39,957 $36,666 $37,766 $38,216 $39,362
16 $39,419 $40,601 $37,233 $38,350 $38,841 $40,006
17 $40,044 $41,245 $37,801 $38,935 $39,466 $40,650
18 $40,669 $41,889 $38,368 $39,519 $40,091 $41,294
19 $41,294 $42,533 $38,935 $40,103 $40,716 $41,937
20 $41,919 $43,177 $39,503 $40,688 $41,341 $42,581
21 $42,544 $43,820 $40,070 $41,272 $41,966 $43,225
22 $43,169 $44,464 $40,637 $41,856 $42,591 $43,869
23 $43,795 $45,108 $41,205 $42,441 $43,216 $44,513
24 $44,419 $45,752 $41,772 $43,025 $43,842 $45,157
25 $45,044 $46,396 $42,339 $43,609 $44,467 $45,801
26 $45,670 $47,040 $42,907 $44,194 $45,092 $46,445
27 $46,295 $47,684 $43,474 $44,778 $45,717 $47,088
28 $46,920 $48,327 $44,041 $45,362 $46,342 $47,732
29 $47,545 $48,971 $44,608 $45,947 $46,967 $48,376
30 $48,170 $49,615 $45,176 $46,531 $47,592 $49,020
31 $48,795 $50,259 $45,743 $47,115 $48,217 $49,664
32 $49,420 $50,903 $46,310 $46,700 $48,842 $50,308
33 $50,045 $51,547 $46,878 $48,284 $49,468 $50,952
34 $50,670 $52,191 $47,445 $48,868 $50,093 $51,595
35 $51,296 $52,834 $48,012 $49,453 $50,718 $52,239
36 $51,921 $53,478 $48,580 $50,037 $51,343 $52,883
37 $52,546 $54,122 $49,147 $50,621 $51,968 $53,527
38 $53,171 $54,766 $49,714 $51,206 $52,593 $54,171
39 $53,796 $55,410 $50,282 $51,790 $53,218 $54,815
40 $54,421 $56,054 $50,849 $52,375 $53,843 $55,459
41 $55,046 $56,698 $51,416 $52,959 $54,468 $56,102
42 $55,671 $57,341 $51,984 $53,543 $55,093 $56,746
43 $56,296 $57,985 $52,551 $54,128 $55,719 $57,390
44 $56,922 $58,629 $53,118 $54,712 $56,344 $58,034
45 $57,547 $59,273 $53,686 $55,296 $56,969 $58,678
46 $58,172 $59,917 $54,253 $55,881 $57,594 $59,322
47 $58,797 $60,561 $54,820 $56,465 $58,219 $59,966
48 $59,422 $61,205 $55,388 $57,049 $58,844 $60,609
49 $60,047 $61,848 $55,955 $57,634 $59,469 $61,253
50 $60,672 $62,492 $56,522 $58,218 $60,094 $61,897
1. Social Security - The contribution rate for 2007 is 15.3%. One half the rate is 7.65%.
2. Housing (Pastors only)
a. Parsonage = Utilities + Maintenance + Equity Allowance
(e.g. 30% of total compensation)
b. Housing Allowance = Total costs of living in a community,
(e.g. taxes, utilities, maintenance, improvements, insurance, etc.)
ELCA PLANS
1. The rates for participation in the ELCA Plans change each year. These rates are determined as a percentage of defined compensation, which includes the base salary, housing, and Social Security allowances. For those who live in a parsonage housing is figured at 30% of the sum of base salary plus Social Security allowance.
Contribution Rate
(as a % of Defined
Compensation) Minimum
Monthly
Contribution Maximum
Monthly
Contribution
MEDICAL AND DENTAL PLAN
Member Only 11.9% $434 $602
Member & Spouse 20.8% $759 $1,054
Member & Children 20.8% $759 $1.054
Member, Spouse & Children 29.7% $1,085 $1,506
* All Coverage Waived -- -- --
** DISABILITY BENEFITS 2.0%
RETIREE SUPPORT 0.7%
*** PENSION PLAN 10.0 to 12.0%
****TOTAL REQUIRED CONTRIBUTIONS:
* Member and all eligible family members must be covered under a spouse's employer-provided group plan or under the plan of a former employer in order for coverage to be waived.
** Includes 0.6% for health plan support.
*** Congregations may choose to remit contributions at a higher level by making additional pension contributions for members. Please note that our synod encourages our congregations to fund at 12%, regardless of the participant's age. If a member participated in a predecessor plan on December 31, 1987, was at least 45 years on that date, continuously been a sponsored member of an ELCA retirement plan since January 1, 1988, the retirement contribution must be at least 11%.
**** Total depends on the election of medical benefits coverage and the required pension contribution rate. The total percentage may vary if the minimum or maximum contribution amount for the Medical and Dental Benefits Plan applies.
The total contribution rate will vary from 24.4% to 42.1%, depending upon the election of coverage’s and the required pension contribution rate.
Sponsored Couples
If both spouses are sponsored in the ELCA Pension and Other Benefits Program, the sponsor of the lower-salaried member is not required to contribute to the Medical and Dental Benefits Plan for that individual. (Full contributions for retirement, disability and survivor benefits coverage’s are required for both spouses.)
The 2007 monthly contribution rates for other members will be as follows:
ELCA Primary Coverage Medicare Primary Coverage
1. Member on Leave from Call (OLC), spouses, surviving spouses, retirees, other coverage continuation
Under age 60: $483
Ages 60-64: $577
Age 65 and above:
$265
2. Children of an on leave, deceased, divorced or retired member or those who extended coverage after loss of eligibility.
$338
$265
PROFESSIONAL EXPENSES
1. Automobile Expenses: a. Fixed monthly amount or a cost-per-mile reimbursement.
b. Congregation owns or leases a car.
2. Continuing Education: $550 per year. Continuing education time of two weeks per year, which may be accumulated up to six weeks over a three-year period, is recommended.
3. Professional Books and Journals: $200 per year.
4. Insurance, et. al.: includes malpractice and worker comprehensive coverage’s.
LEAVE TIME
1. Continuing Education: two weeks per year, which may be accumulated up to six weeks over a three year period.
2. Regular vacation: Minimum of four weeks with Sundays per year. Additional Sundays may be granted.
3. Sick leave: Full salary until ELCA Disability Plan takes effect. See Letter of Call or Appointment for specific details.
4. Parental leave: Maternal = 6 weeks with full salary.
Paternal = 2 weeks with full salary.
5. Personal leave: as mutually agreed upon.