Shepherd of the Lake Lutheran Church Annual Congregation Meeting January 31, 2010 1.
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Transcript of Shepherd of the Lake Lutheran Church Annual Congregation Meeting January 31, 2010 1.
Shepherd of the Lake Lutheran Church
Annual Congregation Meeting
January 31, 2010
1
1. Quick review of what we said we’d do in 2009
2. Review of 2009 financial performance.
3. The 2010 budget
4. Questions and Answers
5. Next Steps
Overview
2
What we said we would do in 2009
1. Transparency
2. This is not a year to be increasing expenses
3. Assumptions are particularly difficult to pin down in this environment.
4. Mid-year adjustments may be needed.
Review of 2009 meeting
3
• Seven Q&A financial presentations between Worship Services
January (3), Feb (2), April, July
• Update at worship by Pastor Peter - October
• Multiple “Shepherd’s Voice” newsletter articles throughout the year
• Letters written by Pastor Peter mailed to homes along with giving statements.
• Monthly Financial snapshots – they are published on the SOLLC web site each month immediately following council meetings.
• Council minutes – on website for each of the 12 months in 2009.
• The church council has always operated as an open forum. Any member is invited to attend our meetings (2nd Thursday). Member attendance in 2009 totaled one person.
Transparency was delivered
4
2009 Attendance / Offerings
5
2009 Operating Expenses
Proactive Financial Management
• In January 2009, this congregation approved a $1,475,000 operating budget.
• Actual spending in 2009 was $1,317,000. A 10.7% reduction from the budget (and previous year’s spending) equating to a savings of $158,000.
Budget -2009 Actual 2009 2008 2007 2006
Operating Expenses 1,475,000$ 1,317,000$ 1,474,000$ 1,402,000$ 1,398,000$
Yearly Percentage Change -10.7% 5.1% 0.3%
6
2009 Cash Flows
• This results in a $148,000 negative cash run rate 2009 (we spent more than we got in). We projected to use $325,000 in cash. This is about a $175,000 savings!!
How did we do it?• + Proactive expense management (described on previous chart) • + Interest only mortgage payments for a portion of 2009 • - McKenna Crossing performance (we expected $75,000 and received
zero).
Cash Flow Summary - 2009
Cash on Hand - 01/2009 205,000$ Less: SOLLC -- cash expenses exceeded offerings (71,000)$ Less: Pay down of debt owed (mortgage, etc.) (77,000)$ Add: 2009 Additional borrowings 214,000$
Cash on Hand 12/31/2009 271,000$
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2010 Budget - Offerings
Actual Actual Actual Actual Actual2010 2009 2008 2007 2006
Total Pledges 470 596 559 827 640
Total Annual Pledge $840,000 $1,075,000 $912,000 $1,072,000 $1,125,00078.1% of prior year
Operating Fund Pledging 2010
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2010 Budget - Offerings
Faithfully, Forward, Together
Continuing the Path
Blessing the Path
Preparing the Path
2010-2011 2007-2009 2004-2006 2001-2004
Pledge Length (months) 24 36 31 36
# of Pledges 341 535 656 555
Average Annual Pledge 398,500$ 624,737$ 889,909$ 701,573$
Mortgage Fund Pledging 2010
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2010 Budget - Offerings
2009 Budget 2009 Actual 2010 Budget
Operating Fund Offerings $1,389,900 $1,386,645 $1,276,700% change from 2009 92%$ change from 2009 ($109,945)
Mortgage Fund - Offerings/Income $627,200 $556,323 $437,000% change from 2009 79%$ change from 2009 ($119,323)
TOTAL $2,017,100 $1,942,968 $1,713,70088%
($229,268)
• NOTE: 2009 Mortgage Fund actuals include $11,200 of land lease income and 2010 budget includes $22,200 of lease income.
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2010 Budget – Operating Expenses
• Goal is to obviously hold expenses as low as possible while not severely impairing the ministries. • A challenge when utilities, health insurance and other costs
have risen.
• Significant funds come in through tuition, registration fees, etc.
• Maintain outreach
• Proper staffing levels
• Lay Leadership
Budget -2010 Actual 2009 2008 2007 2006
Operating Expenses 1,378,000$ 1,317,000$ 1,474,000$ 1,402,000$ 1,398,000$
Yearly % Change 4.6% -10.7% 5.1% 0.3%
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2010 Budget - Cash
• For 2010, this budget assumes a cash shortfall of about $570,000.
• This is a result of:
• Expected decrease in giving of $230,000.
• Our interest only agreement with Thrivent expires in March.
• Higher operating expense budget of $60,000.
• Unlike 2007, 2008 and 2009, we believe we will see up to$15,000 cash as a return of investment from our partnership with Presbyterian Homes ( we received $5k in January 2010 already)
12
Debt Financing review
• We have $300,000 of available capacity via a Thrivent line of credit. We currently do not have a balance owed on this line. It matures in May and we intend to renew it (if the lender so approves).
• We have a long term mortgage with Thrivent with the following:
• Interest Rate is 5.7%
• Outstanding balance owed is $11,164,000
• Monthly payment is about $78,000 (53k in interest and 25k in principal).
• We have been making interest only payments via an agreement with Thrivent since 4/09. That expires in March.
13
Partner Performance Summary
Note: while the YMCA opened several months ago, the lease agreement does not require them to begin lease payments until 1/2010.
Partner Structure2008
Expectations 2008 Actual2009
Expectations 2009 Actual
McKenna Crossings J oint Venture 50,000 0 75,000 0
YMCA Lessor/Leasee 0 0 0 0
Safe Haven for Youth Lessor/Leasee 10,200 10,200 10,200 10,200
60,200 10,200 85,200 10,200
Partner summary of cash flow to SOLLC
14
McKenna Crossings audited F/S
2008 Actual 2009 Actual 2009 Budget Variance
Revenue 3,611,000 5,876,000 6,076,000 (200,000)
Expenses 6,518,000 7,361,000 6,750,000 (611,000)
Net Loss (2,907,000) (1,485,000) (674,000) (811,000)
Shepherd's Path Senior Housing, Inc.DBA: McKenna Crossings
Years ended 9/30/2009 and 2008
Estimated that additional phases/projects will not begin until 2014. Source: Actual financial data supplied via audited financial statements from Larson Allen LLP. 2009 budgeted data and estimates referenced above provided by Presbyterian Homes. 15
Future Cash Flow Projections
2010 2011 2012 2013 2014 2015
McKenna Crossings 10,000 60,000 75,000 90,000 100,000 120,000
YMCA 12,000 12,000 12,000 12,000 12,000 12,000
Safe Haven 10,200 10,200 10,200 10,200 10,200 10,200
TOTAL 32,200 82,200 97,200 112,200 122,200 142,200
Source: McKenna projections come directly from Pres. Homes CFO. YMCA and Safe Haven are simply lease income expectations based on current lease agreements.
Future Projected Cash Flows from our current partners
16
Where do we go from here?
Let’s recap:• There was execution on transparency
• Worship attendance has been flat relative to previous years
• Financial performance (cash preservation, expense mgmt, etc.) was strong relative to budget in 2009.
• 2010 Pledging is down (mortgage fund pledging is of particular concern)
• McKenna Crossings has underperformed financially with significant cash flows and additional phases many years away.
• Our ‘house’ is most likely worth less than our mortgage today
• Our ability to borrow more money is limited due to no further unencumbered assets.
• We are staring at a 570,000 cash shortfall in 2010.
17
Where do we go from here
The next three months will require creative problem solving using traditional and non-traditional solutions that may include:
• Negotiating new terms with our lenders
• Negotiating new terms with our partners
• Engaging our current base of members
• Expanding our footprint in the community to broaden our existing member base.
18
Next Steps
1. Understand all of our options.• What legal rights do we have in our agreements?• What leverage do we have with our
partners/lenders?
2. Review those options carefully• We are working with an outside consulting team
that is experienced with situations like ours.• Solicit member feedback/recommendations.
3. Bring the feedback and recommendations to the members of this church in the next few months to engage them with thoughts, options and recommendations.
19
SOLLC Finance Committee
Pastor Peter Strommen
Pastor Hal Weldin
Katy Hallberg
Kermit Mahlum
Patrice Sturm
Jon Taxdahl
Ken Unruh
20
Shepherd of the Lake Lutheran Church
Personnel Team Report
January 31, 2010
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1. Engaging 2. Caring Community3. Effective Christian Education4. Evangelism and Mission Emphasis5. Inspiring Worship6. Support for Families 7. A Clear Vision8. Empowering Lay Leadership
Vision to Action
22
Interim Process1. An interim period is less about calling a pastor and more
about the congregation being readied as soil willing and able to receive much that will be new when the appropriate time for planting comes.
2. The focus must be on the congregation: its vision for mission and its need to come to terms with its history, to rediscover its identity apart from its former pastor,…to allow needed leadership change within, and to make a commitment to new leadership and directions in ministry.
The Lutheran, Dec 2009
PRESENT
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Personnel Team Goals1. Re-design organizational structure which matches
ministries to the vision of the Path/SOLLC’s mission. (Apply V2A)
2. Re-visit pastoral models and implementation thereof.3. Full staff review beginning with pastoral staff followed
thereafter with:A. Full HR re-design and implementation of policies,
procedures, language, expectations of a large church construct.
B. Staff for vision centric, exemplary ministries with strong vertical and horizontal alignments which embrace a very high level of lay staff involvement.
4. Encourage congregation to commit to lay ministries and re-ignite passion to Grow in Faith, Live to Serve.
Future
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Conclusion
Leadership focuses on
"What's right,
not "Who's right."
25