LAKELAND — The Florida Conference experienced an approximately $1 million deficit during the 1999 fiscal year, according to interim conference treasurer, Dr. Randy Casey-Rutland. Although the numbers are not final since the financial statements are undergoing their regular annual audit by Lakeland public accounting firm Bayless and Company, the size of the deficit compared to the total budget "is significant," Casey-Rutland said.

A variety of factors contributed to the deficit, according to Casey-Rutland, including a change in accounting procedures in 1999. Prior to that year, depreciation of fixed assets was recorded in an account that was not included in the conference budget, he said, adding, "Now that it’s part of the total picture, we have about $400,000 of depreciation we didn’t have the cash to cover."

Depreciation is the required accounting procedure by which the payment of a fixed asset—a computer, building, vehicle or desk—is spread out over the predetermined life of the asset. Each year, a portion of the asset’s value is deducted from the budget, even though no cash is spent in that year, Casey-Rutland said.

Connectional giving support, or apportionments, from conference churches was also lower last year than it has been for several previous years. The conference received about 84 percent of what it expected from local churches in 1999.

"Two thirds of the local churches faithfully and regularly pay their apportionments in full each year," Casey-Rutland said. "The shortfall arises from a relatively small number of churches."

Another factor, Casey-Rutland says, is a "significant cost overrun" in the conference’s 1999 investment in technology, which included purchasing a reservations system for the Life Enrichment Center and desktop computers for conference staff, as well as upgrading the conference’s e-mail system.

A fourth factor is a steady rise over the past several years in the percentage of fixed costs in the conference budget, Casey-Rutland said. Fixed costs are expenses the conference must pay, including utilities, salaries, benefits, insurance, taxes, depreciation and health care.

"Health care costs are rising faster than our budget, and are a much higher percentage of our budget than they were five or 10 years ago," he said. "As our fixed costs rise and connectional giving declines, we have a gap that was very wide last year.

"When you pay out fixed costs…at 100 percent, but only receive apportionment money from churches at 84 percent, it’s very difficult to balance the budget."

The total amount budgeted by the conference for 1999 was more than $16 million. Of that, more than $5 million was budgeted for general church ministries and jurisdictional administration. More than $1 million was budgeted for ministerial pensions and benefits.

The nearly $10 million remaining was budgeted for the Conference Council on Ministries (CCOM), Conference Services and Administration (CSA), Board of Higher Education and Campus Ministry, and New Church Development and Church Redevelopment.

The CCOM’s budget goes primarily toward programming to support local churches, including summer camp fee subsidies, Discipleship Weekend, conference mission support and interpretation, communications, Spiritual Formation and Leader Development. CCOM also pays the salaries of the staff people who coordinate those programs.

CSA’s budget covers the cost of maintaining conference facilities, utilities, insurance, health care and salaries for district superintendents. CSA budgets more than $2.2 million of its $5.9 million to subsidize health care premiums for conference employees and active and retired clergy.

"For the breadth, depth and volume of ministry we do, we have a fairly lean budget," Casey-Rutland said.

Each of the four areas spent less than budgeted in 1999, but both the CCOM and CSA spent more than they received through apportioned giving, according to Casey-Rutland. "Basically, we spent $1 million more than we received."

The conference was able to meet its commitments last year by spending several hundred thousand dollars of the conference’s reserves. The exact impact to the reserves will not be known until the annual audit is complete.

To prevent a similar deficit in the future, the conference’s Commission on Finance and Administration (CFA) will recommend at the Dare to Share Jesus 2000 Florida Annual Conference Event May 30-June 2 that the annual conference freeze all budget expenditures in 2001. That means the entire budget, excluding health care and pensions, will remain at the 2000 level. Most conference staff salaries will be frozen at the 2000 level, also, according to Casey-Rutland.

"We’re examining many ways to spend the money in programmatic and administrative areas with an eye to do those things more cost effectively," he said.

Additionally, CFA will recommend that the annual conference hold a special one-day session in the fall to set the 2001 budget. Casey-Rutland says the conference will have a better picture of its fiscal situation because the third quarter 2000 financial results will be available and the conference will have received its 2001 health insurance premium amounts.

"It’s hard to establish a budget in March of one year that affects December of the next year…," Casey-Rutland said.

The conference is also looking for ways to use volunteers to perform tasks for which the conference previously paid.

"We are also informing the churches of the situation with the deficit," Casey-Rutland said. "Some churches consider apportionments as something they pay when they have the money. The conference receives 25 percent of apportionments after Dec. 15, so we’re asking churches to pay 100 percent in a timely manner, month-to-month."

The late payment of connectional giving means the conference has to float its budget and use cash reserves to meet its obligations during the year, Casey-Rutland said. It also prevents conference leaders from being able to react to giving shortfalls, since they do not become obvious until the end of the year.

As conference leaders prepare the 2001 budget, which will be approved at the Dare to Share Jesus 2000 Florida Annual Conference Event, they are also dealing with an error made in the 2000 budget approved at 1999’s Annual Conference Event.

Due to a math error, the line items under CSA’s 2000 budget add up to $500,000 more than the total budget, Casey-Rutland said.

The total, and not the line items, was used to calculate the connectional giving amounts for local churches, making the connectional giving amount assigned to churches too low on line 10, which is the CSA budget.