Is Your Salary Too High?

paycheckIt’s budget time in our churches again.  I recall a vulnerable church I served that tried every year to raise my salary according to their judicatory’s guidelines.  I really appreciated that!  But one year, when we assembled and studied the numbers, I started to cry when I saw what was happening to the rest of the budget: it was shrinking.

I suddenly recognized that, every year, as I drew a little more salary for cost of living and health insurance, other areas of the budget were getting chipped away.  Membership decline had effected our revenue stream and there had been sustained cuts to program and mission.  The budget was now so lean that, although  I could still come to work and get paid, there was no money to do anything once I got there!

What I was experiencing may be quietly happening in your church, too.  The percentage of your church’s budget devoted to payroll may be inching up year by year.

Recently I read in this study about what is happening with church payrolls in relation to total budgets.  In 2009, churches overall were allocating about 38% of their budgets to payroll.  Researchers think it was this low because churches had taken drastic steps to freeze or cut their payrolls after the 2008 market crash.  But today, church payrolls have increased to nearly 60% of total church budgets.  The healthy range is considered to be from 40-60% of total budget.

I’ve watched payrolls in my own churches rise because of health care costs, judicatory expectations, and the desire to attract and keep qualified leaders.  But meanwhile, other parts of the budget, like direct mission and support for the wider church, may have no one to advocate for them.

Many congregations want to do right by their pastors, and pastors deserve to be paid well.  By professional standards, for our level of education (which many are paying down debt on) our salaries are pretty humble, and we work hard for them.

But the ratio of payroll to total budget is important to pay attention to.  If it is sneaking upward, it may indicate that your church, while still employing a pastor, is losing its ability to fund significant programs or mission in your community.  This is even more detrimental if the pastor is primarily in the building caring for his/her own flock.

Some things a church may need to consider are:

What are members giving and is there room for growth?  In a struggling church, some are certainly already giving sacrificially,  but others could probably improve.

Does your staffing configuration, from clergy to custodian, need to be re-evaluated?  This can be a sensitive question when beloved employees are part of the equation, but maintaining a sustainable budget is a worthy goal.  That may mean cutting some staff hours or asking for some volunteer service from the congregation.

Here’s a handy tool  by Dan Hotchkiss that I found at the Alban Institute website.  It encourages a congregation to analyze its budget for health and sustainability.  Check it out!

*Photo used by permission from Creative Commons.

4 responses to “Is Your Salary Too High?

  1. Once again, Gail, you have tackled a ticklish topic with many facets, more complicated than clear. I worry about many of the same worries that you enumerate here. Indeed my compensation package makes up a large percentage of the church’s budget. As I mentioned, it is something I worry about. On the other hand, in another Alban Institute publication from too far back for me to remember specifics it said, in effect if not in actuality, that that is the way it should be. That the Pastor’s compensation should be the largest budget item. Admittedly I may have been reading into it what I wanted to read but nevertheless this is yet another sign of the drastic changes in ministry.

    When I started ordained ministry in 1977 in a small South Dakota parish, my salary was $8000 and never changed in the 3 years I served there. We got an occasional chicken or a few cuts of beef when one of the ranchers would slaughter a cow for their own use. We thought we were rich, young and broke as we were after 8 years of earning only enough $ to scrounge for food and tuition. It took another 10 years or so to break the $20000 barrier and another 15+ years to get anywhere near $30000. All this time things like pension were based on a % of salary. But I was young, gung-ho, and among the many who foolishly never really spent much time looking ahead to silly things like retirement or putting kids thru college.

    Now I am finally in a church that truly understands and respects “Conference Guidelines” for salary & compensation. But church life has changed drastically as you have illustrated so very well here and in your time here with us at our fall Retreat. Good intentions aside there is a very real chance that next year I will need to either remain full time with a significant cut in pay or go to 3/4 time which is something most churches have trouble defining and respecting.

    I look back on all of this and realize what a precarious position the poor salaries & compensation over the years have put us in as I seek to want to retire or at least slow down (on my own terms and time). I never sought to pursue this calling in the hopes of getting rich and indeed lived that out by meekly agreeing to inadequate salaries for most of my working years. And let me add that I don’t expect my current church to make up for that.

    Put this all together and add a reluctant and often inept ability to discuss financial matters in churches and among clergy and you have the tensions and struggles that you share in your blog post.

    I apologize for the length of my comments but this is not a simple matter. I always value your insights and your challenges and certainly mean no disrespect to you. I hope you know me well enough for that. Thanks for letting me think out loud 🙂 .

  2. Thanks so much for your honesty, Wayne, and for articulating what is a difficult issue for so many of us. We all form ideas out of our own experience, and I can only write from mine. However, I know many like yourself who worked in settings where offering fair compensation was/is impossible or is not respected by the congregation. This time of transition is a painful one for clergy who expected to be able to raise a family and retire on their church salaries and in some cases have not been able to. It’s one reason we need our judicatories and seminaries to start preparing new clergy for a different professional landscape. But what do we do to care for those who have lost jobs or gone part time due to the congregation’s inability to pay us? (This includes me). Some denominations have ways of “equalizing” salaries, but this is also controversial. It is also a bit painful to me to see the wide disparity in salaries for clergy even in a single denomination, based on the size or location of a church. I wonder if we too closely mirror the wider culture in this regard…In years past, the UCC has appealed to all the churches to donate at Christmas time for the needs of retired clergy who worked for smaller amounts and thus had less to live on in retirement. But wider church offerings are not as effective as they once were. So many issues! Any other good ideas to alleviate this inequity are welcome!

  3. Gail, I also recognize that the clergy generation before me is / was by far less prepared financially for retirement and have had to depend on the Christmas Fund, etc. for support. Many churches, while promoting OGHS and NIN (maybe) ignore the Christmas Fund because of end of the year financial jitters. Some way of urging and assisting churches to illustrate the importance of this appeal would certainly be welcome.

    The salary disparity dialog is an old and seemingly unsolvable problem. Back in the day there were attempts to “Unionize” clergy towards this goal. It went over as well as the same efforts have gone over with farmers! It may come, as most changes finally do, when the church has no other options.

    There are many “vicious circles” here, many “Catch 22’s.” It may be that treating the symptoms may be the best we can do.

    From what I can see through our church’s seminary student, seminaries are still deficient in preparing students financially, both personal and professional. I think it has improved slightly since I was there, but as always the seminary claim is that they are teaching students to “think theologically” and pretty much leave it up to the students to provide any real “practical” issues and skills. Had I not done a full year’s internship I would not have survived as long as I have. But even then finances were strictly avoided. Perhaps a persistent urging from our Church & Ministry folks might foster some changes, but they are already burdened.

  4. As usual, your post has hit the nail right on the head for our church. Jim and I serve a church of 800+ as time-and-a-half pastors. (Of course, it is really two full-time pastors, but that is a subject for another note.) This month, we offered to work only one pastors’ worth for two months of the summer when confirmation and Sunday School do not meet, etc. We plan to have only one pastor on duty for each of the eight weeks. Our offer has been accepted by the Council; I imagine the congregation will accept it as well. We also cut our office manager’s hours significantly but raised her hourly wage by a couple of dollars so she ends up with a self-esteem boost to help with the pain of the loss in pay J It has been difficult, but we are all feeling all right about it, I think. Your post encouraged me; we are moving in a good direction. Thank you! Jenny

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