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June 2005 finance update
General Assembly financial position for the year ending 30 June 2005
In its March newsletter, the policy group reported that a full-year deficit of $1,220,000 was likely unless action was taken to address the issue. The measures implemented have had some effect, and the latest forecast indicates that the operating deficit should come in considerably short of that figure, although not back to the original budgeted deficit for the year of $660,000.
Action has been taken to reduce expenditure by $200,000 less than the level forecast for the last six months of the financial year. Unfortunately, expenditure forecasts did not fully reflect some ongoing staff and property costs, and this together with other necessary but unforeseen costs, has made the full $200,000 expenditure cut difficult to achieve.
Depreciation on student housing and Laughton House had not been fully recognised in the budget or forecast, nor had some superannuation costs for Assembly staff. Despite these setbacks, A&F believes the net expenditure reduction is still achievable.
Income has been enhanced by the parish appeal and together with other above-forecast levels of income, the final total income result may be greater than first anticipated. There is every indication that improved payment of Assembly Assessment will ensure that the provision made for underpayment will be adequate. Receipts from Assembly Assessment are now at 90 per cent of the amount levied, compared with 85 per cent as recently as February. Continued action is being taken to collect outstanding amounts, with some degree of success.
More specific information about General Assembly’s financial position, including explanatory detail, will be provided as soon as the accounts for the year ended 30 June 2005 have been finalised.
Parish Appeal
At the end of May, around $90,000 had been received from parishes and individuals around the country. The response to the appeal has been generous, and A&F and Assembly staff have taken heart from the words of support accompanying many of the letters. Te Aka Puaho has also made a generous contribution of $32,000 to the appeal, which represents 10 per cent of their 2004/05 Assembly gift. Some parishes have written explaining why they cannot contribute, and others are considering their response, with further contributions expected up to the end of June.
2005/06 Budget
The policy group considered a draft budget for 2005/06 at a meeting in late May. In line with the 2004 General Assembly decision requiring a balanced budget, the projection provided for changes in expenditure and income that would lead to a balanced budget for the year ended June 2006. Since that initial meeting A&F have been working with the Assembly finance team to consider a number of alternative ways to achieve this balance. However, it appears that whatever direction is chosen, trade-offs will need to be made between the various areas that require funding. Decisions about these trade-offs will be needed to bring about a sustainable budget, in which expenditure does not exceed income. The policy group is attempting to provide Council of Assembly with a range of options for consideration. Council will consider Focus on the Future outcomes ahead of the budget and therefore will be in a position to take into account any impact on next year’s income and expenditure. More information on the 2005/06 budget is expected to be sent out to the wider church in the last week of June, following Council’s teleconference on this matter. Meetings
Since its last newsletter, the A&F Policy Group has met four times by teleconference, and once, on 21 May face-to-face in Auckland . This was possible only because non-Auckland members either covered their own costs or were sponsored by others to attend.
John Trainor and Ian Watson - Co-Conveners of Administration and Finance Policy Group.