Ruling elders may understand compensation issues related to their own jobs or professions, but these may be quite different from those in the church. To assist the ruling elders, especially those involved in budget development or staff support, a short lesson in understanding these salaries is helpful.
SALARY COMPENSATION
1. Salary – Depending on the individual employee, salary may be an hourly wage or an annual salary. The Head of Staff or the Church Administrator can provide information on each employee’s status.
2. Housing – The IRS allows some professions (military, hotel managers, clergy, etc) to benefit from a “housing allowance.” By designating a portion of the pastor’s salary as a housing allowance, the minister receives this advantage at no additional cost to the church.
3. Additional Income – The church can designate some funds as “additional income” that can be used at the employee’s discretion: for the 403b, for Continuing Education, etc. This may be a savings to the church as these funds are not used in the calculation of benefit costs.
SOCIAL SECURITY TAX
1. Social Security – The church pays half of the Social Security tax, which is calculated at 7.65% of the sum of the Salary and Housing.
EXPENSE BUDGETS
This is not income. Expense reimbursements are made to protect the salary of the staff member from being used to pay for church expenses. Expenses are reimbursed when an appropriate expense voucher is submitted. What is not used in a budget year, remains property of the church. Continuing Education/Professional Expense can accumulate for three years.
1. Travel Budget – This is most commonly used for mileage (excluding to and from home and work) and is paid at the current IRS mileage rate. For example, if an employee goes to visit a parishioner in the hospital and the travel involves 10 miles and the current IRS rate is 50 cents per mile, then the church would pay $5 as a reimbursement. Other use of this expense budget would include air fare, room and board for out of town work, meals when out of town on church business, bus fare, cab fare, and parking fees.
2. Continuing Education/Professional Expense – This provides for additional training and for reimbursement for professional expenses. Examples of Continuing Education would include conference fees, registration, books and materials required by the course. Professional Expenses include membership fees in professional organizations, meals with volunteers, appreciation gifts to volunteers, uniforms, vestments, equipment needed for work, etc.
BENEFITS
1. Board of Pension dues – These dues provide for medical insurance, death and disability coverage, and pension. Pension is not paid for the first three years of a lay person’s employment. These dues will vary from time to time, but are a percentage of the employee’s “Effective Salary” (which is the sum of the Salary and Housing). If an employee works less than 40 hours per week or makes below a church-wide median, certain rules regarding the dues may apply. The Church Administrator can assist in the calculation of these dues.
2. Dental Coverage – Chapel by the Sea provides for the cost of the Optional Dental Coverage. The annual cost of this coverage varies.
3. Additional Retirement Savings – Staff members may elect to participate in a 403b plan and have a portion their salary put in this plan. The church may also elect to offer a matching program. Any such matching funds do not increase the Board of Pensions dues.
Remember – any increase in salary increases the cost of employment beyond just the salary. For example, an additional $100 in salary may cost the church $139.15. However, any increase given as an expense reimbursement budget or dental coverage benefit the church in that $100 given toward these areas costs the church $100.
