Guidelines for the Call and Support of Ministry Leadership

2006

Guidelines for the financial compensation of clergy serving churches of the Illinois Conference, United Church of Christ, are established by the Ottawa Table, a body comprised of representatives from each of the five Association Church and Ministry Committees (or equivalent).

In establishing the guidelines, the Ottawa Table has sought to be mindful of several factors which are important to consider in the process of setting clergy compensation. These include:

·        Attention to issues of justice. Jesus once observed that the "laborer deserves to be paid" (Luke 10:7). Fair compensation for service rendered is not an optional matter; it is a matter of fairness and justice.

·        Local economics and market forces. Though we are challenged not to be of the world, we are, nonetheless, in it. The laws of supply and demand operate in the realm of clergy compensation just as they do in other contexts. It also seems clear that pastors ought not be expected to live at a significantly different standard of living than those among whom they are called to live and serve.

·        Principles of pastoral care. Just as every good pastor goes out of his/her way to provide effective and sensitive care to those in his/her congregation, so the congregation must understand that they have pastoral responsibility toward and for their pastor. One way to evidence that care is through the provision of sufficiently generous compensation so that the pastor need not be unduly troubled by the challenge of making "ends meet."

The guidelines are exactly that; they are guidelines. In a conference as large and diverse as is the Illinois Conference, it is impossible for any single formula to account for all the varying economic and societal contexts of our churches. NONETHELESS, the guidelines have been established with care and represent an approximation of the "market" for compensation of clergy. Obviously the single most variable element in the cost of living across our conference is that of housing. The guidelines attempt to address that variation by suggesting a way to establish a housing allowance (for those churches which do not provide a parsonage) based on housing costs in the church's own community.

Two additional introductory observations are important. Clergy are subject to the same economic pressures as are all other church members. Many have families to support, and all have bills to pay, as do all other people. Some will be making payments on educational loans acquired during their time of post-graduate study in seminary. Though it is undoubtedly true that clergy are not "in it for the money," it is equally untrue and unwise to think that levels of compensation are of no interest or concern to pastors. Whether we like or not, it is usually true that "you get what you pay for."

It is also true that many of our smaller churches cannot (and perhaps SHOULD NOT) devote sufficient financial resources to be able to afford full-time pastoral leadership. Rather than engaging in the demeaning and abusive practice of expecting full-time work for part-time pay, these churches are advised to consult with their association minister about alternative models for leadership provision and compensation thereof. There are models of part-time ministry, bi-vocational ministry and in some cases licensed ministry which may be healthier for smaller churches to consider. Nonetheless, even when a pastor is employed at less than full-time, the compensation should still be proportional to that of a full-time position. In this document, a full-time position is considered to be one in which the pastor averages 45-50 hours of work per week.

THE COMPENSATION GUIDELINES

In the Illinois Conference, in order for a compensation package to be advertised or presented as "meeting guidelines" it must, at minimum, include the following elements:

4.      Cash salary,
5.      Housing, and
6.      Specified economic and non-economic benefits.
7.      Additionally, while not considered part of pastoral compensation, the call must include provision for the reimbursement of professional expenses.

1.      Cash Salary

The base cash salary in 2006 for a pastor newly graduated from seminary is $28,000. This figure should be raised by $600 for each year of pastoral experience up to a maximum of 15 years (potentially $9000). The base cash salary should also be adjusted if the church's average worship attendance exceeds 75:

Up to 75            Base salary

75 to 199           Base salary + $1000 to $3000

200 to 399         Base salary + $3000 to $5000

400 and over     Base salary + $5000 or more

In addition, there are times when a church will find it appropriate to adjust these numbers in order to account for special skills and effectiveness, educational attainment beyond the Master of Divinity, particular responsibilities for which additional compensation is thought appropriate, or for other relevant life and work experience which the pastor brings to his/her call.

2.      Housing

If the church chooses to provide a parsonage, all utilities except personal long-distance phone calls should be paid by the church.

If the church does not provide a parsonage, a housing allowance should be calculated based on the median price of owner-occupied housing in the church's own community. The guidelines suggest that the housing allowance be set at 1% per month of the cost of that median priced home (e.g., if the median priced home is $100,000, the annual housing allowance would be $12,000).

For pastors provided a housing allowance, the cash salary plus the housing allowance will determine the "salary basis." When a parsonage is provided, the "salary basis" will be understood to be 130% of the cash salary. This number is important because it is upon this figure that several other benefits as well as the pastor's liability for Social Security tax will be calculated.

3.      Benefits

 A full-time compensation package must include these benefits at minimum: retirement annuity, group life and disability insurance, a Social Security tax offset, health and dental insurance, vacation and days off, and provision for continuing education.

1.      Retirement Annuity - The retirement annuity should be calculated at 14% of the "salary basis" (see note above).

2.      Group Life and Disability Insurance - Group life and disability is provided through the UCC Pension Boards at a cost of 1.5% of the "salary basis."

3.      Social Security Offset - Because the IRS considers a pastor to be self-employed for purposes of Social Security (though not for purposes of income tax), the guidelines expect churches to provide an additional cash benefit equal to approximately half of the pastor's Social Security liability (the same percentage the church pays for other non-ordained employees). The Social Security offset should be calculated at 7.65% of the "salary basis." For purposes of tax reporting, the Social Security offset must be reported as additional compensation on the pastor's federal W-2 form.

4.      Health and Dental Insurance - The provision of health and dental insurance for the employee and family is a required part of the compensation guidelines. The Ottawa Table strongly recommends that the insurance provided be that of the UCC Pension Boards, though in some cases the employee may negotiate other arrangements. Whenever a church and/or pastor contemplates health insurance coverage from sources other than the Pension Boards it is CRITICALLY IMPORTANT that there be conversation with a conference staff person so the potential future risks of this decision are fully understood. The costs of UCC health and dental insurance are available upon request from the Conference and Association offices.

It is not uncommon that church members will question why the church pays the entire cost of health and dental insurance coverage for the pastor. It is true that employees in many other businesses and industries are being expected to assume an increasing share of the cost of this benefit. The church has not followed this trend at least partly in recognition of the fact that ordained clergy are typically compensated at levels substantially lower than are other professionals with similar educational requirements. The provision of a fully paid health benefit is one way to acknowledge and partially compensate for this reality.

5.      Vacation - The guidelines include the provision of 4 weeks of paid vacation for all clergy (for a local church pastor, 4 Sundays and the accompanying week days).

6.      Holidays and Days Off - It is expected that clergy will be afforded the usual holidays enjoyed by the majority of other employed persons (including the provision that the pastor will take compensatory time when the holiday falls on a day requiring ministerial work). The guidelines also expect that the pastor will take the equivalent of two days off per calendar week, as do employees of most other organizations and businesses.

7.      Continuing Education - Provision of time and financial support for continuing education should be a standard part of the compensation package.  Typically two weeks are suggested.

 4.      Professional Expenses

The guidelines also require that provision should be included in the church budget (and explicitly referenced in the call letter) for the reimbursement of expenses (mileage, books, meals, etc.) which the pastor incurs in the exercise of her/his ministry on behalf of the church. This reimbursement should NOT be considered additional compensation; instead, these expenses are part of the church's overall expenses of ministry, much like the heat bill and telephone. It is expected that mileage expenses will be reimbursed at the current IRS rate.

Other Considerations

It is important and expected that all particulars of the compensation package will be fully and explicitly detailed in the letter of call. Attending carefully to such a detailed agreement can and will serve to avoid misunderstanding and conflict in the future.

Though not part of the formal guidelines requirements, there are other items which should be considered for inclusion in the compensation package and specified in the call letter. Examples might include the provision of sabbatical, a housing equity allowance for pastors living in a parsonage, financial assistance (usually in the form of a loan) for clergy buying a home for the first time, maternity/paternity leave, etc. It is also helpful to include specific language about sick leave and the possibility of pastoral disability, as well as understandings about pastoral evaluation and agreed-on procedures should the church and pastor come into conflict.

It should be understood that these same guidelines apply to associate ministers and also to interim/transitional ministers, though in the case of interim/transitional ministers there are other considerations which apply. Please consult with your association minister about those considerations.

Many churches are uncertain how the pastor's compensation should be reported for purposes of federal and state taxation. Except in very rare instances, the IRS has made clear that for purposes of income tax liability the pastor is an employee of the church and MUST be provided a W-2 form as are other employees (though as noted earlier, for purposes of Social Security taxation, the pastor is considered self-employed). 

For more information about taxation and other compensation questions, please contact your association office.