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Budget Narrative 2016

Aspirational and Pragmatic:  Luther Place Budget 2016
In 2012 the Congregation approved a five-year vision plan to re-energize our institution in order to spread the Gospel in our community.  With an eye towards growing our membership, Council and staff have taken steps since then to implement the various parts of the vision plan.  In order to do that, Luther Place has operated under deficit budgets to support an enlarged staff and expanded ministries.  We come before you again with a deficit budget – which Council approved unanimously – to continue to build on the progress we’ve made as 2017 approaches.

The proposed 2016 budget projects $978,901 in expenses and $884,300 in income, which results in a projected deficit of $94,601.  In 2015, we expected a deficit of $88,879, but ended up with a smaller deficit of $70,262.60.

Our congregational budget is comprised of three main categories:  personnel (57 percent), property and maintenance (32 percent), and ministry (10 percent).  Balancing the budget would require deferring essential maintenance of the building or eliminating staff positions (or some combination of both).  At this time, Council does not believe these alternatives would allow us to faithfully live into the Vision we believe God has called us to.  Therefore, as we have in recent years, our budget deficit would be “filled” by relying on reserve funds mostly from generous bequests we have received in recent years.

Personnel
Like most non-profits, salaries and benefits for our staff represent the largest share of Luther Place’s expenses. However, we wish to point out that 2015 personnel expenses ended up being more than $20,000 below budget mostly due to changes in the staff configuration.  We believe the current staffing structure will most effectively facilitate the progress towards the Vision we desire in the next two years.  The budget:

  • Merges the part-time Parish Administrator position (previously held by Jack Reiffer) with the full-time Organizer of Community Life & Justice position (previously held by Kristen Kane) into a Director of Operations position (now held by Kristen Kane).
  • Reflects the elimination of the Parent Coordinator position which was phased out at the conclusion of this year’s ArtSmart Summer Camp.
  • Accounts for the grant received by Bianca Vazquez to fund 50 percent of her salary as Steinbruck Center Program Manager for her organizing work within the ELCA. It also accounts for the new Steinbruck Center Coordinator position held by Sarah Johnson, the salary for which is far below market rate because of the housing provided in the vicar apartment.
  • Finally compensates the Senior Pastor within the salary guidelines of the Metro DC Synod. Karen Brau has not been paid within the Synod guidelines since her arrival seven years ago.
  • Maintains the $15 per hour wage for all hourly employees and provides salaried employees a one percent cost-of-living adjustment.

Property and Maintenance
This budget reflects the true cost of maintaining an aging and historic building.  Keep in mind, our building is in use 24 hours a day seven days a week to support our various ministries, the N Street Village night shelter, and the Steinbruck Center hostel.  Such continuous and ongoing use of the building results in significant utility and repair costs.  For example, in 2015 we spent $107,833.63 on utilities; we had budgeted $105,000.  The proposed 2016 budget supports our ministries and tenants by responding to ongoing maintenance needs and avoids increased expenses that would come by deferring such expenditures.

Repair Costs
The congregation should understand that decisions made in years past to defer maintenance have resulted in several expensive “emergency” repairs and replacements of essential building equipment.  Last year we spent $67,384.81 on “regular” repairs and services – $14,384.81 over budget.  These repairs include general maintenance, appliance repairs, and miscellaneous plumbing projects.  We also spent $263,422.44 on “major repairs.” For example, last July we spent $55,000 to replace the boilers that had ceased to function (had aged beyond their projected lifespan).  In October we had to replace the chillers for the HVAC system at a cost of $150,000.  We also paid to finish renovations of the Parish Hall bathrooms, refurbishments of the outside doors, and maintenance of the stained glass windows.  These necessary repairs had not been previously budgeted.

The Property Committee has developed a plan that prioritizes major repairs and improvements over the next three years so that Luther Place will be on more sustainable financial footing in terms of annual budgeted repair costs.  Council has approved spending from our bequest funds to begin financing this plan in 2016 (see Capital Budget under Stewardship below).

Tenant Rents
Recognizing that our tenant rents have not been increased in recent years, despite costly improvements to the bathrooms and entrances, the Property Committee has taken action to increase the monthly rent of our two largest building tenants.  Last fall conversations were begun with N Street Village to increase their rent by two percent per year beginning July 1, 2016 for three years (until July 2019).  N Street Village currently pays $2000 per month for using our fourth floor as a night shelter.  N Street Village has informed Council they agree to these terms.  Also, conversations have started with the Senior Center to increase their rent by three percent per year beginning October 1, 2016 for three years (until October 2019).  The Senior Center, operated by Terrific, Inc., currently pays $3,000 per month to use the basement of the facility during the daytime Monday through Friday.

Stewardship: Together Generously
Stewardship comes in many forms.  Each of us tends to the ministry, financial, and community needs of Luther Place in myriad ways.  Council takes seriously its responsibility for the financial health of the church and has taken action in this budget to responsibly care for our staff, our property, and financial resources.  We also wish to report at this time other actions we have taken to steward Luther Place’s financial resources and how those actions relate to this budget.

Congregational Giving
Earlier this year, Council led a stewardship campaign and asked members of the congregation to make pledges for 2015 and 2016.  We have budgeted a three percent increase in congregational giving for 2016 for a total of $515,000.  As discussed above, we receive some income from tenant rents but the majority of our operating expenses are derived from member offerings.  If you have not already, please complete a pledge card so we can more accurately forecast our financial position.

In 2015 we budgeted $500,000 for congregational giving income.  We nearly reached that goal with $492,516.72.

Also, this year an anonymous donor paid the outstanding balance on our building loan.  Other generous contributions were made to help us meet our 2015 year-end appeal goal for congregational giving.  Such generosity has been deeply moving to members of Council and should inspire us all to live together generously in our life in Christ.

2016 Capital Budget
In addition to the nearly $1.2 million bequest by Catherine Rinker, we expect to receive a large bequest from Lisa Anderson Todd in the coming months.  These bequests, combined with previous ones, have enabled us to finance the improvements to the bathrooms and historic doors to our building.  Late last year, Council approved a separate capital budget to prioritize building-related projects with these funds in 2016.  As mentioned previously, these funds also help to “fill” the deficits of our increased operational expenses.

Capital Bequest Funds
Rinker Bequest $628,995
Todd Bequest $96,348
All Saints Fund $90,222
TOTAL BEQUEST FUNDS AVAILABLE $815,565
Obligated for Deficit Coverage (for FY 15, 16, and 17) $300,000
2016 Capital Budget
Rooftop Handlers $75,000
Slate Tile Replacements $12,000
Resealing 4th Floor Windows $33,000
Sacred Commons Project (Part 1 of 3) $10,000
Building Vision Team 2017 Improvements (Part 1 of 3) $10,000
2016 CAPITAL BUDGET TOTAL $140,000
REMAINING UNOBLIGATED BALANCE OF BEQUEST FUNDS $375,565

In addition to the Capital Budget, Council has approved spending the remaining $67,878 of the Music Endowment and Whitten Music Fund to pay for upgrades to the sanctuary sound system in the coming months.  Many of you may have noticed how difficult it can be to hear depending on where you sit in the sanctuary.  The microphones and speakers are also not functioning as they should. Creative Music Minister Jeremy Grenhart will work with congregation leaders to make sound system improvements that may also enable interfaces for hearing aids.

Burning Hearts – not cold feet
While a deficit budget may at first glance appear irresponsible, we believe that in our context and in this time the reverse is true.  Balancing our budget now would eliminate the opportunity for us to take important and necessary steps to realize our Vision.

Each year planning and discussing the budget is a time for us all to “get real” about where we are and where we are going as a congregation.  In recent years these discussions have resulted in a reconfigured staff, prioritizing aspects of the Vision over others, refocusing on necessary administrative and technical support needed for successful programming and operations, and a congregation-wide stewardship campaign.  Already this year’s discussion has resulted in developing a capital budget, committing the Finance Committee to support grant applications going forward, and a still nascent two-year strategic plan to follow through on various outstanding aspects of the Vision.  Now is not the time to reverse course or change direction.

Rather, it’s time to go deeper.  While committees, plans and campaigns are and will be essential to realizing our Vision, they alone will not make real.  At its core, our Vision is about faith – our hearts’ burning desire for God found in community and relationship with one another.   Yes, we need your time, expressed in your attendance in worship on Sunday.  Yes, we need your talent, expressed in your volunteer activity at Luther Place.  Yes, we need your treasure, through your financial contributions.  But for our Vision to become reality we also need your burning heart.  Sharing your witness to Christ – through your faithful actions inside and outside our community – is how we will grow, in numbers and in deeper relationship.

Council is committed to moving in this direction in 2016.  Our prayer is that this budget inspires us all to grow in our faith out of our love for Christ, each other, and the world.

Respectfully submitted,

Jackson Droney                                                          Kate Wulff
President                                                                     Treasurer

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