Saturday, November 3, 2012

2% - the new 1%?


This week, the Board of Pensions of my denomination, the Presbyterian Church (USA), announced a plan to change the current medical coverage plan in what amounts to a radical way. 

First, I should say that the Board of Pensions is a wonderful service and safety net for Presbyterian clergy, active and retired, and in far better shape than the plans of many other denominations. One reason for this health is good management. Another reason is the community nature of the plan itself. All churches are required to pay into the plan a percentage of the salary paid to pastoral staff, regardless of church size or anything else. This covers medical care, pension, and death and disability coverage for plan members. A church pays the same percentage whether its pastor is healthy or chronically ill; whether the pastor is single with no children or married with many dependents. All pastors who are members of the Board of Pensions then receive the same medical benefits (varying by state), regardless of whether they serve a small, rural congregation or a large church with a multi-million dollar budget.

Imagine a pastor who is called to a small, rural church. The church can’t afford to pay much more than the presbytery minimum (a minimum salary that varies from presbytery to presbytery, or region to region), and that isn’t much money. She still has outstanding debts from her undergraduate and seminary education, and her husband has some educational debt, as well. They have one baby and hope to expand their young family in the near future. The salary the church offers isn’t much, and the couple knows that taking this call will require living very simply and making certain sacrifices. Despite a having a professional degree equivalent to that of a lawyer, this young woman has known that her salary will likely never be commensurate with her level of education and experience. Still, she and her husband feel called to serve in this particular place, and so she accepts the position, knowing that at least that their basic needs will be covered – food, shelter, and health care. 

The couple move, and the husband isn’t able to find full time work in the new community. In fact, the work he is able to find pays barely enough to cover the cost of childcare so that he can go to work. Money is tight, but at least their basic needs are met.

The church has been struggling financially for some time. The dues that the church pays to cover the pastor under the Board of Pensions are not insignificant, but they are at least scaled to the salary offered. A large church down the road pays its pastor twice what this small church can pay, but at least the small church can offer the same medical coverage to a pastor, making the playing field a little more level.

This scenario plays itself out in churches across the country. In the PC(USA), more than 50% of our congregations have fewer than 100 members, and more than 50% of those are under 50. While our church is working to establish 1001 new worshipping communities, these new worshipping communities are often ministering to the people who are most in need of the outreach, but often least able to financially sustain pastoral leadership. The disparity of salaries between ministers at “large steeple” churches and the rest of us is huge, even if education levels and years of experience are the same. There is still a wide pay disparity between men and women, and between white, non-Hispanic pastors and pastors of other races or ethnicities. For a church that prides itself on being “connectional,” we are full of inequalities that reflect both changing realities and institutional injustices.

I understand that the Board of Pensions dues are a financial burden for many smaller churches, in particular. This proposed change would reduce the medical portion of those dues from 21%, where it currently stands, to 19% of effective salary. This is being celebrated as a way to reduce the costs of dues. What this does is rather shifts the burden of the costs of medical care from congregations to the pastors that serve them.

The Board of Pensions coverage will still cover 100% of the costs of health insurance for the member (note that this does NOT include deductibles, co-pays, and all of the other costs associated with health care), but only 65% of the cost for dependents. The member can choose to add full dependent coverage by paying a “fixed premium/flat dollar amount” at different levels: member plus partner, member plus child/ren, member plus family (partner plus child/ren). The more dependents, the higher the cost.

This means that plan members will face the same costs regardless of salary, removing the protective aspect of percentage-based fees that churches enjoy. Whatever this fee ends up being, it will require a much bigger percentage of the salary of a pastor who is working at presbytery minimum than a pastor whose salary is two or three times presbytery minimum or more – a pay disparity that is quite common across the country. This means that those who have the very least to begin with are more disproportionately hurt by this proposed change.

Also, the change allows for the church to pick up the additional cost – something that is far more likely to happen in wealthier congregations than in most others. It is not uncommon for clergy who are well-compensated to negotiate these kinds of extras in the package – things like optional dental coverage, a larger “professional expenses” allowance, more money for continuing education. That is great, but what it means is that in many cases, pastors who are already making far less money also have more expenses out of pocket that aren’t covered by the church, such as this additional premium charge. This continues to give large churches an additional advantage in clergy recruitment and retention, while smaller churches (and the pastors that serve them) suffer.

Going back to the communal nature of the plan, it is true that churches who pay higher salaries and have more staff pay more into the Board of Pensions. But, there is a cap. So the churches that pay the highest salaries are actually protected from paying the regular percentage of dues. These churches are going to be least affected by raises in the dues structure.

It is usually the smallest churches that feel most acutely the burden of rising dues. So while it seems to offer some relief to those churches, at a second look, it is still the larger, wealthier churches that come out ahead. In my presbytery, the minimum “effective salary” (this is cash salary, including the housing allowance, or cash salary plus the value of the use of a manse, if applicable) is $33,600. For a person coming out of 7 years or more of higher education, this is not much, and yet at least 2/3 of the congregations in our presbytery are unable to afford even the minimum, resulting in many part-time calls, difficulty finding trained pastoral leadership, etc… At any rate, this proposed change would reduce the medical portion of dues paid for presbytery minimum salary from $7,056 a year to $6,384 a year, a savings of $672 a year. I don’t know what the premium costs will be for adding dependent coverage, but I am willing to bet that it will be more than $672 a year. Even if the church wanted to offer to cover the additional dependent coverage, they would likely be unable to do so.

On the other hand, for a pastor making $75,000 a year (and there are a few in our presbytery that make more than that), medical dues would go from $15,750 down to $14,250 – a savings of $1500. That would be closer to the cost of covering dependent coverage, and it probably wouldn’t make much of a dent for the church to assume those costs.

Of course, if the plan continues to go unchanged, the folks at Board of Pensions know that the medical dues percentages will have to be raised, perhaps up to 25%. That does add to the burden that churches have to pay, but it would allow smaller congregations to continue to offer competitive health care coverage, which would free more candidates to serve those churches.

What is being discussed is a 2% change in medical dues. This is a very SMALL savings for churches that are already at the low end of the salary spectrum – the vast majority of our congregations, and a larger savings for the wealthier churches. This increases the burden particularly on young clergy, who are more likely to have dependents, who are more likely to be working at or around presbytery minimum, who are more likely to have crushing educational debt, and who are less likely to have savings, established households, and other financial cushions.

I know that financial realities must be addressed, but this is the wrong way to do it. When we talk about our responsibility to care for the most vulnerable in society, may we not forget about our own.

Update: If you would like to sign an online petition, please click here.

Additional blog responses are linked below. If you would like me to add a link, please send it in an email or comment.




9 comments:

  1. Thank you for this. I have been frustrated with how the church treats newer/young clergy. We teach and expect our leaders to teach one thing as the church does another to them. My heart and prayers are with us all.

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  2. Hi Stephanie -- I tried to reply from my phone but may have failed. Great points -- if you want to convene a task group on this, please be in touch. Cynthia Holder Rich

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    1. Thanks, Cynthia. Got your reply! Let's keep in touch about this.

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  3. Thanks for bringing this bad idea to my attention.

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  4. (I believe the cap was repealed by the 2008 GA. So things are a little better.) What we ought to do to rectify this situation is have a graduated dues system, so that the more money a minister makes, the higher the percentage her/his church has to pay in dues. Simple. This doesn't have to be a generational thing. But some rich church/poor church parity would be a good thing.

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  5. I don't think the issue is so much an older/younger problem. It's an actuarial problem. What to do? First, the investments of the BOP have been not going so well since 2008. This and contributions are what fund the BOP and especially the medical side of it. Perhaps we need better investment advice. Secondly, and I have not heard anyone comment on this too much, the churches which are leaving to the EPC and ECO are fairly large churches which contribute heavily to the BOP. We cannot have these departures and still sustain the BOP. Might we find away to allow them to continue with the BOP? Third, a number of companies have selective HMO's for various illnesses and ailments. We may need to do this. We could have selected hospitals which members must use for various procedures with agreed upon prices. I do know that some companies will charge more for various lifestyle choices. Smokers and drinkers will typically pay more. Most secular companies have a fairly strong policy about increasing the health of its members. Finally, here is the thing that I have not heard suggested yet. Why not open the medical plan up to other denominations or go in together with other denominations to increase the pool of people paying in(why not join up with the UMC or DOC). Change is coming no matter what. I do not think that what the BOP has suggested will be helpful. Clearly, based on some of the posts, it will create animosity between generations. I think there are other, better structural changes which will take us further in the long run. The proposed policy is only a Bandaid and not a very good one.

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    1. Yes, there are many problems... There actually was a resolution passed at GA directing the BOP folks to enter into conversations with other Presbyterian and Reformed Denominations about sharing plans. I can't remember the exact directive or wording, but we'll see what comes out of this.

      I recognize that there is a huge shift going on in the church and in society (many shifts, actually), and while I expect and even hope the denomination to respond with change on our end, this particular answer is deeply problematic and worrisome. I hope, too, that any proposed changes are open to member feedback.

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  6. Stephanie, I got a call today from my BOP regional representative (Clark Simmons in Atlanta) when he saw I had signed your petition on change.org. He was a great help. He said that concerns about the policy change should be addressed to the Board members through the corporate secretary. His name is Andy Browne, and his e-mail is abrowne@pensions.org. Of course, that is not the only way to lobby for a change, but since this is a board decision, the regional reps can't really do anything to change it. In my response to him (which was cc'd to Andy Browne), I pointed him toward this blog post and Carol's CC post as examples of what the concerns are. Thanks for pushing!

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