2012

CLERGY

COMPENSATION

GUIDELINES

Maine Conference

United Church of Christ

28 Yarmouth Crossing Drive

Yarmouth, Maine 04096

207 846 5118

1 800 244 0937

Table of Contents

I.	Decision Making	3
II.	Salary Guideline Principles	4
III.	Associate Pastor	4
IV.	Benefits and Employer Expenses	4
V.	Part-Time Employment	5
VI.	Part-Time Compensation Guidelines	6
VII.	Clergy Units	6
VIII.	Other Compensation	6
IX.	Sabbatical	7
X.	Health Insurance	7
XI.	Life Insurance and Disability	7
XII.	Flexible Spending Account	7
XIII.	How Should We Present the Pastor’s Compensation in the Church Budget?..	8
XIV.	Parsonage/Housing Allowance	8
XV.	Tax Implications for Clergy Compensation	9
XVI.	A Church’s Actual Cost for a Minister	9
XVII.	CLERGY COMPENSATION GUIDELINES SALARY SCHEDULE	11
XVIII.	Interim Ministry	11

 I. Decision Making

How we decide is almost as important as what we decide. In every church, some process needs to be in place for the regular, annual review of employee compensation. Some group within the church (i.e. Pastoral Relations, Personnel, etc) needs to have responsibility for the process. This booklet deals with clergy compensation, but regular review of compensation for other church staff members is just as important.

We were guided by the following principles:

1. How Do We Decide?

Compensation should be fair and just, taking into consideration the size of the church and the clergy person's experience, skills, and education. Other practical factors that churches must consider are their income and their geographical setting.

Churches whose size and/or income make it impossible to approach these guidelines should consider options that fit their budget while treating their clergy with fairness and integrity.

The process for reviewing clergy compensation should be one in which the professional person (i.e. the clergy) is a full participant. Pastors have a right, and indeed an obligation, to share with an appropriate designated body whatever feelings, hopes, and needs they may have with regard to compensation. Even in situations where resources are severely limited and the church is unable to pay what it might like to, the fact that the pastor has been consulted is very important in terms of clergy morale and open communication.

We suggest that in each church, a small committee, perhaps a Personnel Committee, be given the task of initial negotiations with the pastor or pastors each year, several months before the next year’s budget is drafted. Recommendations for changes in compensation can be forwarded from this group to be included in the budget-building process. Ideally, the same committee, which initiates compensation recommendations, will also be involved in defining and evaluating the pastor’s work on a regular basis.

2. What Factors Should Be Considered?

The size of your church - Smaller congregations generally pay less than larger ones although there are exceptions to this pattern. The guidelines which follow recognize that church size may make a difference in a church’s ability to compensate its pastor and in the demands the church places on its pastor.

The experience and skills of your pastor Generally, pastors who have served in ministry for several years will possess more skills than those whose experience is limited. It is appropriate that acquired skills and advanced training be recognized with a higher salary. The Conference guidelines provide salary ranges. The more experience and skilled your pastor is, the higher in the guideline range you should expect his or her salary to be.

Your assessment of your pastor’s performance Pastors who have performed well in meeting the needs of the congregation should receive a performance increase.

The cost of living The cost of goods and services rises nearly every year and clergy compensation should be adjusted accordingly. Otherwise, simply maintaining the same salary will reduce the pastor’s purchasing ability. We suggest that you adjust your pastor’s specific salary based on performance and the cost-of-living index (COLA).

II. Salary Guideline Principles

Salary guideline figures for 2012 can be found at the end of this document.

Where a parsonage is not provided, a housing allowance of 30 percent of salary is recommended.

The Maine Conference also recommends a cash package sufficient to allow the minister to buy, furnish and maintain a median-priced house in the church’s community: The minimum cash package should be no less than 1/100 per month of the value of a median-priced home in the community; (for example: if a median-priced house in a community is $150,000, the church’s minimum cash package for housing would be $1,500 per month, or $18,000 per annum.

III. Associate Pastor

A full-time Associate Pastor’s salary is generally set at 70%-80% of the Senior Pastor’s salary.

IV. Benefits and Employer Expenses

The figures above are for cash salary with parsonage or with housing allowance. (See the Compensation Worksheet). These additional items are usually part of a compensation package:

___Annuity – 14%

 ___Sabbatical Leave

___Health and Dental Insurance

___Two Weeks of Study Leave (to further equip the minister to perform ministerial duties)

___Life and Disability Insurance 

___Professional Expenses/Books

___Four Weeks Paid Vacation

___Maternity/Paternity Leave

___One half of Social Security (7.65% of Base)

___Housing Equity Allowance (2% of Base)

___Transportation/Travel Expenses

___Continuing Education Expenses

___Meetings/Conferences Expenses

We recommend that all clergy receive at least an increase based on the number of years served at the church, expertise, performance and additional education.

The salary benefit and annual increase recommendations in these guidelines are based on a consideration of:

1. Clergy compensation currently provided by Maine UCC churches; 

2. Compensation provided by Maine churches of other mainline Protestant                         Denominations;

3. Compensation provided by UCC congregations in neighboring states;

4. Compensation for other professional positions, which require a similar amount of education and responsibility (i.e. educators).

See actual cost examples at rear of Booklet

V. Part-Time Employment

Churches that cannot afford the recommended full-time compensation (salary plus benefits) may consider offering fair part-time compensation. Fairness is the key because without it a congregation may have unrealistic expectations of a part-time clergy person. One approach to negotiating a fair part-time congregation-clergy covenant is to look at the responsibilities in terms of units. A morning, afternoon or evening would constitute one unit of work. For example, a pastor who spends a morning on worship preparation, the afternoon on hospital visits and the evening at a trustee meeting would have worked three units that day.

A full-time pastoral position would involve 10 to 14 units a week, depending on the season, emergencies and other situations, but should average 12 units a week over the course of a year. Three-quarter time compensation would average 9 units while half-time compensation would average 6 units.

This approach allows a congregation to set priorities and provides considerable flexibility. Lay people might prepare the newsletter, teach an adult Bible study or make routine visits to shuts-in, freeing the part-time clergy person to concentrate on worship preparation and a limited number of meetings, counseling sessions and crisis visitation. In this way, a church may provide a professional-level ministry with a part-time pastor.

Imaginative approaches to bi-vocational ministry offer another option. Churches with part-time ministers might explore innovative ways to attract clergy by investigating other part-time employment opportunities in their communities and listing them in their search profiles. Especially as more people enter the ministry after working in other areas, this approach offers possibilities.

VI. Part-time Compensation Guidelines

Congregations who call pastors to less than full-time service should use the salary guidelines to determine the recommended minimum salary for full time service for their church and their pastor's experience and then multiply that salary by the percentage of full-time service worked by the part-time pastor. (Example: A church with 100 members and a parsonage hires a part-time minister with 5 years of ministerial experience for halftime. The recommended cash minimum salary is $34,083.00 (Salary Grid) x (50%) or $17,041.oo)

1. Clergy employed on a part-time basis should receive a percentage of housing and all benefits equal to their percentage of part-time employment.

2.  Part-time clergy need to receive expense offsets for mileage, books and meetings.

3.  Part-time clergy & churches are urged to arrange compensation agreement as best suits the particulars of each clergy regarding Income Tax Liability.

VII. Clergy Units

The following suggests unit assignments for the most common clergy responsibilities:

Responsibility Units Per Week

Worship Preparation	2 – 4 Units
Sunday Worship/Coffee Hour	1 Unit
Visitation of those in need (shut-ins, hospitalized, etc.)	2 – 3 Units
Administration	1 – 2 Units
Meetings	2 – 3 Units
UCC Association, Conference, etc.	1 – 2 Units
Counseling, Weddings, Funerals	1 Unit
Preparing and Teaching Bible Study	1 – 2 Units
Communications – bulletin/newsletter	1 – 2 Units
Community Chaplaincy – nursing home, jail, hospital, etc.	1 Unit

VIII. Other Compensation

While the Housing Allowance in lieu of a parsonage is calculated at 30% of cash salary, actual clergy need depends on location.  Housing cost is likely to be significantly higher in southern and coastal Maine than inland and northern regions. There may be a difference between the housing allowance compensation from the church and the allowance permitted by the IRS.  Clergy are advised to consult with a tax advisor.

Churches which provide parsonages should also provide a housing equity allowance. Lay people may assume that clergy who are provided with parsonages are freed from concern about mortgages. Pastors, however, who have lived in parsonages throughout their career, often retire with few funds for retirement housing because they have not accumulated equity in their own homes through those career years. Thus a two percent (2%) housing equity allowance is recommended. This is based upon the Base Salary figure.

IX. Sabbatical

We recommend that a three-month sabbatical leave be provided to full-time pastors for every five years of service. Churches are advised to save for this expense in their operating budget over the five-year period.  It is a professional expectation that a minister will remain in the employment of the local church granting the sabbatical for at least one year after the end of the sabbatical period.

X. Health Insurance

Finally, we strongly recommend that pastors be enrolled in the UCC health insurance plan because it assures portability and continuity. That is, as pastors move to new parishes, they can take their health insurance with them. We recommend that pastors be provided with this health insurance even if their spouses/partners can obtain family coverage at their own place of employment to ensure continuous clergy coverage in the case of divorce or death of a spouse/partner. We also recommend that clergy with families be provided with full family health and dental insurance coverage.

XI. Life Insurance and Disability

The Life Insurance and Disability Plan offered through the UCC Pension Boards is vitally important coverage offered at a very modest cost.  This coverage should not be neglected by either the pastor or the congregation.  The Plan actually helps protect the church as well as the pastor.

This plan through the UCC Pension Board provides disability income and term life insurance for your pastor. The premium is 1.5% of the same "salary basis" used previously to compute the annuity. The Plan provides benefits in the event of death or disability. The Plan has three key parts:

1. Life insurance program

2. Short Term disability program that can replace a portion of income for up to five months

3. Long Term disability program that can replace a portion of income when a disability continues beyond six months

If your minister is new to the UCC ministry, it is important that he or she apply for the Life Insurance and Disability Plan within the first 90 days of arriving in their ministry setting.  Failure to do so may result in having to pass medical exams in order to be eligible. Such exams may result in the denial of coverage.  This is also true for clergy families.

XII. Flexible Spending Account Plan

Through the Pension Boards, local churches participating in the UCC Health Benefit Plans may establish a Flexible Spending Account for clergy.  Aside from a modest initial set-up fee, making this Account available does not have a cost to the local church as it is funded by the clergy person’s voluntary salary redirection into the Account. The Account provides participants with tax-savings related to medical deductibles, co-pays and dependent care expenses and is an attractive addition to a compensation arrangement.

XIII. How Should We Present the Pastor’s Compensation in the Church Budget?

Given the fact that people inevitably make comparisons between their own earnings and those of the pastor, thought needs to be given to the way this information is presented in the church budget. In view of this, we recommend that a budget format be used which clearly distinguishes between those line items which are in the category of “salary” and those which are employer costs. In the case of a pastor, it is reasonable to include both cash salary and a housing allowance or provided parsonage as salary items, comparable to what a layperson’s salary would include.

We recommend that all other compensation items be listed as “employer expenses,” because they are the equivalent of items regarded that way outside the church. Retirement and health plans are fringe benefits that other employees also receive. A Social Security allowance is equivalent to the employer’s share paid on behalf of other employees. Auto and other expense allowances also have their equivalents in the secular world, where they are regarded as basic costs of doing business.

XIV. Parsonage/Housing Allowance

Living in a Parsonage is not as free as it looks. To be sure, the Church puts up the capital investment, pays the taxes, utilities and repairs etc., but the minister may serve an entire lifetime without building any equity in a house. A list of pros and cons might look like this.

A parsonage is helpful when: Real estate costs in the community are so high clergy would not be able to buy. The minister does not plan to stay long enough to make housing investment wise. The pastor does not have to be concerned about taxes, utilities, repairs or periodic renovation. The pastor can easily decide to leave on short notice without having to sell property.

A parsonage is a disadvantage when: A parsonage may not be either comfortable or convenient for the pastor’s family.  There is a felt lack of privacy in parsonage living. In the case of death or disability the parsonage family must move in addition to deal of the death or loss.

Obviously what is an advantage for the pastor may be a disadvantage for the church and vice versa. In the past we have suggested a 2% equity allowance to help clergy who live in parsonages save for future housing needs. A housing allowance can build equity toward the time when the minister needs a retirement home. Housing equity is also a major form of savings for most other people. A housing allowance gives the minister a chance to build equity toward the time when through retirement or disability s/he no longer has a church provided home.

Home ownership carries tax advantages such as: Ownership may represent a stronger commitment to the community. A pastor’s voice is more likely to be heard in Community affairs if s/he is a taxpayer as well as a resident.

Home ownership also has disadvantages that include: The possibility that the pastor might need to sell property to move.  The possibility that a retiring pastor will not feel as free to move from his/her final parish. The costs of ownership are often greater than some people realize.

XV. Tax Implications for Clergy Compensation

For most of us the Social Security tax we pay is withheld along with the Federal Income Tax and we realize that our employer pays half of the total while we pay the other half. Clergy are treated as “self-employed” for purposes of Social Security so they pay the whole 15.3% tax.  And they pay it on cash salary plus housing provided. (Parsonage, figured at 30% of salary or fair market value, or actual housing allowance.) For many ministers, this is by far the largest tax they pay. This is why many Churches include a Social Security allowance equal to what would otherwise be the employer’s share of the tax. Even though this allowance is taxable as income, it can be helpful and also serve to remind people that for clergy, housing is a mixed blessing. An additional booklet, A Negotiating Handbook for Congregations and Clergy is available from the Maine Conference Resource Center.

XVI. A Church’s Actual Cost for a Minister

To help churches avoid the “sticker shock” of how much it actually costs to employ a full-time minister, the following examples are provided.

The examples come right from the Clergy Compensation Guidelines and DO NOT reflect geographical locations where additional housing allowance must be provided to reflect higher than average costs.

EXAMPLE #1: Entry-level church of under 100 members providing a housing allowance and working full-time. These figures are based on a 2% increase from 2011. 

$32,338	Salary
9,701	Housing Allowance (30% of Salary)
42,039	BASE COMPENSATION
3,216	Social Security Allowance (7.65% of Base)
3,000	Travel Allowance (this may need to be raised for clergy in rural areas)
5,885	Pension Annuity (14% of Base)
631	Disability Insurance (1.5% of Base)
6,357	Health Insurance (Pension Board sets rates)*
459	Dental Insurance (Pension Board sets rates)*
1,000	Books and Continuing Education
2,102	Sabbatical escrow (3 month after 5 years of service: $171.72/month will total $10,303 after five years) Calculate at 5% of Base
$64,689	CHURCH’S ACTUAL COST FOR A MINISTER

*Based on one adult, 2010 rates

IF A PARSONAGE IS PROVIDED INSTEAD deduct housing allowance ..add maintenance, snow, lawn care, utilities, taxes ..add housing equity allowance (2% of salary)

EXAMPLE #2: Mid-level church of 251-400 members providing a housing allowance for a pastor with 9 years of ministerial experience

$68,781	Salary (includes Housing Allowance)
68,781	BASE COMPENSATION
5,262	Social Security Allowance (7.65% of Base)
3,000	Travel Allowance (this may need to be raised for clergy in rural areas)
9,629	Pension Annuity (14% of Base)
1,032	Disability Insurance (1.5% of Base)
6,357	Health Insurance (Pension Board sets rates)*
459	Dental Insurance (Pension Board sets rates)*
1,000	Books and Continuing Education
3,439	Sabbatical escrow (3 month after 5 years of service: $171.72/month will total $10,303 after five years) Calculate at 5% of Base
$98,959	CHURCH’S ACTUAL COST FOR A MINISTER

*Based on one adult, 2010 rates

IF A PARSONAGE IS PROVIDED INSTEAD ..deduct housing allowance ..add maintenance, snow, lawn care, utilities, taxes ..add housing equity allowance (2% of salary)

XVII. CLERGY COMPENSATION GUIDELINES SALARY SCHEDULE (Recommendations for 2012)

Salary and Housing (2% increase)

Church Size Salary With Parsonage

Members	1-4 Years Exp.	5-8 Years Exp.	9-12 Years Exp.	13-16 Yrs. Exp.	Notes
<100	32,388 – 34,764	34,475 – 37,191	37,192 – 39,615	39,616 – 42,042	+ 800/yr expenses
100-150	33,903 – 37,626	37,627 – 41,349	41,350 – 45,073	45,074 – 48,796	+ 800/yr expenses
151-250	36,728 – 40,512	40,513 – 44,298	44,299 – 48,083	48,084 – 51,863	+ 800/yr expenses
251-400	39,556 – 46,232	46,233 – 52,908	52,909 – 59,585	59,586 – 66,259	+ 800/yr expenses
401-500	42,404 – 49,815	49,816 – 57,226	57,227 – 64,637	64,638 – 72,045	+ 800/yr expenses

For every 100 members above 500, an additional $2,550 should be added to the salary base.

Church Size Salary With Housing Allowance

Members	1-4 Years Exp.	5-8 Years Exp.	9-12 Years Exp.	13-16 Yrs. Exp.	Notes
<100	42,039 – 45,193	45,194 – 48,348	48,349 – 51,500	51,501 – 54,655	+ 800/yr expenses
100-150	44,074 – 48,914	48,915 – 53,754	53,755 – 58,595	58,596 – 63,435	+ 800/yr expenses
151-250	47,746 – 52,666	52,667 – 57,587	57,588 – 62,508	62,509 – 67,422	+ 800/yr expenses
251-400	51,423 – 60,102	60,103 – 68,780	68,781 – 77,461	77,462 – 86,137	+ 800/yr expenses
401-500	55,125 – 64,760	64,761 – 74,394	74,395 – 84,028	84,029 – 93,659	+ 800/yr expenses

For every 100 members above 500, an additional $2,550 should be added to the salary base.

XVIII. Interim Ministry

Interim Minister’s should receive the same salary and benefits as a settled pastor.  We recommend that the Interim’s salary and benefit package be the same as that of the departing pastor.

Interim Ministry Sabbatical

Interim Minister’s need times of sabbatical as much as a settled pastor.  It is our recommendation that one month of the salary base be accumulated during each year of the interim’s service to the local church.  We recommend that this one month (for each year of service) be provided to the Interim Minister at the time of his/her departure from service.