Clergy Compensation Guidelines

Members of the Committee

The Rev. Jean Alexander, Yarmouth
The Rev. Iris K. Burnell, Hampden
Ms. Molly Hahn,Westport
The Rev. Charles Ihloff, Casco
Ms. Joan Shea, Wiscasset
The Rev. John Zehring, Augusta

Maine Conference of the United Church of Christ
PO Box 966
Yarmouth, Maine 04096
207 846 5118
1 800 244 0937 (in state)

2001 CLERGY COMPENSATION GUIDE

Maine Conference UCC
From the Clergy Compensation Task Force
Of the Commission for Spiritual Life

We were guided by the following principles:
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.

                                            How Do We Decide?

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 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.

The process for reviewing clergy compensation should be one in which the professional person 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.

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. 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.

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)

The following grid provides a range of recommended full-time clergy salaries for 2000-2001. Where a parsonage is not provided, a housing allowance of 30 percent of salary is recommended. This represents an increase of 4% as a cost of living adjustment and a pay raise. It also reflects what Maine Conference Churches actually paid in 2000.

251-400 Members         $30,576 –  51,220     $39,748 – 66,586

400 + Members              $32,760 –  55,692     $42,588 – 72,399

                                            Associate Pastor

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

All Clergy should receive at least an annual cost of living increase based on the federal cost-of-living index (COLA) as well as an increase based on the number of years served at the church, expertise, performance and additional education.

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

a. Clergy compensation currently provided by Maine UCC churches;
b. Compensation provided by Maine churches of other mainline Protestant Denominations;
c. Compensation provided by UCC congregations in neighboring states;
d. Compensation for other professional positions, which require a similar amount of education and responsibility (i.e. educators).

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 work 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.

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

Worship Preparation 2-4
Sunday Worship/Coffee Hour 1
Visitation 3-4
__Those in need – shut-ins, hospitalized, etc.
__other church members

While the housing allowance in lieu of a parsonage is calculated at 30 percent of cash salary, actual clergy need depends on location. Housing cost is likely to be significantly higher in southern Maine and along the coast than inland and northern regions. There may be a difference between housing allowance compensation from a church and the housing allowance a clergyperson may claim for IRS purposes. See a specialized tax guide or consult a tax advisor.

Churches, which provide parsonages, should 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 housing equity allowance is recommended.

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.

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 assure 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.

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.

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 case of death or disability, the parsonage family must move as well as cope with the 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 saving 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 and 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 cost of ownership are often greater than some people realize.

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 we pay the whole 15.3% tax. And we 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 we 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 help and also serve to remind people that for clergy, housing is a mixed blessing.

    A. Cash Salary                                                 __________ __________
    B. Housing Allowance paid directly to pastor
   Or value of parsonage (minimum value is
   30% of cash salary)                                         __________ __________

2. BENEFITS
   A. Retirement
   i.UCC Pension Plan-14% of Salary
   & Housing                                                     __________ __________
   ii.Social Security Allowance -
   Salary and Housing times 7.65%                     __________ __________
   iii.Housing Equity Allowance
   (if minister is provided a parsonage)
   2% of cash salary                                            __________ __________

B. Long Term Disability (Family Protection Plan)
   1% of salary and housing                                 __________ __________

D. Health Insurance (2001 rates)                          __________ __________
   Single with dental                                              __________ __________
   Single without dental                                         __________ __________
   Family with dental                                             __________ __________
   Family without dental                                        __________ __________

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