Diocesan Budget History

For most of the last decade, the Diocese of Michigan was running an operating deficit and funding that deficit by excessive endowment withdrawals. Towards the end of the decade, strides were being made to address the deficit. But then the Great Recession hit the world in late 2008. Southeast Michigan was hit particularly hard and the Diocese of Michigan was not spared. All funding sources for the diocese plummeted in 2009, with Total Operating Revenues dropping by 15% (or $400,000) compared with the totals from just one year earlier. Cuts to Operating Expenses could not keep pace with the steep drop in funding and, therefore, the Operating Deficit ballooned in 2009. After a difficult budget-cutting and restructuring plan, the Diocese of Michigan emerged from the recession with a balanced budget in 2010 and has maintained balanced budgets since then.

While the diocese continued to balance its books immediately following the restructuring, it took two more years before the diocese would see growth in its Operating Revenues. Since that time Operating Revenues have continued to grow almost every year, averaging an increase of about 1.4% each year. This growth in funding, while modest, has allowed the diocese to give staff regular cost of living adjustments, absorb most of the increasing healthcare costs, expand outreach efforts, and even help hire new staff. And, throughout it all, the diocese was able to maintain its full assessment to The Episcopal Church.

The Apportionment formula for the Diocese of Michigan is 10% of the average Normal Operating Income from the last three parochial reports of each congregation. The number of congregations paying the full apportionment has been growing over the last several years with the 2018 rate coming in at 73% compared to 61% just a few years ago. Likewise, the shortfall in actual apportionment payments compared to the full apportionment calculation has been steadily dropping. That shortfall was 19% (or $330,000) in 2011 and was pledged to be only 7% (or $117,000) in 2018.

The next largest funding source is from investment income, representing 21% of the total budget.  Diocesan investment balances have continued to grow during this economic cycle, both from market appreciation and also from new bequests.  The withdrawal (dividend) rate, while too high in the not too distant past, current sits at a very prudent and sustainable 4.15% of the average market value of the last 20 quarters.  The Investment Committee has been discussing this year whether or not to take advantage of market appreciation and lower the rate even further, perhaps down to 4.00%.

The third source of funding for the diocesan budget is from Contributions, which account for 10% of the total. Almost 99% of that total comes from one perpetual trust, so there is virtually no reliance on annual giving. The foundation managing that one perpetual trust has indicated their intention to continue to make beneficiary disbursements from the trust, just as they have for the past 50 years.