NEW ORLEANS (BP)–Most ministers’ salary “packages” create a false impression of how much money ministers really take home, said Richard Skidmore.
Thus it is imperative that ministers and churches plan correctly on compensation matters, Skidmore, a Tennessee Baptist Convention church ministers’ financial support specialist, told future ministers at New Orleans Baptist Theological Seminary.
Skidmore was one of the featured speakers for this year’s Life Beyond Seminary emphasis Feb. 19-21 at the seminary. Various seminars addressed topics such as preparing for interviews with search committees, handling conflict, church planting and preparing a ministry resume for the 21st century. The seminars supplement NOBTS’ regular academic classes which feature a church-focused, competency-based practical curriculum to equip leaders to grow healthy churches.
In addition, representatives from more than 10 state conventions, the International Mission Board and the North American Mission Board were on hand to speak with students regarding future ministry possibilities.
Skidmore, describing in his presentation the church layman’s understanding of the minister’s salary, said that when John Q. Church Member sees an annual line item of $35,000 for the minister’s salary, for example, the inclination is to compare that salary to someone who works in the secular arena, such as Wal-Mart or Saturn.
However, when you examine the comparison more closely, the minister really is not making the same, Skidmore said, using a question to explain: “Do you pay for your benefits out of your salary?” the secular employee is asked, to which the typical answer is no. In fact, the benefits – medical insurance, retirement and other fringe benefits — are added to the baseline salary, thereby increasing the amount, he explained.
In comparison, typically deducted from the minister’s published salary of $35,000 is medical insurance, housing, job-related expenses, and if the church agrees, disability and life insurance and retirement. And, because the minister is considered self-employed for Social Security tax purposes, the minister must pay the employer’s portion and his portion of the Social Security tax, which amounts to around 15 percent of his compensation, Skidmore said.
“So, the salary of the minister, when you count out everything else, is actually closer to $20,000 or less,” Skidmore said. “When John Q. Church Member sees $35,000 published, he’s seeing the entire package, not just the take home salary.
“The salary package may look like a ‘Wow!’ but it can really be a ‘Woe!'” Skidmore said, referencing the seminar’s title, “The Salary Package: Wow! Or Woe!”
Moreover, the minister’s published salary may include a line item to cover expenses such as books, conference fees and use of the minister’s personal car. “That expense belongs to the church, not to the individual,” Skidmore said.
Consider how it would make the church secretary feel if deducted from her paycheck is the cost of leasing or owning the computer she uses to produce church bulletins and letters, Skidmore suggested. “That’s exactly what we do when we expect our ministers to use their own automobiles for visitation and other church-related travel. Often, ministers are given a published salary, which includes expense money that is subtracted from their total earnings rather than added to it,” he said.
Instead, churches should not include expenses as part of the salary, but as a church expense similar to a utility bill, Skidmore said. At the end of the month, the minister should be reimbursed for expenses paid out of his pocket in the same way the electric bill is paid, he said, suggesting that ministers settle with the church monthly, using a mileage log and attaching other receipts as necessary. The minister and the church should agree in writing at the outset what expenses are acceptable, he said.
Skidmore also pointed out that ministers may be paying taxes they do not owe because of the way some churches set up the payment of medical insurance benefits.
“If the church pays the premium directly to the insurance company, the benefit is not reportable for tax purposes,” Skidmore explained. However, if ministers are given the money in their salary package to pay the premiums on their own, then it becomes taxable income, and the ministers have to pay taxes on that amount, he said.
“It’s important to always check with your state convention representative who handles compensation and tax issues to be sure that you are not paying more than you need to pay,” Skidmore advised the students.
Skidmore also offered counsel about the inclusion of a parsonage in the salary package, saying that such use may leave a church at risk and/or may hurt ministers and their families in the long run. “What happens if the pastor has a stroke and can no longer speak in the pulpit?” he asked. “Who wants to be the one in the personnel/finance committee who has to move the family out of the parsonage?”
Without an opportunity to build personal equity through a housing allowance stipend, the minister has nothing of his own to fall back on, Skidmore said.
Skidmore, on other subjects, advised the students:
— Buy medical insurance from a national company, which would be easily transferable in cases of moving. Otherwise, they would have to provide proof of good health when switching to a new company, with the added risk of non-acceptance or higher premiums, Skidmore said. “Rates may vary from local companies to national ones,” he said, “but over time, the cost will level off.”
— When buying insurance, be sure to compare the same benefits with each company. With a smaller premium, for example, a minister may be paying for a $2,000 deductible, rather than a $200 one, Skidmore said.
— When buying life insurance, consider basing it on your salary — at least twice your salary — instead of buying flat amounts, he said. “Your life insurance grows with you as your salary grows, and your premium is adjusted accordingly,” he explained. “Readjusting a flat rate for unexpected increases may be problematic, depending on your health at the time.”
— The Southern Baptist Convention Annuity Board offers each of its insurance benefits — such as life, disability, dental and health insurance — as stand-alone options. “We want to meet you where you have a point of need,” Skidmore said. More information from the Annuity Board can be obtained online at www.absbc.org or by phone at 1-800-262-0511.
“Life Beyond Seminary is all about seeking God’s heart for the ministry he has for each student,” said Ron Holman, the seminary’s director for church-minister relations and alumni affairs and organizer of Life Beyond Seminary.
“Students were able to interact and build relationships with key people in states and ministries around the world,” Holman said. “Through this interaction, we pray that God will begin to burden the student’s heart for the ministry he has for them, and the student can begin to see what they need to do to prepare for whatever ministry God is calling them to, whether it be further equipping and education or proper ministry experience.”
David Jackson, church planting consultant specialist with the Baptist Convention of Maryland/Delaware, described Life Beyond Seminary as “an exceptionally good experience, all the way from the facilitation of the event to our lodging and meals.
“I was able to network with several students one-on-one and share about several NOBTS alumni who are serving as church planters in our region,” Jackson said. “There are a lot of possibilities to work together.”
“We want our students to be used by God in ministry to bring revival and great awakening to the world in fulfillment of the Great Commission,” Holman said. “That all begins now in seeking God’s heart for what he would have each of us to do. That is what seminary is all about … and that is what Life Beyond Seminary is all about.”
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(BP) photos posted in the BP Photo Library at http://www.bpnews.net. Photo titles: INTERNATIONAL POSSIBILITIES and LIFE BEYOND SEMINARY.
