Eugene Mason has some thoughts and tips:
What if you were faced with a situation where you had to cut your church budget significantly? Where would you start? How would you go about deciding what (and who!) could stay, and what you could do without? This may become a reality within the current recession in North America.
A church I served faced this situation in 2006. Our Senior Pastor retired, and during the search for our next senior staff and church leader, nearly 20% of our attenders moved on. This resulted in a corresponding decline in giving and attendance. Now, this is quite natural and even predictable in our situation–when polling other churches who went through a similar transition we found our numbers to be about average. Our Senior Pastor was with us for 15 years, and long-tenure leaders leaving tends to result in difficult transitions. In our case, we had to trim a $6.5 million budget to $5.5 million–a 15% reduction in spending, year-over-year.
To make matters more difficult, many fixed-cost items like insurance, healthcare and utilities rose, and we could not cut our debt payments. So we entered the budget process with nearly $500,000 more in fixed expenses we had to compensate for even if we did not cut the budget at all. In total we had to find $1.5 million in spending we were forced to do without. It wasn’t pretty, it wasn’t fun, but here’s what we learned.
Be realistic, but optimistic. One approach to our situation would be to just “trust God” for that $1 million and not cut anything. And we honestly considered that option–after all, God can do whatever He pleases, and He has promised to provide our every need. At the same time, we knew we had to be realistic about where we were. You cannot lose 20% of your average attendance and not have that affect your giving. We had some track-recording to lean on–giving was down significantly in the months following the Pastor’s retirement, and that was an indicator that adjustments would be required. We felt a 15% cut, $1 million, still left us with a challenging but attainable budget goal.
In the end, our desire was not to spend beyond what we took in–that’s realistic. But we also planned some “wish list” budget items in case God blessed beyond our Budget–that’s optimistic. It’s okay to encourage blue-sky thinking, but face it, we live in a world that is partly-cloudy most of the time.
Cut what you can before touching personnel. Bonuses, pay increases, ministry budgets and flexible expenses should be cut first. Capital spending should be reduced. If the budget adjustments must result in loss of personnel, it’s crazy to leave in money for new Christmas decorations at the expense of a person’s livelihood. Personnel should be the last cut on the list, because when you make those cuts, they’re going to leave wounds. Before getting to staff cuts, we pored over every line item, reducing each where we could. I know some leaders may disagree here, as personnel is the highest-cost item in most budgets. But remember, the church is not like a for-profit company. The church is, first and foremost, people. So we want to put people first versus other priorities in any plan to reduce expenses.
Be in line with your vision. The mission of our church did not change as a result of a budget cut, so any cuts had to be in line with our church’s overall ministry role. This actually made the cuts easier to make, because we had a firm foundational statement on which to weigh these decisions. Remember, in a budget cut you are trimming expenses, not ministry. For us it meant refocusing on core areas of service that were closely aligned with scripture, and trimming expenses in areas that were more peripheral. It doesn’t make it any easier to explain to ministry leaders why a specific area of ministry is not considered “core,” but the reasoning holds up in light of the Budget situation that is being managed.
Treat personnel cuts with dignity. In our case, a $1 million budget adjustment meant cutting 15 full- and part-time staff positions. Even after cuts in other areas, we were forced to trim personnel. We began with our intern program and part-time helpers, then moved on to full-time positions. Most cuts were based on seniority and the ability of other areas to absorb some of the workload. Frankly, there is no way to make these kinds of decisions without affecting emotionally those in the affected area of ministry and lowering overall staff morale.
Have you ever had to make huge budget cuts? Maybe you’re going through that right now for 2013. How did you do it?