Report of the Assessment Review Task Force
April 12, 2002
Table of Contents
Executive Summary .............................................................................................................3
Description of Assessment Formula ....................................................................................4
Establishing the Task Force .................................................................................................4
Task Force Process and Timetable ......................................................................................5
Findings from Congregational Visits and Task Force Discussions .....................................5
Issues and Options ...............................................................................................................7
Appendix A: Questions and Answers about the Diocesan Assessment ............................10
Appendix B: Assessment Review Task Force Members ..................................................14
In November of 2001, Bishop Mark Sisk appointed a Task Force and asked it to review
the fairness of the Diocesan assessment formula. The Assessment Review Task Force,
chaired by Douglas Mercer, visited more than forty parishes to collect information.
In April of 2002, the Task Force proposed a series of modifications in the formula. These
Limit annual increases in congregational assessments, capping increases at 12.5%
instead of the 25% cap currently in place. Many congregations had complained
that their assessment significantly limited their ability to grow, even with the 25%
Increase the income levels that trigger changes in assessment rates. Many
congregations had requested adjustments in those rate brackets to offset the
pressures of inflation.
Adjust rates, including increasing the top rate from 22.5% to 25% and the lowest
rate from 3% to 5%, with adjustments at other steps as well. These changes were
designed to cushion rate increases from bracket to bracket, and also to mitigate
the impact of the package of changes on the Diocesan budget.
For reference the current and proposed formulas are shown below. Both formulas are
applied to the average operating income shown on the two previous years’ parochial
reports (e.g., the 2002 assessment is calculated on the average of the 1999 and 2000
Current formula Proposed formula
$0 - $50,000 3% $0 - $50,000 5%
$50,000 - $100,000 I 14% $50,000 - $100,000 12%
$100,000 - $150,000 16% $100,000 - $200,000 15%
$150,000 - $200,000 18% $200,000 - $300,000 18%
$200,000 - $250,000 20% $300,000 - $500,000 20%
Over $250,000 22.25% Over $500,000 25%
Cap on annual increases: 25% Cap on annual increases: 12.5%
The Task Force estimates that the proposed modifications will have a negative impact of
$130,000 on the 2003 Diocesan budget, reducing assessment revenues by that amount
from the level which would have been collected under the old formula.
This proposal was approved by Bishop Sisk and the Diocesan trustees. It will be
presented to Diocesan Convention for action in June.
Description of Assessment Formula
Assessments paid by the congregations are the principal revenue source for the diocesan
budget, totaling about $7.3 million in 2002 and funding nearly 80% of the budget.
Smaller revenue sources include payments from the 63 congregations in the
Congregational Support Plan (CSP), who pay one-half their income to the Diocese, and
income from the Diocese’s long-term investments and endowment.
The assessment formula, which is paid by 137 congregations, is applied to the average of
Normal Operating Income (Line A on the parochial report) for the previous two years.
The 2002 assessment is based on the average Normal Operating Income (NOI) reported
for 1999 and 2000. The formula is as follows:
$0 - $50,000 NOI 3%
$50,000 - $100,000 NOI 14%
$100,000 - $150,000 NOI 16%
$150,000 - $200,000 NOI 18%
$200,000 - $250,000 NOI 20%
Over $250,000 NOI 22.25%
The current formula for calculating the diocesan assessment was adopted by Convention
in 1994. As part of that restructuring, the Convention also created the Congregational
Support Plan and Episcopal Charities. In 2001, the Convention added a cap on annual
increases in assessment, limiting the increase in any one year to 25%.
For additional information about the assessment, see Appendix A. The questions and
answers in this Appendix were sent out to all the Diocese’s congregations as the Task
Force began its work.
Establishing the Task Force
In June of 2001, Bishop Mark Sisk told the Diocesan Convention that he intended to
appoint a task force to review the assessment formula and recommend changes, if
needed. The Task Force was appointed in November 2001, with C. Douglas Mercer as
chair and the Rev. L. Kathleen Liles as vice-chair. A list of members is included as
In appointing the Task Force, Bishop Sisk asked one apparently simple question: “Is the
assessment fair?” In a number of meetings, the members of the task force discussed that
question, using criteria drawn from economics and government as well as ethics and
scripture. The group’s tentative conclusion was that the base of the assessment – a
congregation’s net operating income (NOI) – was narrow, but that the progressive nature
of the assessment was itself an important plus in any analysis of fairness. The Task Force
also agreed that the most important judgment about fairness would be the views of the
congregations that pay the assessment. As outlined below, the Task Force collected
information from a sizable sample of those congregations by on-site visits.
The Task Force also decided that two other criteria would be used in evaluating options.
Revenue neutrality: In the absence of a decision to the contrary by the budget and
finance committee of the Council, the Task Force concluded that it would aim for
a set of recommendations that neither increased nor decreased the total
assessment revenue collected by the Diocese under the old formula.
Simplicity: It is important for congregations and their leaders to be able to
understand and calculate the assessment due to the Diocese. Everything else
being equal, proposals which added to the complexity of the assessment formula
would be less positively received by the Task Force. Additional complexity
would also add to the administrative burdens of the diocesan staff, and might have
a negative effect on the accurate reporting which is a necessary basis for high
levels of voluntary compliance with the assessment.
Task Force Process and Timetable
On January 10, 2002, an informational packet was sent out to all assessment-paying
parishes. The material included questions and answers (included as Appendix A), and
other supporting material.
Visits were scheduled with rectors, wardens and treasurers in more than 40 of the 137
parishes which pay assessments. During those visits, two Task Force members or staff
collected information in a standard format, addressing four key questions:
Do the congregational representatives understand how the Diocese’s assessment
and budgeting processes work?
Do they think the assessment is fair?
What suggestions do they have to improve the formula or make it fairer?
How do they feel about their relationship with the Diocese in general – its
bishops, staff and their work?
At each subsequent Task Force meeting, members reviewed their findings from the visits,
and discussed possible responses to the problems found.
Findings from Congregational Visits and Task Force Discussions
The findings from these visits were an important input into the deliberations of the Task
Force. The comments of parish representatives can be summarized under several
Fairness: In general, parish representatives said that they thought the assessment
formula was fair, although nobody thought it was perfect.
Growth: Even with the 25% cap on annual contributions, fast-growing
congregations reported that the assessment was a significant drag on growth.
Under an assessment system with progressive rates, the assessment increases at a
faster rate than NOI. Many congregations suggested lower caps, ranging all the
way down to twice the level of inflation.
Impact of inflation on brackets: Several parishes complained that the assessment
rate brackets, which seemed satisfactory in 1994, were now too low. The remedy
they requested was an adjustment in brackets to reflect some or all of the
inflationary impact since the last reform of the assessment formula.
Outreach: The assessment does include net operating income used to fund
outreach through a congregation’s budget. Several parishes complained that this
reduced their ability to carry out their missions. Some parishes have responded to
this problem by raising funds specifically for outreach, separately from normal
plate and pledge revenues. Others suggested a deduction from NOI reflecting
some or all of the congregation’s outreach spending.
Financial problems in congregations: A noticeable number of congregations
reported that they were or soon would be suffering fiscal stress. One important
symptom of these problems is a draw from the endowment of more than 5%.
Some of these congregations have found themselves in problems so serious that
they have applied for relief from some or all of their assessment from the
Compliance and reporting: Representatives of some congregations expressed
concern about whether other parishes were correctly reporting all of their NOI.
For some, a red flag is net operating income significantly lower than reported
expenses. Others suggested some kind of audit of parochial report data.
The Congregational Support Plan: Many congregations expressed support for the
CSP and pride their contribution to that work through their assessments. Others
expressed concern about whether and how the Diocese would wean CSP
congregations from budget support, and whether the CSP would find appropriate
incentives and technical assistance to help congregations grow. The
Congregational Support Plan Committee has reiterated its intention to help
member congregations plan for and grow into self-sufficiency.
Special circumstances: A number of congregations felt that they had to deal with
special circumstances, ranging from the high cost of living in Manhattan to
depressed economic conditions in communities and neighborhoods throughout the
Diocese. Leaders of these congregations understood that it would be difficult to
take account of those factors in an assessment formula.
Comments about relationships with Diocesan administrative staff were generally positive,
but the Task Force believes that the Diocese should take additional steps to communicate
the details of the Diocesan budget and budget process to the congregations.
Issues and Options
The Task Force reviewed and discussed more than two dozen options, ranging from
leaving the current system unchanged to levying an assessment on the financial assets of
congregations. These options are summarized below.
No change: One obvious option was to leave the existing system in place without
alteration. As suggested above, most congregational leaders believed that the
current assessment formula is generally fair. Moreover, it has provided a
predictable and adequate stream of revenue for the diocesan budget. Although the
Task Force rejected the status quo option, it did agree that the changes proposed
should be incremental in nature, building on the positive elements of the existing
system and correcting some of the problems observed during parish visits.
Adjusting brackets: A number of congregations suggested that the NOI brackets
were too tight, and argued that higher assessment rates should kick in at higher
levels. The Task Force reviewed proposals which adjusted those rates for post-
1994 inflation, and also looked at other bracket adjustments.
Reducing the cap: Growing congregations focused their concern on the 25% cap
on year to year increases in assessments. While a great improvement over the
uncapped system, they argued that the cap should be smaller still. Proposals
ranged from 20% down to twice the level of inflation, or about 5% in the current
Adjusting the multi-year averaging methodology: The current system uses two
years of NOI averaged together as the base for the assessment. This averaging
method means that increases in NOI are reflected more slowly in the assessment
than a base of a single year. Alternatively, if a congregation’s income declines,
the reduction in assessment based on that decline would also be phased in more
slowly. Some congregation leaders argued for including a third year in the
average, while others asked for an assessment based only on the most recent
Outreach and other “carve-outs:” Some parish leaders suggested a deduction for
outreach, reducing NOI by an equivalent amount. Others suggested allowing a
deduction for a portion of outreach spending, such as $25,000. Some worried that
an outreach “carve-out,” as it was sometimes called, would lead to additional
compliance problems. Another congregation suggested a “standard deduction”
for a clergy salary.
Assets as a base for assessment: The Task Force debated various proposals that
linked an element of the assessment to financial assets. Some of those proposals
would have assessed all financial assets at some modest rate. Others were aimed
at encouraging vestry to limit drawdowns from long-term investments to no more
than 5%. The Task Force believes that there is a high degree of variability in the
completeness and reliability of current reporting of financial assets. Moreover,
these proposals would be technically challenging to administer fairly. Finally, the
Task Force concluded that they went well beyond incremental changes.
The Task Force listened carefully to all these ideas and discussed them thoroughly at its
meetings. The Task Force believes that its recommendations respond to as many of the
suggestions as is possible without dangerously complicating the system or reducing the
good-faith compliance of the congregations. As outlined above, assessment mechanisms
must be simple and transparent as well as fair.
The current system, adopted in 1994, levies assessments as follows:
Bracket Assessment Rate
Up to $50,000 3%
Over $250,000 22.25%
Annual increases in assessments are capped at 25% under the current system, a change
made in 2001.
The main components of the Task Force proposal are:
A cap of 12.5% on annual increases in assessments, reduced from the present
level of 25%.
New rates and brackets as follows:
Bracket Assessment Rate
Up to $50,000 5%
Over $500,000 25%
The Task Force proposal widens the steps between brackets above $100,000, raising
them in $100,000 and $200,000 increments. This modification directly responds to the
requests from congregations that the effects of “bracket creep” be recognized. Adjusting
the brackets brings relief to many congregations that over the years had found themselves
in higher brackets.
The proposed new top rate would be paid on average income over $500,000, not
$250,000 as under the current formula. In the last few years of rising congregational
income, the percentage of congregations paying at the top rate had doubled, and
approximately one third of the congregations were paying at that rate. The new top rate
will affect about 15% of the congregations, about the same number as were paying at the
top rate when the current formula was introduced in 1995. This change responds directly
to the difficulties mid-sized congregations had expressed.
The Task Force also proposes that the cap on annual increases be dramatically lowered
from 25% to 12.5%. Congregations whose income is rising significantly will find the
assessment much less of a drag on their growth. A low cap permits a congregation’s
income to increase substantially with only a moderate increase in the assessment.
Increasing the bottom and top rates helps to offset the cost of the other modifications.
Nonetheless, the proposal assessment will have an impact on the Diocesan budget,
reducing 2003 assessment revenue about $130,000 from the level projected under the old
formula. Congregations affected by those rate changes will find the impact mitigated by
the tight cap on increases of 12.5%.
Bishop Sisk and the Diocesan trustees have approved the Task Force’s recommendations.
The proposal will be presented to the Convention for action in June.
The executive summary of this report and the Task Force recommendations will be
distributed widely, and the full report and supporting materials, including spreadsheets
showing impacts on individual parishes, will be mailed to each congregation.
Staff and Task Force members, as available, will schedule meeting around the Diocese to
present and discuss the report and its recommendations before the Convention. An
additional briefing session will be scheduled at the Convention, and full copies of the
report will be available for all delegates.
If adopted by Convention, explanatory materials on the new formula will be circulated to
each congregation later in the year. Additional discussion will take place at Diocesan
meetings, including Parochial Report Workshops, the Wardens Conference, Treasurers
Workshops, and other forums.
Staff will work with individual congregations to discuss and resolve reporting and
Appendix A: Questions and Answers about the Diocesan Assessment
What is the Assessment Review Task Force? Who serves on it?
At the Diocesan Convention in June 2001 Bishop Sisk announced that he would appoint a
Task Force to examine the diocesan assessment and, if appropriate, recommend changes
to the 2002 Convention. A list of the members of the Task Force is attached. You are
invited to contact any member of the Task Force or the staff support at any time.
What is the diocesan assessment?
The assessment is the amount each congregation pays to support the budget of the
What is the Diocese?
When people say “the Diocese,” they often mean the diocesan office on the Cathedral
Close. Actually, “the Diocese” means the 200 congregations in the 10-county area
overseen by the Bishop of New York. “The Diocese” acts when the clergy and lay
delegates assemble with the bishops in Convention. At other times the diocesan office in
Manhattan, and the regional offices in Dobbs Ferry and Kingston work to assist the
Bishop and to carry out the policies established by the entire Diocese at the Convention.
Why should my congregation support the diocesan budget?
As members of an Episcopal Diocese, we are a church catholic, bound together not only
by law and canon, but by mutual agreement in the Body of Christ. The work of our
congregations, and the Orders of the Clergy, stem from the Bishop. The work of the
Church is done through the congregations, but we maintain our universality and union
through the Bishop and the Diocese. We are not, nor can we be, congregational entities.
If we wish to eliminate our support of the National Church or of our own bishops, our
assistance to one another, or any of the other things we do as a Diocese, we need to do
that together in Convention, not as individual congregations refusing to pay a fair share
of the budget we have all adopted together.
But is the assessment fair?
The current formula was generally thought to be fair when it was adopted. Bishop Sisk
told the Convention and the Assessment Review Task Force that he wanted to take
another look at the formula to see if the formula is still fair. If inequities exist, the Task
Force wants to identify and address them. And that’s why the Task Force wants to hear
from every congregation affected.
The Task Force has set a second goal to give the congregations as much information as
possible about how the budget and the assessment work. Hence, the information you have
Is there another way the bishops can be paid?
There used to be. The first three Bishops of New York also served as Rector of Trinity
Church, Wall Street. Trinity paid their salaries. Only in 1836, when the demands of the
office of Bishop had grown, did the fourth Bishop of New York resign as an assistant
minister at Trinity and begin to be supported by assessments paid by all the congregations
of the Diocese. The bishops and their staff have been supported by the entire Diocese
What about the assistance given to other congregations? When did that start?
Almost immediately. In 1796 Trinity Parish distributed £7,000 among the “country
parishes.” The first bishops, together with the lay leaders of Trinity, were very mindful of
the responsibility those with resources have to share them with others. Trinity continues
its assistance in the Diocese and around the world. For the last 125 years, through efforts
by local archdeaconries and at the diocesan level, all congregations in the Diocese have
taken part in initiatives to found new congregations and help congregations in need. The
diocesan budget continues that work today, primarily through the work of the
Congregational Support Plan.
Let’s get back to the assessment. Does every congregation pay an assessment?
There are 200 congregations that file parochial reports in the Diocese of New York. The
63 congregations in the Congregational Support Plan (CSP) contribute 50% of their
Normal Operating Income to the diocesan budget toward the support of the clergy
serving those congregations. The CSP congregations do not pay an assessment on top of
their contribution to the Plan. The remaining 137 congregations pay assessments.
Who decides how much the assessment is?
The entire Diocese makes the decision. The Convention approves the assessment
formula. The Convention is the “Annual Meeting” of the Diocese. The clergy of the
Diocese and representatives of every congregation assemble to make decisions for our
common life. The last time the Convention revised the diocesan assessment formula was
How much is the assessment?
The amount of a congregation’s assessment depends on the congregation’s operating
income. The assessment formula is applied to the amount each congregation reports as
Normal Operating Income on the annual parochial report that is filed with the diocesan
office and the National Church.
How does it work exactly?
The formula is applied to the average of Normal Operating Income (Line A on the
parochial report) for the previous two years. The 2002 assessment is based on the average
Normal Operating Income (NOI) reported for 1999 and 2000. The formula is as follows:
$0 - $50,000 NOI 3%
$50,000 - $100,000 NOI 14%
$100,000 - $150,000 NOI 16%
$150,000 - $200,000 NOI 18%
$200,000 - $250,000 NOI 20%
Over $250,000 NOI 22.25%
For a sample calculation of the assessment under the current formula, see the Controller’s
office page of the diocesan website: www.dioceseny.org/controller/services/index.
What is the average percentage the congregations pay in assessment?
In 2000 assessments totaled $6,737,690. The congregations paying assessments reported
Total Normal Operating income on the 2000 parochial reports of $48,284,974. So the
average congregation paid 13.95% of its 2000 income in assessments that year.
Who decides what happens to the assessment money?
The entire Diocese makes the decision. Every year the Convention approves a budget to
support the Bishops and the diocesan program.
Who puts the budget together?
The Budget Committee of the Diocesan Council drafts the budget. Every program,
committee, and staff department prepares a request, called an “asking,” and submits it to
the Budget Committee. In the asking it is necessary to account for what was
accomplished with the previous year’s allocation, what will be done with the current
year’s allotment, and why funds are needed the next year. A member of the Budget
Committee is assigned to discuss the asking with the person who submitted it.
The Budget Committee presents the Diocesan Council with a balanced budget based on
available projections of revenue. The Diocesan Council must approve the proposed
budget before it can be put before the Convention of the Diocese.
Tell me more about the diocesan budget. What are the sources of income in the
In June the Convention adopted a balanced budget for 2002. Sources of income are:
Assessments $7,334,000 78.8%
CSP contributions 1,274,084 13.7%
From investments 671,500 7.2%
Other 33,060 0.3%
Total $9,312,644 100.0%
Where does the money go?
Below is a summary of the expenses in the 2002 budget. The detailed budget was
circulated before Convention to all the clergy members and lay delegates, and after the
Convention the adopted detailed budget was sent for review to every Vestry.
National Church $ 965,000 10.4%
CSP expenses 2,913,238 31.3%
Other program 1,832,564 19.7%
Mission & Program 5,710,802 61.4%
Episcopate 1,420,000 15.2%
Administration 985,091 10.6%
Communictns & Mtgs 467,417 5.0%
Commissions 105,606 1.1%
Allowances 250,000 2.7%
Transfers & Reserves 373,728 4.0%
Total $9,312,644 100.0%
How is the Assessment Review Task Force going about its work?
The Task Force is doing three things to listen to the congregations.
(1) Every congregation is receiving a letter with background material, including
these questions and answers. The clergy and lay leaders of every congregation are
asked to share with the Task Force any comments, questions or suggestions about
(2) Members of the Task Force will try to meet with 50 of the congregations
between January and March. The Task Force intends these to be in-depth
conversations about the basis of the assessment and its effects. The Task Force
would like to meet with every congregation, but with the time at its disposal,
meeting with one-third of the affected congregations is all that can reasonably be
(3) The diocesan Controller’s office has scheduled two workshops in February to
discuss the preparation of the parochial report. (Saturday, February 9, at St.
James’ Church, Hyde Park, and Saturday, February 23, in Donegan Hall of
Diocesan House) One session of each workshop will be a discussion of the
assessment and the issues before the Task Force.
While information is being received from congregations in these ways, the Task Force
will be meeting twice a month to consider possible revisions to the assessment formula.
How will we learn about the Task Force’s recommendations?
If the Task Force decides to recommend any change in the current formula in time for the
2002 Convention, it will have to finish its work by the end of March 2002. The Task
Force will send its report to the clergy and lay delegates to Convention and will attend the
pre-Convention caucuses. Since the next Convention will be a two-day event in
Tarrytown, there will also be workshops on the Task Force’s recommendations on the
Friday afternoon of the Convention.
Appendix B: Assessment Review Task Force Members
Mr. C. Douglas Mercer II (Chair) The Rev. S. Burtner Ulrich
St. Peter’s, Lithgow St. John’s, Getty Square, Yonkers
The Rev. L. Kathleen Liles (Vice-Chair) Ms. Vivian Valbuena
Christ and St. Stephen’s, Manhattan Good Shepherd, Manhattan
Mr. James A. Barba Mr. Roger B. Vincent
Zion, Wappingers Falls St. Matthew’s, Bedford
Mr. N. Kurt Barnes, Treasurer of the The Rev. Stephen O. Voysey
Diocese St. Mark’s, Mount Kisco
Mr. Squire Bozorth
St. Peter’s, Lithgow Staff Support
The Rev. Douglas J. Fisher Mr. Dall Forsythe
Grace, Millbrook The Rev. Gerald W. Keucher
Mr. Michael J. McPherson
Mr. James A. Forde Sr.
Good Shepherd, Bronx
Ms. Sarah Davis Geer
St. Philip’s, Garrison
Mr. G. William Haas Esq.
St. Thomas, Manhattan
The Rev. Dr. Stuart H. Hoke
Parish of Trinity Church, Manhattan
Ms. Sandra T. Johnson
Christ Church, Short Hills NJ
Mr. Frank Pierson
St. John’s, Fountain Square,
Mr. Stephen Rimmer
Christ’s Church, Rye