'Life Beyond Seminary' speaker examines 'wow! or woe!' salaries
March 8 2002 by Shannon Baker , Baptist Press

'Life Beyond Seminary' speaker examines 'wow! or woe!' salaries | Friday, March 8, 2002
  • Buy medical insurance from a national company, which would be easily transferable in cases of moving. "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 purchasing life insurance, consider basing it on your salary - at least twice your salary - instead of buying flat amounts.

    "Your life insurance grows with you as your salary grows, and your premium is adjusted accordingly," he said. "Readjusting a flat rate for unexpected increases may be problematic, depending on your health at the time."

  • Friday, March 8, 2002

    'Life Beyond Seminary' speaker examines 'wow! or woe!' salaries

    By Shannon Baker Baptist Press

    NEW ORLEANS - 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.

    In describing the layman's understanding of the minister's salary, Skidmore 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.

    However, when you examine the comparison more closely, the minister really is not making the same, Skidmore said. He used 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, 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.

    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" 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 suggested 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.

    Skidmore also pointed out that ministers might 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 said.

    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.

    "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 said.

    He also offered counsel about the inclusion of a parsonage in the salary package, saying that such use might 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.

    On other subjects, Skidmore advised:

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    3/8/2002 12:00:00 AM by Shannon Baker , Baptist Press | with 0 comments
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