Finance and Administration FAQs
Q1. What is the current mileage rate?
A1. The conference adopts the mileage rate as set by the IRS. As of January 1, 2016, the current mileage rate is :
- Standard mileage rate for the cost of operating your car for business use is 54 cents per mile.
- Medical-and move-related mileage is 19 cents per mile.
- Charitable-related mileage is 14 cents per mile.
Q2. How does my church calculate its Our Mission Covenant?
A2. In order to financially underwrite our connectional ministries as a Kentucky Annual Conference, CFA asks that each church covenant to remit monthly 13% of income received for the operating budget of the local church. Monies received for capital expenditures, debt retirement, Advance Specials, special day offerings, the 5th Sunday offerings for the Kentucky United Methodist Home for Children and Youth and other missional projects beyond the local church are to be excluded. Here are some example scenarios.
Q3. Where can I get more OMC forms?
A3. Our Mission Covenant Remittance forms are available in both PDF and Excel.
Q4. Where do I send my OMC and Benefits Payments?
A4. Our Mission Covenant apportionment funds can be sent to the Kentucky Conference at:
Kentucky Annual Conference
PO Box 1529
Crestwood, KY 40014
Pension and Medical payments can be sent to the Kentucky Conference Board of Pensions at:
Kentucky Conference Board of Pensions
PO Box 677
Crestwood, KY 40014
Q5. What is the Budget for the current year?
A5. In June, the Annual Conference approved a 2016 budget of $7,486,940. Click here for a line item budget.
Q6. Does my church need an audit?
A6. An annual audit sets habits of fiscal responsibility, provides checks and balances, builds trust and confidence of the financial supporters of the church, and protects the persons the local church elects to offices of financial responsibility. The Book of Discipline outlines the requirement for the local church’s committee of finance to make provisions for an annual audit of the financial statements as well as what constitutes an audit. For more information on local church audits, please reference GCFA’s Local Church Audit Guide as well as ¶258.4 of the 2012 Book of Discipline.
Q7. How long should we keep our records?
A7. Different types of records require different retention periods. For more information on records management, the Kentucky Annual Conference recommends the General Commission on Archives & History’s suggested record retention policy.
Q8. What is the Conference’s Accountable Reimbursement Policy?
A8. The Kentucky Annual Conference adheres to an accountable reimbursement policy which can be found in the CFA Report of the Conference Journal (chapter 10 page 22 of the pdf file or page 366 of printed book). The Kentucky Annual Conference recommends each local church adopt an accountable reimbursement plan. This written plan should clearly identify all expenses to be reimbursed and the responsible party, whether another employee or an elected officer of the church, who must approve the vouchered expenses before reimbursement is made. To comply with IRS regulations for accountable reimbursement plans, business expenses must be reimbursed from church funds and not out of salary reductions. Any and all amounts to be reimbursed under the written accountable reimbursement plan should be paid on a separate check and should not be combined with employees’ salary checks. CFA recommends that the line item in local church budgets for reimbursable expenses should not exceed 20% of the pastor’s base salary.
Q9. Should my church be incorporated?
A9. The Conference Board of Trustees encourages all local churches to incorporate. To incorporate your congregation, a local church must first register with the IRS to obtain a Federal Tax Identification Number. To obtain a tax ID number, please visit www.irs.gov to download and complete IRS Form SS-4. Incorporation forms can then be filed with the Kentucky Secretary of State’s Office (www.sos.ky.gov).
Q10. How does my church obtain 501(c)(3) status?
A10. A United Methodist church or agency can submit a request to GCFA by completing the Group Ruling Request at www.umgroupruling.org.
Q11. Does my pastor need a W-2 or 1099?
A11. Salaries and wages should be reported to all employees, including pastors, on a W-2.
Q12. Does my church need Worker’s Comp?
A12. Kentucky State law requires all employers to have worker’s compensation insurance. This is true even if the pastor is the only employee of the church. The Kentucky Annual Conference currently endorses a conference-wide worker’s compensation plan in which any local church can participate. Click here to download the form. Completed forms can be submitted to Eric Harden (email@example.com) with Insuramax.
Q13. Does my church need liability insurance?
A13. Local churches may be legally liable for certain negligent acts and omissions of church employees and church members performing voluntary work for the church. Therefore, the Conference Board of Trustees requires local churches to obtain adequate liability insurance. For information on liability insurance, please reference the Risk Management section of GCFA’s Legal Manual.
Q14. What is a Housing Allowance and how do we determine it?
A14. Under Section 107 of the Internal Revenue Code, clergy can exclude a portion of their income designated by their church or salary paying unit as a “housing allowance”. The church’s designation must be in writing and set in advance of the payment to the minister. To be excludible, amounts designated as a housing allowance must be used to provide housing. In addition, there are limits on the amount that can be excluded. Clergy may exclude from gross income for federal income tax purposes the cost of owning, renting, and/or furnishing a home up to the least amount of the following:
- The amount designated as the housing exclusion
- The amount of documented housing expenses
- The fair rental value of the property (furnished, plus utilities)
If a church sets a housing allowance in error or needs to amend the set housing allowance mid-year, the church can set a new housing allowance to take affect prospectively, never retroactively. Doing so adheres to IRS Publication 1828 that states the housing allowance must be set in advance of the payment.
Q15. Where can I learn about the Good Samaritan Foundation?
A15. The Good Samaritan Foundation provides grants on an annual basis to charitable and educational agencies in Kentucky for health care and health education. Grants can be submitted online beginning January 1 and are due by March 1. Click here for more information.
Q16. Where can I learn about the Eastern Kentucky Ministry Grants?
A16. The purpose of the Eastern Kentucky UM Health Education and Welfare Fund is to provide funding for health care issues in Kentucky. Methodist and non-Methodist agencies can both apply for grants from this fund. Applications are accepted from July 1 through August 31 and awarded after the committee meets in October. For more information on Eastern Kentucky Ministry Grants, click here.
Q17. Where can I learn about grants for capital improvements (Frank C. King Fund)?
A17. The Conference Board of Trustees awards grants from the Frank C. King Fund on an annual basis. Grants are for congregations with membership of 200 or less or worship attendance of 100 or less. The Frank C. King Fund provides qualifying congregations with a matching grant up to $3,000 for capital improvements and additions to the church. Information regarding this grant is emailed to pastors and church treasurers in the fall each year.
Q18. Does my church need better internal controls?
A18. Similar to the need for an audit, Internal Controls are a necessary component to building trust between the congregation and those who have been entrusted to handle the financials of a church. The 2013-2016 United Methodist Church Financial Records Handbook, available through Cokesbury, provides a basic guide for establishing proper procedures.
Q19. To whom should I submit a change in church treasurer information?
A19. Changes to church treasurers should be sent to your District Superintendent’s Office for updating.
Q20. Where can I learn about Special Sunday Offerings?
A20. General Conference created six unique Special Sundays to help congregations work with communities, rebuild shattered lives, strengthen self-sufficiency, encourage partnerships, nurture Native American ministries, model peace and justice, provide scholarships and loans for United Methodist students, and much more. Visit www.umcgiving.org to learn more about each of these special offerings.
Q21. Where can I find information on Advance Projects?
A21. The Advance is an official program of The United Methodist Church for voluntary, designated, second-mile giving. Through The Advance, United Methodist annual conferences, districts, local churches, and organizations, as well as individuals and families, may choose to support mission programs or mission personnel with their financial gifts. Each Advance project has been vetted and approved by Global Ministries and Advance staff. Visit www.umcmission.org/advance to learn more about Advance Projects throughout the denomination.