Finance and Administration FAQs

A1. The conference adopts the mileage rate as set by the IRS. As of January 1, 2023, the current mileage rate is:

A2. In order to financially underwrite our connectional ministries as a Kentucky Annual Conference, CFA asks that each church covenant to remit monthly 10% 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.

 

 

A3. Our Mission Covenant Remittance forms are available in both PDF and Excel.

 

 

A4. Our Mission Covenant 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

 

Payments can also be made securely online at: Kentucky Conference Online Payments

 

A5. In June, the Annual Conference approved a 2023 expense budget of $6,442,270. The 2023 Conference Budget, as approved at the June 2022 Annual Conference, is available here: 2023 Conference Budget.

 

 

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.

 

 

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.

 

 

A8. The Kentucky Annual Conference adheres to an accountable reimbursement policy which can be found in the CFA Report of the Conference Journal. 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.

 

 

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).

 

 

A10. A United Methodist church or agency can submit a request to GCFA by completing the Group Ruling Request at www.umgroupruling.org.

 

 

A11. Salaries and wages should be reported to all employees, including pastors, on a W-2.

 

 

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.

 

 

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.

 

 

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:

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.

 

 

A15. The Kentucky Conference is excited to offer a variety of grant opportunities for local churches and other ministry partners. You can read more about these opportunities here: Kentucky Conference Grants

 

 

A16. 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 2017-2020 United Methodist Church Financial Records Handbook, available through Cokesbury, provides a basic guide for establishing proper procedures.

 

 

A17. Changes to church treasurers should be sent to your District Superintendent’s Office for updating.

 

 

A18. 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.

 

 

A19. 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 to learn more about Advance Projects throughout the denomination.