We looked last week at the costs of “worshipping here.” It will cost $444,101 in 2007 to worship here. This includes the compensation of lay and clerical staff , as well as any material supplies needed to facilitate our worship together on Sunday.

This week, let us focus on the compensation provided to clergy; both the Rector and the Priest Associate. This cost covers salary, housing allowance, pension, health insurance, a lump sum payment of the employer side of social security, life insurance and long term disability insurance.

There are three unusual requirements in tax and church law, which affect clergy compensation.

Those requirements are not generally found elsewhere in the pay structures of lay employees in other occupations. First, as far as the Internal Revenue Service is concerned, a clergy person is an independent contractor for a parish, not an employee. This is a quirk in the tax code that goes back to the early 1940’s and applies to all clergy: not just Episcopal clergy.

Thus, benefits that the employer normally pays some one other than the employee are paid directly to the clergy person, and must be counted as part of his compensation. For example, the clergy person is responsible to pay all social security costs: both the employer and the employee side. So, the parish pays the clergy person what it would have paid the Social Security Administration and it counts as compensation to the priest. This payment is included in the compensation figure above.

The second odd feature is housing. The Diocese of Virginia requires a parish to provide a home for the priest and family, or to provide a housing allowance in lieu thereof. IRS rules require that this allowance reflect the actual cost of housing. As most of us are aware the cost of housing in Loudoun County rose very rapidly in the past ten years. In fact the average price of a single family home in Loudoun County has increased from $202,000 to $641,381 by 2006.

Assuming market price a priest at this parish who bought a home in 2006 would have a real cost, and therefore housing allowance, 3.2 times greater than that of a priest who bought in 1997. Housing allowance is included in the compensation totals above.

The third odd feature is health insurance. The Diocese requires parishes to provide heath insurance coverage for clergy and their families. If the priest is single and has no dependents then the cost to the parish is about $5,000. If, on the other hand, the priest is married and has children, then the cost increases to about $15,000. Health insurance costs are included in the compensation totals above.

Finally to attract and retain qualified clergy a parish must offer a competitive basic salary. While there are many ways to measure the size of a church the most objective and accurate is average Sunday attendance. This parish has the largest average Sunday attendance (ASA) of any Episcopal church in Loudoun County.

With the Diocese’s help in 2005 we compared the salary of our former Rector to the salaries of other Episcopal rectors in Northern Virginia with an ASA of more than 450 persons. The former Rector was being paid substantially below the lowest paid comparable Rector in Northern Virginia.

We could not attract a qualified candidate with that salary. The Vestry consulted with the Diocese and established a salary range which would, they believed, be acceptable to a qualified candidate. Our offer which was within that range was, in fact, acceptable to both finalists.

Including salary, social security, housing allowance, insurance and pension Clergy compensation for this Parish in 2007 will be $215,039.

The cost of people is more than 50% of our budget. Next week we will look at the cost of materials required to support worship and the value returned.