It’s late May, which means a few things are about to happen in Southern California; school is about to end, summer weather is starting to rear its head, and budget season is kicking off at my church. Yes, our fiscal year officially runs October through September, but I have a pre-budget routine for the upcoming fiscal year that takes about five months to plan effectively. During May and June, I try to determine if attendance and donations are growing or shrinking by analyzing the data. It is essential to use at least 12 months’ data to avoid inaccurate trends due to seasonal attendance or giving spikes – like Christmas or Easter. Over the years, I’ve learned that understanding your church’s giving and attendance trends have many implications when crafting an upcoming annual budget, especially regarding staffing and payroll costs. Specifically, it gives a snapshot to show if you have too many or too few employees. And for a church with a trend that shows a decline in attendance or donations, this information is vital. When performing this evaluation, I start by assessing two key determiners: our attendance trends to the number of paid staff and our total compensation costs to our total budget.
Attendance
The assumption here is that your church is tracking attendance – accurately. Don’t pad the numbers to make the Lead Pastor feel good about the service. Get an accurate account of each adult in each service. We installed a high-resolution camera to capture attendance, and it works great. In addition to adults in the worship service, get a precise count of the youth and the children. Getting attendance for the youth and children is much easier as most churches have a check-in system that will provide totals. Armed with this information, determine the average weekly attendance. According to Chemistry Staffing, churches should use a 1:76 ratio to determine the number of FTE (Full-Time Equivalent) employees. That seems like a lot of insider language, so let’s break that down.
- The FTE – is a calculation to determine how many part-time employees are equivalent to a full-time employee. What? A full-time employee works 8 hours a day for five days totaling 40 hours a week. Over a year (52 weeks), that equals 2,080 hours. The FTE formula adds up all part-time hours on an annual basis, then divides it by 2,080 to see how many full-time employees are equivalent based on all part-time hours.
- The 1:76 Ratio – This calculation means there should be one FTE employee for every 76 people in attendance. According to this calculation, a church with an average weekly attendance of 500 should have between 6 and 7 FTE employees.
Remember, this is a guide; consider if your church is experiencing growth or in a period of shrinking when making any personnel decisions.
Compensation Budget
Another indicator to consider is that compensation for a healthy church ranges between 45%-55%. This analysis uses non-exempt and exempt annual wages, housing allowances, benefits (including the employer portion of medical, dental, vision, short-term disability, long-term disability, and life insurance), taxes, and retirement. Then based on your total operating budget, determine the percentage of the total budget dedicated to compensation. Like the attendance comparison metric, use this as a guide, not an absolute. There are many variables to consider before making personnel decisions.
As you begin the initial planning stages of the upcoming budget, take the time to evaluate your church’s staffing levels. Start by comparing the number of FTE employees to your average weekly attendance and then determine how your compensation total compares to the overall budget total. These are guides, not absolutes. Every church is unique and needs to prayerfully consider which actions to take based on its mission, vision, values, and situation.
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