Pastoral Compensation Report

Update – August 2010

Prepared by
Dean A. Lundgren
The Evangelical Covenant Church

Our goal is to develop and disseminate minimum salary guidelines and

to encourage churches to improve compensation where warranted.

INTRODUCTION AND OVERVIEW

This update focuses on internal and external data, additional resource materials, and revision of the
minimum guidelines. Specific application of this information requires interpretation and adjustment
depending on the specifics of the local church situation.

Please keep the following observations in mind as you read and use this report:
• The material in this report is designed to be a useful framework. However, specific application
depends on unique, local circumstances – which imply that certain data may not be relevant to the
local situation.
• The objectives of this report are:
 to focus local church attention on taking action with regard to those pastors compensated
below suggested minimum guidelines;
 to make pastoral compensation, with full support of regional and denominational leadership, an
important priority of local church management; and
 to provide useful information for all churches in making decisions regarding pastoral
compensation.
• The focus of this report is to provide resource materials to local churches, specifically to encourage all
churches to compensate pastors above the minimums and to promote adequate and fair compensation
for all pastors.
• Some regional conferences also publish information and guidelines regarding compensation in that
conference. Where there is conflicting information, you should utilize the conference material
because it is designed for that specific geographical area.
• More detailed Covenant data is available to the local church pastoral relations committee through the
Conference Superintendent.

Plan to purchase for your church a copy of the 2010-2011 Compensation Handbook for
Church Staff (described on the next page). This book is an excellent reference tool for
pastors and lay leaders! It includes compensation data for many positions in the local
church.
 Page 2

EXTERNAL DATA
Annually, the Church Benefits Association collects and distributes salary information from many church
denominations. Across this spectrum of denominations, the Covenant is at the 81st percentile. For only
two out of sixteen reporting denominations, the average salary is higher than the Covenant and in thirteen
out of sixteen, the average is lower. The average Covenant salary is about $2,300 above the median for
all reporting denominations. The average Covenant salary, as reported to us, increased 3.7% in the
previous year. The following table compares average Covenant compensation with a number of other
well-known denominations, as reported to the Church Benefits Association (CBA).

Denomination 2008 Average Ministerial

Salary *
American Baptist $49,000
Baptist General Conference $55,600
Episcopal Church $68,400
Evangelical Covenant Church $58,300
Evangelical Lutheran Church in America (ELCA) $57,000
United Church of Christ $51,600
United Methodist Church $56,000
Median for 16 reporting denominations: $56,000
* includes salary, housing, and church’s payment of FICA (if any).

RESOURCE MATERIAL - THE 2010-2011 COMPENSATION HANDBOOK

Under the direction of Richard Hammar, an excellent annual resource book on this subject has been
developed. The 2010-2011 edition, by Richard R. Hammar, is entitled The 2010-2011 Compensation
Handbook for Church Staff. This handbook contains 2009 survey data from over 5,000 churches
representing more than 10,000 staff members.
To order a copy of this book you may call Your Church Resources at 1-800-222-1840 or order online at
http://store.churchlawtodaystore.com. The cost of the book is $34.95 plus shipping and handling.
All pastors and church pastoral relations committees should have a copy of this book. It is, by far,
the best resource material on this subject and provides a very useful framework for pastors and church
leaders in addressing pastoral (and all staff positions) compensation planning.
This handbook suggests focusing on the following areas in compensation planning: salary, housing
allowance, accountable business expense reimbursement policy, automobile expenses, self-employment
tax, insurance, and pension.
This book contains compensation information on senior pastors, associate pastors, Christian education
directors, youth ministers, choir and music directors, church administrators, church bookkeepers, church
secretaries, and church custodians. The data is organized by church attendance, church income, setting
(urban, suburban, medium size city, small town, and rural), gender, education, and years employed.

Their data suggests that, for senior pastors, the most critical variables influencing compensation, in
descending order of importance, are: church income, church attendance, geographical setting, gender and
years of service.
 Page 3

REGIONAL INFORMATION
United States
We have updated the regional information through the first quarter of 2010. The regional cost of living
data is obtained from ACCRA (located in Arlington, VA at 703-552-4980) and is updated quarterly for
over 300 cities and non-metropolitan areas.

ACCRA, founded in 1991 as the American Chamber of Commerce Researchers Association, is a

nonprofit professional organization comprising research staff of chambers of commerce, economic
development organizations, and related entities throughout the United States. You may find additional
information regarding ACCRA on the website, c2er.org (The Council for Community and Economic
Research).

Not surprisingly, the most important determination of regional living costs is the housing component.
Results are summarized graphically in Exhibit A (the average United States cost of living base = 100%).
In addition, Exhibit B contains regional cost of living information for a number of locations. We have
included data for every area ACCRA reported on which is in close proximity to Covenant churches. If
your area is not included, it is because ACCRA did not provide that information for your area.
ACCRA has no data for areas that do not appear in the report.

Howard Burgoyne, East Coast Conference Superintendent, has informed me that there is a website on
which one can determine the cost of living index for any city in the United States:
www.realestate.yahoo.com/neighborhoods. You may want to access that data yourself.

CONSUMER PRICE INDEX (United States)

The United States Consumer Price Index (CPI) increases since 2000 are listed below. The average for the
period (2000-2009) has been 2.9% and for the most recent five years 3.2%. (* Source = Bureau of
Labor Statistics)
Year CPI *
2000 3.4%
2001 2.2%
2002 2.2%
2003 2.3%
2004 3.3%
2005 3.4%
2006 2.0%
2007 4.1%
2008 3.8%
2009 2.7%
Guidelines
Minimum Salary Guidelines are included as Exhibit C. Decisions regarding pastoral compensation are
vested in the local congregation. We do believe that it is important for local churches to raise the salary
levels of pastors who are compensated below recommended minimum guidelines.
Guidelines were increased 3.0% over those for the previous year.

Our objective is not to identify ranges or potential maximums; this is outside the scope of this effort.

We hope that this information will enable all parties to make more informed decisions regarding pastoral
compensation.
 Exhibit B

ACCRA - 2010 Cost of Living Index

(Data is organized alphabetically by state)
(First Quarter, 2010)

Urban Area 100% Urban Area 100% Charlotte, NC 93.5

and Composite and Composite Fargo-Moorhead, ND 92.5
State Index State Index Ashland, OH 88.3
Champaign-Urbana, IL 98.8 Cincinnati, OH 93.7
Data below includes every area ACCRA
reported on which is in close proximity to Chicago, IL 118.3 Columbus, OH 92.7
Covenant churches. If your area is not Joliet/Will County IL 102.6 Wooster, OH 93.0
included, it is because ACCRA had no data Galesburg, IL 92.4 Youngstown-Warren,
for that area. Peoria, IL 95.0 OH 92.2
Rockford, IL 94.2 Edmond, OK 93.0
Birmingham, AL 90.0 Lafayette, IN 96.9 Oklahoma City, OK 91.9
Mobile, AL 92.3 South Bend, IN 91.6 Tulsa, OK 88.3
Anchorage, AK 128.8 Davenport-Moline- Eugene, OR 110.4
Fairbanks, AK 139.9 Rock Is IA-IL 98.7 Portland, OR 109.5
Phoenix, AZ 99.5 Des Moines, IA 92.1 Philadelphia, PA 126.5
Tucson, AZ 96.8 Mason City, IA 90.9 Pittsburgh, PA 91.5
Los Angeles-Long Salina, KS 88.5 York County, PA 102.4
Beach, CA 136.2 Topeka, KS 89.1 Providence, RI 121.7
Oakland, CA 137.0 Wichita, KS 91.6 Columbia, SC 101.5
Sacramento, CA 116.7 Paducah, KY 88.5 Sioux Falls, SD 92.8
San Diego, CA 132.3 Portland, ME 119.2 Morristown, TN 90.9
San Francisco,-San Baltimore, MD 119.1 Murfreesboro-Smyrna,
Mateo-Redwood City, Boston, MA 131.1 TN 88.4
CA Metro 162.1 Fitchburg-Leominster, Dallas, TX 90.8
Santa Ana-Anaheim- MA 103.1 Houston, TX 91.4
Irvine, CA 146.5 Detroit, MI 102.6 Burlington-Chittenden
Colorado Springs, CO 93.2 Kalamazoo, MI 92.6 Co, VT 119.9
Fort Collins-Loveland, Mankato, MN 93.2 Bellingham, WA 112.4
CO 90.5 Minneapolis, MN 109.7 Everett, WA 111.0
Bridgeport-Stamford- Rochester, MN 98.8 Olympia, WA 103.7
Norwalk, CT 145.9 St. Cloud, MN 98.9 Portland-Vancouver-
Hartford, CT 119.6 St. Paul, MN 107.3 Beaverton, OR-WA
New Haven/Milford, CT 120.9 Kansas City, MO-KS 97.6 Metro 93.9
Washington DC- St. Louis, MO-IL 90.1 Seattle, WA 123.3
Arlington-Alexandria, 137.9 Springfield, MO 88.7 Spokane, WA 93.0
VA Bozeman, MT 102.9 Tacoma, WA 108.1
Bradenton, FL 94.6 Lincoln, NE 93.3 Yakima, WA 96.4
Miami-Dade County FL 104.7 Omaha, NE 87.9 Eau Claire, WI 95.8
Orlando, FL 97.4 Manchester, NH 117.1 Green Bay, WI 95.4
Sarasota, FL 100.7 Newark-Elizabeth, NJ 128.8 Milwaukee-Waukesha-
Vero Beach-Indian Buffalo, NY 95.2 WI 103.5
River, FL 97.9 New York (Brooklyn), Sheboygan, WI 99.1
Atlanta, GA 96.2 NY 182.8
Douglas, GA 86.0 Rochester, NY 100.9
Honolulu, HI 163.0 Syracuse, NY 101.6
Boise, ID 95.4 Urban Area 100%
and Composite
State Index
 Exhibit C

RECOMMENDED MINIMUM GUIDELINES

FOR PASTORAL COMPENSATION

Pastoral ministry is a unique calling within the priesthood of all believers. Serving in Christ's
Church as a pastor is both a calling and a special privilege to those who do so. Pastors are
expected to hold the mission of the church in high priority, balanced with care for their families
and themselves.

Congregations seek to honor and support their pastors. Many would like to be able to reward
them with a more than adequate salary. Still, they must reckon with the reality of church
finances.

In the end, it comes down to a question of balance and fairness. Providing an acceptable
standard of living for the pastor and her/his family; enabling a sense of high self-esteem;
encouraging healthy family life; creating a positive relationship between pastor and
congregation; and, above all, encouraging effective ministry – these are the goals of fair and
balanced compensation.

Ultimately, compensation is part of a covenant relationship between pastor and congregation in

which each looks out for the good of the other. The pastor commits her/his life to the service of
God and the Church. The congregation, as a part of their commitment, cares for, supports, and
upholds the pastor. Uninhibited by financial worry, fair compensation frees the pastor to be
creative and to use the gifts God has given for ministry. At the same time, it enables the
congregation to tangibly love their pastor and to affirm her/him for work well done.

See: I Corinthians 9:13-18

Philippians 1:21-26; 2:14-18; 4:8-13
I Timothy 5:17-18
 Exhibit C
(continued)

RECOMMENDED MINIMUM BASE SALARIES

FOR COVENANT PASTORS

To provide fair and equitable compensation for Covenant pastors, the following minimum base
salary scale is recommended:

1. BASE SALARY MINIMUMS BASED UPON AVERAGE SUNDAY MORNING

ATTENDANCE

PLEASE NOTE: Base salary does NOT include parsonage, utilities, housing
allowance, FICA, Covenant Pension Plan, health insurance, auto expenses, and
other benefits and ministry expenses.

Average Minimum Note:

Attendance* Base Salary The minimums in this table do not
less than 75 $27,600 include (a) value of a parsonage, if
75 - 125 $32,300 such a structure is provided by the church
125 - 175 $37,100 and (b) the church’s portion of FICA.
175 - 250 $44,500 The local church needs to add these items
250 - 350 $51,800 to the total pastoral compensation. The
350 - 450 $58,300 interdenominational data on page 2
450 - 550 $65,500 includes housing allowance and the
550 and up $70,200 church’s portion of FICA.
* Average attendance is the definition used in the Covenant’s November attendance survey and
includes adults, children, nursery.

2. IN ADDITION, THE LOCAL CHURCH IS REQUESTED TO:

A. Provide a well-maintained parsonage, with all utilities paid. An alternative is to provide cash
allowance sufficient to cover reasonable and adequate housing and utility costs.

B. Pay full premium for the Covenant Group Insurance Program.

C. Pay full premium for pastor's membership in Covenant Pension Plan.

D. Cover pastor's church related expenses, including automobile expenses, to the limits
established by the Internal Revenue Service.

E. Cover pastor's expenses for Conference and Covenant meetings. Specifically: Covenant
Midwinter Conference; Annual Meetings of the Conference and The Covenant Ministerial
Association Retreat; where the Conference Ministerial Association Retreat is for both pastors
and their spouses, both pastor's and spouse's expenses should be covered.

F. Pay expenses and grant time to assure pastor's compliance with the Covenant Ministerium's
annual continuing education requirements.

G. Pay at least one half of the pastor's self-employment tax (Social Security).
 Exhibit C
(continued)

3. NOTES

A. Minimum base salaries of ministerial staff shall be at least 60% of the Senior Pastor's base
salary. In any case, it should never be lower than the lowest figure on the scale (i.e., in the
chart on the previous page, $27,600).

B. Where compensation is less than recommended minimum scale, the church is expected to re-
examine its budget and level of stewardship in order to give pastoral compensation a higher
priority. Compensation less than scale may well suggest that the pastor be given permission
to supplement income through part-time employment.

C. Both pastor and church should be aware of the Internal Revenue Service so that full
advantage can be taken of the allowances granted in the Tax Code, and to assure compliance
with the law.

D. These guidelines relate only to base salary. Pension calculations for Covenant pastors are
based on considered compensation, which is defined as:
Considered compensation shall include annual base salary and other income from the employer,
including housing and utility allowances, if any. Where a parsonage is provided, base salary for
purposes of this calculation shall be increased by 33 percent or $4,200, whichever is greater. In
no event shall considered compensation for any one participant be reported as less than $9,000
a year.