Securing our Future Together

How will funds be redeployed after the debt is retired, and what will the impact be on the mission and ministry of the church?

The “redeployable” funds would be the amount in the operating budget that pay mortgage interest. These vary throughout the term of the loan and interest rate ($133K in 2024; $226K in 2028 and would potentially reach a total of $2.3 million for the entire term of the loan – February 2041).

Each year the Church Council approves a budget based on likely contributions, the expressed plans for ministry and other obligations relative to programming ministries, staffing, and facility upkeep. Money not required for interest would be available to support these other areas

How will the campaign impact giving to the general operating budget?

Each of the previous two campaigns was conducted concurrently with the stewardship campaign for the annual operating budget. RisingUp (2017-2019) had accompanying operating budget contribution increases averaging 3.6% per year for that period. Increases over the BuiltTogether period were flat to 1% per year.

Most of the campaigns that Horizons Stewardship have led have experienced flat to minimal increases to annual operating giving during the three years of a campaign and then more substantial increases to general operating giving in the first few years after a campaign.

What are the specifics of KMC’s budget, giving trends, and the percent of the budget required for debt service now and when our loan reprices in 2028?

School for Little Children and Society of St. Stephen are funded separately (i.e., not included in the operating budget).

1. Additional (Restricted) Missions Funding ($400,000+ in 2023). KMC has a 2-year waiver ($50,000 in 2024) for Connectional Giving (aka GMC Apportionments).

2. Contributions typically increase by ~2% year over year. Contributions decreased by ~8% in 2022 post-COVID and disaffiliation.

When the interest resets, the annual amount would consume 8% of the budget instead of the current 4.5%

What is the impact of doing nothing?

While not visible for a few years, doing nothing means an extra $250K in interest and principal must be paid through the operating budget. To accommodate this increase, contributions would need to increase by ~10% and/or expenditures in other areas would need to decrease (most impact likely on staffing; the largest expense category.)

Why are these capital projects needed, and when must investments be made?

These projects are those currently deemed highly likely to need repair or replacement soon due to imminent failure or obsolescence. They are not discretionary and must be repaired if/when they fail. In most cases the timing will and can be delayed until failure is imminent. For instance, a lower cost leveling and support solution to the FOC parking lot failure is being researched. Alternatively, the Sanctuary A/V is failing and is currently being addressed. No project will be committed to until severely impacting ministry.

How accurate are the cost estimates?

The costs are recent estimates from reputable contractors. We continue to look for lower cost options and ways to limit the scope of the replacement or delay before needing a more expensive solution.

What capital needs have been identified beyond the five already identified in the Vision Case Statement?

Needed capital (large) projects are evaluated regularly by Trustees based on expressed ministry needs, safety, building integrity, and failure and damage (e.g., air conditioning, bats). Historically, these have been funded through regular operations, including accumulated cash surpluses, which are currently fully used.

Other capital needs that we potentially face are: “K” building flooring and refresh; sanctuary carpeting and reupholstery; replacement of chiller condenser coils.

Who decided to explore the possibility of a campaign, and who will ultimately make the decision to move forward with the campaign in the Fall?

In September 2023, the Finance Committee recommended, and the Board of Stewards approved preparing for and launching a capital campaign to retire debt and fund identified capital maintenance items. Rationale: Rising Up funds for paying loan principal is depleted in June 2026. The remaining unfunded debt is $3.67 million. Interest, currently 3.25% resets (likely significantly higher) and remaining mortgage recalculated in February 2028. Substantial “capital maintenance” needed in the upcoming years will also further burden the Operating budget.
The Capital Campaign Steering Committee was nominated at the Church Conference in December 2023 and began their initial work by contracting Horizons Stewardship to assist with planning, a feasibility study, and campaign preparation. Based on the feedback from the congregation after the “preparation/readiness” phases, the Church Council will decide whether or not to proceed with a fall campaign.

What did the gift sizes and breakdown in giving look like on the previous two campaigns? What percentage of pledges were fulfilled?

What happens if we raise more or less than expected?

All money raised is held in a “restricted” account to be used only for the specified purposes and overseen by the Finance Committee – in this case, debt retirement, capital maintenance, and campaign expenses. Any excess money would remain and be available for future approved capital projects.

If less than the anticipated amount or goal is raised, the decision process becomes more complex but will ultimately be made by the Church Council (see next)

How will the priority of debt retirement versus the capital improvements/maintenance be managed?

Any decisions associated with the use of campaign funds will be made by the Church Council with input/recommendations from Trustees and Finance Committees, each exercising their respective governance role.

Considerations include but are not limited to optimal timing of debt retirements per the terms of our loan; leveraging the difference between our current investment interest and mortgage interest (currently ~2%); availability of other funding sources (i.e. funds available in future annual operating budgets); timing based on indications of failure and lead times for replacements; and availability of other (lower cost) solutions.
Throughout the campaign, as decisions are made, we will clearly communicate and provide full transparency into the use of the funds.