Diocese of Olympia 114th Annual Convention
Treasurer’s Report

First, I want to welcome Bishop Phil+ to his episcopacy here in the Diocese of Olympia. Welcome! And welcome Delegates, Alternates, Staff and Guests.

It has been my pleasure serving you these last four years as Treasurer, and I especially want to thank Canon Dede, Canon Arienne, Cristi Chapman, the Chair of Budget and Finance, and Charles Thorne, the Canon for Finance. We meet weekly by Zoom and go over any financial issues that may arise during the week. Their expertise helps guide the smooth financial operations of the diocese. I also want to recognize the Rev. Dennis Tierney, who serves as our Property Manager. His expertise and diocesan knowledge has helped guide the Board and myself through a myriad of property details. I am grateful for all this assistance.

As I look over the past year, I thought now would be a good time to provide a concise overview of the finances of the diocese, but, first, a word about insurance. You will have noticed that insurance rates have risen sharply in recent years. The insurance industry as a whole has struggled with their sudden increased liability due to climate change, for example, the recent hurricanes in the Southeast and the forest fires in the Northwest. Insurance companies have thus been forced to raise rates to meet the challenge. Locally we have the added onus of the Cascadia fault running right through our diocese. Overall the Insurance Industries’ liability is high. Most churches in the diocese are covered by Church Insurance, a nonprofit organization created by The Episcopal Church to ensure that Episcopal Churches everywhere can find insurance. Locally, those covered in the diocese serve as a pool to share overall costs in maintaining that insurance. Recently, we’ve had several churches incur some rather large losses that were happily and most promptly handled. I do ask that before you look elsewhere and take your church out of the shared pool that you contact Church Insurance directly to see what cost savings they might be able to provide for your parish.

As I reported earlier, we had trouble with the auditing firm that bought out our long-term auditors, Peterson-Sullivan. The new firm took a long time to complete their first audits and then delayed the following year’s audits to an exasperating point that we finally had to hire a new firm, Clark Nuber, to do the work. This put us a couple of years behind. Clark Nuber and our staff are working diligently to get caught up, but we do require 4 different audits and, since the former auditor would not pass on their work to Clark Nuber, Clark Nuber had the onus of creating a baseline from the beginning. This takes time, both for them and for our Accounting Staff, who must do their own work along with responding to the needs of the auditor. Charles Thorne meets weekly with the auditor to smooth the process, but we require 4 different audits each and every year and that takes time. Realistically, looking at the time it takes for each audit, it will be 2026 before we can finally be back on a regular schedule.

Now to our finances, The Diocese of Olympia is blessed to have a total of $42 million invested in our Diocesan Investment Fund, a fund we share with congregations throughout the diocese who have invested another $60+ million alongside ours. Much of our diocesan funds, however, are restricted and can only be used for specific purposes. Of those remaining, the diocese can draw upon capital gains to help supplement the annual budget. The Board of Directors, in its wisdom, has chosen to allow up to 75% of the average of 3 years’ capital gains to help the budget. We do not touch the corpus. (I want to step away from my prepared remarks, because I had several questioners this week ask, “Why don’t we touch the corpus, the principal?” and the reason is the Board of Directors has a fiduciary responsibility not just for this generation but for future generations in this diocese and, frankly, for previous generations, for they are the ones who gave us the funds to make sure that we can act strongly today. They have given us that help. We want to pass that help onto the future. The Church is 2,000 years old. We expect to be here a while, at least until the Second Coming. We want to prepare the diocese for the future.) Now by averaging the three years of capital gains, this helps counterbalance the years where the stock market may lose value and thus we would have nothing to apply to the budget. Most recently that happened in 2022, but the preceding and following years have allowed us to augment the budget and continue to grow our investments. Should the stock market fail in multiple years, or should we borrow funds from our investments; for example, to provide funds for a church planting, then the amount to apply to the budget could drop significantly.

To understand the budget, one must realize that the Diocese is on a fixed income. By that I mean, there are only two principal sources of income to support the budget, assessment income from the churches and investment income from the Diocesan Investment Fund. Since at least 2013 and possibly before that, and I found this interesting, the income from assessments has been a nearly consistent $3.6 million with occasional increases and decreases from that figure. The budgets from 2013 to 2021 were also consistent to about $4.2 million. To pay the difference of approximately $600,000, we were fortunate to be able to use a percentage of cash generated from our investments in the Diocesan Investment Fund.

Beginning in 2022 due to costs from inflation, the hiring of additional staff, the 2% increase to support multicultural ministries, our response to the wider Episcopal Church, the budget rose to $5.3 million. Much of that is fixed costs that cannot be cut and rises each year, such as employee benefits, utility costs and necessary business expense. This has been sustainable up until this coming year where unfortunately we realized we had to cut a member of staff, the first time in 15 years, to maintain the same level of service to the diocese. Now, don’t get me wrong. Our investments are strong, our assessment income is strong, but frankly we are reaching the financial limits of our growth. Going forward, we will need to become more creative and efficient in how we support our common ministry. I bring all this to you, not as some scare tactic to worry you, (We are financially strong), but to give you an understanding of what the Board of Directors and the Council grapple with each and every year as they manage the assets and the operations of the diocese. As I said, we are fortunate in that we have a strong investment base to work with, thanks to past generations. Many dioceses are not so fortunate, and we have excellent managers of our assets.

I move to ratify the 2025 budget as presented.