Fletch Answers Salary & Forecaster Questions
Send your questions to Fletch here. You will get a personal reply. Any topics posted here are made anonymous regarding people, location or church.
Salary Questions
Fletch uses the term Pastor a lot, such as Operations Pastor. Is this defined as ordained versus non-ordained in the data?
We list our 58 church positions with a variety of titles to protect anonymity. When submitting data on this form, you will see some titles listed with the pastor/director terms, such as “Operations Pastor/Director.”
Whether they have the title Pastor or Director, the pay difference is often minimal for upper level staff. The director often does not receive a housing allowance.
Ordination is not as common as it once was, excepting in certain denominations. Many churches license someone on the road to ordination. A great many have the board commission someone for a ministerial role in the church. To receive a housing allowance, one must be licensed, commissioned or ordained.
The board minutes should detail that action or acceptance of the credentials from another church.
Regarding who is a minister and how much time one must do to be considered a minister, the Supreme Court in Hosanna vs. Tabor noted that: “It is not one that can be resolved by a stopwatch. The amount of time an employee spends on particular activities is relevant in assessing that employee’s status, but that factor cannot be considered in isolation, without regard to the nature of the religious functions performed.”
For example, you can commission a church administrator as long as they have some religious functions in the church—such as prayer, counseling, on-call duty, and more.
Remember that the IRS rules need to include Protestant Pastors, Catholic Priests and Nuns, Moslem Imams, Native American Shaman, Christian Scientist Practitioners, and many more. The bottom line is that you should have good policy to define your roles, so you have cogent answers. To date, the IRS does not want to get into defining or messing with your ecclesiastical policy and polity.
I am in Southern California in a high cost of living area. What should be our goal for percentage of personnel over budget?
The data points to churches in high cost of living areas as paying a bit better for upper level positions. Unfortunately, it is not as much as you might hope or think.
Housing is the main issue of high cost of living areas, such as Seattle, most of California, Boston and many others. A bungalow in SoCal can cost $600,000. At the one-to-three loan ratio, a person would have to earn $200,000 to finance that loan. To help, some churches offer forgivable loans while a few others are buying parsonages. Look at local teacher salaries to help determine fair pay.
The national average from the Salary Forecaster is 54.6% of budget goes to salaries and benefits. The averages break down to 45.2% for salaries and 9.4% for benefits. This is for churches in low cost of living and high cost of living areas. You can go higher than the norms, but you will squeeze ministry or facility dollars.
For highly compensated employees, does the salary line include only salary over $150,000 or are benefits included?
The IRS defines a highly compensated employee as earning over $150,000. You can read IRS Notice 2022-55. It is a real slog to get through, as it is pretty technical reading.
Investopedia says:
If you receive compensation in 2024 that’s more than $155,000 and you’re in the top 20% of employees as ranked by compensation, your employer can classify you as a highly compensated employee. Compensation includes overtime, bonuses, commissions, and salary deferrals made toward cafeteria plans and 401(k)s.
The salary line in the Forecaster includes salary without benefits.
As of the day that I’m writing this, in the XPastor Forecaster data, the average salary for a Senior Pastor is $147,210. That is based on almost 600 churches, with an average of $3,048,817 in General Fund budgets. Ergo, there are many earning more than this number and are considered highly compensated.
It is a best practice to get excellent salary comparisons for highly compensated employees. Many boards prefer for an independent person to create the report, that is, not a staff person. I help a goodly number of churches who have boards that want an independent opinion.
I see that the salary amount may increase to $55,000. Is this something that is slated to happen on a specific date?
The current salary definitions to be considered as managerially exempt is directors meeting the FLSA criteria and a salary of $35,568 (more in certain states). This may increase to $55,068. This rule is currently being studied. It may be implemented as soon as April, 2024.
This salary base also applies to Executive Assistants who meet the Department of Labor guidelines. I get into this with a full Compensation Analysis. It is deep but not too complicated once you understand the rules.
Exempt employees do not have to turn in a time card, record meal and rest breaks or be paid overtime. All non-exempt employees must follow those rules. No exceptions. So if you call your Administrative Assistant after hours, he or she should be noting the time!
I am under the impression that there is a difference between ministerially exempt for FSLA and the IRS requirement for SECA pay and housing allowance. Is this not correct? (i.e. licensed or ordained pastors pay SECA but you can exempt a Children’s director or Worship Leader that teaches religious topics as a ministerially exempt, but those individuals are not licensed or ordained.
This is a wonderfully technical question. The rules say someone has to be licensed, commissioned or ordained to be ministerially exempt.
There is a wrinkle for ministry people as you have described. A few courts have widened this for certain jurisdictions. The details of it are long and tangled. The safest route is to commission all ministerial workers, giving them a housing allowance. I get into those issues in a full Compensation Analysis.
What is your opinion on transparency of compensation within congregations?
There are really two questions here, one for the congregation and another for the state.
For the congregational question, many smaller churches, especially those with congregational governance, post the salaries of all their workers. As a church grows in size, this generally goes away.
For the state question, about 20 states now ban asking for salary data in the hiring process. Seven states now require pay transparency in the hiring process or to existing staff. This means that churches in those states must tell the salary range in the job posting.
I have mixed feelings on this. One of the causes for these laws was that women were often paid about 10% less than men. I’m a huge fan of paying women the same amount that a man would make in a given position—and over the years have raised many women who were underpaid to their fair levels. My preference that churches would be excluded from these laws, as it could be a poor inroad to the separation of church and state. Pay people based on their work, not their gender or being a friend of yours.
As one person wrote to me, and was agreed upon by another from California: “In New York City you now have to post salary range for any position you advertise for. This makes salary range info public and can potentially make existing staff think they are underpaid.”
Why do you utilize teacher compensation data for comparison data? I don’t necessarily believe they are compensated very well on average.
Some folks don’t think teachers are paid a fair and living wage. During the recent webinar, one person looked up teachers in their local school district. The comment back to me was, Okay, now I get it. They are paid just about like our pastors.
I like school district pay scales as they are locally negotiated. They reflect local values and pay scales. And I’ve never had a congregant complain that our staff was paid about the same as local teachers. It’s a good talking point without ever going into the dollars and cents.
Let me add that top staff in many churches earn salaries that are comparable to district officials.
Finally, pastors can utilize the ministerial housing allowance to offset federal income taxes, while teachers tend to have better retirement plans in place.
When I do a compensation study or analysis, I like to see what the local school district pays. I am rarely disappointed in teacher or administrator salaries.
Does tenure affect salary in a significant way?
The length of time that upper level staff are in their positions does greatly affect compensation. This is especially true of senior pastors and founding pastors. There are churches of under 1,000 in worship that pay their SPs $150,000+, which is more than some in a church of 2,000 earn.
Is there a benefit to longevity in a pastor and should that be rewarded?
I would answer, yes. The longer that upper level staff are in place, the greater likelihood for a successful culture and sustainable growth. Remember the caveat: “your mileage may vary!” In other words, your results may be different.
The thing to consider is the old adage about the school teacher. The teacher said, I have taught for 28 years and haven’t gotten much of a raise. The Principal said, yes you have been teaching the same thing for 28 years, but you never grew. Being a live-long learner is what it is all about.
Forecaster Questions
Why do you use the budget as a determinant for salary size versus how many people come on Sunday?
This is a data driven answer. As you review the Salary Forecaster, you will find that churches with similar worship sizes often have huge variances in what they pay for upper level staff. I’m just following the data analysis with my preference to say that budget is a bigger factor in salaries then worship attendance.
Would the Forecaster be flexible enough to use if we are a church with a school and early education center?
The Salary Forecaster only lists church staff positions. It does not contain data on principals, teachers or other school employees. You will be able to get great data on church positions.
If my church has a Christian School, should I include their revenue in our church’s budget? Our church has a budget of $2.7 million and our school $2.0 million.
If the school is integrated into the church, the answer is yes. By that, I mean if the church is the one who processes payroll, and ultimately oversees HR, hiring and terminations. Your finance team is cutting those checks and processing payments, so it should be included.
The salaries shown here seem fairly higher than what I’ve seen on the Forecaster when I looked this past December. Do you agree? Why do you think that is?
It would take some time and digging to prove or disprove that. In general upper level salaries can be very healthy in churches with a wide variety of budget and worship sizes. When the economy is healthy, salaries go up.
The Forecaster is indexed for inflation, so this year’s salaries reflect the anticipated inflation for the year. The Forecaster is just that, a forecaster for the coming year. That inflation number is finalized in the Forecaster when the Social Security Cost of Living Adjustment (COLA) is announced.
What defines Quads 1 through 4?
If you do a Compensation Study, such as with XPastor, Salary Quads 1 through 4 are created. The Finance Committee, Compensation Committee, or Board has the final decision for salaries in each quad.
As to what defines those quads, they should represent minimum to maximum pay for the respective staffing tiers.
The quads are based on the Standard Deviation for a given dataset. When I do a compensation study, I provide the Standard Deviation numbers, the bell curve chart, the XPastor suggested quads and list the 50 or so detailed salaries used.
Some use Standard Deviation numbers for their tiers but that has some inherent issues. XPastor prefers to smooth out the numbers into meaningful and evenly spaced norms.
Remember that staff rarely jump from one quad to another. Generally raises over several years take a person from one quad to another.
Does salary include housing?
Yes it does. That’s because the housing allowance is a self-determined number by the pastor, approved by the church. Some churches list it separately in their budget numbers. For SECA tax purposes, the pastor pays 15.3% on total salary, including housing and any bonuses.
Did your data include additional Senior Pastor perks? Car allowance? Housing?
Housing is not a perk. It is a number determined by the pastor from their total salary and submitted to the board for approval.
When I work with a church to create a total compensation worksheet, or “Big Burrito” as I like to call it, we look at all perks for every employee.
The numbers for the Salary Forecaster should include in one line all staff benefits, from those you mentioned, plus medical, insurance, life insurance, car, cell phone, retirement, etc.
When you fill out this form for the Salary Forecaster, you will see separate lines for annual budget, payroll budget and benefits budget. We don’t ask for benefits for each position, mostly because the majority of people won’t take the time to fill it in. Knowing the total benefits number, you can then find the percentage of benefits to general fund budget, and that gives plenty of good data.
How many churches have responded so far to the surveys?
The Salary Forecaster now has billions of dollars in church budgets from hundreds of churches, with almost 12,000 roles listed.
Some other data sources may have more churches, the Forecaster gives you access to most salaries in each church, thousands of line items. You can compare all of them in a way that you would in your own budget process.
The Forecaster database is sufficiently large so as to be statistically accurate. It provides meaningful data.
When you say worship size are you referring to the number of people in your primary worship service or the number of people in the building at worship time? Our worship is for 6th grade through adult. Below 6th grade has their own programming.
Counting worship attendance varies a great deal.
The input form for the Forecaster asks for, “Average # in weekly worship.”
Everyone has their own formula, some including online attendance. The preference to count all those in weekly worship, which in your case would include in 6th grade and above.