Pastor Package w/ Parsonage & Housing Allowance

by Lynda
(Iowa)

Our church has just created a Finance Board and I have been elected chairman. The finances in our church lack in some areas. We are using an Interim Pastor and the package that was put together for him was
Salary $6,000
HA $10,600
Church provided parsonage rental value of $7,800
Church will pay the utilities estimated to be at $4,800 Reimbursable expenses of $3,000.

It was also agreed upon verbally that he would do some work around the parsonage and the paint and supplies would be reimbursed to him.

Now I have subscribed to this site for over a year now and find it very beneficial and appreciate all the work that Vickey does for it. After reading the ebooks, and newsletters that come I am somewhat uncomfortable that the pastoral package we have put together is not the best solution for both the pastor and the church.

It seems to me that #1 the paint and supplies that was verbally agreed upon should go under the HA. The church paying the utilities seems ok, but don't understand the advantage of the church paying these bills over designating an amount and include it with the HA.

The balance between the HA and salary seem a little backwards. Questions that I have is if it is a church provided parsonage and the church is paying the utility bills why would the HA be so high? It is my understanding that the pastor will have to be able to account for the housing expense money or it is turned into income, is that not correct? And is this income then subject to Fed tax?

I know this is a lot of information but wanted to give a full picture and would be very interested in comments that help me understand the breakout of these numbers. It is my goal that our church is providing a fair package to our pastor.

thanks in advance.