122 nd ANNUAL MEETING

JANUARY 16,2011

Be of One M ind

St. Peter’s By~the~Sea Episcopal Church

Agenda

Appoint Clerk of Meeting & Tellers

The Rector’s Address

The Curate’s Address

Approval of 2010 Minutes

Close Vestry Election Polls

St. Peter’s Farm Report

Treasurer’s Financial Presentation

Financial Report

Agenda, continued

Day School Report

Vestry term-end Recognition

Vestry Election Results

Old Business

New Business

Resolution A: Fund’s Principal

Resolution B: $400,000 to Support Day School

Adjournment

Vestry Nominations

Bernard G. Brophy: Warden

Bernard G. Brophy is a long time resident of the Bay Shore/Brightwaters community and a lifelong parishioner of St. Peter’s by~the~Sea. Having served on Vestry as Finance Chair in the late 1990’s, Bernard was tapped to serve as Senior Warden from 2000 to 2004. During that time, he also served as Vice President of the Board of Trustees for the day school. Bernard has a long history with charitable and civic organizations; he has served on the Wall Street Committee for St. Jude Children’s Research Hospital and on the Friends of Children’s Bereavement Committee for Hospice Care Network. He served as Vice President of the Bay Shore High School Alumni Association, and is a member of the Chamber of Commerce of Greater Bay Shore, and the Bay Shore/Brightwaters St. Patrick’s Day Parade Committee. A graduate of Bay Shore High School and Wake Forest University, Bernard spent 20 years as a commodities trader at JP Morgan and Goldman Sachs before becoming a Franchisee in the Dunkin’ Brands network of Dunkin’ Donuts and Baskin Robbins stores

Vestry Nominations

Keith Oncale, Vestry

Keith Oncale, a Louisiana native, has been a member of St Peter's for nearly 10 years. He has served as a Delegate to the 2010 Diocesan Convention, the Head of the Search Committee for the Head of the Day School, the committee to hire Sunday nursery school personnel and the vestry nominating committee. He and his partner of 23 years, Gregory Tippit, had their daughter, Mira, baptized at St Peters in July of 2006. Mira currently attends the Pre-K program at the day school. Keith is currently the Dean of Students & Academics and Theatre Arts Director at the Winston Preparatory School, a prep school for students with diagnosed learning disabilities in New York City and Norwalk, CT. While living in Texas, he was the Music Director for the Boys & Girls Clubs of Greater Dallas and served as adjunct professor of Theatre History at Moutainview Conservatory. Keith holds a BA in Speech from the University of North Texas and a Master of Liberal Arts from Southern Methodist University. He also served as an archeological assistant at the Poggia Colla dig outside Florence, Italy. He is the Founding Artistic Director of the theatre group, Actors Stock Company NYC, having directed many theatre productions across the country. Most recently he directed the award-winning short feature film, BREAK which screened at the Cannes Independent Film Festival last spring.

Vestry Nominations

Marge Middlemiss

Member of St. Peter’s since 1965. Married to Don. Present member of the Vestry. Active in many areas of parish life, including co-coordinator of Eucharistic Ministers and Visitors, healing ministry, member and past directress of St. Peter’s Altar Guild, former vice president of the Diocesan Altar Guild, member of ECW, the Farm Board, Bible study, Coffee, Crafts & Conversation. Also participated in Cursillo, Faith Alive, needle pointers and the Couples Club.

Vestry Nominations

Joe Concalves, Vestry

I have been an active communicant of St. Peter’s Church since 1985. I served on the vestry from 1994-97. I have been a member of the Church’s finance committee since 1994. I served as a Sunday school instructor teaching the 7th and 8th graders for nine years. I am a counter and have been doing so for the past six years. I am the Church’s property/casualty Insurance Co-coordinator, making sure the necessary coverage is in place. I am the Executive Director of a not for profit insurance company and have been in the insurance field for well over 30 years. I have a bachelor’s degree in history/political science and an MBA with a concentration in human resources. I have been married to my lovely wife Diane for 32 years. We have a wonderful son Greg and a beautiful granddaughter Gianna. We live in Brightwaters. My outside interests include politics and history as well as a good novel. I’m an avid sports fan and I love my Syracuse Orangemen.

We will be facing a number of critical financial decisions over the next few years. We have good leadership in place with Fr. Sellery, Marc Johnston and Bill Crawford. I would like to be part of that decision making process.

Investment Summary Report

Presented by Treasurer, John Cochrane

Financial Report

Presented by Finance Committee Chair,

William Crawford

2010 Actual vs. 2010 Budget

2010 Summary:

Actual Deficit $121,411

Budgeted Deficit $158,993

Total Receipts $ 51,163 Above Plan

Total Expenses $ 13,580 ” ”

Upside vs. Budget $ 37,583 ” ”

2010 Actual vs. 2010 Budget

Receipts:

Offertory Giving $ 5,200 Below Plan

Large Donations $ 61,300 Above ”

Building Use $ 5,300 Below Plan

2010 Actual vs. 2010 Budget

Expenses:

Salaries, Benefits $ 6,500 Below Plan

Building & Grounds $ 5,200 Below Plan

Administrative Exp. $ 9,600 Above ”

Ministry & Programs $ 3,200 Above ”

Insurance $ 9,500 Above ”

Day School Shared Costs $ 3,100 Below ”

2011 Pledge Drive Status

2011 vs. 2010 Written Pledges:

2011 Pledging Families to Date 99

2011 Dollars Pledged to Date $ 184,953

2011 Average Pledge $ 1,868

2010 Final Pledging Families 113

2010 Total Dollars Pledged $184,797

2010 Average Pledge $ 1,635

2011 Pledges to date

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Weekly Pledge

Weekly Pledge Analysis

2011 Budget vs. 2010 Actual

2011 Budget Comparison:

2010 Actual Deficit $121,411

2011 Budgeted Deficit $138,983

2011 Budgeted Receipts $ 40,063 Less

2011 Budgeted Expenses $ 22,500 Less

2011 Budget vs. 2010 Budget

2011 Budget Comparison:

2010 Budgeted Deficit $158,993

2011 Budgeted Deficit $138,985

2011 Budgeted Receipts $ 11,100 More

2011 Budgeted Expenses $ 8,900 Less

2011 Budget vs. 2010 Budget

Receipts:

Offertory Collections $ 500 More

Building Use $ 4,400 Less

Music Endowment Income $ 15,000 More

2011 Budget vs. 2010 Budget

Expenses:

Salaries, Benefits $ 3,900 More

Building & Grounds $ 6,800 Less

Administrative Exp. $ 2,500 More

Ministry & Programs $ 3,300 More

Day School Shared Costs $ 6,000 More

2011 Budget Discussion

2011 revenue budget increased by income from music program endowment established by an anonymous parishioner

Expenses have been reduced for 2011. Deficit has been reduced by $20,000 total in 2011 budget

General investment account, source of funding of operating deficit over the past decade is all but depleted

Vestry Requests parish approval to continue operation

Day School Report

Mr. Frank Fallon

Principal, St. Peter’s Day School

Financial and Operations Analysis with RecommendationsPresented by John Romano

ST. PETER’S BY-THE-SEA EPISCOPAL

DAY SCHOOL

Evaluation Objectives

Evaluate the current financial reports of the school (YTD actual vs. budget) to ensure these reports reflect an accurate picture of the financial state of the school (verify compliance with GAAP).

Review both income and expense items and make recommendations for improvement. This includes tuition, financial aid, and fundraising as well as staffing and expenses.

Conduct a break-even analysis. Evaluate the strengths, weaknesses and trends which despite future attempts to cut expense or increase revenue may still provide a challenge to the organization.

Based on the loan as well as the continued support of the school deficit, develop a timeline whereby the school would strive to become self-sustaining and return funds loaned to the school to cover the deficit.

Current and Future Financial State

A review of the profit and loss statements and general ledger as well as other transactional details have shown that the current financial picture for 2010 is accurate and conforms to generally accepted accounting principles. This includes a significant shortfall in income due to use of tuition for prior year expenses. At current pace, the school will require support from the church in excess of $400,000 for school year 2010/2011. This clearly demonstrates the school’s current inability to sustain itself without regular support from the church.

For the 2011/2012 school year, with enrollment constant, this reliance on church resources will drop to approximately $150-200K. This is primarily due to proper booking of tuition payments in the correct period. (tuition write-off in 2010/11 exceeded $250K)

The following slides discuss suggestions as well as concerns as the school moves forward.

Action Item

Tuition

o Current 2010/2011 tuition rates:Nursery/Pre-Kindergarten - $3600 (3 mornings) to $7400 (5 full days)

Grade Kindergarten - 4 - $8700Grade 5 - $9000Grade 6-8 - $9150

o Average Tuition rate statisticsNursery/Kindergarten - $7000 nationwide and $8500 in NYElementary/Middle School - $7800 nationwide and $9400 in NY

o Overall, tuition rates appear to be in line with other local private religious schools. Recommendation would be to implement a 10% tuition increase for 2011/2012 school year. (resultant income increase of approx $125K)

Action Item

Classroom offerings by group Early Childhood (Nursery/PreK/Kindergarten) program is currently the

most stable and cost-effective age group at the school. Space allocation for additional sections is recommended.

Elementary (grade 1-5) program has a healthy enrollment. Drop off after first grade (attrition) should be evaluated by head of school to determine trends causing this (i.e. exit survey). Advertising efforts should increase targeting pre-schools.

Middle School (grade 6-8) program is a problem area. The mix of teacher salary and single digit enrollment clearly is contributing to deficit. Recommendation at this time is NOT to eliminate the middle school offerings but instead to develop a tracking system which includes exit surveys and attrition data. Based on feedback from this, focused changes may include adjustment to curriculum, teaching styles, or relationships with local high schools.

Action Items

501©3 The school should consider the benefits of 501©3 status and the window of

opportunity that may open with external organizations from such a change. This includes a number of new grant opportunities.

Financial Aid Financial Aid is sourced not only from fundraising but also from external programs.

With regard to fundraising sources, this concept will become more attainable as the school refines its definition (discussed later). As the school becomes self-sustaining, such funding will become more realistic. The church and school should discuss the balance between revenue requirements and social responsibility (i.e. offering tuition assistance to those in need).

Action Item

FundraisingoFundraising has shown a decline of 30% from 2009/10 actual to

2010/11 budget.

oFundraising is a key component in the solution to the school’s financial struggle.

oThere needs to be significant communication to the Parents Association/Parish and public regarding the mission of the school, how the efforts of the school and church are a combined effort, and how this mission serves as outreach to the community.

oFundraising should focus on strengthening the financial state of the school (operating funds) and providing funding for financial aid.

Recommendation Target a 2011/12 fundraising goal of $100K which would include doubling annual giving goals (enhanced campaign) as well as growing fundraising events to three rather than one. This adds potential income of $50K for 2011/12. This goal should be increased by an additional $50K in 2012/13.

Action Item

Staffing Payroll as a % of income for 2009/10 (actual) was 82%

Payroll as a % of income for 2010/11 (budget) is 66%

The budgeted ratio for 2010/11 is in line overall with the average amongst private elementary schools (slightly lower). However, a more detailed analysis is necessary to determine if the current spread of placements are appropriate to provide balance amongst the various grades.

In reviewing the teacher salaries, average salaries for the respective teaching grade are within 15% of the industry average for schools in the same pool (with a few exceptions for senior faculty). However, there is clearly no incremental schedule or tenure guidance in place. A scale should be created including teaching level and experience. As the school stabilizes, adjustments should be made to adjust for inequities. A more detailed analysis needs to be conducted for the assistants category. There is potential savings in a reorganization of these positions. At this time, aside from a freeze in staff increases for the time being, there is no recommendation for staffing salary reductions.

Action Item

Non-payroll related expenses

Aside from janitorial expenses, non-payroll expense represents a very small percentage of total spending.

If janitorial expense is not already linked to the current church contract for cleaning, this should be linked.

In addition, it is assumed that the benefit program is also tied to that of the church. If not, or if not permitted, this should be linked or reviewed.

These two components represent the only non-payroll expense related savings that might be realized.

Concerns

Discounting: Current tuition discounting for parish members is too low. The industry

benchmark is 15%. Recommendation is to modify to industry benchmark beginning school year 2011/2012.

The early bird discount is being taken advantage of by more than 70% of the student base. This averages 5% and while this frees up cash flow, it results in an annual income loss of approx $50K.

Benchmarks for multiple children in school is 10-15% for second/third child. This is in line with current school policy.

The School currently discounts tuition for staff by 50%. Employee discount benchmarks are as follows:

Less than 1 year - waiting period – no benefit Greater than 1 year but less than 2 - 20% Greater than 2 years but less than 3 - 40% Greater than 3 years but less than 4 - 60% Greater than 4 years but less than 5 - 80%Greater than 5 years- 90%

Timeline For Implementation

Based on analysis thus far and potential savings already identified in

addition to remaining pieces to be reviewed (payroll scales, assistant

payroll, combining expense contracts, etc), the following timeline can

be established:

2010/11 – deficit of approx $400K (subsidized by the church)

2011/12 – school budget at break-even including payment of shared costs from school to church (approx $125K).

2012/13 – school budget includes surplus of $100K ($350K remaining)

2013/14 – school budget includes surplus of $150K ($200K remaining)

(This number assumes enrollment begins to grow in middle school and staffing model is in place.)

2014/15 – school budget includes surplus of $200K (loan repaid)

Next Steps

o The success of the school is contingent on a relationship between the church and the school rooted in commitment to working together and full transparency of financial and operating decisions.

o The growth and success of the school will come from several areas including student count growth as well as spending more wisely.

o Outreach to families and the public will also be key in stabilizing the school both financially and organizationally.

o Branding is as important to success as financial controls and the school needs to become a school of choice in the Long Island area. This comes not only from advertising and marketing but also from relationships and word of mouth (including referrals).

Resolution A

Resolution A: Funds Principal

Explanation: This is a one time procedural change in the administration of

the endowments giving the parish Vestry authority to approve and administer distributions from the parish endowment, to include use of the principal, with proper notification to the parish. The intent is to give the Vestry authority to address budgeted deficits.

Resolution A: Funds Principal

Resolution B

Resolution B: $400,000 support for Day School

Explanation: Collectively we are seeking the support of the Parish members to

vote to approve monies from the Parish Endowment to be used to rescue the Day School for the 2010-2011 school year. This request is being made with the understanding that this is a onetime request and those monies will be repaid overtime by the Day School revenues back to the Church’s Endowment.

Vestry Term ending January 2009

Recognition of Service

For Retiring Vestry Members

Marc Johnston

Don Metznik

Marge Middlemiss

Steve Rogers

Election Results

Presented by Clerk of Meeting

One Warden

Three Vestry

Old Business

Parsonage

New Business

Open floor

Adjournment

Request Motion to Adjourn & Second