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Retirement – Will the church pay a portion of the minister's retirement? If so, how much? Many churches have matching programs where the church pays a percentage and the employee pays a percentage. Also, churches should discuss vesting options as well. Churches may opt to increase retirement payments with greater tenure.

Moving Expenses – Reimbursed moving expenses are non-taxable, and churches should pay moving expenses for their ministers. Moving expenses include the cost of moving a household, travel, and lodging.

Housing – Some churches provide housing for ministers in the form of a parsonage. If housing is provided, it is a non-taxable expense and should not be counted as salary.

Vacation – Vacation should be determined early in the hiring process. Most churches provide vacation based on experience and tenure. Many churches grant vacation according to years of experience, and they count experience from other church-related work.

Continuing Education – Time for continuing education should also be negotiated, and ministers should be allowed adequate time for continuing education each year. Two weeks is usually standard. Many churches offer sabbatical programs every 3-5 years. These sabbaticals might be from one month to six or more months. Often, they can include one month per year and can be accumulated for several years.

Accountable Reimbursement Plans – Churches should set up accountable reimbursement plans for ministers to cover expenses in the following areas: travel, entertainment (taking someone to lunch, etc.), conferences, books, and other valid expenses. These expenses should be seen as "the cost of doing business" for the minister, and they should not be treated as salary. They are expenses that directly affect the ministry of the church, and they should be considered as such. In order to reimburse these expenses, the church should set up accounts for each. The minister is responsible for documenting each expense for which he/she is reimbursed or money is advanced. The expense must be documented within 60 days, and any excess money received by the minister from the church must be returned within 120 days. Accountable reimbursement plans should not appear on the church's budget in the salary category. They should appear in another place on the budget with other expenses for carrying out the church's ministry.

Expense Reimbursement Accounts – These accounts, sometimes known as cafeteria plans, allow ministers to put money into an account each pay period to be used for medical expense reimbursement or childcare expenses. The money put into these accounts is non-taxable. The amount must be carefully estimated because any money that is not used at the end of the year cannot be returned to the minister but must be retained by the church. In order to access the account, the minister must submit receipts to the church that document the expense, i.e., medical deductibles and other nonreimbursed medical expenses. In order to be reimbursed for child- care, the minister must submit receipts for money paid to a childcare provider.

Annual Salary Review

Each minister should have an annual salary review, for perhaps nothing is more uncomfortable and misunderstood than a minister's having to ask for a raise. Churches are notorious for not discussing salary issues with the minister. In extreme cases, salary is not discussed with the minister until the recommendation reaches the church's governing body.

Each year, the church's personnel committee should discuss salary with the minister. This is best handled through discussion with one or two persons who become the advocate for the music minister. This usually helps the larger group to discuss the issue more freely, and it takes the minister out of an otherwise awkward situation. The discussion should include issues such as cost of living increases or changes in status, i.e., new responsibilities, growth, additional education or training, merit pay, and other related area. See the following page for a Minister's Compensation Worksheet. This form can assist in determining the minister's salary and can help with decisions related to designating salary and benefits appropriately. It is important to note that a cost of living increase is actually not a raise; it is simply money that keeps the minister's salary at its current level. Additionally, dealing with staff salaries prior to other budget discussions is important so that salaries do not reflect what is (or isn't) left after everything else has been budgeted.

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