Salary Consulting for Pastors: Importance of Cost of Living Adjustments
In my interviews with Pastors, one of the more difficult conversations is the importance of adjusting the salary of the Pastor(s) and/or Staff with a Cost of Living Adjustment (COLA). It is difficult for the Pastor who may need to ask for this which they may feel uncomfortable about. The leadership team should review this especially as the Pastors do a lot of traveling for visitations and hosting meals. In the past few years, we have had an increase of 20% just for these expenses, not to mention many others. Instead of having to visit this annually, the method can be approved once and then followed on an annual basis unless an extraordinary event occurs which may require an adjustment.
There are several advantages to including a COLA in the salary on an automated basis.
- Avoids having to discuss each year
- Assures that the salary is keeping up on a current basis with expenses as they increase
- Sets an example for the incoming Pastor(s) with something already considered and implemented
What Consumer Price Index (CPI) to use has also been a source of controversy as there are several and they all have nuances, therefore, in my opinion, using the Social Security Administrations (SSA) Cost of Living Adjustment (COLA), has been accurate on a National basis. The SSA COLA begins in November and runs through the end of October of the following year, adjusting each November for the cumulative total. This approach uses the 12 month average ending October 31st, and since it is published and the calculation already done, the salary can be adjusted for November 1st of the current year. You can also use a CPI on a Regional basis, however the calculation may need to be manually calculated. There can be issues when calculating the CPI on a manual basis and unfortunately, the Pastor may wind up with a current CPI based on the current month of the calculation relative to where it was a year ago, which is not taking into account the 12 month experience of inflation on the Pastor's salary. In addition, unless all purchases are made on a Regional basis, which they are usually not, the Pastor is not receivng a CPI that reflects their expenses.
Now, you may think that the differences are small, however they do add up and on a biblical basis, we should be accurately assisting our Pastors the correct amount of salary.
