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The local church may be a community of faith, but it is also a local employer. Like all employers, churches hire people to fill staff positions. They also face the tough, and sometimes risky, decisions to lay off people.

More congregations than ever in recent memory face difficult decisions involving downsizing. A fall-off in stewardship and severe declines in investment fund values because of the sharp drop in the stock market this past year have taken tolls on many churches.

Because personnel costs often take up at least a third of a church's operating budget, and even half or more, the spotlight inevitably shines on staffing as a primary place to reduce costs. Surprisingly, Your Church's church budget priorities survey of 827 church leaders in March showed only 13 percent would consider layoffs in 2009, with salary freezes (27 percent), hiring freezes (19 percent), and pay cuts (14 percent) the three likelier options.

A variety of reasons may exist for this outlook. Layoffs may not be necessary in some instances. Or, in other instances, church leaders often put off crucial staffing decisions until finances get out of hand, says Frank Sommerville, a Texas-based attorney experienced in church labor issues. "The attitude regarding church staffing is that 'the Lord will provide,'" he says, "but (they) seek help way too late in the process, and make it a more expensive and deeper problem to dig out of. Church leaders need to learn the Rule of the Shovel: when in the hole, the first step is to put down the shovel."

With a national employment rate topping 8 percent—and in some parts of the country, more than 10 percent—the economy is having a serious impact on the staffing of local churches. So church leaders must give serious thought and prayer to this question: If staff reductions become necessary, how can they be done in a pastorally, spiritually sensitive—and legally sound—manner?

Churches and ministries consider employee layoffs and termination actions usually for four different reasons:

Financial challenge. A church may need to pare back its number of employees due to a decrease in giving or pledges. Endowed funds may have decreased in value, resulting in reduced income that may have supported specific programs. Other church expenses may have increased dramatically for a variety of reasons, including rising energy costs that expand utility bills, or unexpected building repair jobs. Any or all of these financial challenges may bring about a financial crisis that must be faced, and when budget cuts quickly need to be made, staffing levels may be reduced.

Strategic challenge. Through a strategic or long-range planning process, or a pastor's vision for ministry, the existing staff roster may not fit the new directions or priorities that the congregation chooses to take. Current positions may be eliminated or redefined, and existing employees may be offered an opportunity to retrain, or asked to go.

Pastoral transition. Churches redesign staff positions and reassign responsibilities during a pastoral transition or interim ministry period. A church board may seek a different kind of pastor than the one who retired or left for another ministry. The interim period may allow the church board or interim pastor to make decisions that the previous pastor either chose not to implement or couldn't make.

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