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	Diocese Facing Financial Woes Audit Shows Strained Schools, Parishes By Mark Guydish Times Leader [Scranton PA] January 12, 2007 http://www.timesleader.com/mld/timesleader/news/local/16443151.htm Scranton – The Diocese of Scranton released audit information that, it said, shows the diocese "is facing serious financial challenges," including a $1.3 million deficit last fiscal year, $5.5 million owed by parishes for annual assessments, and $12 million in loan payments due from "financially troubled parishes and schools." The diocese printed extensive information for the fiscal year from July 1, 2005, to June 30, 2006, in the Thursday edition of its newspaper, The Catholic Light. In a letter accompanying the report, Bishop Joseph Martino noted that the basic numbers look deceptively healthy, with the diocese taking in slightly more than the roughly $26.3 million it spent. But he insisted "there are other factors" that create the $1.3 million deficit. Among them, he cites $70,403 in "bad debts." In fact, the report cites what it calls "a troubling trend" of parishes and schools seeking more loans from the diocese for day-to-day operations rather than for the traditional uses of such loans: long-term construction or renovation projects. As of Dec. 31, outstanding loans the diocese made totaled more than $28 million, with almost $13 million of that owed by parishes and schools already in deep financial waters. Since the money loaned out comes from parishes and other institutions depositing surplus cash they don't immediately need, the diocese can't simply "write off" the loans as some people have suggested, the report said. "This money belongs to all of the parishes and the people who have contributed to the parishes," diocesan Chief Financial Officer James Quinn said in the Catholic Light article. "It is essential that we collect the money owed on these loans." As of Dec. 31, the diocese was owed $5.5 million from parishes that had fallen behind in their annual "assessments," essentially a tax levied on each parish to support diocesan operations. And under "recent changes in accounting regulations," the diocese has had to increase the amount of money it sets aside each year to pay for expected "post-retirement" medical health costs for priests still working. While the diocese currently pays $420,000 toward those future costs, the amount actually due is $1.2 million, the report said. The diocese is working on long-term plans to turn the financial tide, including building a "debt reduction fund" and possible changes to pension plans for lay employees "that could take effect as soon as July 1." The report also notes that the restructuring of Catholic schools under way is part of the effort to get on firm financial footing. Savings have already been realized through recent school restructurings. According to the audit, educational expenses dropped from more than $3 million in 2005 to less than $2.5 million in 2006. Mark Guydish, a Times Leader staff writer, can be reached at 829-7161 or mguydish@timesleader.com
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