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	After Costly Sex-Abuse Claims, Diocese Moves to Shield Assets By Michael Clancy The Arizona Republic February 2, 2008 http://www.azcentral.com/arizonarepublic/news/articles/0202catholic0202.html The Roman Catholic Diocese of Phoenix is set to institute fundamental changes in the operations of local parishes, which will reduce the diocese's exposure to sexual-abuse lawsuits and other liabilities. The change follows a difficult five-year period for the diocese and for the church in the United States generally, with thousands of abuse-related lawsuits exposing the nation's 195 dioceses to the threat of financial ruin. At least five dioceses, including Tucson, filed for bankruptcy. The Phoenix Diocese, which covers several counties in central and northern Arizona, has spent several million dollars to settle about 20 lawsuits. advertisement Numerous dioceses now are moving toward incorporating each parish separately as a way to protect the assets of the diocese as a whole. "The trend is picking up steam," said Charles Zech, a professor of economics at Villanova University who follows church leadership closely. Under the old model, the entire diocese and each of its parishes could be at risk in the event of a lawsuit or bankruptcy, Zech said. Under the new model, he said, only the individual parish and possibly diocesan offices would be at risk. "Even dioceses were surprised that parishes could be considered part of diocesan assets," Zech said. "Plaintiffs used to be not as aware of what they could claim." Parishes differ financially Dioceses in the United States typically have been multimillion-dollar enterprises, when including in the assets the properties and belongings of all parishes. Individual parishes can be worth millions, depending on their locations, and annual budgets exceed $3 million per year for a handful of churches and schools in Phoenix. On the other hand, said Joseph Anderson, the Phoenix Diocese's chief financial officer, some parishes have virtually no assets, especially if they have not yet purchased property. In a financial report the diocese just published, it listed assets of nearly $122 million and a budget of about $30 million, just for the downtown church headquarters. Under the new system, scheduled to take effect July 1, all the diocese's 92 parishes will be incorporated as separate entities. Although the change won't noticeably affect day-to-day life, incorporation will provide each parish with the title to its property and protection from diocesewide financial liabilities. None of the parishes will be set adrift on its own, and the poorer parishes still will receive support from the diocese. Even in the case of lawsuits, the parishes will be separately insured under a blanket policy the diocese will purchase. The move follows similar changes in the neighboring Diocese of Tucson and numerous others around the country. Tucson made the change two years ago as it emerged from bankruptcy proceedings. The Archdiocese of New York adopted the system as far back as 1911. Model already in place Church leaders acknowledge the liability issues, which have cost some dioceses hundreds of millions of dollars and forced the sale of diocesan assets. Just last week, the Archdiocese of Los Angeles sold its headquarters building to cover the costs of abuse-related lawsuits. In Phoenix, diocesan leaders contend the real impetus for change lies beyond liability issues. Phoenix Bishop Thomas J. Olmsted, who came from dioceses where the model already was in place, began the move toward incorporation shortly after his arrival in Phoenix. According to the Catholic Sun, the diocese newspaper, Olmsted believes separate incorporation fits better with church law than the current model, in which the bishop maintains control of the diocese's entire base of assets. Olmsted was not available for comment. The Rev. Fred Adamson, Olmsted's key assistant at the Phoenix Diocese, said control of each parish will remain with clergy members despite the changes. That has been the model followed nationally, in keeping with the dictates of church law, which gives pastors and bishops control of the parishes. Each parish will have a board of directors consisting of the parish pastor, Adamson or his successor in a position called moderator of the curia, and the bishop, as well as two lay members. Everyday life not affected Adamson said that, despite the changes, religious life within the parish will not be affected at all, he said. The Rev. Pat Robinson, who leads Blessed Sacrament parish in Phoenix, said he anticipates no major changes. "We still will be responsible to the bishop, while civilly we will stand alone," he said. "Not much is going to change for day-to-day operations." The bishop will retain the authority to appoint pastors, to require financial reports and to approve certain expenditures. Each parish already pays for its own insurance coverage, and the diocese will continue to purchase the insurance packages in bulk, said John Kelly, diocesan attorney. Parishes will pay the insurer rather than the diocese for the coverage. The insurance will cover property damage, vehicles, liability for injuries, and director and officer coverage, he said. Each parish could purchase additional insurance, Kelly said. He discounted the fear that individual parishes would be at substantial risk of lawsuits, although the new arrangement would appear to put each parish at greater risk. "We have had very few lawsuits," Kelly said. "For a group our size, we have been very fortunate." But the threat remains. In Tucson, according to church member Bob Scala, some parishes have required the pastor to notify the board in case certain issues arise. Scala, a layman who took part in establishing the new corporations and serves on a parish board, said a key benefit of the boards will be "to provide additional sets of eyes" on parish affairs. Adamson's counterpart in Tucson, the Rev. Al Schifano, said church members have taken a "real sense of ownership" from the change. "To see the sense of responsibility and accountability and to give the lay members another perspective has really been fulfilling," he said. Reaction mixed Catholics in the diocese have mixed feelings about the changes. "It is being done solely to protect assets, though it is a step in right direction," said John Chuchman of Scottsdale, a parishioner at St. Patrick. "The bishop will still control each parish through his appointees." Ed Beauvais, founder of America West Airlines who attends the Franciscan Renewal Center, said the change is a good idea. "It would be irresponsible not to do this, just to protect the assets of the diocese from lawsuits," he said. John Garcia, a Knights of Columbus leader who attends SS. Simon and Jude Cathedral, said the change appears to him to be a fiscally sound approach to church management. "The first thing that comes to mind is what happens when a parish has to take care of its own problems," he said. "That may be a good step in the right direction."
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