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	Boston Archdiocese: Finances Weak but Improving By Michael Paulson Boston Globe July 10, 2008 http://www.boston.com/news/local/breaking_news/2008/07/boston_archdioc_3.html BRAINTREE -- The Roman Catholic Archdiocese of Boston, which has been reeling from the financial effects of the sexual abuse crisis, is still two years from balancing its budget, but is making steady progress addressing a raft of complex administrative problems, top church officials said today. The archdiocese, in its annual financial report, disclosed several important positive developments, particularly a 5 percent increase in contributions to parishes, even though Cardinal Sean P. O'Malley has reduced the overall number of parishes in the archdiocese by nearly 20 percent. The archdiocese's annual fund-raising campaign, although still down from the levels raised before the abuse crisis, has also been increasing every year; several prominent businessmen are raising tens of millions of dollars to shore up the struggling Catholic schools; and archdiocesan officials say they are hopeful that new leadership for the Catholic hospital system, Caritas Christi, will improve the finances of that organization. "We think people are feeling better about the church, and have a greater confidence in our improved stewardship,'' said the archdiocesan chancellor, James P. McDonough. "We feel optimistic about the future, but we still are faced with a number of challenges.'' Church officials have taken several steps to improve the archdiocese's financial state, including selling its headquarters in Brighton, closing parishes and schools, and reducing the number of employees at the church's central office by 10 percent, to 225. The staff reductions, which followed a pro bono study of the archdiocesan administration by the management consulting firm McKinsey & Company, were accomplished through a combination of voluntary buyouts, involuntary layoffs, and unfilled job openings, said the officials. The archdiocese was able to pay off a $26 million line of credit from the Knights of Columbus by selling its headquarters in Brighton to Boston College and moving to a modern office building in Braintree that was given to the church by developer Thomas Flatley. And the pension fund for retired lay church employees, which covers about 6,600 people, is now fully funded, six years ahead of schedule. But the archdiocese continues to face huge financial challenges, particularly in its pension fund for retired and disabled clergy, which covers about 800 active and retired priests and is underfunded by $110 million. Several years ago the archdiocese was forced to withdraw a proposal to cut benefits for retired priests after a public outcry over the church's handling of the funds. The archdiocese said it will meet with priests this fall to discuss new ways of solving the problem, and it declined to release any details today. The financial progress is coming at a slower pace than desired by O'Malley, who has won considerable praise for his decision, starting in 2005, to significantly improve the financial disclosures by the archdiocese and the several dozen affiliated Catholic organizations overseen by the cardinal. O'Malley had wanted to balance the archdiocesan budget by fiscal 2008, but the archdiocese said today that it will not achieve that goal until 2010 -- a delay the church attributes to changes in its accounting methods. The archdiocese said it cut the operating loss of its central administration to $2 million in fiscal 2007, down from $9 million in fiscal 2006. But the archdiocese said it expects to lose $4 million in 2008 and $2 million in fiscal 2009 before balancing its budget in 2010. O'Malley had also wanted every parish to disclose its finances by 2006, but that has proven so difficult that the archdiocese no longer has any idea when that goal might be accomplished. Some parishes are currently reporting their finances annually, but the reports are not published centrally by the archdiocese. The archdiocese said it is hoping to hold workshops this fall to help more parishes learn how to do annual reports. "The bottom line is that the financial health of the archdiocese is improving,'' said the Rev. Richard M. Erikson, the vicar general of the archdiocese. Erikson said the archdiocese, as symbolized by renaming its headquarters a "pastoral center'' rather than the more bureaucratic-sounding "chancery,'' is trying to ensure that its administration is focused on serving parishes, schools, and other Catholic agencies. "The improved health is an indication of us becoming more mission-focused,'' he said. The archdiocese's financial troubles began in large part with the clergy sexual abuse crisis that erupted in 2002. According to the church's annual reports, the archdiocese spent $136 million as of last summer to settle claims by 1,015 people who said they were abused by Boston priests. A spokeswoman said the archdiocese now faces about 70 remaining claims from people who say they were abused by priests, down from about 130 outstanding claims a year ago. The abuse settlements have been paid through property sales, particularly of the Brighton headquarters, and insurance payments. But the crisis also impacted the overall health of the archdiocese by diminishing its fund-raising capacity, and by leading to increased public scrutiny of archdiocesan management. The archdiocese said today that it is seeking to increase the role of laypeople in overseeing church finances. It said that a group of laypeople will now oversee the church's investments, and that the archdiocesan finance council will have a strengthened role under a new charter for that panel. Michael Paulson can be reached at mpaulson@globe.com The reports of all the affiliated organizations, as well as letters from church officials, are posted at http://www.rcab.org/Finance/HomePage.html.
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