Diocese Reports 15 5m 09 Losses, Erin Moody, Standard Speaker, February 19, 2010

Diocese Reports $15.5m "09 Losses

By Erin Moody
Standard-Speaker
February 19, 2010

http://standardspeaker.com/news/diocese-reports-15-5m-09-losses-1.627785

JAMIE PESOTINE/Staff Photographer The Knights of Columbus lead the procession into Holy Trinity Slovak Church in Hazleton for the final Mass on Jan. 3.

As the Diocese of Scranton reports a third-straight year of multi-million dollar losses, officials say social services remain intact but the future of Catholic education faces additional changes.

Deficits for fiscal year 2009 totaled almost $15.5 million, according to financial statements published Thursday in the Catholic Light, the diocesan newspaper. That is more than twice the $7.1 million loss reported in 2008 and the $6.7 million in 2007 by the 11-county diocese.

"While the diocesan finances are deeply troubling and present formidable challenges, with God's help we will find creative ways to meet the challenges and reverse the significant losses that are evident in the published financial statement. I ask for your prayers for our Diocese," interim leader of the diocese Cardinal Justin Rigali wrote in a letter accompanying the annual report.

In an effort to improve the diocese's financial outlook, officials are working with parishes to set up schedules for repaying loans, a wage freeze went into effect June 30 and changes were made to the pension system, according to Rigali.

Of the $15.5 million deficit, $7.1 million is for bad debts, most from parishes that borrowed money to fund Catholic schools, according to the letter from Rigali.

School consolidations, tuition increases, program cuts, major fundraising efforts and more options are all on the table, said Bill Finnegan, head of the Holy Redeemer School Board.

"I can't get into any details because we still have to sit down and look at the decisions to be made," Finnegan said. "It's a multi-layered situation."

In a release last Feb. 11, the diocese reported $15.2 million in non-performing loans. The majority are directly related to schools or made to parishes for supporting schools. In addition, during the last two years, schools had an operating loss of $5.6 million, according to the release.

The diocese operates four school systems, based on geography, each with its own high school. The systems have been consolidated several times during the past few years because of declining enrollment and funding. The diocese is committed to providing Catholic education, but additional changes are necessary in light of finances and other factors, spokesman Bill Genello said Friday.

The Holy Redeemer board plans to meet within the next few days to discuss options, and will then make a recommendation to the diocese, Finnegan said. Further information could be available in a few weeks.

"I think everybody is doing the best that they can, but the facts are what they are. The attendance at the churches is what it is, and it's all interrelated," he said.

The 2009 financial report covers administrative finances, but states it does not include information on individual parishes, St. Michael's School, Little Flower Manor, Catholic schools, the Catholic Youth Center, Guild Studios, Catholic Social Services and other diocesan service organizations.

"The struggle in the diocese doesn't really reflect Catholic Social Services," said Monsignor Joseph Kelly, executive director of Catholic Social Services. "Our concern is the state budget. That is the greatest struggle for us."

While the diocese contributes a small portion of funding for the agency, most of the money used to operate kitchens, counseling services, drug and alcohol rehabilitation and programs for children, seniors, the unemployed, homeless and others comes from federal, state and county grants, he said.

Although cash flow is tight because of the delay in passing the 2009-10 state budget, no programs have been cut during the past two years. The agency has, however, taken out almost $1 million in loans to cover expenses while officials wait for about $720,000 from the government, Kelly said.

Catholic Social Services also runs its own annual financial appeal to raise funds, which is going on right now, and relies heavily on and is grateful for those donations, he said. Knowing the diocese is not in a position to increase contributions makes the donations even more important, Kelly said.

"I don't see how. I think you see from the Catholic Light that the diocese is struggling very much," he said. "What that does is make me work harder at our fundraising."

In addition to school-related losses for the diocese, $3.6 million is related to changes to the pension system, according to the financial statements. An additional $1.5 million is from unrealized losses on investments, an effect of the struggling economy and financial markets.

Improved market performance this current fiscal year could help the diocese recover some losses on investments, Rigali wrote.

During 2009, the diocese had a $3.2 million operating deficit, as compared to a $640,000 deficit in 2008 and a $1.4 million surplus in 2007.

In a bright note, donations and bequests jumped from $28,000 in 2008 to $1.4 million in 2009. The reason was not clear from the report.

In January, the diocese reported the current annual appeal has raised $4.48 million, about 85 percent of the $5.3 million goal. Annual appeals do not have a set end date. Last year, the diocese revved up efforts to solicit donations when 81 percent of the goal had been reached in January. No similar efforts were announced for this year.

Contact: emoody@citizensvoice.com, 570-821-2051