The Catholic Archdiocese of Milwaukee, which faces more than a dozen civil fraud lawsuits over its handling of clergy sex abuse cases, filed for Chapter 11 bankruptcy protection in January. As the case proceeds, we'll have updates, analysis, documents and more.

Three pension funds operated by the Archdiocese of Milwaukee for priests, lay employees and unionized cemetery workers have unfunded liabilities totaling $41.8 million, according to documents filed as part of the archdiocese's bankruptcy proceedings.

The gap between current assets and future payouts for the priest and lay workers' pensions - at 9.6% and 16.9%, respectively - fall within reasonable ranges given the economic conditions of the last few years, according to pension experts.

But the size of the lay workers' pension liability (at $37.4 million) and the funding level of the cemetery workers' pension (55% - with $1.3 million in assets and a $1 million unfunded liability) raise concerns about the health and future of those benefits, pension experts say.

"Anything funded below 80%, you'd have to look at, but a large gap is cause for concern, said Eric Loi, staff attorney for the Pension Rights Center, a consumer advocacy group in Washington, D.C.

Archdiocese spokeswoman Julie Wolf blamed the shortfalls on poor investment returns and said in a statement that there is "no current cause for concern for employees."

"All benefits have been timely paid, and it is clear that the plans will continue to pay all benefits payable in the immediate future," she said.

The pension liabilities are laid out in claims filed last week against the assets of the archdiocese. They are among 160 claims totaling $123.4 million filed to date by creditors in the church's Chapter 11 bankruptcy. In this case, it is the archdiocese itself and the pension trustees making the claims to protect the pensions.

In addition, $40 million in claims have been filed by eight individuals alleging sex abuse. Nearly 70 other sex-abuse claims filed so far, most of which are sealed, include no dollar amount.

The pension and sex-abuse claims, to date the largest, create a tension for the bankruptcy judge who must balance the interests of the church's victims against those of its employees, said James J. Keightley, a Washington, D.C, attorney who specializes in pension law and former general counsel for the Pension Benefit Guaranty Corp.

"We saw this in the (Diocese of) Wilmington bankruptcy," said Keightley, who was not involved in that case. "There's a real tension for the judge between, 'How much do I give to these poor people who've been abused?' And 'Do I want to unduly burden the diocese so it cannot pay the pensions of these good, honest, employees?' "

As in Wilmington, the Milwaukee pensions are not covered by the 1974 Employee Retirement Income Security Act, known as ERISA, or insured by the Pension Benefit Guaranty Corp. As a result, the pensions are exempt from certain regulations requiring minimum funding levels or communication with the plans' participants.

Wolf, of the archdiocese, said the plans continue to be funded according to actuarial recommendations, and the archdiocese communicates regularly with vested participants.

Employees and pensioners in Wilmington, where the pension was underfunded by $55 million, hired their own attorney who won the creation of a separate committee to represent their interests in the bankruptcy there. As a result, they won an additional infusion of $20 million, plus guarantees of additional contributions, said attorney Don Detweiler, who represented workers there.

Priest pensions The Milwaukee employees' pension is by far the largest of the three, with $183.2 million in assets, according to the court records. The priest pension has nearly $31 million in assets.

Some dioceses around the country, including Boston, Cincinnati and Minneapolis-St. Paul, have terminated their defined pensions for less costly plans, according to the Catholic News Service. In addition, there is another risk: pensions can be a casualty of bankruptcy. But Wolf said the Milwaukee archdiocese has no intention of terminating its benefit.

In addition to the pension and sex-abuse claims, others include:

• $5.8 million in claims by banks that lent the archdiocese money.
• A $476,000 claim by a former priest who says he's owed back pay and benefits after the archdiocese mishandled a sex-abuse case in which he was acquitted.
• And a claim for $14 million representing the future costs of health care for retired priests that are currently funded on a pay-as-you-go basis.