Fiscal 2014 Statements Show Archdiocese's Finances Are Improving

By Harold Brubaker
Reading Eagle
November 7, 2014

http://readingeagle.com/ap/article/fiscal-2014-statements-show-archdioceses-finances-are-improving

It's too soon to say that the Archdiocese of Philadelphia has recovered from the deep financial distress it was mired in three years ago, but financial statements released Thursday show positive momentum continued in the fiscal year ended June 30.

On an operating basis, the archdiocese's central financial office posted a loss of $3.1 million in fiscal 2014, down from $4.9 million the year before and well below the $17.6 million loss in fiscal 2012.

That was when Archbishop Charles J. Chaput arrived to find the finances of the Catholic Church in Southeastern Pennsylvania in shambles after years of mismanagement, compelling him to embark on a major campaign to convert assets into cash.

In one sign of progress, the archdiocese collected 94 percent of parish assessments due in fiscal 2014, up from an estimated 88 percent or 89 percent the previous year. Parish assessments yield money that the Office of Financial Services uses to pay for its operations and certain archdiocese-wide programs.

Timothy O'Shaughnessy, chief financial officer for the archdiocese, said in an interview that a combination of factors probably led to the improvement.

"We're very timely and prompt now in getting bills out. We're timely and prompt in terms of follow-up," O'Shaughnessy said. "Hopefully, some of it is strengthened parishes, too."

The archdiocese continued filling the big holes in its balance sheet for self-insurance, pensions, and the archdiocesan trust and loan fund, a quasi-bank that collects deposits from parishes and makes loans for construction projects at the parish level.

Thanks to real estate sales and other deals, such as the lease of its 13 cemeteries, the archdiocese has cut those long-term liabilities by nearly $100 million, to $256.9 million on June 30 from $354.4 million two years earlier, the financial statements show.

That deficit will be reduced further early next year, when archdiocesan officials expect to apply an estimated $90 million in net proceeds from the sale of the archdiocese's seven nursing homes - a deal completed Monday - into a self-insurance reserve and the woefully underfunded priests' pension fund.

Additional real estate sales are expected to bring in millions more that will be used, among other things, to repay $50.3 million still owed to the trust and loan fund, which was used under Cardinal Justin Rigali to pay for archdiocesan operations that regular income could not support.

Proceeds from the nursing-home sale will eliminate the estimated $19.6 million deficit in the self-insurance reserve and increase the priests' pension plan to a funding level of about 85 percent of expected liabilities. That is the same level as the pension plan for archdiocesan lay employees that was frozen on June 30.

The archdiocese still faces potentially significant financial wild cards in the form of civil lawsuits in Philadelphia Common Pleas Court over allegations of sexual abuse by priests. Nine lawsuits were filed after the release of a February 2011 grand jury report issued by the city District Attorney's Office.

Three of the cases were beyond the statute of limitations, the archdiocese's audited statement said. One was voluntarily dismissed by the plaintiff, and the archdiocese won summary judgment in two other cases, the statement said.

Trials have been scheduled for January and March in two cases, and a third is expected in May or June, according to the audited statement.

Contact: hbrubaker@phillynews.com

215-854-4651

Contact: @InqBrubaker