Group Suggests Ways for Diocese to Spend Reserve

By Rita Ciolli
Newsday (NY)
January 13, 2005

How much money should the Diocese of Rockville Centre set aside for a rainy day?

Voice of the Faithful, an organization of lay Catholics seeking more accountability from church leaders, is releasing an analysis today that finds the diocese is sitting on excess cash reserves of about $180 million.

The organization is urging Bishop William Murphy to spend some of that reserve on worthy local causes, such as increased educational spending, new programs for immigrants and increasing benefits for retired nuns.

"We are raising the question of how much is too much, and what is the best use of this money?" said Dan Bartley, co-director of the local group of 2,300 lay Catholics formed three years ago in response to the clerical sex-abuse scandal.

Diocese spokesman Sean Dolan, however, criticized the lay group for failing to "understand the budget concerns the finance council has to wrestle with."

He said that all the reserve money was needed to operate a diocese with 1.5 million Catholics, 134 parishes and many programs. "There is no extra money in there," he said.

Each diocesan bishop is required by church law to appoint a finance council with expertise in money matters to safeguard the church's assets and to monitor investments. Dolan pointed to a March 2004 statement by the council that labeled the reserves only "adequate" and noted that many diocesan buildings are aging, which the council said meant that major capital expenses would be required for them.

The lay group's audit comes as the diocese is launching its 2005 Catholic Ministries Appeal, the diocese's main fund-raising drive, which raised about $10 million last year. Besides the appeal, the diocese's other sources of income are a percentage of Sunday collections, direct donations, bequests and investment income.

"The timing is suspect," Dolan said of the group's report, charging that linking the issue of cash reserves with the launch of the annual appeal was "wrong and irresponsible."

The diocese, whose fiscal year ends Aug. 31, is expected to publish its 2004 financial audits in a few weeks, according to Dolan. He said it was "weird" for the lay group to release its statement before the official numbers came out.

The group's audit was done by H. Richard Grafer, a retired partner in the Arthur Andersen accounting firm and a Voice of the Faithful member.

Using the diocese's published financial statements for fiscal year 2003, Grafer said the diocese has as much as $180 million in cash and liquid securities beyond what general accounting standards require to be kept in reserve for nonprofit corporations.

Grafer said that if the diocese did not receive another dollar through its collection basket or annual appeal, it could continue to operate for about three years and nine months, as long as revenues such as tuition and Medicaid reimbursements continued to come in.

Additionally, the diocese could fund any needed project by tapping into its estimated $10 million to $20 million a year in investment income.

Grafer will present his finding tonight at the group's monthly meeting at the Unitarian Universalist Congregation church in Manhasset. The group is calling on Murphy to consider creating a second council to evaluate spending priorities.

But that's not likely to happen, Dolan said yesterday. He said Catholics can use their parish councils to express concerns.

"The existing structure is there for input from the people in the pews," he said.

The group's suggestions for additional spending include bolstering educational resources for Catholic schools, including increasing salaries for teachers; creating schools for new immigrants that would teach English and job skills; contributing to affordable housing in the region; and improving the care and living conditions for retired nuns.

"The sisters and nuns dedicated their lives to educating our children, and when they retire, they can't even afford an air conditioner," said Kevin Connor, the group's treasurer.

Tracking the money

Voice of the Faithful has analyzed published financial statements of the Diocese of Rockville Centre for fiscal year 2003 and completed this breakdown of the diocese’s approximate $180 million in cash reserves:

$53.5 million is in the account of the administrative offices, or headquarters.

$52.5 million in protected self-insurance fund. Diocese is self-insured for property and casualty losses. This is in addition to the $45.6 million of reserves required by generally accepted accounting principles. The diocese puts the insured value of $2.6 billion on the properties it owns.

$4.6 million for medical self-insurance for all employees. This in addition to $14.1 million that is required by accounting standards to be kept in reserve.

$44.6 million in cemetery funds. In addition, there is another $46.4 million restricted for future use in maintaining the diocese’s three cemeteries.

$19 million in the Catholic Charities fund, of which $14.8 million is designated for future use by the Catholic Charities Support Corporation.

$5.9 million residing in seven other diocesan entities including Telecare, Immaculate Conception seminary and the Mission Office.