Holy Trinity Trickery

March 31, 2011

We leave the subject of pensions for now to return to a topic we covered about two weeks ago, the efforts by the archdiocese to sell Holy Trinity in Boston.  As you may recall, former parishioners at Holy Trinity Church in the South End asked the Vatican to stop any sale of the building after it was listed for sale  at $2.3 million on Sothebys, a residential real estate site. They argued that the archdiocese had not completed the required  relegation to profane use process to convert it to secular use, and the archdiocese responded by pulling the listing. The explanation given at the time raised eyebrows for its failure to make logical sense, as we discussed in More Diocesan Deception.

Below you will see a copy of the letter sent by Chancellor Jim McDonough to former parishioners of Holy Trinity explaining what the archdiocese was up to, and you will see all of the contradictions between actions and words once again exposed.  As with virtually everything you see on BCI these days, this came from outside of 66 Brooks Drive, despite what folks at the Pastoral Center in Braintree  still seem to believe about who writes BCI or helps BCI, and despite our multiple open disclosures that the primary sources of information for BCI are not at 66 Brooks Drive.

March 17, 2011

Former Parishioners of Holy Trinity Parish
c/o xxx

Dear XXX,

His Eminence Sean Cardinal O’Malley, OFM Cap., has asked me to respond to you and to those on whose behalf you have written regarding your letters concerning Holy Trinity Church in the South End. Cardinal O’Malley has requested that I clarify an important matter in your recent correspondences. The Cardinal has not made a decision to relegate Holy Trinity Church to profane use, nor has he directed the Archdiocese of Boston to sell the church building.

Several weeks ago, at His Eminence’s request, several individuals of the Cardinal’s staff, including myself, began a consultation process to determine whether Holy Trinity Church should be relegated to profane use. As you are aware, when the Cardinal directs that the possible relegation of a church building be considered, an extensive consultation process is undertaken that enables us to make an informed and just decision. This process is already in progress for seven church buildings in the Archdiocese.

The first step in the relegation consultation process is to work with the pastor of the parish who received the Catholic faithful from the closed parish of the church under consideration. The pastor serves as a point of contact for the former parishioners of the closed parish and helps lead our discussions with them. During this initial stage, we gather information that will assist the pastor throughout the consultation. Our present actions regarding Holy Trinity Church have been taken for the purpose of gathering that information, including determining the possible market value of the property and whether there may be other Catholic groups who are interested in making use of it.

The second step in this process is the consultation of the Catholic faithful. At present, we are in the midst of this stage of the relegation consultation process for seven area churches. Holy Trinity was not included with this grouping because we had not yet obtained the needed information for the consultation. Cardinal O’Malley will be announcing a new series of consultations soon and this grouping will include Holy Trinity Church.

The final step in the relegation consultation process is the formal decision by His Eminence. If after consultation he decides that the best option for the church is that it continues to exist as a Catholic worship space, the Cardinal may designate that a Catholic group in good standing be sought as a buyer. If this is his decision, the Cardinal does not need to relegate the church building for profane use. If, on the other hand, the relegation consultation process leads the Cardinal to believe that relegation is appropriate, His Eminence will fulfill his canonical obligation to consult with the Presbyteral Council prior to relegating the building for profane but not sordid use.

I can assure you that Cardinal O’Malley is committed to following this process with regard to Holy Trinity Church. Admittedly, such a process requires substantial time, effort, and expense, but His Eminence willingly undertakes this process because it is an extension of his commitment to rebuild our Archdiocese and to foster a culture of collaboration and trust. It is my privilege to serve with him in doing so. I can confidently assure you and those who joined in your letter that the actions currently being undertaken are in service of the process I have outlined.

However, after having consulted with Cardinal O’Malley, I have recently asked our real estate broker to withdraw the listing of Holy Trinity Church. The listing was done in order to gather the necessary information to facilitate transparent conversation with the former members of Holy Trinity parish when the planned relegation consultation meetings occur. The information gathered through the listing is a valuable tool for both His Eminence and the pastor who assists in the relegation consultation process. Nevertheless, the broker has agreed to withdraw this listing in light of the apparent misunderstanding that has arisen.

Please be assured that during the planned consultation period, you and all who wish to be heard will have ample opportunity to give your input to Cardinal O’Malley and to Father O’Leary, the pastor of Cathedral Parish, which welcomed the former parishioners of Holy Trinity. I hope that you will take advantage of this opportunity and provide thoughtful comments so that the Cardinal may make an informed and just decision as to the ultimate use of the church building.

In addition to this letter, Cardinal O’Malley has asked his Assistant for Canonical Affairs, Reverend Robert Oliver, to be available to you by phone. Father Oliver is happy to discuss any questions you may have regarding the relegation consultation process and can be reached at (617) 746-5650.

Sincerely,

James P. McDonough

Chancellor

cc: Sean Cardinal O’Malley, OFM Cap., Archbishop of Boston
Rev. Robert Oliver, Assistant for Canonical Affairs
Very Rev. Richard M. Erikson, Ph.D., V.G.

- – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – -
BCI commentary:

We just do not understand this archdiocese. Are we really being asked to believe that the archdiocese signed an agreement with Sotheby’s to have them  spend their resources marketing and selling this building so the archdiocese could merely gather information for the consultation process?  Why was the previous process of placing a listing in The Pilot not followed?  What about the Sotheby’s website ad was expected to more effectively identify a Catholic buyer vs listing it in Catholic newspapers across the country?  Are we to infer that if the archdiocese finds they can get a lot of money for a building, that will increase the likelihood of relegation to profane use and sale, but if there is not so much money to be realized, they might keep the site for Catholic worship? How come they were able to gather all of this same information for the other seven properties that were the subject of the Consultation 2011 survey process without listing them for sale with residential real estate brokers, but that was somehow not possible with Holy Trinity?

It has also not gone unnoticed by those who care about this situation how the language on the archdiocesan Real Estate website underwent a bit of a metamorphosis recently.   On its website,  the Archdiocese now makes the following statement about properties that it lists for sale.  Since this statement is backdated to March 8, it clearly would have applied to Holy Trinity when it was listed for sale:

“Offers, solicited over a 90-day period, will be evaluated at the conclusion of that process.   At the conclusion of the process the Archdiocesan Real Estate office and the Real Estate Advisory committee will review the offers.  They will make their recommendations to the Chancellor.  The Chancellor will review the financial terms and social considerations connected with the offers and forward his recommendations to the Archbishop through the Vicar General.  If the Archbishop is inclined to accept offers, permissions will be sought from the College of Consultors, the Finance Council and, where needed, from the Holy See. “

Unfortunately, the website statement now dated March 8 about the intended process for selling properties apears to conflict with the above statement of the Chancellor of the Archdiocese, James McDonough, in his letter to Holy Trinity parishioners dated 17 March 2011.

Given no such sale listings were done for the other seven properties, it is difficult to believe the explanation that the website listing of the property on Sotheby’s for a selling price of $2.3M was really an effort to gather information about the market value of the property and find a Catholic buyer.  Rather, it sure looks a lot more like the archdiocese was accepting offers from potential buyers, as it now states on its real estate web page.

Last Wednesday, March 23, a story about Holy Trinity’s listing for sale and emergency appeal appeared in the online edition of the South End News.At the end of the story, an anonymous reader using the handle “BRA_scandal” wrote the following comment.

“Developers want to declare those blocks as part of Chinatown, so that they can build huge characterless buildings unlike the neighboring South End. Big money wants to demolish Holy Trinity.”
We do not know if that is true or not, or what is really going on.  We simply share with you the facts and objective information. It would be nice if the archdiocese just told faithful Catholics the truth. Is that too much to ask?

Pension Contention

March 30, 2011

We know everyone is waiting for the latest in the employee pension saga–both the issues raised by former Chancellor David Smith on behalf of former employees, and the mediation session yesterday between the Daughters of St. Paul and the Archdiocese of Boston to try and resolve the stalemate over them getting their lay employee pension funds out of the archdiocesan pension plan.

To be honest with you, we are afraid that we have not got much news we can report.

There is no public word from Attorney General Martha Coakley or Secretary of the Commonwealth William Galvin about whether they will intervene to take over and manage the archdiocesan plan.  Perhaps Martha is so busy looking at the issue of board of director fees paid by the state’s large health insurers that she has simply not had the time yet to look at the problems of coercion, deception, withholding of information, diversion of funds from one corporate entity to benefit a different one, material non-disclosure, and broken promises that affect 10,000 lay employees dealing with the $70 million underfunding of the Archdiocese’s employee pension fund.  As an aside, it baffles BCI how she can justify being so committed to dealing with the problem of director stipends at some non-profits (like Blue Cross), but not concerned at all with vastly greater excessive spending at other non-profits, like the Boston archdiocese. The AP reported earlier in March that she said this about Blue Cross:

“Blue Cross enjoys certain tax benefits as a non-profit in exchange for being committed to a purpose other than making money. Paying directors makes it look a lot like a regular business, and Blue Cross can’t have it both ways.”

Is it not be case that paying excessive salaries to lay executives instead of using those scarce monies to fund the lay or clergy pension funds would also be problematic for a non-profit charity like the Catholic Church, whose purpose is also other than making money?  (Sorry, we digress…)

Back to the pensions, as far as the mediation between the Daughters of St. Paul and the Boston archdiocese, sources indicate that no meaningful progress was made in the day-long mediation session on Tuesday.  The absence of any announcement by either side today would serve to validate that.  In terms of  next steps in the lawsuit and court case, we need to confirm those before we can share more details, but by all indications, it appears they will be headed to court.

The silence by Terry Donilon on this issue today is particularly noteworthy.  Terry was “Mr. Interview” on Monday when he was leading the smear campaign to counter the bad press about the latest pension flap.  Today, nada.  You will all also recall how confident he was just a week ago to Catholic News Service that the situation with the Daughters would get resolved amicably:

“Terrence Donilon, archdiocesan secretary for communications and public affairs, told Catholic News Service in an email March 23 that the archdiocese has been working “for some time” with the Daughters of St. Paul “regarding their request to withdraw from the lay pension plan.” Donilon said archdiocesan officials believed they were “making progress toward resolving any outstanding concerns” and found the December lawsuit “unexpected.” Since the suit was filed, he said, the archdiocese reached an agreement with the Daughters of St. Paul “on a number of issues.” He also noted that the archdiocese has “a long-standing and good relationship” with the sisters. “We will resolve this disagreement through mediation and continue to work closely together in the future for the good of the church.”

Terry, how confident are you now that the disagreement will get resolved through mediation?


Pension Tension

March 29, 2011

Tensions are escalating over the employee pension fund, and if you did not notice from the statement by the former Chancellor, David Smith and subsequent response by the archdiocese, there was a bit of a war of words going on yesterday.  As one might expect , the Archdiocese still fails to answer pointed questions and apparently has started their characteristic “smear campaign” in retaliation when someone raises public criticism they do not like.   Here are a few highlights from the fireworks:

Article in today’s Boston Globe:Church is faulted on handling of pensions.”  There are not really any new insights here.

“My concern is that there are 10,000 people out here who have worked their whole lives for the church for submarket wages, and those people are being put at risk,’’ Smith said.

He also said the archdiocese is overstating the value of the lump sum payments.

Smith also said that the archdiocese is taking advantage of the fact that church plans are not held to strict federal standards, which apply to most pension plans and which prohibit pension funds from asking employees to accept a reduced benefit.

Even if the church does not have a legal obligation to follow federal guidelines, he said, it has a moral responsibility to do so.

O’Malley should “simply stand up and publicly say on television that this is the full faith and credit of the diocese and every single person will get every dollar they’re due,’’ Smith said.

Before yesterday’s press conference, Smith met with a group of about 15 current and former employees of the archdiocese whom he provocatively dubbed “Boston Pension Abuse Victims.’’

Most of the employees declined to speak to the press. But one former administrator for the archdiocese who would give only her first name, Karen, said she had worked for the archdiocese for 22 years. Her lump sum payment would amount to about half of her former annual salary, but she is nervous about leaving it on the table.  “They’re making a threat that it may not be there,’’ she said.

In an interview yesterday, the current archdiocesan chancellor, James P. McDonough, said it is “the cardinal’s goal and the pension trustees’ goal to fully fund the pensions, but neither the cardinal nor the trustees can predict what will happen over the next 30 years.’’

Carol Gustavson, director of benefit trusts and plan administrator for the archdiocese, said the plan has been carefully reviewed by lawyers and actuaries to make sure it complies with the law.

Yes, Jim and Carol, it may comply with the law (because the law does not govern church plans), but does what you are doing comply with past promises made by the Archdiocese of Boston to employees and the Catholic faithful?  Is it correct on an ethical and moral basis to have the Catholic Church reneg on a promise made to the Catholic faithful like this?  Why will no one from the archdiocese acknowledge the promise made by Cardinal O’Malley in 2004 to repay $5 million still owed to the pension plan by closed parishes and to be repaid from reconfiguration funds? Why won’t the Chancellor at least add that $5 million to the pool of funds and recalculate all of the lump-sum payouts?  Why is no one explaining why $2.5 million of reconfiguration funds that was promised to first repay pension obligations was instead diverted to Jack Connors’ Trinity Academy project in Brockton?  The next time a reporter talks to Terry, could you ask him that question?  Terry, Jim, and Carol, next time you make a statement, could you comment on that?

Then there is the smear campaign.

Terry Donilon, criticized the former chancellor for there not being balanced budgets during his tenure, with no context for the financial freefall that followed the clergy sexual abuse crisis which Terry, of course, never had to deal with because he was doing PR at Shaws Supermarkets at the time.  Terry’s predecessor, who made somewhere in the range of $50-65K less/year than Terry is paid today, walked into her job thinking she was doing proactive PR for the good works of the archdiocese and Catholic Church in Boston, and instead found the sexual abuse crisis hitting weeks later.

In a WBUR interview, Terry continued the smear campaign.  The WBUR reporter discussed the objective downsides of the offer to retirees (listen at 2:35):

“I’ve talked to tax experts who say this is a problem because it could open the person receiving this lump sum up for a large tax bill, in addition, they’re reducing the amount that they get because they’re taking it earlier in their retirement, and in addition, they’re absorbing the losses for the plan suffered. One tax expert said,  ‘It’s a surprising idea to come from a Church.’ “

The response by Terry Donilon from the archdiocese (listen at 2:48):

“I don’t know what planet David Smith is living on.  What we’re doing is a very responsible transparent, and fair way of trying to protect the beneficiaries. We are living in extreme and extraordinary times.”

The reporter went on to say (3:30) that “Terry, really just attacked David Smith’s track record as chancellor of the archdiocese.”

Nice job, Terry, of upholding the “highest Christian ethical standards and personal integrity.”By the way, if you are being transparent, how’s about explaining what happened to the $5M owed by closed parishes the Cardinal promised would be repaid from reconfiguration funds?

We are waiting now to see what Attorney General Martha Coakley and Secretary of the Commonwealth William Galvin are going to do.  Do not all hold your breath at once waiting for their response. In the meantime, we think the failure to repay this $5M as promised and the redirection of reconfiguration funds to Brockton’s Trinity Academy constitutes “Abuse of, or Fraud with Benefits”, which would be a violation of the new Code of Conduct Policy.  Anyone who cares about this issue and wants to do something about it immediately can submit an Ethicspoint claim here and see what happens. All the information you need to reference is here.  Former employees, current employees, priests, religious, or any concerned Catholic can file a claim, and is set-up so you can file the claim anonymously.

Lastly, as reported in the media, the Daughters of St Paul and the Archdiocese sit with a mediator today to see if the issues that motivated their lawsuit against the archdiocese can be resolved.   Comedian and talk show host, Conan O’Brien mentioned the lawsuit by the Daughters in one of his monologues last week.  Here is a link to the video. (fast forward to 4:00 for the 20-second part about the Daughters).

Even if what they are doing is technically “legal,” does anyone believe it is correct ethically and morally for the Catholic archdiocese to summarily abandon their promises made to long-time dedicated Catholic employees and publicly position it as though they are somehow doing the right thing?


Archdiocese Responds to Former Chancellor

March 28, 2011

Sorry for all of the posts today.  The Archdiocese has now responded to the action by former Chancellor, David Smith, in the statement below.

Anyone reading this statement will note it still conveniently overlooks any mention of the $5 million still owed to the pension plan by closed parishes which Cardinal O’Malley promised in 2004 would be repaid from reconfiguration funds. Nor does it mention why $2.5 million of those reconfiguration funds was diverted to Trinity Academy in Brockton instead of being repaid to the plan.  Terry, next time you make a statement, could you comment on that?

(By the way, in case people are wondering, the person writing on pension-related matters for BCI is an independent voice here who is not an archdiocesan pension beneficiary and has no axes to grind. The person only has a desire for truth and integrity).

Here is the archdiocese’s statement, publicly accessible to anyone here.
STATEMENT OF THE ARCHDIOCESE

The Archdiocese of Boston has been consistently and actively involved in developing and implementing a comprehensive plan to address the long-term stability of its defined benefit lay pension plan (the Plan).  The pension plan impacts approximately 10,000 current and former employees and beneficiaries of parishes, schools, and Archdiocesan-related agencies.   Due to extraordinarily difficult global markets, the Plan, once 100% funded, is now estimated to be 83% funded.  Like portfolios, pension plans and endowments in many sectors of society, the Archdiocesan Plan suffered greatly during the recent economic downturn.  Trustees of the Archdiocese pension plan are committed to addressing the financial problems the pension plan faces and continue to work towards the goal of full funding.  Neither commitments are new; both have been a matter of fact and practice for decades.   Despite the fact that since the inception of the Plan almost 50 years ago, benefits under the Archdiocese Pension Plan have not been guaranteed or insured, it is the goal of the Trustees of the Pension Plan and a priority of the Cardinal Archbishop to achieve full funding.

The Trustees for the Plan have been committed to a process that is transparent and inclusive while relying on the financial advice of experienced and reputable professionals in the industry.  Meetings regarding the changes to the plan, which include freezing the benefits for active employees at the end of the 2011, began in June 2010 with leaders of Archdiocesan entities.  Plan changes were then adjusted based on their feedback.  In the fall of 2010, letters went out to all 10,000 participants in the plan, and over 45 meetings and webinars were held with current employees.  Approximately 1,600 individuals attended those meetings. Additional meetings with current employees will be held in the fall, when they will become eligible for the lump sum or in-service annuity options.

In late February 2011, a detailed package of information was sent to approximately 1,800 former employees.  These individuals were being offered two voluntary options: those vested may elect to receive a monthly payment when they retire or a lump-sum payout reduced to reflect the plan’s underfunded status.   The average payment at age 65 for those receiving a letter is approximately $365 per month.  Information about the voluntary options was posted on www.catholicbenefits.org and a dedicated telephone line was set up to answer calls.  Call volume was high right after the mailing and is now steady at 5-10 calls per day, many from financial advisors who represent eligible former employees.  All individuals offered the option were invited to attend one of 11 regional meetings and encouraged to bring a spouse or trusted advisor.  Approximately 100 people have attended the meetings to date.  The meetings include information from an independent financial education firm engaged to provide information about factors that should be considered in electing either option or doing nothing with the options today.  The Archdiocese has informed meeting attendees that the choice to take a lump-sum payment or remain in the pension plan would be a voluntary and individual one.  The Archdiocese has noted at the meetings and in prior correspondence that each person must consider his/her own life circumstances when making his/her decision.  The plan’s staff has also provided translators and held one-on-one meetings when requested.  Throughout these communications, the message that these options are voluntary has been consistent.

With regards to claims made by former Chancellor David Smith, a participant in the Plan and an individual currently eligible for a lump sum or monthly annuity payment, the Archdiocese and Plan Trustees deny unequivocally his claims, including that the choice to take a lump sum payment is an involuntary one.  The Plan Administrator and multiple Trustees have communicated directly with Mr. Smith via email, phone and in person since December 2010 to provide specific information in response to his expressed concerns.

Just as it would with any former employee who received a packet in February 2011 outlining his lump sum and monthly annuity option amounts, the Archdiocese has been responsive and thorough in responding to Mr. Smith’s questions.  Specific concerns he raised were addressed in two meetings he attended recently at the Pastoral Center with other former employees.

Mr. Smith notified the Archdiocese late last week that he had filed a document with the IRS several days earlier.  He was asked to provide a copy and to date has not done so.

The Pension Plan Trustee’s worked for over a year with several highly-respected consultants to develop the current voluntary options, all of whom had worked with Mr. Smith in the past when he was a Trustee and/or Plan Administrator – the Plan’s actuary; the law firm for the Trustees (Wilmer Hale); and the consultant for the Trustees (Towers Watson). Careful and considered thought, in additional to thorough legal and actuarial reviews, were completed before the options were announced.

The Trustees have made audited financial statements for the Plan available online back to FY2005 on the Archdiocese website (http://www.bostoncatholic.org/annualreport.aspx).  A new benefits website (http://www.catholicbenefits.org/) was launched in early 2010 to encourage sharing of information to employees and employers.  Notice of the new website was sent to employees.  Detailed information about the Pension Plan, including recent financial statements and valuation reports, is available on the website and has been for nearly a year.

To date, 190 beneficiaries have elected the lump sum payment, 14 have waived participation and 22 have elected a monthly annuity.  The first round of payments will be mailed first week of May 2011.

**********************************************

Terrence C. Donilon
Secretary for Communications
Archdiocese of Boston
Email:  tdonilon@rcab.org
Work:  617-746-5775
Cell:  401-480-0171 

www.bostoncatholic.org

Pastoral Center
66 Brooks Dr
Braintree, MA  02184


Statement of Former Boston Archdiocese Chancellor Calling for Takeover of Pension Plan by Massachusetts Attorney General and Secretary of Commonwealth

March 28, 2011

In follow-up of our last post with excerpts from the Boston Globe’s article on this same topic, BCI has obtained a copy of the statement released by David W. Smith, Retired Chancellor of the Archdiocese of Boston at a 3pm press conference at the Newton Marriott. We are publishing the statement worded just as we obtained it, with no editorial comments by BCI.

March 28, 2011 Statement of David W. Smith
Retired Chancellor of the Archdiocese of Boston
Former Pension Plan Administrator
Former Pension Plan Trustee

Former Archdiocese of Boston Chancellor Calls for Takeover of Archdiocesan Pension Plan by Massachusetts Attorney General Martha Coakley and Secretary of Commonwealth William Galvin to Protect Public Interest

I am here today because almost 10,000 people, most of whom worked for years at low wages in service to the Catholic Church in Boston, have their retirement pensions endangered by a reckless attempt by the Archdiocese to shirk their financial commitments by changing the previous “defined benefit” plan with guaranteed benefits to a “take your share of whatever happens to be left” offering.  Conflicted trustees are doing this through coercion and deceit, and by withholding information needed to evaluate their offer.  Worse yet, the promises of two Cardinal Archbishops, Cardinal Bernard Law and Cardinal Sean O’Malley are being abandoned, while money promised for pensions has been withheld or diverted elsewhere.  The time has come for Secretary of the Commonwealth Galvin and Attorney General Coakley to protect the public interest by taking control of the Archdiocese of Boston’s lay pension plan away from the Church and placing it in the hands of a truly independent third party trustee.

Coercion

Officials of the Archdiocese Pension Plan are “offering” to “select” groups of employees the option of forfeiting previously accrued benefits.  Examples of the coercion can be found in their presentation materials:

“Financial stress on Plan expected to increase due to investment volatility, lower investment returns, and employees covered by the Plan are living longer”

“The pension Plan is not and has never been an insured plan…Although the goal is to make sure there are adequate assets in Trust to meet all Plan liabilities, due to the unpredictability of future investments, there is no guarantee that all benefits will be fully payable at retirement”

“The time frame for achieving full funding depends upon future market returns and the rate of future employer contributions and thus cannot be guaranteed.  The plan could become less well funded at any point in time, depending on economic and other factors”

Curiously, absent from their presentations on funded status is any reference to the obligations of the Trustees to invoice the participating institutions as needed to meet Plan liabilities, the liquidity of many of the participating employers or the obligation of these employers to fund the Plan as directed by the Trustees.  For example, paragraph 19.3 of the pension plan says:

“Each employer shall periodically make contributions which … are sufficient on an actuarial basis approved by the plan’s actuary to fund the costs of the plan arising with respect to the participants…”

Deceit

The average person reading the Archdiocesan-prepared “take your share of whatever happens to be is left” presentation materials who is unfamiliar with IRS code might easily miss the deceit.  Here is an example they used in the Archdiocesan presentations:

Example estimate: One-time lump sum opportunity

  • Sharon Sullivan has a $6,000 annual benefit ($500 monthly benefit) if she retires and begins payments at age 65.
  • If she elects a lump sum payment at age 55, the estimated amount of her lump sum payment would be $6,000 multiplied by a “present value” factor which takes into account her current age, the number of years payments will likely be made over her lifetime, and expected interest returns over that period.

$6,000 x 5.41 (PV FACTOR FOR AGE 55) = $32,460”

By using unrealistic assumptions, most notably a 6.5% investment return, the Trustees come up with a 5.41 PV Factor for Miss Sullivan.  Reasonable actuarial assumptions as defined by the Internal Revenue Code require a 7.0 PV factor and Miss Sullivan’s benefit would be worth closer to $42,000.  What happened? Miss Sullivan not only lost almost $10,000 to a fast-handed actuary,, the conflicted Trustees want to take yet another 17% discount because the plan is “underfunded.”  Her offer is for 64.1% of what the Internal Revenue Code says her benefit is worth, not the 83% that the trustees want her to believe.

The real value of the “take your share of whatever happens to be left” offer was confirmed when I asked for an annuity quote from the Hartford Insurance company.  If I took the funds offered to me, I could buy an annuity from them equal to 61.8% of my vested benefit, not the 83% that the trustees want me to believe.

If the plan were really 83% funded and 6.5% was a realistic investment target, why would the trustees be asking beneficiaries to accept payments worth just 62-64% of their accrued benefit? By trying to get us to simply “take our share of whatever happens to be left offer,” the conflicted trustees are acting to protect their income at the expense of the plan beneficiaries.

Unanswered Questions and Stonewalling

Further, the Plan Administrator and the Chancellor have stonewalled my written attempts, dating back to December 21st of last year, to get answers to questions that would be necessary to fairly evaluate the “take your share of whatever happens to be left” offer.

Here are some of the questions they that they have promised to answer for me on many occasions but have not answered.  I cannot help but wonder why these are unanswered:

  • Were assets and liabilities being shifted from one trust to another to facilitate the sale of Caritas?
  • Why are employees of the Archdiocesan Cemetery Association (94.4% funded according to the July 2010 actuarial valuation) getting the same offer as employees of the new central high schools (62.6% funded according to the same valuation report)?
  • Why are the 956 employees and former employees of Boston College High School, Campion Health Center, Inc, Campion Residential & Renewal Center, Inc., Catholic Charitable Bureau, Central Catholic High School, and New England Province of Jesuits (Society of Jesus of New England) are not included in this “offer”?
  • What are the conflicts of interest of “outside” trustees?  I know only two of them.  Both fine gentlemen BUT both represent major vendors.  We have a right to know about the others.
  • What is the attendance record of the each of the Trustees?  From what I know, the Cardinal never comes and the Chancellor rarely attends a full meeting, if he attends any portion of the meeting at all.  We should know who is behind this cost-shifting attempt.
  • What information do you have about the participating employers’ ability to fund their respective obligations, especially the Archdiocese and the Parishes?
  • Why did the Archdiocese breach its promise to fully fund the obligations of closed parishes  and how do you justify making this offer without first paying over the funds needed to cover the obligations to employees of closed Parishes and increasing the proposed payout?

Even if all of this were somehow acceptable, what is not acceptable is that the plan will lose its tax deferred status if this “take your share whatever is left” offer is allowed to stand.  On March 16th my lawyer Russ Gaudreau of the Wagner Law Group  filed a six-page comment letter with the IRS along with three pages of attachments pointing out that the amended and restated plan would not, as written, qualify to retain its tax status.

Broken Promises by Cardinal Bernard Law and Cardinal Sean O’Malley

A number of promises made by two Cardinal Archbishops have been broken, whether intentionally or due to employee turnover.

First, I remember when His Eminence Bernard Cardinal Law called me to his office and dispatched me to a Board meeting at what was then, Youville Hospital, because he had heard that they wanted to withdraw from our pension plan and go to a defined contribution plan.  I was sent to relay this message:

Every Catholic institution in this Archdiocese has a moral obligation to guarantee adequate pension benefits to its employees.  Most Church and hospital employees work for low wages and lack financial training.  Therefore, we must take on the investment and mortality risks for them.  Maintaining and funding a defined benefit pension program is our moral obligation.

Second, after then-Archbishop O’Malley arrived in Boston, Bishop Lennon sent me to his office to make sure that the Archbishop would allow the elimination of the cost of living allowance (COLA) provisions of the plan and the reduction in future accruals.  After a long discussion, then Archbishop O’Malley signed off on the changes with the express understanding that we could never even discuss any reduction of pension benefits, especially those that were already accrued.

Third, in two published letters from 2004, then-Archbishop O’Malley promised that funds from parishes closed as part of reconfiguration would be used to repay unfunded pension liabilities.  That has also been broken:

From letter dated February 13, 2004: “The Archbishop has chosen this approach so that many issues may be addressed…The proceeds from the assets of suppressed parishes will provide… for amounts for past employee benefits and parish insurances due from suppressed parishes…”

From letter dated July 24, 2004: “The funds raised from the sale of suppressed properties will be used to address past due obligations and employee benefits of the suppressed parishes, including: … 4. For covering unfunded pension liability for lay employees and clergy of all parishes.”

Despite these 2004 promises from the Archbishop, the Actuary’s 2010 report shows $5 million in unfunded benefits owed to the pension plan for employees of closed parishes.  So what the trustees are really saying is: after we allow the Archdiocese to divert $5 Million that Cardinal O’Malley promised to pay over to the pension plan, past and present employees can “take your share of whatever is left (minus $5 Million)”.

So what happened to the promise made by Bernard Cardinal Law that the Church in Boston would always and under all circumstances fund its pension obligations?  Not valid just because he is no longer Archbishop of Boston?   What happened to the promises of Sean Cardinal O’Malley that there could never even be a discussion about reducing accrued benefits, or that funds from closed parishes would be used to repay unfunded pension liability?  Not valid because David Smith is no longer Chancellor?

In summary we have:

  • Coercion
  • Deceit
  • Shifting of funds set aside for by one corporation to benefit another
  • Conflicts of interest
  • Selective offers
  • Breach of promise to fund liabilities of closed parishes
  • Material non-disclosure
  • 10,000 or so victims of pension abuse
  • The tax status of the beneficiaries at risk

The Secretary of the Commonwealth and/or the Attorney General share responsibility to address these breaches of public trust and to protect the best interests of these citizens of the Commonwealth.  I urge them to take control of this plan away from those with conflicts of interest who have broken the trust of the beneficiaries and have acted wrongly, and to appoint an independent trustee to correct this situation and protect the 10,000 people at risk.


Former archdiocesan official blasts church’s pension plan oversight

March 28, 2011

It is shaping up to be a mighty interesting week here in the Archdiocese of Boston.  If you have not yet read our post from this morning, “Dishonest Diocese,” give that a read when you can.

Meanwhile, our email is abuzz with the headline in a news story at Boston.com: “Former archdiocesan official blasts church’s pension plan oversight.”  Here are a few excerpts from the article, which describes how the previous chancellor, David Smith, is blasting the church’s oversight of pensions for retired lay church workers:

Today’s critique, by former archdiocesan chancellor David W. Smith, makes public long-simmering tension between Smith and his former employer, the Archdiocese of Boston. Smith said he would meet today with the offices of Secretary of State William Galvin and Attorney General Martha Coakley, asking them to look into the pension funds, and that he would also ask the IRS to investigate.

Smith also said he plans to meet today with a group he has provocatively dubbed “Boston Pension Abuse Victims.” He plans to hold a news conference in Newton this afternoon.

Smith says the archdiocese, which is in the process of freezing its pension plan for lay employees and transitioning to a 401(k)-style plan, is trying to get past and present employees “to choose to forfeit their pension benefits in exchange for a grossly inadequate one-time payout.”

Terrence C. Donilon, a spokesman for the archdiocese, reacted angrily to Smith’s criticisms.

“It’s outrageous — when David Smith was chancellor, we were running annual deficits and we are now running a balanced budget,” Donilon said. “If he wants to get into a give and take about his performance as chancellor, which included serving as a trustee of the plan, I’m sure a lot of people would like to do that. But we have prepared a good plan to address the lay pension plan for the future.”

Comments from Terry Donilon like this make our blood boil here at BCI. Feels like our first Code of Conduct policy violation for failing to uphold the “highest Christian ethical standards and personal integrity.”  BCI was obviously not blogging back during the tenure of Chancellor David Smith, but it does not take a brain surgeon or relative of the politically-powerful Donilon family to remember how donations to the Cardinal’s Appeal (later renamed the Catholic Appeal) had plummeted in the wake of the clergy sexual abuse crisis of 2002 and calls by people like Jack Connors to hold back on donating. But, Terry conveniently neglected to mention that as a contributing cause for the previous annual deficits. There is more

To get to what Terry is calling a “balanced budget,” the archdiocese is coincidentally leaving out about $200 million in debt they have not figured out how to repay, and whose annual cost could and should be treated as a debit/expense that would make the current budget “unbalanced”:

  • The Cardinal is breaking his own written promise to repay $5M to the lay employee pension plan from closed parishes and the archdiocese is leaving that pension plan underfunded in total by $70M.
  • They are technically in default of a payment of $5M due January 1, 2011 to St. Johns Seminary and have no plan for how to repay the other $36M owed.
  • The clergy retirement fund is down by around $95 million at last count.
  • And no explanation has been given for how the 2011 budget–that was “balanced” assuming they raised a minimum of $14 million from the  Catholic Appeal–will make do with just $12.5 million apparently raised in 2010. Oops, I forgot, they do not want to tell us about the 2010 results despite the pledges to operate fundraising and fiscal operations with “accountability” and “transparency.”

We will have more to say about this in a subsequent post.  We hope the next time mainstream reporters talk to Terry, they will ask him about these details, and whether he considers his deceptive comments to be consistent with “highest Christian ethical standards and personal integrity.”


Dishonest Diocese?

March 28, 2011

In Luke 16,  Jesus said the following to the disciples:

” The person who is trustworthy in very small matters is also trustworthy in great ones; and the person who is dishonest in very small matters is also dishonest in great ones. If, therefore, you are not trustworthy with dishonest wealth, who will trust you with true wealth? (Luke 16:10-11)

Only God can judge the state of each of our souls.  But anyone with access to factual information can tell when someone (or an organization) is being honest or dishonest.  Sadly, it does not take an awful lot of digging to reach a conclusion about whether the Archdiocese of Boston is being honest with Catholics lately.

What do Catholics do, hypothetically speaking, of course,  if they were to find a consistent pattern of their diocesan leadership not being honest with them?

This is particularly relevant because the Archdiocese just released a Code of Conduct policy on Friday that says, “Church Personnel will exhibit the highest Christian ethical standards and personal integrity” and “The Roman Catholic Archbishop of Boston…places the highest value on the integrity and high moral standards of each of the bishops, priests…pastoral ministers, administrators, lay employees, officers, directors, trustees, governors, members, and volunteers (collectively, “Church Personnel”) in our parishes, agencies, schools and organizations sponsored by the Archdiocese.”

The policy has some problems that we will address in a separate post.  At the same time, if these standards are to be believed and taken seriously, they may need to start preparing letters of dismissal for a few people with offices at 66 Brooks Drive soon.

In a moment, we will go through the announcement about the renewal of Chancellor Jim McDonough’s term, but first, let us just review some recent history and questions BCI has for the archdiocesan code of conduct enforcers:

  • Does the deception propagated to all Catholics and members of the presbyterate by Jack Connors and the Vicar General, with help from Chancellor Jim McDonough, about the “sham search” for a new secretary for institutional advancement last year qualify under “highest Christian ethical standards and personal integrity”?  If not, then what are the consequences for those who propagated the deception?  Or are violations of the code of conduct that occurred prior to its promulgation excused?
  • Does the deception propagated in the Catholic Schools Admission Policy to all Catholics by the Catholic Schools office also qualify for “highest Christian ethical standards and personal integrity”?  Long-time readers remember we pointed out in November how the policy says, “In creating this policy we are guided by the words of the Holy Father…”, but unfortunately, the words of the Holy Father were in a totally different context.  And besides that, Fr. Bryan Hehir had already told everyone what the direction was back on May 20 in his WBUR interview (listen at 10:00-10:15, “Are we doing it already?  Yes.   And we intend to do it as the Cardinal indicated, with formal policies”) well before anyone met to start drafting the policy. What are the consequences for everyone who propagated this deception, or is everyone also excused from practicing integrity up to now?
  • Does the deception used to explain the “for sale” listing on Sothebys of Holy Trinity Church also qualify for “highest Christian ethical standards and personal integrity”?

Now we get to the email communication from the Vicar General and the reappointment notice attributed to the Cardinal.  You can read the whole notice here.   We will comment on just selected parts of it.

Cardinal O’Malley said: “Among his many accomplishments, he has taken the lead in addressing clergy pension funding, insuring funding for clergy support, and implementing transparent financial reporting for the Archdiocese.”
BCI response: These are areas of responsibility, not accomplishments.  How can it be even suggested that the Chancellor has “accomplished” transparent financial reporting when for the first time in more than a decade, the results from the 2010 Catholic Appeal have not been publicly announced nearly two months after the campaign finished?  Nor have the results from the Campaign for Catholic Schools 2010 Initiative.

Cardinal O’Malley said: “In 2008 Jim oversaw the move of our central administration from the former Brighton campus to the Pastoral Center in Braintree.   Our parishes, schools and ministries have greatly benefited from the services provided at the new location.”
BCI response: Um, those were basically the same services provided at the previous location, weren’t they?

Cardinal O’Malley said: “Jim has also initiated an effort to overhaul our technology systems and institute efficiencies that benefit our parishes.”
BCI response: Would that include the $5.5 million spent over 5 years on the ill-suited Lawson system that everyone hates?

Cardinal O’Malley said: “During his first term, we have moved from systemic annual budget deficits to a plan for achieving a balanced budget.”
BCI response: This one is the real doozey.  Where is the “plan for achieving a balanced budget?”  If there is a plan for achieving a balanced budget, then that plan obviously needs to take account for paying back debts:

Maybe BCI is missing something, but where exactly is the plan for a balanced operational budget that shows how the Archdiocese plans to pay back about $183 million to these entities owed money? Is that plan going to be released shortly, along with the 2010 Annual Report?
Cardinal O’Malley said: “While we have experienced difficult reductions in work force in recent years, Jim led by example in making significant cuts in his secretariat to minimize the reductions in mission-based agencies and departments.”
BCI response: Does this include the hiring of John Straub (as essentially the “Chief Operating Officer” to complement the “CEO/Chancellor”), at more than $200K in salary + benefits, and lowering the Chancellor’s headcount by moving Carol Gustavson’s salary of about $149.9K into the benefits trust, so the former employees’ pension benefits get hit with the cost instead of Corporation Sole?  And if Jim “led by example,” why has he, a multi-millionaire who said 5 years ago he “didn’t need the job” not cut his own $250K/year salary to, say, $1/year, and cut his six-weeks paid vacation to the same level as the peons in the Pastoral Center?

Cardinal O’Malley said: “As Chancellor, Jim oversees the financial and material goods of the Archdiocese; he is also a dedicated and faithful Catholic who leads  by example in promoting a welcoming and evangelizing Church.
BCI response: The long-time Chancery employees pushed out in HR, finance, the Cardinal’s Office, and elsewhere would disagree that he has promoted a welcoming and evangelizing Church.  Does his rampant dropping of “F-bombs” in conversation also exemplify his welcoming attitude?

Cardinal O’Malley said: “Jim is first and foremost a man of God, a family man devoted to his wife and children and an experienced professional who has never lost sight of our mission to build a community of love in the image of Christ.”
BCI response: No comment on the “man of God” part.  As for the “family man devoted to his…children,” that part we can affirm.  In fact, he is so devoted to his children that he found a way for the “no nepotism” policy in Pastoral Center hiring which his department put in place to somehow apply to everyone else in the Pastoral center EXCEPT him and his children, so his son and daughter could be given jobs after they graduated from college.  We also struggle to understand how building a community in the image of Christ would allow for paying salaries in Boston that are unprecedented in other U.S. dioceses that also have built their communities in the image of Christ.  Did Christ imagine wasting the assets and temporal goods of the Church in Boston and taking scarce funds away from parishes, ministry to the needy, evangelization, and retirement needs of priests and former employees by paying three lay executives more than $1 million/year in combined salaries and benefits, and the top 10 archdiocesan employees  nearly $3 million in salaries and benefits?

BCI just does not understand how there can be such a disconnect between the words of the Cardinal and the actions of the Chancellor and diocese overall. If Cardinal O’Malley, Chancellor McDonough, Terry Donilon, or anyone else can explain this for the benefit of the Catholic faithful, please response via comments or just drop us a line.

What do you think faithful Catholics should do if they find a consistent pattern of their diocesan leadership not being honest with them?


Follow

Get every new post delivered to your Inbox.

Join 585 other followers

%d bloggers like this: