How Your Money is Spent

We move back to the topic of finances in the Boston Archdiocese today and for the next few posts.  You will see today how administrative expenses have grown as a percent of the total budget over the last 6 years.

Last week, in “Balanced Budget” or Unbalanced Budget?, we raised the question of how the archdiocese managed to publicly claim that the 2011 budget was “balanced” when the financial statements actually show a $4.2M loss.  BCI emailed Jack McCarthy (Finance Council Co-chair), outgoing Chancellor Jim McDonough, and Interim Chancellor John Straub to ask them about this, and while we wait for their response, we thought we would show you how your money is expected to be spent in the 2012 fiscal year currently in process.

To the credit of the archdiocese, the 2012 budget document is quite comprehensive–probably moreso in a published form than any other diocese issues. You can find it here.

Below is a pie chart taken from the document showing where the $27.8M Central Ministries budget is being spent.

As you can see, in the 2012 fiscal year, 36% of the budget ($9.95M out of $27.8M) is consumed by Administrative Services. By means of comparison, in 2010, Administrative Services expenses were 30% of the total budget (see “Easy Come, Easy Go”  from a year ago).  As a further comparison, if you look at the 2005 operating results in the annual report here, you will see that Management and General expenses (equivalent to Administrative Services, as best as we can tell) in 2005 were $10.1M out of total expenses of $37.9M, or 26% of the total.  Click on the graphic on the right to see the numbers from 2005.  Some line items may not be perfectly matched between the annual report and operating budget, but this is the best comparison possible without having access to more detailed information.

Below you will find the detailed breakdown of expenses for 2012.

(You will notice in the footnote that the $2.5-2.6M spent annually on the Office for Child Advocacy and Victim Assistance has been moved off the main Central Ministries operating budget and is now accounted for under Risk Management and self-insurance for Corporation Sole. We are still trying to fully determine the ramifications of that move).

There is much to be said about the overall budget, including spending priorities, fund-raising costs relative to funds raised, and more.

For today, BCI mainly wishes to focus on the apparent growth in administrative expenses in recent years as a percent of the total budget. While Jim McDonough is still wrapping things up in his final weeks as Chancellor, BCI suggests that perhaps the Priest Budget Advisory Committee and Vicar General Msgr. Deeley might take a closer look at why administrative expenses have grown from 26% of the expenses to 36% of expenses over the past 6 years. Perhaps they may not want such a high percentage of donor funds and total budget going to pay administrative overhead expenses including excessive six-figure salaries.  What would it take to cut $1M to $2M in administrative expenses, so that category of spending would be much more in proportion to past levels? Instead of spending so much on administrative overhead and excessive salaries, they may want to think about how some of those limited funds could be better used to support ministry programs, such as evangelization, adult faith formation, college campus ministry, the deaf apostolate, vocations, and other programs that support priests and parishes and help advance the saving mission and ministry of the Catholic Church in Boston.

What do you think?

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6 Responses to How Your Money is Spent

  1. jbq2 says:

    You are right. The admin overhead (36%) and the number of 6 figure salaries is simply unacceptable.

  2. Mack says:

    Yes, the administrative expenses are much too high. Cut some of those high salaries, or better yet, dispense with some of the unneeded positions.

  3. What I find most disturbing is how the archdiocese lets this go on and on and on and doesn’t do anything about it. This says the total budget has dropped from about $38 million to about $28 million over the last 6 years–a 26% drop in overall budget, while the administrative expenses have not been reduced from about $10 million a year commensurate with the rest of the budget drop. Isn’t there anyone on the Finance Council watching this and saying anything?

  4. Carolyn says:

    Warning: The following comment comes from a non-accountant…
    The Appeal is budgeted to raise $14,000,000.00. $12,853,000.00 is budgeted to be spent for central administration and fundraising only. So if you’re going to spend 92% of what you raise on those two functions only, aren’t you in trouble? Does almost $13,000,000.00 seem like a lot of money to be spent on salaries and related expenses on two floors of 66 Brooks?

  5. Little Red Hen says:

    I thank Carolyn for being up front about her non-accountant status. I, too, have no accounting background. Now, here’s my question: why is is that figures appear in the revenue column for operations that don’t generate revenue (e.g., $216,000 for the Catholic Schools Office)? I will leave it for others more knowledgeable than me to discuss the colossal amount of money that they spend, apparently to no good purpose…

    • Little Red Hen,
      This is complicated and lengthy to explain.Here is a short version with a few examples.

      In some cases (e.g. administrative services), the revenue column for operations reflects service fees to related organizations. For example if the RCAB Finance group handles IT or accounting for a related entity or other RCAB office, they charge service fees to that related entity which show up as revenue for administrative services. That is the way it has been handled for a number of years, including in the administration prior to Cardinal O’Malley.

      In Faith Formation and Evangelization, they get revenue from program/attendance fees or specific contributions or money from endowed funds for a particular purpose (e.g. campus ministries). Deaf Apostolate, within Cultural Diversity and the Office for Black Catholics have reasonably-sized endowments, but the one for the Deaf Apostolate is being drawn down substantially every year to pay for the cost of interpreters. There is also some sort of “healthcare tax” on hospitals served with chaplains that contributes to their revenue.

      For the Catholic Schools Office specifically, the source of their revenue from operations is not publicly disclosed. But do not be surprised if perhaps some part of that comes from their own service fees charged to all of the Catholic schools they support.

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