Did Boston Archdiocese Violate Trust with Catholics Over “Balanced Budget” Claim?

We return to local Boston Archdiocese matters to let you know the archdiocese refuses to respond to inquiries about how they claimed to have a “balanced budget” in the 2011 fiscal year when their own financial reports show they did not. With the outgoing chancellor, Jim McDonough, still there for a few days, we hope the Vicar General can get answers from him before he departs, for the benefit of the future of the archdiocese.

The subject of this post is the key point to take away.

The archdiocese set out with a plan and goal to run a balanced budget for the 2011 fiscal year, but they spent more than expected and the published financials show they ran an operating loss of $4.2M–yet still announced to 1.8M Catholics and the media that they achieved the goal of a “balanced budget.”   Plain and simple–unless there is some other data not published, what they announced appears to be untrue, and it is unhealthy for institutions that should be respected and trusted to violate that trust by saying things that are objectively not true.

Below are two emails we sent  to the vice-chair of the Finance Council, Jack McCarthy, outgoing Chancellor Jim McDonough, Vicar General Msgr. Deeley, and John Straub, interim chancellor, and a short response from Communications Secretary, Terry Donilon.

———- Forwarded message ———-
From: Jim Franklin <bostoncatholicinsider@gmail.com>
Date: Mon, Feb 13, 2012 at 8:31 PM
Subject: Budget questions
To: jack.mccarthy@neu.edu, jpm@rcab.org, John_Straub@rcab.org
Cc: vicar_general@rcab.org

Mr. McCarthy, Mr. McDonough, and Mr. Straub,

As followup to the publication of the 2011 Annual Report, could you help explain how the Boston Archdiocese justifies publicly claiming the 2011 budget was “balanced” when on an operational basis, it was not actually balanced.  I would also like to ask if you can let Boston Catholic Insider know if the attached comparison of budgeted expenses to actual expenses is accurate.

The Annual Report shows Operating Expense exceeded Operating Revenue by $4.2M.  That means Central Operations ran at an operating loss.  See below (our blog post, ““Balanced Budget” or Unbalanced Budget?)  for the explanation we posted last week at Boston Catholic Insider.  Is there some explanation available for why the archdiocese considers this budget to be “balanced” when the financial statements show a loss?

In the absence of any explanation for this discrepancy, we would be hard pressed to not say that the archdiocese is deceiving the Catholic faithful by saying the budget was balanced when in reality it was not.

Also, attached is a comparison of budgeted expenses from the 2011 budget plan vs the actual expenses in the 2011 Annual Report.  It shows expenses up considerably over the original plan, and service fees up as well. When the budgeted spend is compared vs the higher than budgeted operating expenses, that explains the operating loss.

Boston Catholic Insider plans to publish this later in the week on Thursday and welcomes your feedback on what we are missing in our analysis or what errors we might have made.  If you do not wish to interface directly with BCI, perhaps you might find some intermediary who would be willing to share your feedback on the below and the attached via email by end of day on Wednesday.

Thank you very much.

–Jim, for Boston Catholic Insider

———- Forwarded message ———-
From: Jim Franklin <bostoncatholicinsider@gmail.com>
Date: Thu, Feb 16, 2012 at 4:53 PM
Subject: Re: Budget questions
To: jack.mccarthy@neu.edu, jpm@rcab.org, John_Straub@rcab.org
Cc: vicar_general@rcab.org

Gentlemen,

in follow-up of my email of earlier in the week, would you like some additional time in which to respond–perhaps until end of day on Friday, or Monday?  BCI is merely asking for clarification on why the financial statements show the budget is not balanced yet the verbiage accompanying the annual report says the budget is balanced. We are also wondering whether our analysis of budget vs actual spend is accurate for 2011?  Is the analysis, and are the conclusions correct?

The archdiocese says you are delivering financial transparency. We are trying to help you with that! If the archdiocese operated at a loss, why not disclose that so that the best minds available could help to solve that problem?  Jack McCarthy did a lot of work on financial transparency several years ago with the goal of restoring trust.  In the absence of any response from the archdiocese and in the presence of the data reported and our analysis (which anyone can easily do), BCI will find it difficult to not tell our readers that essentially the Boston Archdiocese has lied to the public in the financial report.

In our post, we will communicate that the audited financial results and annual report show Central Ministries operated at a loss of $4.2M, the letter accompanying the report erroneously stated that the budget was balanced when that was known to be untrue, and the actual Central Ministries expenses were higher than the budget plan by about $4.1M.  We will let our readers know that we approached you via email twice and asked for clarification and an explanation, but we received no response. We will also let readers and the press know we notified you in advance we were going to report that the archdiocese deceived the public in the annual report and received no rebuttal or correction from you.

In the absence of any rebuttal or correction by end of day on Friday, BCI assumes that you agree with our assessment of the financial condition of the diocese and the deceptive claim that the budget was balanced–and you have no problem with our publishing this.

To conclude, BCI does not wish to be in a position where we are reporting that the Boston Archdiocese has apparently deceived the public with the annual report and accompanying statement, but the apparent deception begs an explanation and clarification in order to maintain the transparency and trust the diocese says you are seeking.  We look forward to hearing from you.

————————————-
From: Donilon, Terrence <Terrence_Donilon@rcab.org>
Date: Fri, Feb 17, 2012 at 5:03 PM
Subject: FW: Budget questions
To: “bostoncatholicinsider@gmail.com” <bostoncatholicinsider@gmail.com>

“Jim” –

We have been down this road before.

We are more than happy to meet with you but only if you agree to come in and meet with us in person.

As you know we are not going to engage anonymous bloggers.

Thanks,

Terry

#   #   #   #

So, there you have it.  The archdiocese has decided that faithful Catholics do not deserve a truthful explanation for the financial status of the archdiocese or a response to questions about what they have reported.

In case anyone got lost by all the numbers, here is the summary:

If you look at page 74 in the pdf of the 2011 Annual Report, you will see the following for Central Operations Total Operating Revenue and Expense:

Yet, despite published operating results which rather clearly show a loss, the report says on p.7, “During fiscal 2011, the goal of a balanced operating budget was once again achieved. The budget was approved in June 2010 as balanced with gross operating revenue and expense of $33.9 million.”

Yes, the budget was “approved as balanced” in June 2010 at 33.9M, but the data in the report says the goal was not actually achieved. If there is other data that shows the budget was really “balanced,” it has not been published.

In response to the email from Terry Donilon, BCI blogs anonymously because the Boston Archdiocese has a well documented pattern of retaliation against those who criticize them. We know the archdiocese has consulted with lawyers and reached out to computer forensics experts to try and identify BCI and stop our efforts, so we are protecting our reputations and livelihoods by blogging under a pseudonym. We hope one day to stop blogging –when the archdiocese simply operates with transparency and integrity–however the archdiocese keeps giving us new material, such as this.

BCI does not see any point in a private meeting with the archdiocese.  If they feel comfortable deceiving 1.8M Catholics in the annual report and the secular media (e.g. Boston Globe and Boston Herald) or withholding important information, why would they feel obliged to tell BCI something more in a private meeting?

Besides withholding contributions to the Catholic Appeal, several readers have suggested we launch a campaign asking people to write and call the U.S. Apostolic Nuncio, who has a reputation for cleaning up fiscal corruption in the Vatican. We are prayerfully considering that option.

In the meantime, for today, you might try calling the office of the Vicar General, Msgr. Deeley at 617-746-5619 or sending him an email at Vicar_General@rcab.org to ask for an explanation. Let us know if you get a response.

Are faithful Catholics, and is BCI, out of line for asking that the Boston Archdiocese simply be honest and transparent in communicating the fiscal condition of the diocese?  What do you think?

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28 Responses to Did Boston Archdiocese Violate Trust with Catholics Over “Balanced Budget” Claim?

  1. Maybe someone who actually lies, should be removed from “office” and placed somewhere not connected with money.
    We have communists in our clergy, let’s be blunt about that.Vatican II gave us much more leeway to deal with priests who are not priests. They know how to “wheedle” their way into places of power. We need to be sure we have none placing our money in places against our religion -like happened with 7Mil to ACORN through the CCB . If there is ANY doubt tie them down so they can do no harm.

    If th

  2. Bill Redmond says:

    BCI,

    I have a couple of questions. It seems that you are using information provided by the archdiocese to accuse the archdiocese of failing to disclose the information. Am I missing something?

    Also, why are you asking people to call the Vicar General when you say the archdiocese has a pattern of retaliation against those who are critical?

    • Bill, Thank you for your comment. To clarify any confusion, we are not using information provided by the archdiocese to accuse them of failing to disclose the information. They disclosed financial information about their results that clearly showed one situation–they ran at an operating loss. But the EXPLANATION that accompanied the financial information–that they achieved a balanced budget–did not match the results. Imagine a public company that discloses their financials each quarter. If the ran at an operating loss and their financials reflect that, but their press release says, “we broke even,” what would you think?

      As far as contacting the archdiocese, though BCI knows that we (BCI) are “persona non grata,” some people have found the office of the current Vicar General responsive and helpful. If individuals contact the archdiocese and let them know they are withholding contributions, we believe they will probably get some response, so we think it is worth a try.

      • Bill Redmond says:

        Thanks BCI. Maybe use of the word balanced is a case of “you keep using that word but I don’t think it means what you think it means.” Overall, it seems like the archdiocese, in its financial report, is providing the proper information for us to see where our money is going. Given the level if financial disclosure, I don’t see misuse of the term ‘balanced budget’ as an issue of trust.

        I’ll pray that you can become “grata.” I think we are living in a time when unity among Catholics is becoming more important, and you would be able to get the answers you are looking for.

      • Michael says:

        Bill,
        I think you underestimate the lengths the Archdiocese will go to cover their wrongful behavior. They have already spent time (and probably money) investigating the identity of the bloggers. Are they serious?

        There is only one reason to seek to learn the identity of the bloggers. That would be to undermine their efforts with personal attacks.

        No need to know their identities if the information the bloggers provide is 100% accurate and the questions they ask are relevant. I have seen nothing to indicate that their information is not 100% accurate nor that their questions are irrelevant.

        The questions to be asked are:
        why is there massive corruption in the archdiocese? and
        how does it get stopped?

        BCI has been asking that for over a year. The Archdiocese has avoided the answer.

  3. Does the Vatican actually know that the Archdiocese committed a sin by violating the 7th Commandment (“Thou shalt not bear false witness against thy neighbor”)? They should come to Boston first-hand to see what has been destroyed. I suppose if they had to testify before Congress they would say the same thing and commit perjury, and every one of them will end up like Sal DiMasi.

  4. DBP says:

    As I’m sure most people have surmised by now, the Archdiocese is actually practicing public relations a la politicians. That is, they find a way to say something that seems, to the sound-bite public, to mean something which it doesn’t, all the while maintaining a fall-back position to which they can retreat if forced to defend themselves.

    What is a “balanced budget,” after all? To the majority of people it means that what you’ve spent has equaled what you appropriated. If my salary is $20,000 per year and therefore my overall budget is $20,000 per year, and at the end of the year I calculate that I’ve spent $24,00 by using credit cards, I can’t’ say that I’ve balanced my budget.

    However, I could say that, since at the beginning of the year I projected that I’d earn $20,000 and I only planned to spend $20,000 during that time, I possessed a “balanced budget.” In this case, it would matter that I planned to spend no more than my projected income. If my income didn’t match my projections, or if my spending went over my projections – well, no matter, I still had a “balanced budget” that I could look back upon and be pleased with.

    Public relations double-speak. It’s the way all the best politicians do it. I’m sure the good folks at the Archdiocese rationalize this sweet-sounding lie the way they rationalize all their lies – the end justifies the means.

  5. Mack says:

    In reference to Bill’s comment above, yes, we do know where “our” money is going: much of it to pay the bloated salaries of the 17 individuals the RCAB is paying over 150,000 per year, to a total of 3.5 million.

    Yes, we know.
    That’s why I’m not donating even a penny to them. If they have that kind of money to pay bureaucrats, on what moral basis can they ask the good working people of this archdiocese for more? I prefer to give to support religious orders.

  6. Dave Maier says:

    I found this site a few days ago through a link from a conservative blog. I was impressed with the thoroughness of the research and the excellent analysis. Imagine my disappointment to learn that same level of competence is completely missing on this issue.

    While I am unfamiliar with the inner workings of the Archdiocese, it was fairly easy to pick apart their financial report. I was actually surprised at how much information is provided which might be part of the reason for your gross error or assumption.

    It is plainly evident why the writers believe there is an issue with the Archdiocese budget given this blog entry only includes one portion of the budget information. Any company performing a public filing (which the Archdiocese is not required to by the government) would include four pieces of information to paint a complete budget picture. This blog entry only includes one of those pieces. When you add the other traditional pieces of their budget including interest expense, depreciation, etc., the Archdiocese ends up with a small surplus. This is accounting for their budget in the same way any corporation would.

    The most blatant or egregiously naive assumption made by the blog writers is that an international audit firm such as they used would allow them to publicly claim something that could not be tied or validated in the documentation.

    I am sorry to say this, but you couldn’t be further off base on your assumptions/allegations and tarnishing your credibility with such an amateur view of finances. I understand and am sympathetic to your posting on the salaries and will take time to review some of your other postings, but it is clear accounting and public finance are not your strong suit.

    I remain very interested in your political analysis and hope you return soon to that level.

    • Michael says:

      Dave as a self-proclaimed expert in accounting and public finance, are you saying you have information that Terry Donnilon could easily have pointed to in order to answer the question asked twice by BCI. BUT instead of pointing the “amatuer” bloggers in the right direction, Terry intentionally withheld that information knowing that the “amateurs” were planning to publish the “false” accusation and that some self-proclaimed expert could then try to (as you have here) embarrass BCI? Is that really your defense of the Archdiocese?

      I don’t buy your self-appointed expertise mostly because you did not (in contrast to BCI) back up your assertion with any fact. Where is your actual proof that the Archdiocese actually balanced its budget? Where is your evidence that their “international audit firm” allowed them to publish the document?

      It seems to me, your mudslinging is uncalled for. BCI asked twice for an explanation and now is publicly asking a legitimate question. When their own accounting records say they had a loss of 4.2 million, how is that a “balanced” budget? Please indulge me and my amateur understanding of the finer details.

    • Dave,

      Thank you for your message and the positive feedback on the blog posts you read and liked.

      With regard to the inner workings of the Boston Archdiocese and their budget, we actually are more familiar with the area than you might think, and we get help from finance/accounting experts as well. A similar question came up last year. When the Boston Archdiocese says the operating budget for Central Ministries was balanced, here is how they define the revenue and expenses for Central Ministries (also known as Central Operations):

      –Total Revenue includes the Catholic Appeal, gifts & bequests, interest & dividends, rental income, restricted funds distributions, Cathedraticum collection, and service fees.
      –Total Expenses include Parish Life & Leadership, Faith Formation & Evangelization, Catholic Schools Office, Seminaries, Health & Social Services, Central Services, Communications & Public Affairs, Management and General (Administrative Services), General Counsel, Parish Support & Emergencies, Professional Responsibility & Oversight, Fundraising

      That is Central Ministries (or Central Operations). You can see that very clearly in the 2011 budget plan:

      http://www.bostoncatholic.org/uploadedFiles/BostonCatholicorg/Offices_And_Services/Offices/Sub_Pages/Finance_and_Technology/fiscal2011budget.pdf

      They had a budget PLAN for Central Ministries where they intended for the revenue and expenses to be $33.9. That is why they said, “The budget was approved in June 2010 as balanced with gross operating revenue and expense of $33.9 million.” That is accurate. But when the year was done, their own audited financial statements showed those expenses to have been $39.7M, and shows an operating loss of $4.2M. This is the apples-to-apples comparison. So, when they said for Central Ministries, “during fiscal 2011, the goal of a balanced operating budget was once again achieved” in reality, that goal was not achieved. Central Ministries, as defined in the budget plan approved in June 2010 and as reported in the annual report, does not include interest expense, depreciation, etc. To include those other areas as you are suggesting, when the budget plan only includes operating revenue and operating expenses, would be comparing apples and bananas.

      The main focus of the blog has been on exposing corruption, deception, cronyism, mismanagement and breaches of fiduciary responsibility in the Boston Archdiocese, and we take only occasional forays into the political realm–mostly when there is a tie to Massachusetts (e.g. the Romney comments). So, we hate to disappoint you, but you probably will not see too much from us on politics.

    • BobofNewtn says:

      I agree totally. We keep going around and around on this bloated salary kick when, in comparison with other dioceses, the RCAB seems to be more open. Imagine the uproar if the RCAB published nothing and left us in the dark?

      How about going back to the Presidential nominating process – I find that much more interesting. Regards.

      • BobofNewtn, If you would like to write your own blog where you get to pick the topics and do the writing, do not let BCI stop you!

      • BobofNewtn says:

        Always an option: start up one’s blog but thanks for the suggestion in any event. As a participant, however, I prefer hearing about events that affect the population at large rather than some folks who are down the food chain than those who “fit” in Braintree (for whatever reason – if you get my drift). As Catholics, let’s worry about Catholic Rick Santorium getting his clock cleaned by michigan Catholics and mormon Mitt. Catholic Rick is “with us” on the vital issue of contraception – what is his loss among Catholic voters all about?

      • BobofNewtn, The focus of Boston Catholic Insider (BCI) remains on the Archdiocese of Boston. If that becomes too mundane for you, we understand, but it does not seem yet to be too mundane to other readers. That said, we reserve the right to take occasional forays into other topical areas In the case of Mitt Momney and emergency contraception, we saw that topic as directly related to Massachusetts Catholics because of what he said on national television about the Massachusetts situation. If you are looking for regular poiitical commentary, you probably should look to another venue for that.

    • Time for a Change says:

      David: You sound like a financial professional. You say that when we add in some other things that I guess would be in the budget if the Archdiocese were required to publish a full one, they actually had a small surplus. Can you go to the audit report and show us what the missing items are? I can’t find either interset expense or depreciation for central administration anywhere in what they publish.
      Thanks.

    • Dave Maier,
      Assuming you are still reading and following the blog, we have several additional comments we did not have time to make earlier.

      First, you said an international audit firm such as they used would not allow them to publicly claim something that could not be tied or validated in the documentation. If you are a finance or accounting professional, as it sounds like you are, you would know that the audit firm only signs off on what is contained in the audit report. The claims of a “balanced budget” are not contained in the archdiocesan audit report, they are in the verbiage from the archdiocese that precedes the audit report.

      Secondly, you did not comment at all about the $5.8M overage in expenses vs the budget plan.

      Lastly, can you please point BCI to the specific pages in the audit report where you claim we are missing key information? If it is not there, and if you feel there is financial information missing from our analysis which the “transparent and accountable” archdiocese did not publish and which we asked them about in advance, then your blame is misdirected. You should be blaming the archdiocese. We reviewed the publicly disclosed financials extensively before writing our post and also wrote to the Archdiocese with questions about the difference between the budget and actuals. They refused to respond. Now, if what you are suggesting is that the Archdiocese publish a full budget–including which items are cash and which items are not–as well as a final reconciliation of the full budget to actuals, we agree! The fact is they do not publish this, and what they published shows an operating loss. If you can point BCI to some public information that fills in other pieces of the budget puzzle and shows what you claim is a small surplus, or you have access to reports which you say show a small surplus and you can forward them to BCI, we would be happy to publish them. Feel free to send them to us via email bostoncatholicinsider(at)gmail.com. We will believe it when we see it.

  7. qclou says:

    I guess I don’t understand either.
    if the expenses exceed the income, it seems to me the RCAB operated at a loss. . how would you ‘balance’ your check book in that situation ? I am an engineer, not a corporate accountant , please help me out .

  8. Jack O'Malley says:

    The bottom line is: FOJ.

    Friends of Jack.

    I am not the Jack in question.

    O’Malley and Wuerl. Lesbian sympathisers.

  9. BobofNewtn says:

    I do not understand – I kinda like “Latin speaking Jack” who, I think, appeals to an audience of one. However, rather than contribute by an off-topic post, let proceed with “the analysis”, ferret out the culprit(s) who are deceiving the “faithful” and, somehow, punish those boys. Seems to me like the RCAB is sitting on its hands until there is a public appearance by BCI. This is kind of an exciting standoff! My bet is that BCI will adopt annonmity! Any takers?

    Why not ask for a “representative” to appear from here who is wiling to meet with Terry and discuss these irregularities and, in turn, report back to this group. Does this not seem like a reasonable wa to stop the bossy fits” and, maybe, provide us with answers. I think Cardinal O’Malley (no offense, Jack Wannabe Cardinal), would agree. If you want, I can do it. I have nothing to hide or an identity to protect. Let me know. Maybe then we can get back to issues that really Lunt.

    • BobofNewtn, Thank you for your offer to serve as a “representative” of BCI. If the archdiocese operates with accountability, transparency, and integrity and as a good steward of the resources of the faithful, there is no reason for the blog to exist and no reason for a meeting. If they do not feel such practices and values are a high priority for the sake of trust and achieving the mission of the Catholic Church in Boston, then a meeting will not change that either. Furthermore, closed-door meetings are always subject to spin by either side, and BCI is about transparency. Lastly,should the occasion arise for a serious discussion between the archdiocese and BCI, as you can no doubt appreciate, we would tap people already very closely tied to BCI and/or who we know and trust to represent the views of BCI.

      • BobofNewtn says:

        Good response and thank you for your extensive efforts with respect to budgetary matters at the RCAB.

  10. Stephen says:

    I am a frequent reader of BCI. I am recently struck at how it is really about exposing essentially; a non-profit agency gone wild. Posting after posting talk about money, and the players and agendas. It seems nearly all of what comes out of Braintree is; corporate this, fund raising that, and of course the occasional milk toast political statement. The Catholic Faith as revealed through time seems to be sprinkled lightly and ceremoniously like at high profile funerals or other photo opportunities.

    Folks like BobofNewtn seem to like this modernized church, how it
    feels so welcoming, like a remodeled town hall or something. How the whole dogma thing has been done away with and that the church is fully integrated with the modern world. For many others, the Church of Boston has become so well rounded…it has become pointless. Thus the empty pews – come home? Love to, but grandpa sold the farm.

    And then there is Jack O’Malley, a true icon. Like the red candle by the Tabernacle he is a testament to the True Faith. His grasp of the big picture of exactly what has occurred over the last 40 years hold a lesson for all. Sermo datur cunctis; animi sapientia paucis.

    • Jack O'Malley says:

      Thank you for the good words, Stephen, unmerited though they are. But I gotta tell ya, being an icon ain’t no day at the beach. :-)

      BobofNewtn, were I to aspire to being a cardinal, I think I’d prefer the avian variety. To wit: you are nicely decked out, you flutter around high places, kind people habitually feed you and build a nice house for you, you fly anywhere in the world you want and all you have to do is warble once in a while. Sorry, I initially meant to draw a contrast there.

      And apologies to BCI, the quip about O’Malley and Wuerl somehow got pasted into the wrong window – it was relevant on another blog and an obvious non-sequitur here.

  11. BobofNewtn says:

    Hi – The sentence “love to, but grandpa sold the farm” is 100% accurate and, I think, why the pews are so empty. I agree.

  12. YOUGOTTABEKIDDING says:

    I see the point that BCI makes in that the “budget” is not balanced if there is a deficit when you use income vs. expenses etc and the archdiocese is actually running on a small deficit, though significant. Of course, that is all when you are concentrating on the annual statement of the archdiocese and the numbers contained therein.

    What concerns me much more is the Archdiocese’s recent proclamation that 40% of the parishes are not meeting their expenses. Now, 40% is huge and this is probably the overriding justification for the new clustering/reconfiuration of the parishes with the inevitable closures, aside from shortage of priests.

    I understand the intrisic inconsistency of claiming a “balanced budget” when, in fact, it is not by the RCAB’s own numbers. However, how about reconciling all this with evidence extrinsic to the annual accounting, like the 40% parishes not meeting their expenses. That is HUGE. I absulutely cannot see how anything is balanced with that kind of data.

  13. [...] Did Boston Archd. Violate Trust of Catholics Over Balanced Budget Claim? – Bstn Cth Insd [...]

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