Moving Money, Building Distrust

For new readers or those not following the past few posts, you may find our recent Lending Money Part 1, Lending Money Part 2, and Archdiocesan Accounting/”Fuzzy Math” posts useful background for our post today. Today we revisit the 26-million-dollar question:  how did that $26M loan to the Campaign for Catholic Schools come about and get approved?   (More hyperlinks and references to be added later, so check back).

In short, the archdiocesean Revolving Loan Fund, a virtual savings and loan intended not long ago primarily for parishes who need money on a short-term basis for various expenses, loaned about $26 million to the Campaign for Catholic Schools in the 2009 fiscal year to help build a new $70 million dollar Catholic academy in Dorchester, one of many inner-city areas where the Catholic population has been dropping for years. The loan was secured against promised pledges, and as the Campaign’s 3-year fund-raising initiative nears its end, it appears that the campaign is still about $20 million short of their fund-raising goal based on most recent published information.  One key question is how the loan will be repaid if the money has already been spent on construction and the pledges simply are not there.  Equally important are the questions over where the funds originated,  who actually approved this loan, and how it was determined that this was the best use of funds vs something like, funding employee pension plans, for example.

The blogging research team is still hard at work trying to verify everything, so we will just get you the high points in this post.

Way way back in the 2003-2006 timeframe, the archdiocese closed 66 parishes.   A lot of property was sold, and at first, it seemed canon law dictated that the welcoming parishes should assume the assets and liabilities of the closed parishes.  (Here is how the The Pilot reported on that canonical conundrum in October 2005, and here is a separate report in 2006 from Catholic News Service.) That would have had problematic results for a variety of reasons—the forgiveness of parish debts in the Jubilee Year 2000 left the Revolving Loan fund at a deficit; employee pension plans for parish, school, and chancery employees were underfunded; and there would be inequities of merging two poor parishes with debt into one very poor debt-laden parish while two wealthy parishes merged to make one very wealthy parish.  The archdiocese solved this problem by jumping through a big canonical hoop and getting most pastors to agree that the archdiocese could assume the assets of the closed parishes.  A special fund, the “Reconfiguration Fund” was established, separate from other archdiocesan central funds.  The idea—at least, in principle–was that it would receive and manage these monies and assure they were used for the appropriate past, present, and future parish obligations and programs.  There was even a Reconfiguration Fund oversight committee formed.  Sounded fine in principle.

Many people thought the closings were about the Archdiocese of Boston getting money, and so to address the “considerable pain and misunderstanding” over this, then-Vicar General, Bishop Richard Lennon, wrote a letter in July of 2004 to clarify the usage of the funds.  See page 6-7 of this document distributed at the March 2006 Archdiocesan Pastoral Council meeting.  Note how the document coincidentally opens on page 1, “Communication Builds Trust.”)  Here is what Bishop Lennon said:

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:

1. Monies due employees of suppressed parishes for past work and separation assistance;

2. For vendors who are owed monies from suppressed parishes;

3. For amounts for past employee benefits and parish insurance due from suppressed parishes;

4. For run-out costs of health insurance for separated employees;

5. For repayment of revolving loans from suppressed parishes; and

6. For expenses involved in the closure of suppressed parishes.

In addition, these funds will be used to assist in rebuilding our Archdiocese as we go forward:

1. For assistance to parishes that are unable to fund needed church repairs;

2. For expenses to provide current direct and indirect support services to parishes;

3. For establishing an endowment fund for parish support for those parishes that cannot beself-supporting;

4. For covering unfunded pension liability for lay employees and clergy of all parishes; and

5. For restoring the $28 million of equity to the various funds that provided “Jubilee Year”debt forgiveness

If you look at the annual reports and the Reconfiguration report, we see parishes sold and assets and liabilities assumed by the archdiocese.  Debts to pension funds and to the Revolving Loan Fund were repaid.   In the 2006 Annual Report and  2006 audited results we see  a gain of about $40 million from sale of properties, and the Revolving Loan Fund was paid-back $14 million from the sale of properties.  But something noteworthy happens after the Reconfiguration Fund Oversight Committee was disbanded and subsequent reconfiguration funds were moved to the Central Fund, like the archdiocese disclosed would happen.  Once centralized, it became possible for those funds to be granted or loaned to parishes or other entities outside the decree zone or unnamed in the decree without anyone really watching.  For example, in the 2008 annual report we see this:

“On August 13, 2007 as part of the parish reconfiguration process $2.5 million was transferred to Trinity Catholic Academy Brockton, Inc.”  a newly formed related organization that consolidated the operations of certain parish schools in Brockton.”

Maybe we missed something.  How did Jack Connors’ new Catholic Schools program suddenly become part of the previous “parish reconfiguration process”?  Does this mean that funds originally intended for parishes were instead directed to the Brockton project, a newly formed “related organization”?  Then in 2009, when the Campaign for Catholic Schools, Inc., another separate but “related” corporate entity, needed cash to pay construction bills, somehow $26 million in Revolving Loan funds–some of which came through the revolving door from Reconfiguration–revolved right back out the door to Jack Connors’ pet project.  We keep going through the list of 11 usages for reconfiguration funds and must be missing something.  Can anyone point out where building new non-parish-affiliated archdiocesan Catholic academies by a different but “related” corporation fits into this list of usages?  Maybe we are dead wrong and auditors can show where absolutely zero reconfiguration-related funds were used to finance this grant, but based on what we described in our last post, we would be surprised if that is the case.  Have any and all reconfiguration funds been used consistent with the original decrees? Who has provided independent oversight and accounting for use of those funds since the oversight committee was disbanded in 2006?  Was any canonical approval needed and granted, or was the repurposing of these assets totally fine once the archdiocese claimed the money?

So to summarize where we are, we have a $26 million loan made with Revolving Loan funds (principally intended for parishes) to a separate but “related” corporate entity and for a purpose rather different than what we were told any reconfiguration-related part of those funds would be used for when parishes were closed.  $70 million is spent on one school that may never reach the envisioned potential due to known demographic shifts and other reasons.  We have some portion of $26 million loaned to that school from parish-based funds which may never be repaid, while we have hundreds of hard-working school and parish employees who got an anonymously-signed letter a few weeks ago telling them their pensions are being cut because the archdiocese doesn’t have the money to keep funding them.

Which Cabinet official or officials made the recommendations and decisions to use parish and donor funds this way?  We do not know but we can guess.  Who are all of the current members of the Finance Council who approve of this manner of moving around and managing donor funds?  We do not know because the current membership is about as anonymous as the people blogging at Boston Catholic Insider.  (At least with this blog, you can send us an email and we will respond.  How do you write to the Finance Council?)   Was an assessment conducted to compare a variety of ways to use this money, and this project of all possibilities was determined to best advance the mission of the Catholic Church in Boston?  Who is in a position to inform Boston Catholics as to the likelihood of the loan being repaid and the consequences if it is not?  Regardless of whether there was or was not any canonical “cutting of corners” to make this happen, does anyone besides this blogging team feel as though this use of funds represents a breach of trust with donors?

But not to worry.  This is just another day with business as usual in the Archdiocese of Boston.

14 Responses to Moving Money, Building Distrust

  1. david budinger says:

    according to the 2010 official catholic directory (kenedy book, p 134) the members of the finance council are:
    card sean o’malley, fr richard erikson, sr joan duffy, john connors, john kaneb, peter lynch, william mccall, john mccarthy, james mcdonough, sean mcgrath, john mcniece, james mooney, robert morrissey, giles mosher, paul sandman, and mary ryan.

  2. David, thanks for your response. We do have those names from the 2010 directory. But we are aware that some new people have joined since the directory went to press in late 2009, and some people on this list may no longer be voting members. Since the archdiocese touts transparency in finances and operations, we feel strongly they should disclose the current council and identify new members–including any prior affiliations or associations those new members may have with other Finance Council members. Is the council being stacked with more “cronies” for the most recent appointments? How will anyone know until the current membership is disclosed?

    Thanks again for taing the time to share the list.

  3. Michael says:

    the current membership is about as anonymous as the people blogging at Boston Catholic Insider

    great line …

    by the way, could you briefly explain why the Archdiocese feels the need to build a brand new ($70M) Catholic school in a city with dozens of catholic schools? Is the answer to that question somewhere in a previous post?

  4. Joan Moran says:

    Every time I read this blog I get upset about the sale of St. John’s Seminary. I believe John O’Connor was advising the cardinal to sell to BC at the same time that Mr. O’Connor was on the Board at. BC> Isn’t that a conflict of interest? And with all this money floating around couln’t the Seminary have been save?

    • Fr. D says:

      Joan, the sale of St. John’s was not as bad an idea as it may at all sound, given the plummet in vocations under instruction. The cost with upkeep, utilities et al, was huge. However, what they did with the money is quite another issue.

      To be honest, I have no idea, given the present situation of the Archdiocese (no guarantee of retirement, pension, health care, etc) how they can recruit vocations at all. To decide to pursue a future with the Archdiocese is a tremendous leap of faith, not in the work of the priesthood or of God but in what you have to look forward to following decades of dedicated services.

      • Fr. K says:

        To Fr. D’s comments I can add this: the Archdiocese has reneged on its commitments to lay employees (i.e. cutting off pensions), but it’s nothing compared to the way it’s reneged on its commitments to clergy.

        For priests ordained in their 20s or 30s, most could expect 40-50 years of service prior to being able to retire (especially at the later retirement age that’s now mandated). Over the course of those years, they’re told where to live, and even with whom they must live (which can be the most challenging and unsettling part of the priesthood!). They are on call 24 hours a day, most of them six or seven days per week. They’re paid very little – most are not even able to afford a separate residence for their “day off.” To add to their stress, these days they constantly walk a tightrope, aware that they are one phone call from a displeased or emotionally-unstable person away from being removed from ministry.

        The only material thing that they’ve had going for them was the certainty that they’d be taken care of in their old age. Since they made so little money, most never invested in Social Security (which many saw for the Ponzi scheme that it is) – why should they, when the Archdiocese promised them perpetual care, including burial expenses?

        Now, because of incredibly stupid (and perhaps civilly-actionable?) decisions by those who are supposed to be looking out for their interests, they’re told to purchase life insurance to cover their burial expenses, that they’ll have to continue working longer, that they’ll have their retirement stipends cut and, worst of all, that they will have to depend upon Medicare and Social Security for their healthcare needs when they finally do reach retirement age.

        It makes me laugh when I hear about how much the new Chancery is dedicated to improving priestly morale.

      • Ignored Pastor says:

        Even though vocations are down and the upkeep of St. John Seminary is very high, the value of the land and buildings, especially after the 25 million dollar rehab of St. John’s, is much higher than the fire sale price which Boston College got it for.

  5. says:

    The decision to build a beautiful Catholic School in the middle of Dorchester during a recession without the fundraising pledges/commitments IN HAND is one of the most fiscally irresponsible decisions I’ve ever seen from a “poor” organization.

    If this ends up costing the Archdiocese more than twenty million (which it will), shouldn’t someone’s head roll for this?

    Does anyone think that a loan for more than a couple of million would have been granted to ANYONE ELSE besides Jack Connors?

    What is even more sad, absurd and pathethic is that the current Chancellor came into the job from a banking background in which he likely made commercial loans all the time? Is there any way he would have made this loan with Abington’s money, yet he made it with the Church’s money!!! If someone made a twenty million dollar mistake at Abington, would the Chancellor kept the person on? Would the board have kept the CEO on if they made that big a blunder and a loan to a “friend”?

    I pray that my brother priests on the priests’ council and college of consultors demand the resignation of the Chancellor and some of those on the finance council (starting with Connors himself) should this twenty million loan not get repaid.

  6. Anonymous says:

    The Catholic School Foundation was loaned 2.6 M in its early years. The loan was forgiven even though the organization has been very successful. St Sebastian’s School was loaned 1 M, forgiven.

    Deja vu?

  7. […] the Chancellor and others if that $20 million loan is not repaid?  A commenter on our last post, Moving Money, Building Distrust, suggested that heads should roll.  What do you […]

  8. SadBusinessMgr says:

    As one of the lay employees who has worked for the Archdiocese for decades, I am constantly trying to remember why I came to work for them in the first place. When I first started working for the Church I was honored and proud to do so. None of us come to work for the Church to get rich (ok, well on the parish level anyway) ~ but one thing we were sure of was that we worked for a Church that was just and a Church that would protect and reward our vocation with a secure retirement.

    In order to escape disillusionment, I must completely reject the illusion I have maintained about the church. My expectations have been far too unrealistic, preventing me from loving the real church.

    We expect flaws from other groups of people, like used car salesmen, politicians, or celebrities, but when it comes to the church, we’re complete suckers…
    I don’t know why we think that just because people all lump together and buy their own buildings in the name of Christ, that they will always – without fail – act like true representatives of Christ.
    Could I get any more unrealistic?
    Our love for the church – just like our love for people – must arise from a commitment that transcends consequences. If we only love the church when it is at its best, we do not love the church that really exists – we love an illusion.

    In order to call us to this level of love, I invite you to consider what we would do if every program in the church were to fail us. What would we do if the worship left us empty? If the pastor’s sermons no longer seemed to “hit home”? I ask you to consider, “Do you love your church enough to love them even when the emotions run low and the feelings of excitement have worn off?… Are you in this for better or for worse, for richer or for poorer, in sickness and in health?”

    The truth is that it is frighteningly easy to criticize everything about the church… It’s admittedly even a bit fun. But, eventually, if we are to mature we must move beyond disillusionment and engage the mission of the church.

    I’m doing my best for the Church. All I ask is that the Church does its best for us.

    • Ignored Pastor says:

      Congratulations (con gratia, “with grace”)on having such a faith-filled view of our dire circumstances in the Archdiocese of Boston. We can survive this!

  9. Susan says:

    God Help us, the truth will set us free. My dear mother used to say, better to always tell the truth because it will surface, no matter how long it takes.

  10. […] is the promise, which we first wrote about in our September 22, 2010 post,  Moving Money, Building Distrust. You will find the promise made twice.  See page 4-7 of this document distributed at the March […]

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