With little fanfare, the Boston Archdiocese published its Fiscal 2015 financial report recently, where they reported a $20 million decline in revenue vs Fiscal 2014, and a $5 million operating loss for the year. In addition, it should be noted that the Boston Archdiocese is unable to repay about $36 million in debt owed to St. Johns Seminary, and managed to get the seminary board to defer repayment from 2017 to 2027 with no interest charges. The annual Catholic Appeal raised $400K less in fiscal 2015 vs 2014, and spent $400K more than the previous year to do so.One third of parishes are operating in the red. Here are a few of the key points from the report.
Operating Loss (p. 12)
Operating income decreased $20.5 million from an operating income of $15.6 million in fiscal 2014 to an operating loss of $4.9 million in fiscal 2015. Revenues declined by $10.4 million, while expenses increased $10.1 million. This was explained as follows (p.8):
“Fiscal 2015 was a challenging year from a financial standpoint, with a significant decline in operating income for parishes, a deficit in central operations, and a loss in our self-insurance program. External events were a major contributor to these results. Low capital market returns impacted by concerns about a global economic slowdown, a return to a more customary level of parish bequests, and an extremely harsh winter that resulted in a number of catastrophic property insurance losses and increased utility and maintenance costs at parishes negatively impacted financial results.”
In addition, Central Operations lost $7.3 million in fiscal 2015 as compared to a $2.3 million loss in 2014.
Unable to Pay $36M in Debt
On many occasions, BCI has questioned how the Archdiocese will be able to repay the $36 million in debt to St. Johns Seminary for the property sold in 2007 in order to pay off sexual abuse settlement loans. That debt was due to be paid in 2017. The 2015 Archdiocesan Annual Report and the 2014 Annual Report both describe how the debt payback has magically been deferred for 10 more years. “On September 22, 2014, the St. John’s Seminary Board of Trustees voted to extend the due date of the $36.4 million note to August 23, 2027 (which was previously due on August 23, 2017).” Such a vote presents a massive conflict of interest, as the Board of Trustees includes: Cardinal Seán O’Malley, Vicar General Bishop Peter Uglietto, and Chancellor John Straub–all of whom have an interest in not seeing the Boston Archdiocese default on the debt. But since the RCAB took the property from the Seminary and sold it out from under them, it’s an inherent conflict of interest for them to vote to defer repayment of this huge loan and charge no interest on a loan for 20 years–from 2007 until 2027. Even in 2027, how will it be repaid?
Deception Around Paying for Clergy Sexual Abuse Settlements with Parish Funds
The lie continues here in the 2015 report. On page 20 they write, “Consistent with past practices, parish funds, money raised from the Promise for Tomorrow Campaign, the Annual Catholic Appeal and proceeds from the parish reconfiguration process are not being used to fund settlements.” Page 21 of the report reveals the deception, which we debunked that deception two years ago in our post, “Archdiocese of Boston uses parish funds to repay sexual abuse settlement costs:
To repay the $4.8 million note, in 2013 the Boston Archdiocese transferred property from the closed Our Lady of Presentation and St. Gabriel’s parishes to the Seminary. Here are the references in the 2013 Annual Report (p. 21):
Corporation Sole agreed to canonically transfer all of its rights, title and interest in Our Lady of Presentation Church, Rectory and parking lots and the St. Gabriel rectory and school to the Seminary. The properties have a collective appraised value of approximately $6,070,000 and a book value of $566,000.
During the year ended June 30, 2013, Corporation Sole transferred the Our Lady of Presentation property with an appraised value of $2,850000 to the Seminary to discharge a portion of the note. In accordance with the MOU, the Seminary agreed to forgive the remaining note balance of $1,038,000 which is included in gain on settlement of note payable in the statement of activities.
Long-term debt is about $100 million, but something funny appears to be happening with the debt for the Clergy Fund and clergy retirement costs. They write, “Net unfunded clergy pension and post retirement obligations of $62.9 million and $36.4 million in debt owed to St. John’s Seminary represent the significant long-term liabilities…Accrued pension and other retirement costs decreased by $21.1 million. An increase in the discount rate, the impact of the Regina Cleri asset transfer and updated retirement age assumptions, somewhat offset by the adoption of new mortality tables, led to the decrease in the net unfunded liability.” With more clergy reaching retirement age, presumably their medical and retirement costs and unfunded liability should be increasing, yet it is somehow miraculously decreasing.
Ongoing Sexual Abuse Costs
For the year, the total cost of sexual abuse settlements was $1.73 million, plus there were costs incurred related to abuse prevention, outreach and other costs of $3.07 million, for a total expenditure of $4.8 million during fiscal year 2015. When will this end?
1/3 of Parishes are In the Red
The 2016 Central Ministries Budget Plan informs us that 1/3 of all parishes are running an annual deficit. “Currently, about one-third of parishes are not self-sustaining with some requiring financial subsidy, either directly of indirectly, by the Archdiocese.”
Other than the above issues, the fiscal health of the Boston Archdiocese is just great! . The Boston Archdiocese is contemplating the idea of launching a major capital campaign to raise hundreds of millions of dollars (rumors have it targeted at anywhere from $100M to more than $300M), and it would surely take that amount of money to repay debt and unfunded liabilities, let alone provide for other long-term needs. Meanwhile, we hear many stories about struggles with the Disciples in Mission initiative (DIM), but that is a topic for another post…