Welcome Home!

March 5, 2011

Today, we welcome several people back to the archdiocese after time away.

First, we welcome back Cardinal O’Malley. This weekend the Cardinal opens the 2011 Catholic Appeal with Mass at Blessed Mother Teresa Parish – St. Margaret Church in Dorchester on Saturday at 4:00 p.m. He is also celebrating Mass tomorrow, Sunday, March 6 at 9:00 am at St. Michael in North Andover, and then finally at St. Brigid in Framingham on Sunday as 12pm.  We think it is very good that the Cardinal is in town visiting parishes and we encourage him to spend more time in the Boston archdiocese visiting parishes and also engaging in governance of the diocese.

Much to our dismay, there is still no word about what was raised in the 2010 Catholic Appeal.  The Boston Herald reports “Like last year, archdiocesan officials didn’t set an official fundraising goal because of concerns that parishioners might feel stretched by several ongoing campaigns, including one for school improvements.”  School improvements?  Is that the Jack Connors’ Catholic Schools 2010 Initiative–the one that was supposed to end last year, where all of the  $70 million to be raised was supposedly coming from deep-pocketed friends of Jack?  Is that millstone now hanging around the necks of everyone in the archdiocese?

Can anyone get a straight story from this archdiocese about what goal the team of 15 people under Kathleen Driscoll is accountable for hitting?  BCI hears the top three people on her team are collectively paid somewhere in the range of about $700k in salaries alone.  How can they ask Catholics to give towards the 2011 campaign without ever telling us what they raised in the 2010 campaign?

We said it before and we will say it again about the hypocracy from 66 Brooks Drive. Last November, when Kathleen Driscoll was announced as the new Secretary for Institutional Advancement and the new Boston Catholic Development Services was formed to centralize fundraising, we were all told this new effort would “ensure donors of…accountability.”

For an archdiocese who publicly criticized this blog last August, for “unfounded claims,” it would seem to us that the real “unfounded claim” is that the new archdiocesan fundraising structure would ensure accountability.

If the new archdiocesan fundraising efforts are characterized by “accountability,” then why is it that no one is accounting for what they have raised for the Catholic Schools 2010 Initiative or the 2010 Catholic Appeal?  Exactly who is this fundraising group accountable to, and if they are not accounting to donors in the pews before they open their hands and ask for more money, who exactly are they accounting to?

Sorry, we got so wrapped up in the Catholic Appeal, we almost forgot the other welcome home.

Secondly, welcome back to Fr. James Flavin and Fr. Michael Medas, who just returned from a boondoggle conference in New Orleans.  They were attending the 2011 convention of the NOCERCC.  For those not familiar with the organization, it is the National Organization for the Continuing Education of Roman Catholic Clergy.

In case you do not know some of these names, here is who these people are:

  • Father Flavin has a degree in counseling who has been director of pastoral care of priests since 2008.  That means he primarily oversees treatment plans for priests with psychological problems including substance abuse, and as best as we can tell, he is liked and respected for his work in this area. However, the archdiocese also asked him since 2008 to oversee the Clergy Retirement Fund, even though he had no specific financial training or qualification for that function. To say the fund’s performance in recent years has not been good is an understatement. Then Carol Gustavson, who also had no skills in that area, got involved helping.  Now Joe D’Arrigo, a consultant who has been trying to stabilize the fund, has just been officially named Executive Director, Clergy Funds.  Fr. Flavin is no longer the fund facillitator, but maintains his role as director of pastoral care of priests–a very important role.  We wonder how the trustees of the fund would grade the fund performance since 2006.  Coincidentally, it may not matter anyway because the trustees have now changed, but that is a topic for a different post.
  • Fr. Medas is Director of the Office for Clergy Personnel.  According to this Pilot article, he was formerly director of the Apostolate for the Deaf and has lived in residence at parishes, including Our Lady Help of Christians, Newton, St. Mary, Ayer and at Holy Family Parish, Concord.

The NOCERCC and their convention are interesting when one digs a little deeper.  Here is a look at the 2011 NOCERCC convention schedule and here are the related links from the NOCERCC website to other websites.  We will leave it to you to reach your own conclusions after checking it out further.  Suffice to say, we need to pray for our priests.

The conference, coincidentally, took place just before Mardi Gras, when a number of pre-Mardi Gras parades take place. The Loews New Orleans Hotel is “within easy walking distance of…the French Quarter” and cost $149/night for a room. Conference registration cost for members was $500 per person.  Assuming the priests from Boston are NOCERCC members, the trip probably cost somewhere around $3,500 for 3 nights, 2 people, with airfares, conference registration and meals.  Last July, when the archdiocese cut 20 positions to save money and Vicar General Fr. Richard Erikson said, “Nearly all travel and conference budgets have been reduced,” some of us thought the archdiocese was actually trying to save money.  Apparently we misunderstood the memo.

So, a hearty welcome back to Boston to Cardinal O’Malley.  We sincerely hope you will be in town for a little while now and can work on reducing spending on excessive six-figure salaries.  And welcome back to Fr. Flavin and Fr.  Medas. We hope and pray that the learnings from the convention and benefits to the Boston presbyterate will pay off the expense many times over.

Easy Come, Easy Go

February 1, 2011

While we await word of how and when the Archdiocese of Boston is going to address six years of mismanagement of the “Invisible Vigils at closed parishes and reduce excessive 6-figure salaries that together are costing donors and parishes somewhere in the range of $1 to $2M a year unnecessarily, we thought we would share some other details of how the archdiocese spends money and manages the budget.  (If you have not read the comments on our last post, do take a moment to check those out).

We have spent a fair amount of time trying to understand the archdiocesan budgeting process.  Even with our own deep knowledge of how things work at 66 Brooks Drive, network of helpful contacts, and consultations with people expert in finance, we just cannot understand how Chancellor McDonough comes up with some of these numbers.

Today we start with the 2010 budget because that has been out there in public for a while and has the greatest level of detail explaining how things work, sort of. It came out as part of the Improved Financial Relationship Model, whereby the patchwork of fees imposed on parishes to fund Central Ministries is supposed to be revised and replaced by a flat “tax” of 18% on parishes instead of all kinds of fees.  You will find the 26-page 2010 Central Ministries Budget  here.

Here are a few highlights, just to get you thinking.

  • To give credit where credit is due, it is a very comprehensive document–much moreso than we have seen other dioceses publish.
  • There are two main sources of “revenue” as described the budget:  1) “Non-Program” Sources of $18.3M, such as the Annual Catholic Appeal, other donations and collections, interest and dividends, restricted funds, a one-time transfer from insurance funds and 2) Central Ministries fees of $15.9M. The latter is where the accounting gymnastics are most difficult to understand.
  • The 2010 budget of $34,260,000 was balanced–but only because the Chancellor tapped $1.4 million in insurance funds in order to balance it. One can do that for only so long until one depletes assets to draw down that were intended for other purposes. We understand the insurance fund reserves may have approached that depletion point.
  • The new Office of Professional Responsibility headed by Mark Dunderdale, another South Shore resident, was funded with $1 million.
  • There is no apparent provision in the budget for allocating funds each year to pay off the $41 million owed to St. Johns Seminary for their property sold to Boston College, including $4.8M due in January of 2011.  The absence of any budgetary allocation for that repayment suggests that the only way to raise that money would be for the archdiocese to sell off other assets.
  • “Administrative Services” somehow generates revenue and fees of $6.3 million to offset the $10.2M they spend.
  • “Administrative Services” and “General/Outside Counsel” accounted for 1/3 of all Central Ministries expenditures.

Here you can see the overall Central Ministries budget with expected “Non-Program” sources of revenue at the top. In the bottom half, you see the Central Ministries expected “revenues” from various fees in the first column, expense in the second column, and “net” cost in the third column. (Click on the image to enlarge, or you can see p.6 of the full document here.)

archdiocese of boston central ministries budget 2010

Though it is easy to see how an entity like Pilot Publishing Group raises revenue through subscriptions and advertising, it is not so straightforward to see how a group like “Administrative Services” raises revenue of $6.3 million.  We will share our best understanding of how they do this through a variety of service fees to parishes and related entities in a separate post, as well as more details of the other areas.

Lastly for today, we take the 2010 budget document one step further and give you our own exclusive 3-D pie-chart showing the percentage of expenses allocated to each area. (click chart to enlarge)

All we did was enter the amounts from the above table and then generate a pie-chart.  It shows for the 2010 fiscal year that 33% of the $34.2M budget was spent on the combination of the Chancellor’s ‘s fiefdom (“Administrative Services” in green at the bottom left) and General Counsel/Legal expenses (purple slice to the left of Administrative Services), plus another 3% on Professional Responsibility and Oversight.  At the same time only 12% was spent on advancing the mission of the church in Faith Formation and Evangelization (dark red at top right).  With the Catholics Come Home initiative, we hear that evangelization has gotten some more funding in the 2011 budget, but this is how the proverbial cookie crumbled in 2010.

Anything look wrong or out-of-balance in this picture to you?

Is Boston Archdiocese Violating the Law?

January 7, 2011

For months now, we have been told by readers they are rather certain the Archdiocese of Boston has been violating the law in ways that could make the archdiocese subject to any of a variety of civil charges or fines.  The excessive salaries we have been reporting on which represent a breach in fiduciary responsibility, and now the manner in which the archdiocese is handling the freezing of the lay pension plan, both raise significant enough questions that we feel this merits urgent attention by those legally expert in such matters, as well as the Presbyteral Council, Finance Council, and College of Consultors.

In yesterday’s post, Catholic School Questions, the comments revealed how the archdiocese is implying to employees that their pension fund might not be there some day so as to encourage them to take a lump sum pension fund payment now.  Beyond the troubling ethical implications, on a legal basis, doing this could leave the RCAB open to sanctions under state and federal regulations. We will take this whole matter up in a separate post, but for now you can share your thoughts on that issue via comments on that post or this one.

Excessive salaries is a whole different issue which we bring to a new level in our coverage today based on the legal consequences many readers may have not been aware of.

In 2004, the Internal Revenue Service announced a new enforcement effort to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders.

Could the Boston Archdiocese be subject to fines or loss of their tax-exempt status because of excessive compensation?  The $325,000 annual salary of Schools Superintendent Mary Grassa O’Neill remains one of several glaring examples that could trigger government fines or sanctions.  Read on.

“We are concerned that some charities and private foundations are abusing their tax-exempt status by paying exorbitant compensation to their officers and others,” said Mark W. Everson, then-Commissioner of the Internal Revenue Service. (The current commissioner is  Douglas Shulman)

This particular enforcement effort lasted about a year.  According to this IRS report , twenty-five (25) of the organization examinations resulted in proposed or assessed excise taxes aggregating in excess of $21 million against 40 persons or organization managers. Among the issues giving rise to these assessments was “excessive salary and incentive compensation.”

If the IRS were to get wind of the current pay practices of the Boston Archdiocese for executive cabinet members, we are honestly not sure what would happen.

This report on the IRS effort says the following:

“There is no bright-line rule defining “reasonable” compensation. The IRS has indicated that reasonable compensation is measured with reference to the amount that would ordinarily be paid for comparable services by comparable enterprises under comparable circumstances.”  Fines are 25% of the part of compensation deemed “excess” plus an excise tax of 10% to the organization manager.  The report also says, “Finally, if the IRS determines that a nonprofit organization pays “excessive” compensation to an employee, it could revoke the nonprofit’s Section 501(c)(3) tax-exempt status on the basis that the payment of excessive compensation violates the prohibition against the use of nonprofit assets to benefit private individuals.”  We are not making this up.  Click on the image to see for yourself.

The report, “Wrongdoing by Officers and Directors of Charities: A Survey of Press Reports 1995-2002″ by the Hauser Center for Non-Profit Organizations at the Kennedy School of Government (where  the most trusted advisor to Cardinal O’Malley on everything, Fr. Bryan Hehir, works and collects his six-figure salary) looked at allegations of criminal and civil wrongdoing by officers and directors of charitable organizations. Of the 152 incidents found, 104 entailed criminal activity, 54 involved breaches of fiduciary responsibility (the duties of loyalty and prudence) – self-dealing, failing to carry out the mission of the charity, and negligent management of assets – and 6 fell into both categories.  Under the caretory of “Fiduciary Duties Breached”, in 14 cases “payment of excessive compensation” was present.

This is a very serious problem.

For first-time readers, here is a quick summary.  Dr. Mary Grassa O’Neill is paid a salary of $325,000 as Secretary for Education and Superintendent of Schools for the archdiocese.  This is the highest paid person in the archdiocese, and we can find no other person in a comparable role in another archdiocese paid at this level.  We checked.  (If someone proves us wrong with documented information, we will issue a correction, but no one has to date).  There are 42,500 students in Catholic schools in Boston and the number is dropping every year.  By means of comparison, Dr. Carol Johnson, superintendent of Boston Public Schools is paid $265,000 and they have 56,000 students.  (Apologies for an error previously–an alert reader checked with the Boston Public Schools office and verified directly that Dr. Johnson is paid exactly $265K, with no bonus accepted).   Here is our previous post on this topic where we cited how Grassa O’Neill was making about $138,000 in 2003 in her last superintendent job.  Here is a comparison vs other public school superintendents in large metropolitan areas:

But even this comparison is flawed because, unlike public schools, where the superintendent is directly responsible for management of policy, curriculum, busing, district-wide budgets, hiring and firing teachers and principals, negotiations with labor unions, and a host of other issues, Grassa O’Neill is not directly accountable for results.  She and her office may support pastors, school leaders and faculty on an as-needed basis with areas like planning, curriculum development, recruitment and hiring, development and fundraising, but they do not actually manage, direct or drive these areas. Since most Catholic schools are parish-based, the key decisions are all made locally, so the role of Catholic Schools Superintendent is mostly consultative and advisory.  As one reader wrote to us about the Boston Catholic Schools Office (CSO):

They aren’t running anything, they are just running to the bank.  It is far from the job description of a superintendent in New York City, Brookline, or Los Angeles, where the superintendent has the ultimate responsibility and authority over the schools.  CSO has none.  So why the big paydays?

It is bizarre.  A million bucks for a command staff that commands nothing, and puts out no financial reporting, no long range plan, no results, nothing.

One of our researchers wrote to other large dioceses about salaries and recently heard back from the head of HR for one of them.  Our researcher shared the Boston salaries and asked if the other diocese could give some sense for how they compared.  Here is what our researcher wrote and received back:

To HR Director,

I am a Boston-based writer conducting some research into whether salaries paid to lay leaders and executives in the Boston archdiocese are consistent with those paid in other dioceses.  I’m wondering if you might be able to share a general range of compensation paid in ___ for key positions, such as the following. The amount in parenthesis is what has been reported publicly that these positions pay in Boston:

Superintendent of Schools (publicly disclosed salary is $325K/year in Boston)
Assoc. Superintendents of Schools (publicly disclosed salary is $188K/year in Boston)
Chancellor and head of finance: (publicly disclosed salary is $250K in Boston)
General Counsel: $300K/year in Boston
HR Director: $150K/year in Boston

Are the salaries of some of these roles a matter of public record in the ___ archdiocese?  If not, I’d appreciate if you are able to give some sense for the ranges. We are looking for a basis to compare vs other large archdioceses.

Thanks in advance for any perspectives you can share.

The response:

These are not consistent in ___.  The first 2 are way over ___
Chancellor is a priest on priest stipend
General Counsel varies but $300K is high
And I wish HR got $150K…..but, not in my lifetime.

As best as this writer can determine, based on IRS guidelines and based on the Kennedy School of Government Hauser Center for Non-Profits’ report on wrongdoing by Officers and Directors of Charities, the leadership of the Boston Archdiocese is today breaching their fiduciary responsibility by paying excessive salaries to a number of senior lay executive employees–in the Catholic Schools Office, in HR/benefits, in legal, in finance, and probably in fund-raising, communications and other areas.   Are laws being violated?  We do not know–we will have to leave that determination up to others.

The archdiocesan Presbyteral Council is meeting with Cardinal O’Malley next week.  We are asking all readers to talk to their pastor this weekend at Sunday Mass about the problems you have seen documented on this blog and ask him to request that these concerns be discussed at the Presbyteral Council meeting. You can focus on just the excessive compensation and legal risks if you wish, but better still, ask him to request that the following concerns be discussed:

  • Leadership/Governance: especially the need for engaged, active leadership and governance by the Archbishop of Boston
  • Integrity: on the part of cabinet members and the archbishop in words and actions
  • Fiscal Management: breach of fiduciary responsibility with excessive six-figure salaries being a good starting point, and
  • Team: will there be likely changes with the Vicar General (returning to the military) and the Chancellor?  How will those be dealt with?

Click on “Leave a comment” at the end of this message, and you’ll get an email link/graphic that will let you easily email a copy of this post to any friend or colleague.  If you have your pastor’s email address or that of a member of the Archdiocesan Presbyteral Council, we suggest you start there.  At the same time you are asking your pastor to request that these issues be discussed by the Presbyteral Council, let your pastor know you are praying for him and supporting him 100% in raising these issues. If you do not know your pastor’s email, talk to him in-person over the weekend.  Regardless, you can also send a copy of this post to: newstip@globe.com.

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