2012 Annual Report – Archdiocesan finance officer report

| February 28, 2013 | 0 Comments

The following comments elaborate on the condensed financial statements of the Archdiocese of St. Paul and Minneapolis for the fiscal year ended June 30, 2012

By John F. Bierbaum

At June 30, 2012, the financial condition of the archdiocese is improved, and the financial result of activities in the fiscal year then ended resulted in a surplus of $3.1 million. The bulk of the surplus can be attributed to the insurance program ($1.6 million) and income from investments ($1.2 million).

ProgramExpensesRevenue

Total revenue for 2012 reached $40,256,000 as compared to $39,951,000 in 2011.

The primary sources of revenue, parish assessments and the Catholic Services Appeal (CSA), were up 6 percent and 11 percent respectively in 2012. The increase in assessments is reflective of increased contributions at parishes during the modest economic recovery that began in 2010.

CSA revenue, as reported, are after deductions for rebates to parishes and allowances. On a pre-deduction basis, the CSA generated $9.7 million, greater than goal and the prior year by $200,000. Net CSA income increased more than $200,000 because of a change in the methodology for setting parish goals and rebate qualification. Both speak to the generosity of the Catholic community despite the severe economic conditions and slow recovery.

Contributions through unsolicited gifts and bequests increased $736,000 while returns on invested assets decreased $2,383,000 as rates moderated.

Operating expenses

Operating expenses totaled $37,160,000 in 2012 as compared to $36,526,000 in 2011. Program costs increased $440,000, while other costs increased $194,000.

Following is a narrative that explains the purpose of the various offices of the archdiocese. Accompanying the narrative is a chart depicting the expenditures by program, including a correlation of how CSA revenue was spent for fiscal year 2012 and 2011.

The archdiocese accomplishes its mission through the following offices and programs:

Programs and other activities

Clergy Services

The role of this department is to assist the archbishop in the needs and supervision of clergy in all aspects of ministry and pastoral care which includes the following:

• Center of Clergy Formation: Institute of Ongoing Formation for Clergy and the Institute of Diaconate Formation. Each entity of the center will provide an integrated approach to priestly and diaconate formation to include newly ordained priest gatherings, new pastors’ programs and ongoing formation opportunities for the presbyterate/diaconate.

• Clergy education: St. Paul Seminary School of Divinity tuition, room and board; St. John Vianney Seminary room and board; Graduation Education program; continuing education; sabbatical program; international enculturation; and a bi-annual presbyteral assembly.

• Chaplaincies: Hospital chaplaincy; prison chaplaincy; and oversight of the Comprehensive Priest Assignment Board.

• Supervision of various specialized ministries: Support for above services and including the following offices and related organizations: International clergy, Leo C. Byrne Residence, retired clergy, Office of Vocations, and clergy medical and dental and other benefits and support.

Community Services

The agencies within this department help men, women and children most in need within the local communities, including the poor, hungry, homeless and those with special needs. The archdiocese provides cash and non-cash support to Catholic Charities and CommonBond Communities (a housing agency for low- and moderate- income families, the elderly and the handicapped.) In addition, support is provided to parishes stressed by debt or operational issues.

Education

The Department of Education includes offices that support the education and formation of children within the Archdiocese of St. Paul and Minneapolis. This support would include: Schools administration, catechesis and providing programmatic oversight of the Legacy Grant, an initiative supporting and transforming our Catholic urban schools. Major responsibilities of this department are to identify systemic needs of the Catholic school system and also to provide subsidies and grants to archdiocesan parish rural and elementary schools, archdiocesan high schools and the campus ministries programs.

Parish Services and Outreach

The Parish Services and Outreach department provides an outreach ministry to members of the archdiocesan community, many of whom are minority groups, specialized ministries and coalitions. Included are the offices of, or subsidies to: Hispanic ministry, Indian ministry, Venezuelan mission, and Archdiocesan Council of Catholic Women. Additionally, included is the Office of Parish Services which supports the work of the Strategic Planning initiative, parish consulting archdiocesan offices, outreach ministries and parish personnel.

Central Services

The Department of Central Services provides support and services to the central corporation staff and the parishes. The department includes the offices of, or subsidies to: finance, accounting services, printing services, communications, computer services, metropolitan tribunal, human resources, special services, maintenance, other collections and diocesan dues. Additionally, this department provides administrative services to the General Insurance Program, the lay and priest pension plans, the archdiocesan medical benefit plan, and other centralized programs within the archdiocesan community.

Marriage, Family and Life

This department provides support by assisting the laity and parishes through the offices and programs of: marriage preparation, laity, family, youth and young adults, respect life, pro-life groups, biomedical ethics and outreach for disabilities.

This year, the archdiocese also provided significant support for a broad coalition to support marriage in the state of Minnesota. In addition, World Youth Day, National Catholic Youth Conference and other youth events are coordinated through the staffing and support of the department.

Community Relations

This is the outreach and communications division for the Archdiocese of St. Paul and Minneapolis, and it conveys the messages of the archbishop and the archdiocese to the faithful and to many others within the community.  It also listens to these audiences and communicates through a professionally staffed Communications Office and through distribution of assessment for The Catholic Spirit, the official archdiocesan bi-weekly newspaper.

Non-program and other General and Administrative

The offices of the archbishop, bishops, moderator of the curia/vicar general, treasurer, administration and finance, and accounting services are included in the General and Administrative reporting. Adjustment of the carrying value of amounts due from parishes and other entities are reflected in the category.

Development and Stewardship

The Department of Development and Stewardship supports the programs of the archbishop’s Catholic Services Appeal; parish and school stewardship and development consulting;  the stewardship conferences, workshops and parish tool kit; planned-giving support; and other archdiocesan fundraising initiatives, including the archdiocesan feasibility study and proposed capital campaign. The expenses within the Development and Stewardship category comprise the archdiocese’s fundraising expense. The CSA funds a portion of the costs associated with it. During 2012, the cost of fundraising was less than 10 cents for each dollar raised.

General Insurance Program

The General Insurance Program of the Archdiocese of St. Paul and Minneapolis provides comprehensive, uniform coverage of all of the parishes and related entities in the archdiocese, as well as the central Archdiocesan Corporation. The coverage includes building and contents, burglary, personal property, student accident, auto, public library, boilers and workers’ compensation.

Financial position

Net assets of the Archdiocesan Corporation were $42,934,000 at the end of fiscal 2012, or $3,097,000 greater than a year earlier. The bulk of the increase was in unrestricted and temporarily restricted net assets. Permanently restricted net assets (endowments and perpetual trusts) decreased $108,000 due to a decrease in the market value of underlying investments which are managed by others.

After adjusting the change in net assets for revenue and expense items that did not result in or require cash, operations in 2012 required cash of $629,000 principally due to the timing of payments of current liabilities.

In addition to the $629,000 of cash used by operating activities, $5,740,000 was realized from the repayment of a loan by an elementary school and used to retire underlying archdiocesan debt. Cash was used in the amount of $1,619,000 to improve archdiocesan property, equipment and systems.

In summary

During 2012, the quality of the archdiocesan balance sheet continued to improve, and significant progress in capacity was made in the year through investment in systems improvements in the areas of fundraising, database management and standardized parish accounting, as well as communication through the Internet.

These improvements were possible because of the departmental restructuring that occurred in 2006 and 2007 and the focus on archdiocesan liability and asset management that ensued and continues. Since 2007, expenses in total have increased only 2 percent (or less than ½ percent per year) and a greater proportion of the expenses relate to programs rather than administrative costs.

The focus on expenses would have been for naught if there had not been an increase in resources through contributions, assessments and the Catholic Services Appeal. Those resources, which are directly related to the generosity and devotion of the Catholic faithful, have increased since 2007.

The combination of expense control and increase in resources has permitted the archdiocese to reduce entirely external debt by $8.2 million, return $1.9 million in deposits to parishes, segregate an additional $1.9 million in assets for the benefit of the group insurance program and increase the working cash balance by $2.1 million in the last five years. During the same period, the contingent liability under guaranteed parish and school debt has decreased by $40 million. In short, the archdiocese is now in a substantially improved fiscal state.

That improvement is important because of issues identified through the recent strategic planning effort around the viability of parishes and schools. The strategies identified by those plans are being implemented through dedication of considerable human and monetary resources at both parish and archdiocesan levels.

Unfortunately, unrelenting changes in demographics and economic resource distribution in the archdiocesan community means the situation continues to evolve even as existing plans are consummated. Meeting the challenges of that evolution will require that Archbishop Nienstedt and staff have a strong fiscal base from which to work to improve the mission of the Catholic community as a whole.

This is my last annual message concerning the finances of the Archdiocese of St. Paul and Minneapolis as my ­retirement is now real. It has been an honor to serve Archbishop Flynn and Archbishop Nienstedt and you my brothers and sisters in Christ in this small capacity.

John F. Bierbaum was chief financial officer of the Archdiocese of St. Paul and Minneapolis from 2005 to 2012, including the fiscal year covered in this report.

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Category: Annual Report

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