Worcester Diocese grapples with $1.2M deficit

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Christ’s apostles heeded his advice and took nothing more than the clothing on their backs as they journeyed out to preach the news of heavenly salvation.

“Take nothing for the journey, neither walking staff nor traveling bag: no bread, no money,” recalls Luke, the evangelist, in his Gospel account of Jesus’ life. “No one is to have two coats. Stay at whatever house you enter and proceed from there.”

In today’s world, it’s not that simple and the local Roman Catholic Church, like its counterparts across the nation, is urgently looking for ways to stretch an already tight dollar so that it can continue to promote its spiritual mission to the community.

To operate effectively, the contemporary church needs more than an offer of free overnight lodging for its clergy.

It needs cold cash to pay its bills.

Worcester Chancery

Sun Staff / Worcester Sun

The Chancery of the Diocese of Worcester

There is now some concern among area Catholics about the future health of their church after the Diocese of Worcester recently reported an operational deficit of almost $1.2 million for the fiscal year that closed Aug. 31.

Diocesan officials said the loss is manageable, but they admit they’re going to have to do a better job in navigating the fluctuating economy that has rocked the church’s finances. They also said they will have to find innovative solutions for other factors that have placed diocesan ledgers in the red.

“We have to look at a number of alternatives to help us with these (financial) problems,” said Raymond L. Delisle, the diocesan chancellor. “We have a (spiritual) job to do and we don’t plan to just go away.”

The losses last fiscal year resulted mainly from the turbulent stock market, and church leaders are hard at work trying to turn around the diocese’s financial picture.

Delisle said the diocese’s investments are diverse and carefully monitored by a local committee whose members have financial expertise. The portfolio itself is managed by Fiduciary Investment Advisers.

Delisle said those involved with the financial books are doing their best to maximize the return on investments. The diocese looks at all investment opportunities except those that conflict with church doctrine and teaching, he said. The church, for example, wouldn’t invest in companies that provide equipment for abortion procedures.

The diocese uses investment guidelines formulated by the United States Conference of Catholic Bishops.

“Overall, we’re still in good shape because much of the deficit was caused by a loss in the value of our investments,” Delisle said. “We’re not talking about a loss of liquid assets.”

Wall Street operates in cycles and it’s assumed that the diocesan portfolio will rebound.

But the Worcester church, like others, faces further challenges perhaps more difficult to surmount. Needs continue to grow, but financial resources are drying up.

In a letter to Central Massachusetts Catholics that accompanied the financial disclosures, Bishop Robert J. McManus pledged the church would continue its evangelization and outreach, despite last year’s losses. He noted that departments share management costs in areas and that many cost-cutting measures have been in effect for years.

“As we focus this coming year on being more prudent stewards of the resources of the Diocese of Worcester, may we never lose sight of this humbling call to be the face of God’s mercy to all we encounter and serve,” wrote the bishop.

The released documents, which include financial statements, an inventory on how parishes were individually doing, and the annual report on diocese financial activities, show the Worcester church had unrealized losses of $840,001 on its investments. Overall, the diocese had an operating deficit of $1,192,704, after expenses that totalled $25,178,740.

The numbers were shocking in that the church, the previous fiscal year, generated a surplus of $1,276,057. That yield came about from unrealized gains on expenses of $25,271,377.

Besides the stock market losses, the diocese was also financially hit hard by the account that helps support retired priests. Despite a subsidy of $800,000 from the annual Partners in Charity campaign, that account operated at about $1.2 million over revenues. Last year, the retirement account stood at about a $993,500 deficit.

To bolster the account this year, the diocese held a special event at Mechanics Hall last fall that helped raise $150,000. According to officials, the bishop has named a special panel to look at corralling retirement costs while maintaining the quality of care for the retired clergy.

The diocesan directory lists 51 retired priests.

Delisle said the diocese is scrutinizing health care plans, nursing home accommodations, senior citizen housing, and other options so retired priests “may live in dignity.”

In the old days, retired priests would go home to live with their relatives or would live out their lives in rectories,” Delisle said. “That’s not how things work today. We have to continually try to work to bring retirement costs down without sacrificing care.”

Officials said housing accommodations for senior priests range widely. For example, some require specialized nursing care while others choose to live on their own in private residences.

Officials said the Central Administration also had difficulty servicing outstanding debt. The department was forced to deal with about $976,000 in interest on the line of credit held by the Diocesan Expansion Fund. The fund lends money to parishes for repair and capital projects. Diocesan officials said many parishes, facing dwindling parishioners and other financial troubles, are having difficulty paying back their loans.

Cathedral of St. Paul on High Street, the mother church of the Roman Catholic Diocese of Worcester

Wikimedia Commons

Cathedral of St. Paul on High Street, the mother church of the Roman Catholic Diocese of Worcester

Delisle estimated about one-third of the parishes face deficits.

“We have to help them out so they can cover their bills,” Delisle said.

Publication in peril?

Meanwhile, The Catholic Free Press, the diocesan weekly newspaper, continues to financially bleed.

The publication, which also maintains a website, operated at a loss of $145,500. Last year, it lost about $125,000. A major problem the newspaper faces is financial support from parishes.

Each church is assessed a certain amount of money to help the paper operate. However, that revenue stream is not dependable, diocesan officials privately said, because pastors aren’t ponying up their assessments. Officials said the pastors believe that the assessment money is better spent on addressing more pressing needs such as physical plant repair.

“Many pastors would like to see the Free Press fold because of the money they are asked to give the diocese for the paper’s operation,” said an individual familiar with the situation.

A source said the Free Press is expected to operate at least for a few more months. Delisle said there are no plans to cease publication.

The bishop, in his letter, said the diocese is developing “a new strategic direction for communications in general, given how critical it is to meet our mission to evangelize in a society which is increasingly unchurched and media-focused.”

According to Delisle, the diocese is exploring a range of alternatives to get out its message, including increased use of websites and utilization of social media.

“We’re looking at how people are getting their news, how they’re getting informed,” he said.

The financial reports weren’t all gloomy.

Partners in Charity, for example, reached about 98 percent of its goal during the 2015 appeal. The campaign funds about 30 agencies, programs, and ministries within the diocese.

And church officials said diocesan schools are doing relatively well, showing only a slight deficit. They said that enrollment is beginning to grow.

Nationally, the Catholic Church has been financially crippled by deep cuts in its membership.

A Pew Research Center study showed that about 52 million individuals in 2015 called themselves Catholic, down from about 55 million in 2007.

Shifting demographics are also hurting, as the church continues to see its more affluent segment move to the suburbs. The trend has meant that very many older urban churches have begun to fall apart since the remaining parishioners are too poor to afford repairs.

Delisle said all institutional churches have seen dropoffs in membership. He said the church is looking at ways “to evangelize,” in order to welcome back lapsed Catholics or attract new members.

“We have to look at better ways of letting people know what we do. Even individuals who regularly attend Mass don’t know the wonderful things that are going on in the diocese,” Delisle said. “We have to get people committed. In order to do that, we have to do a better job in telling our story.”

There are about 286,000 individuals in the Worcester area who in some formal way, such as passing in an envelope in the collection basket during Mass, associate themselves as Catholic. Officials estimated there were about 350,000 about 10 years ago.

Some dioceses are also reeling from huge payouts to victims of the clergy abuse scandal. According to some estimates, church leaders agreed to about $3 billion in settlements nationally. Officials here said settlements were relatively small and did not impact finances.

And Worcester is not alone in having to deal with paying mounting retirement costs to priests. According to Reuters news service, the American church faced a $2 billion shortfall in pension funding in 2014.

Overall, the Center for Church Management and Business Ethics at Villanova University reported that nearly a quarter of U.S. parishes were in the red in 2013.

To stem the financial losses, church leaders have closed schools and churches, merged parishes, sold property, cut back on employee benefits and launched capital and other fundraising campaigns.

Locally, there are now 97 parishes and three mission churches. A couple of decades ago, there were 125 churches and four missions.

Many dioceses also receive aid from organizations such as the United States Conference of Catholic Bishops.

Officials at the bishops council, for example, said they offer relief through programs such as the annual Home Missions Appeal. In 2014, the appeal provided about $9 million in grants to 83 dioceses. Officials estimated that the program has helped about 45 percent of the dioceses that are struggling in rural and other impoverished sections of the country.

“There’s no quick fix and we have to work long-term on some of these problems,” Delisle said. “But in the end, we’ll still be here helping people”

The diocese’s financial audit was compiled by O’Connor, Maloney & Co. of Worcester.

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