Diocese of Manchester Reveals Finances for the First Time
By Shawne K. Wickham
New Hampshire Sunday News [New Hampshire]
December 14, 2003
For the first time in its 120-year history, the Diocese of Manchester has opened its books.
And the newly released financial records — including an independent auditors’ report — reveal that despite paying out millions of dollars to settle 227 cases of child sexual abuse by clergy, the Catholic Church in New Hampshire remains fiscally sound.
That’s the message the Rev. Edward Arsenault, secretary for administration for the Diocese, hopes parishioners will take home with them from Masses this weekend, along with the church’s first-ever “Stewardship and Financial Report.”
“The church in New Hampshire is strong and fulfilling its mission,” Arsenault said. “We’re doing the work of the Lord. We have been impacted financially by this crisis, but we are not down and out.”
Arsenault said the report is not meant to be an implicit or explicit appeal for more contributions. “This is a communication from the bishop to the people who support the church, explaining to them how we use the donations they give us,” he said.
The report, distributed at Masses yesterday and today, is based on an independent auditors’ report that reveals the Diocese’s finances over the past two fiscal years, including revenues, expenses, investments, insurance payments and net assets. It includes a letter from Bishop John B. McCormack that offers a reassurance to “all those who count on the ministry of the Church that we are a strong and vibrant community.”
The diocese is making the full auditors’ report, prepared by the Manchester certified public accounting firm of Howe, Riley & Howe, as well as the four-page Stewardship Report, available on its Web site, www.catholicchurchnh.org.
“We’re disclosing to people what we’ve paid, how we’ve paid it and how we intend to fund those payments,” Arsenault said.
Assets down $12.7 million
According to the reports, the diocese’s net assets dropped from $12.7 million as of June 2002, to $4.9 million in June 2003.
During that same period, the diocese paid more than $18.8 million to resolve 207 “requests for financial settlement, some dating back to the 1940s,” the Stewardship Report states.
The diocese had previously paid $1.4 million to 20 additional survivors of clergy abuse, according to the report.
Only four requests for financial settlements remain outstanding, and Arsenault said church officials are in “active settlement conversations” with those individuals. “And I expect they’ll be resolved in the same manner and spirit we’ve resolved the others.”
He said the average settlement figure has been around $89,000.
Arsenault said that in addition to the settlements, the diocese has spent $80,000 on pastoral care and counseling for the victims. The settlement total includes $393,000 spent on legal fees during the scandal.
Surviving the catastrophe
Arsenault said despite the “catastrophic” financial impact of the clergy abuse crisis, the report is “good news” for New Hampshire Catholics.
“I think what the financial statements express is that we have the wherewithal, given the assets that we have, to fulfill the commitments that we’ve made to assist survivors with financial settlements. We’re going to have to borrow some money to do that, but we can do it and we have the mechanisms in place to do so,” he said.
The diocese has secured a loan commitment from the Catholic Order of Foresters, a fraternal benefit life insurance group, for up to $7.5 million to cover possible costs in the future. Arsenault explained that essentially amounts to an unsecured line of credit.
Arsenault said the diocese may not have to borrow the full amount, but it is available if necessary. The interest rate on any money borrowed will be 7.25 percent, with no principal repayments until September 2008. In October of that year, any outstanding balance would be converted to a 15-year loan at the same interest rate, according to the agreement signed.
Where the money goes
Arsenault said the report should answer some parishioners’ concerns that Sunday collections are funding the abuse case settlements.
“What we’ve been able to say is no parish or school funds were used” to pay settlement costs, he said. “No real estate has been sold, no real estate has been mortgaged. We have in place the ability to fund the response to the survivors. That’s good news.
“We’ve done what we should have done and we’re able to fund it.”
According to the financial reports and Arsenault, about 40 percent of the financial settlements — approximately $7 million — will be covered by liability insurance. The rest will come out of the Diocese’s own insurance reserves, which have been funded over the years from assessments by the state’s 120 Catholic parishes.
On average, Arsenault said, less than one percent of a parish’s overall revenue goes toward liability insurance costs.
Why didn’t the church’s liability insurance cover the whole cost of the legal settlements?
Arsenault explained there are several reasons for that. In some cases, there were limits on the insurance coverage and the diocese had to pay the difference. Some policies also carried high deductibles, which the diocese had to pay.
In addition, the diocese has only had insurance coverage for the past 34 years, Arsenault said, while some of the abuse claims date back 60 years.
“In each year, we had different deductibles, different limits and different coverage,” he explained. “So when you aggregate those, on average, 40 percent or $7 million, is funded by insurance coverage.”
The diocese listened
Former New Hampshire House Speaker Donna Sytek chaired the task force that developed the Manchester diocese’s sexual misconduct policy. She said questions about how the church was funding settlement of clergy abuse cases came up frequently during the “listening sessions” her group held around the state, and she said her group passed on those concerns in its final report to McCormack last Friday.
“We identified it as a concern of the faithful and gave it to the bishop for his action,” Sytek said. “And he’s acted on it. Good for him. Good for us.”
Sytek, who belongs to the Mary Queen of Peace parish in Salem, called the release of the financial information “another step in the road toward rebuilding confidence.”
“As long as it’s one more area where the veil of secrecy has been lifted, it’s significant,” she said.
Moving to rebuild
And Sylvio Dupuis, who was president and CEO of Catholic Medical Center for 15 years and chaired the Bishop’s Fund in 1995, said the report is “an accounting to the people who ultimately own the church.”
“The church belongs to its constituency and not just to the hierarchy,” he said.
Dupuis, who attends St. Marie Church, said the report will help parishioners move forward after the last two years of shocking revelations. “In a way, it’s time to stop looking in the rear-view mirror and to start to move ahead and rebuild. And I think this is going to be another stepping stone in that direction,” he said.
Nothing but spin
But former Republican gubernatorial candidate Bruce Keough, who attends St. Peter Church in Peterborough, called the report “spin.”
“It’s part of a continued public relations campaign orchestrated by the bishop to hold onto his job,” he said. “The fact is that most Catholics that I talk to have completely lost confidence in the ability of Bishop McCormack and Bishop Christian to fulfill their ministries.”
“I think that the church has been financially stressed by the bishop’s insistence on clinging to his job, and that, I believe, is true in the case of Catholic Charities as well as contributions to parishes,” Keough said.
Issue of leadership
Keough said the issue of which funds are being used to settle abuse cases may be important to some people, but that’s not what concerns him.
“The most important question is what kind of accountability exists in the church, and how does the church respond when one of its leaders has proven incapable of fulfilling his responsibilities.”
What would satisfy Keough? “His resignation,” he said.
Arsenault said Bishop McCormack “is mindful that we’re in the process of restoring trust in leadership.”
And he said the newly released documents should help.
“I hope this expression of stewardship by the bishop helps restore confidence in him,” he said. “He’s accounting for the gifts people give us. We would have nothing if it weren’t for generous Catholics.”
“Hopefully, this will make people who currently support the work of the church confident that their gifts are used well.”
The release of the financial audits are the culmination of a process Bishop John McCormack began soon after he came to Manchester in 1998, according to Arsenault. “It had never been done before,” he said. “We’ve been here since 1884.”
The AG’s audit
The financial audit is completely separate from the annual “compliance” audits the diocese agreed to in its historic agreement one year ago with the state Attorney General’s office, which investigated sexual abuse cases by New Hampshire priests.
Arsenault said diocesan officials are currently discussing with the AG’s office just how that compliance audit will be conducted, and he said that process should begin after the first of the year.
While the financial auditors’ report focuses solely on diocesan finances, the Stewardship Report also addresses where parishioners’ weekly contributions go.
The parish collection
The report notes 85 percent of parish revenues comes from the weekly offertory collections. And for every dollar parishioners contribute, about 80 cents stays in the parish for operating expenses.
A total of 12.5 cents goes toward Catholic school subsidies, priests’ retirement and sick funds and mission collections. And 7.8 cents go to the Diocese for “central administration.”
Parishes also contribute to the diocese’s central insurance reserves. Arsenault explained that each parish is assessed a certain rate, based on a variety of risk factors and property values, to cover the costs of all policies, including workmen’s compensation, liability and property insurance.
Reasons for decline
The Stewardship Report indicates that parish revenues dropped an average of 5.2 percent in the last fiscal year from the previous year. That could reflect the economic downturn and parish capital fund campaigns, as well as parishioners withholding contributions to express their “anger and disappointment over the past response to reports of child sexual abuse in the Church,” it stated.
For those who already contribute to the church, Arsenault said, “Bishop McCormack thanks them from the bottom of his heart. We would have nothing if it weren’t for them.”
He went on, “For those who have withheld their gifts, we would ask them to reconsider that, and ask them to consider how in doing so, they’re affecting their parish’s ministry and service to the Lord.
“And to those who’ve never supported the church financially, I hope that this report makes them confident that we are good stewards, and we’d ask them to consider supporting the church through their local parish.”
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