Abuse Cases Crimp Diocese Budget
Orange Bishop Aims to Trim Expenses and Sell off Investments to Prepare for Settlement Costs. Eleven Staffers Will Lose Their Jobs
By Jeff Gottlieb
Los Angeles Times [California]
Downloaded May 28, 2004
Continuing its cuts of the past two years, the Roman Catholic Diocese of Orange announced Thursday it would eliminate nearly 15% of its central office staff and reduce programs, saving $1 million a year as it prepares to settle priest sexual-abuse cases.
Bishop Tod D. Brown said the cuts were necessary because of several years of poor investment performance and the effects the settlements would have on the diocese's long-term finances.
He said the diocese, which spent $42.6 million in the last fiscal year, would have to sell stocks and bonds to pay for the settlements, reducing future investment revenue as well.
"However it turns out, it's going to be very painful financially," Brown said.
Brown said borrowing and further cuts were possible to pay the settlements, which he said he hoped would be reached by June.
The cutbacks apply to diocesan offices and services and do not include parishes.
Parishes will be affected nonetheless, Brown said, because they will be asked to provide services and activities now funded by the diocese, including training for religion teachers and youth ministers.
Eleven of the roughly 75 employees in the diocesan administrative offices in Orange will lose their jobs, at least one of whom worked there for 25 years. The diocese is providing workers with two to eight weeks of severance pay, depending on length of service, said Father Joe Fenton, a diocesan spokesman.
The cuts further delay the diocese's $100-million fundraising campaign for, among other things, a new parish and cathedral in Santa Ana and retirement housing for priests, Brown said.
"The major concern is the settlement question," he said.
"That has to be behind us before we can refocus on another project."
The diocese cut spending about 20% in July, which followed two 5% budget reductions earlier that year, all of which meant job and program cuts and less aid for poor parishes.
John Manly, whose law firm represents about 80 alleged victims of sexual abuse by priests, said the diocese shouldn't claim poverty because it had assets of more than $300 million.
He said insurance would pay much of the settlement cost and called the cuts "an artificial crisis meant to sway public opinion against child rape victims."
Raymond Boucher, who represents more than 300 alleged victims of sexual abuse by priests in Southern California, said the diocese was being prudent in putting aside the money because the insurance companies might refuse to pay, as happened in Boston.
Brown said the diocese was negotiating with insurance companies.
The Diocese of Orange made $4.7 million on its investments in the last fiscal year, said Phil Ries, the director of finance, and about $10 million so far this fiscal year.
The diocese finished $14 million in the red each of the two previous years, when it posted its first budget deficits ever.
As recently as fiscal 2000, the diocese's investments generated $26 million.
Among programs the diocese will cut are the Department of Disciples in Mission, a 3-year-old program to increase spirituality, and the Family Life Department, which prepares people for marriage.
The Media Center, which includes the library, will be run by volunteers, and its hours will be shortened.
Mark Gray, a research associate at the Center for Applied Research in the Apostolate at Georgetown University in Washington, D.C., said the recession hurt churches nationwide by cutting their investment returns and making it more difficult for parishioners to give.
A study by the center found that between 2001 and 2002, people were targeting more of their money to parishes rather than their dioceses.
The Diocese of Orange has not been alone in its cuts. In the Los Angeles archdiocese, Cardinal Roger M. Mahony eliminated seven ministries, cut back others and laid off at least 60 workers a week after opening the $189-million Cathedral of Our Lady of the Angels in September 2002.
Four months later, the shortfall had tripled, partly because of costs related to the sexual abuse scandal.
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