Archdiocese's Funding More Stable:
Abuse Settlement Had Had Triggered Cutstriggered Cuts

By Peter Smith
The Courier-Journa [Louisville KY]
July 19, 2004

The Roman Catholic diocese in Portland, Ore., has filed for bankruptcy, and dioceses from Tucson, Ariz., to Covington, Ky., haven't ruled it out.

But the Archdiocese of Louisville which paid $25.7 million last year in one of the largest sexual-abuse settlements in history says its financial picture is stabilizing after a period of cutbacks.

"It's been a hard year," said Steve Bogus, executive director of Catholic Charities, one of the agencies whose budget was reduced after the settlement.

But the archdiocese says it never seriously considered bankruptcy, Brian Reynolds, its chancellor and chief administrative officer, has said. And in the fiscal year that began July 1, it has managed to avoid further cuts and even provide a 3 percent raise to employees who took a salary freeze the year before.

"Agencies overall were able to continue their work with reduced budgets and reduced staffs," Reynolds said.

Bogus said his agency which receives funding from the archdiocese, fees and government and private grants lost the equivalent of 71/2 positions last year, which "has been pretty stressful."

But, he said, "there's a lot of dedication and commitment on the part of staff to try to keep things together."

The archdiocese's settlement avoided court trials with 243 people who were sexually abused by priests and others associated with the church over the past half-century.

A handful of cases remain pending, but Reynolds said the settlement achieved the goals of preserving the archdiocese's ministries and its parishes' assets while also compensating victims.

"It was important that these men and women received financial support from the archdiocese," he said.

The bulk of the settlement money came from the archdiocese's unrestricted investments, which leaves it without the interest income that it used to receive.

But it also avoided bankruptcy.

A drastic option

The Archdiocese of Portland filed for bankruptcy on July 6, after paying more than $50 million to sexual-abuse victims and facing more trials.

It is believed to be the first Catholic diocese ever to file for bankruptcy.

Other dioceses face numerous sexual-abuse lawsuits and haven't settled on a way to resolve them. The Diocese of Tucson is considering bankruptcy. Officials of the Diocese of Covington, facing a class-action suit, say they've not ruled it out as an option.

"I'm amazed (the Archdiocese of Louisville has) been able to dodge that bullet," said Chuck Zech, author of several books on church finances, noting that Louisville faced one of the largest caseloads in the nation.

Zech, a professor of economics at Villanova University in Pennsylvania, said Boston's and other hard-hit dioceses have also avoided bankruptcy by cutting staff and selling properties.

But other dioceses still face possible bankruptcy, he said, noting that California is a "real danger spot" because of a new law allowing lawsuits over decades-old abuse.

"So many dioceses are still not certain what's going to happen because there are so many court cases out there," he said.

Mixed results

And even in Louisville, the financial picture is murky.

Reynolds said parish income ranging from donations to tuition rose slightly last year, as did stock-market returns on the archdiocese's remaining investments, which are restricted for specific purposes.

But a separate fund drive, the Catholic Services Appeal, has fallen nearly 9 percent short of its $3 million goal, he said.

And while overall parish income is slightly up, priests say the response has varied.

The Rev. Tom Gentile, pastor of St. Helen Church in Shively, said his church raised $2,000 more than its goal for the Catholic Services Appeal, and the church's most recent pledge drive was "on target."

"We did experience probably about a 10 percent decrease in contributions" in the midst of the abuse crisis, he said, which began with a barrage of lawsuits in 2002.

"Obviously some people have walked away from church, but that's kind of stabilized. People are tending to come back, and things have leveled out."

Catholic Charities one of 20 agencies of the archdiocese is looking for outside grants to restore one or two positions. But the archdiocese itself is not restoring any positions this year, Reynolds said.

Service cutbacks

A ministry serving Central Kentucky migrants remains closed, and other departments continue to operate with lower budgets for travel, conferences and other expenses.

For example, the archdiocese's communications office is producing fewer television broadcasts and printing fewer pages in its newspaper, The Record, according to chief communications officer Cecelia Price.

At the same time, the archdiocese has adjusted parts of a five-year financial plan that it released last year after the settlement.

For example, it reversed a decision to sell its Flaget Center in south Louisville, where it housed educational offices and held retreats, after concluding it would cost more to rent retreat space elsewhere.

On a recent afternoon, employees at Catholic Charities said they are making the best of the situation.

"We are definitely not big enough to support the need, but we try to get as many people as possible," said Anne Achico, one of two workers who advise immigrants on legal issues. The office had four counselors before the cutbacks.

Staff member Joyce Connor has been kept busy counseling elderly people and their families on social services and working on a program that shelters abused and exploited seniors.

"It's really full-time plus, but it's the type of situation (in which) you do what needs to be done, no matter the hours," she said.


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