Archdiocese's central offices to cut budget 20 percent, reduce lay staff

By Richard Chin And Will Ashenmacher
Pioneer Press
November 8, 2014

http://www.twincities.com/stpaul/ci_26898491/archdiocese-cut-budget-20-percent-reduce-lay-staff

The Cathedral of Saint Paul on May 9, 2005

The centralized offices of the Archdiocese of St. Paul and Minneapolis will see their budget cut by 20 percent starting this month. That will include at least some cuts to lay staff.

The archdiocese said in a statement Saturday that its Chancery Corporation will cut more than $5 million from its budget "with staff and other expense reductions beginning this month."

In the statement, archdiocese Vicar General Charles Lachowitzer said budgets and staff had grown over the past several years and need to be cut back.

"Even without including unanticipated legal and other outside professional fees, our current operational budget is unsustainable," Lachowitzer said.

The statement did not cite the archdiocese's settlement agreement last month with child sex abuse victims as cause for the cutbacks. Both the attorney for the victims and the archdiocese have said that the financial terms of the settlement will remain confidential.

At the time of the settlement announcement in the "John Doe 1" case Oct. 13, Lachowitzer acknowledged the pending resolution of many sexual abuse claims now before the archdiocese could result in bankruptcy.

Saturday's statement said the budgets of individual parishes, schools or other institutions won't be directly affected by the cuts to the archdiocese central offices.

The budgets of parishes, Catholic schools and other local Catholic entities such as Catholic Charities operate as separate corporations.

A final plan for the expense cuts for the Chancery Corporation will be presented to Archbishop John Nienstedt in mid-November, according to Saturday's statement.

The statement said the need for the 20 percent budget cut was shared with the Chancery Corporation staff in mid-October. The Chancery Corporation employs about 150 people.

Jennifer Haselberger, a canon lawyer and former chancellor for canonical affairs for the archdiocese, said she was not surprised by the budget cuts.

In a post Saturday on her blog, canonicalconsultation.com/blog, Haselberger compared the Twin Cities archdiocese to the Archdiocese of Philadelphia.

"You may recall that in 2012 the Archdiocese of Philadelphia, which has been rocked by similar scandals involving employee embezzlement and mishandling of accusations of sexual abuse, announced a similar shake-up," according to Haselberger.

The Philadelphia archdiocese reorganization resulted in the loss of 45 lay employee jobs and the end of the archdiocese's print newspaper, Haselberger wrote.

In May 2013, the former accounting director of the Twin Cities archdiocese was convicted of theft-by-swindle after being accused of stealing $670,000 from the archdiocese.

Haselberger resigned from the archdiocese in April 2013 in protest of what she said was a widespread mishandling of clergy sexual abuse cases.

In an email Saturday, she said, "I suspect that this mid-budget year belt tightening is less a consequence of the Doe 1 settlement than an acknowledgment that the faithful of this Archdiocese are no longer willing to contribute financially to an institution that has proven itself to be a very poor steward of the resources it has been given. I hear from people each day who do not want to foot the bill for the archdiocese's legal costs, the investigation into the archbishop's conduct, or the support of clergy guilty of sexual abuse."

In a statement issued Feb. 13, 2014, Thomas Mertens, chief financial officer of the archdiocese, described the financial condition of the archdiocese as "solid even with the contingent liability related to litigation stemming from the unprecedented third 'open window' in the civil statute of limitations for alleged sexual abuse."

A 2013 Minnesota law called the Child Victims Act created a three-year window to file civil lawsuits for victims of child sexual abuse whose deadline had previously expired.

In its fiscal year ending June 30, 2013, the archdiocese reported total operating expenses of about $39.4 million, with operating revenues of $35.5 million.

Mertens reported that the $3,872,000 operational deficit "can be attributed to the increase in reserves of $3,950,000 to cover potential liability related to civil litigation."

The financial report indicated a $5 million increase in "Litigation Reserve Expense" between 2012 and 2013.

The archdiocese also reported total assets of $59.3 million as of June 30, 2013.