Boston church details finances

Archdiocese opens books on $46 million deficit, source of sex-abuse settlements


BOSTON --The Roman Catholic Archdiocese of Boston opened its books yesterday, releasing what experts and church officials say is the most detailed financial accounting any diocese has made available.

The reports show that the archdiocese has a $46 million deficit, the largest any diocese has ever had, according to two national experts on church finances.

The archdiocese has paid out more than $150 million in legal settlements related to accusations of sexual abuse by priests. Archdiocesan officials said they planned to address the deficit in part by cutting 50 administrative positions, consolidating departments, reducing the number of Cabinet secretaries and most likely selling more property and cutting programs.

Cardinal Sean P. O'Malley and other officials made it clear that they also hoped that the frankness of the report would inspire parishioners to increase donations, which have fallen off by several million dollars since the abuse crisis began in 2002.

"I think it's quite obvious that our situation is urgent, is dire," O'Malley said at a news conference. "The bleeding that's been going on with deficit spending is something that needs to be dealt with urgently."

O'Malley, who will distribute pamphlets about the finances in every parish, said he hoped that as a result of the report, released a few weeks before the major annual archdiocesan fundraising drive, "people will understand what our finances are and how we're using it, and hopefully will want to help us continue the mission of the church."

The cardinal said that a key to instilling confidence in parishioners was releasing information about the costs of the sexual abuse crisis and the sources of the money that paid for settlements.

Although archdiocesan officials have repeatedly said parish collections and other donations would not be used to pay for legal settlements to abuse victims, some parishioners have remained skeptical. They have also distrusted assurances that the money generated by the closing of 62 of the 357 parishes in the archdiocese would not finance the abuse settlements.

The new information sought to end those concerns. The reports showed that through June 30, 2005, $150.8 million was spent on the abuse crisis, including $127.4 million in legal settlements, $8.8 million in counseling and prevention programs and $8.3 million in legal and professional costs related to the settlements.

Of that money, $68.8 million came from selling the archbishop's residence and other administrative buildings, with the rest from insurance and selling other properties not related to the closed parishes.

"There's been so much talk about the finances of the archdiocese and so much mystery and questions raised," O'Malley said. "We're not trying to keep secrets from people. We're not trying to deceive them. We are trying to use the limited resources that we have for the mission of the church, and we want people to be on board about that."

The cardinal and lay leaders of committees he appointed to examine the finances and propose improvements characterized the situation as serious, but not irrevocable. They said the cause of the problems was not just the abuse settlements, but declining donations as a result of the abuse crisis, pension funds hurt by declining stock prices, skyrocketing health care costs for priests and the expensive maintenance for old parish buildings.

"We're in a difficult financial position," said John H. McCarthy, an accountant who led the committee that prepared the reports, which covered from July 1, 2003, to June 30, 2005. He said the biggest liability was $135 million in unfunded clergy pensions.

An investment banker who led the organization and management review committee, James F. O'Connor, said the management of the archdiocese required a "substantial overhaul" and he hoped that the church could achieve a balanced budget in 18 months.

Charles Zech, an economics professor at Villanova University, said that might be optimistic.

"Eighteen months seems to me like a relatively short time," Zech said. "An operating deficit of $46 million, even for a diocese as large as Boston, that is high."

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