Once again, we are publishing an accounting of the financial operations of our diocese for the fiscal year, which ended June 30, 2011. As we have done in past years, we have also included a consolidated financial report of our high schools and parishes. This is done in the spirit of accountability and transparency.
For fiscal year 2010/11, our total loss was $1,688,552, which you see on the attached sheets. Part of that was our health and accident insurance fund, which lost $2,220,641. Claims were up significantly for fiscal year 2010/11. If you add that back to our total loss, operationally we were actually in the black by $532,089. Total expenses were right on budget, with some fluctuations in departments up and down, but in total right on budget. Offertory income in our parishes was up 1.3 percent during fiscal year 2010/11, the first increase after the prior two fiscal years actually had reductions. Investment returns for the year were up 12.8 percent — two years back-to-back of double digit returns.
The diocese is audited every year by Leonard J. Andorfer & Company, a certified public accounting firm, and, as in the past, no exceptions were noted. This means that the diocesan books, records and accounting principles are conducted in accordance with generally accepted accounting principles. This audit, along with the management letter, is presented not only to the Audit Committee, but to the entire Diocesan Finance Council; and the council is given time alone with the auditor, without the presence of diocesan officials, to be sure that they were given full access to all appropriate financial records.
For the past several years, the United States Conference of Catholic Bishops (USCCB) has required that the Diocesan Finance Council sign a report indicating the following: 1) that the council has met quarterly; 2) that the audit and the management letter have been reviewed; 3) that the budget has been reviewed. This report and certification must then be sent to the Metropolitan Archbishop of the Province, which, in this case, is the Archbishop of Indianapolis. We require similar reporting from our parishes to the diocese.
It is also important that there be accountability and transparency in parishes. According to canon law, every parish must have a parish finance council. We have two retired accountants who do a financial review of every parish every two years; in addition, every parish is audited at the time of a pastoral change. During the past five years, we have sent this financial report, done by our two auditors, to each member of the parish finance council. This enables the review to be discussed at a regular meeting. As indicated above, controls have now been established similar to the accountability of each diocese.
It is important to understand how the Annual Bishop’s Appeal has sustained the parishes. It was the hope of our lay leadership prior to the institution of the appeal that the parishes would benefit. This has become a reality. The appeal has increased the incentive of parishes to seek funds. During the 25 years since the appeal began, our parishes have engaged in major capital fund drives. Since the appeal began, fund drives for parishes have brought in over $125 million for new buildings and renovations approved by the Diocesan Finance Council. This includes parish initiatives linked to the Legacy of Faith. Also, over $129,000,000, which would have been paid to the diocese under the previous system, now remains in the parishes. In addition, $5 million from the appeal has been given in grants to parishes in need. The 25th Annual Bishop’s Appeal was the highest in terms of pledges, attaining $6,285,981.
LEGACY OF FAITH ENDOWMENTS
Contributions Distributions Balance
1st Source — Hispanic $100,000 $116,953
Priest Retirement 955,400 1,052,647
High Schools 955,400 1,052,647
Catholic Charities 1,908,800 ($400,000) 1,922,656
Religious Education 1,908,800 (288,889) 1,952,812
Hispanic Ministry 955,400 (75,000) 977,647
Elementary Schools 19,118,745 (4,468,300) 17,986,234
Total $25,902,545 ($5,232,189) $25,061,596
A number of parishes have agreed to twin with certain targeted parishes to help them provide a full Catholic education. From January 1999 thru April 2012, a total of $2,202,979 has been received by 16 parishes. This is true Christian stewardship; and most of the parishes making these contributions do it as part of their parish stewardship effort. These parishes give a proportionate gift to other parishes in need. This twinning program has saved several parish schools.
Over $56 million has been raised for building projects in our four high schools. The four high schools continue to flourish; but not without challenges. The Annual Bishop’s Appeal gives $1.7 million to the high schools every year, which has created a sense of stability. Next year, tuition will increase by $200 in our high schools. Our high schools are audited every year by an independent CPA firm. Each high school has presented a balanced budget for the fiscal year beginning July 1, 2012. Three high schools have debts to the diocese and all are paying on those debts. Saint Joseph High School will start the 2012/13 school year in their new facilities. This is quite an accomplishment considering the current state of the economy.
CATHOLIC COMMUNITY FOUNDATION OF NORTHEAST INDIANA
Both the Development Office and the Business Office helped put in place the Catholic Community Foundation of Northeast Indiana, which enables parishes, high schools and other diocesan institutions to raise funds for an ongoing endowment. Currently, there are 123 endowments in the Catholic Community Foundation. Talk to your pastor or school board about establishing an endowment for your parish and/or parish school. To establish an endowment and experience endowment growth involves planned giving — bequests, annuities, remainder trusts, as well as gifts and other creative ways by which you can make contributions. Funds placed in this trust will remain there and grow, and the interest realized will continue to fund the designated purpose for years to come. These are gifts that keep on giving. Those who contribute will determine the area where these funds are to be restricted. Regular annual reports and quarterly newsletters are sent to the donors. The Catholic Community Foundation now contains $38,276,755.
Our investments are overseen by Slocum & Associates of St. Paul, Minn. Investments are placed carefully so as to avoid excessive risk. We have a very diversified portfolio, fully in keeping with Catholic moral teaching. Slocum & Associates meet with our Investment Committee on a quarterly basis. In the fiscal year in question here, investments gained 12.8 percent. The current asset allocation is detailed in the pie chart below.
If you take a snapshot of the diocese 10 years ago and next year’s budget, two categories stick out — Seminarian Education and Today’s Catholic. The net burden to the diocese has gone up over $1,100,000 for these two departments. The number of our seminarians has more than doubled in this timeframe. This is a problem we welcome and will find a way to fund. This funding was assisted by the Pentecost Collection, which started in 2011 and continues in 2012. You were very generous in this endeavor, raising over $250,000 each year. Today’s Catholic we see as a means of evangelization for us. We see the benefits of sending the paper to over 50,000 households most weeks throughout the year. As part of this, we have to take some austerity measures to balance our budget and be good stewards of the funds we have. With the 2012/13 budget, we have accomplished this. Another concern for us as we go forward is the funding of our defined benefit lay pension plan. The funding ratio as of Jan. 1, 2011 was 87.1 percent. That has improved from 85.9 percent at Jan. 1, 2010. Long term, is the burden to the parishes and our different locations, sustainable? This fall, in September, we are sending out a mass survey to all of our full-time employees to get their opinions on the value of this plan versus current compensation or maybe a contribution to the diocese’s 403(b) plan, which at the present time is non-contributory. We also see increased volatility in the investment market for the next fiscal year. This is another challenge for us as we go forward. In our health and accident insurance fund, again, for the next fiscal year, we have raised costs significantly to our locations and our employees. We are still trying to recover past losses and to at least break even during 2012/13. It appears that claims are stabilizing a bit and we are starting the year off on a good foot. School enrollment has increased — our schools are filling up the empty seats. One of the reasons for that is school choice legislation was passed by the Indiana General Assembly in the spring of 2011 to support scholarship funding for needy families sending their children to our schools. We see that continuing to increase for the next school year. There are many benefits to having full classrooms and enabling the children who otherwise could not afford or even look at our schools to attend our schools. We have much to be thankful for. This past fiscal year marked continuing financial advancement for our parishes and schools as we work to build sound financial footing. Revenues are increasing; expenses generally fell in line with the budget expectations. May God continue to bless us in our ministries.
Joseph G. Ryan, Chief Financial Officer
DIOCESAN FINANCE COUNCIL
Most Rev. Kevin C. Rhoades
Msgr. Robert Schulte
Mr. James Fitzpatrick
Ms. Alice Kopfer
Mr. Arthur Decio
Mr. Thomas Skiba
Mr. Jerry Kearns
Mr. Albert Gutierrez
Sister Jane Marie Klein, OSF
Mr. Jerry Hammes
Mr. George Witwer
Mr. Michael Hammes
Ms. Linda Teeters
Mr. Christopher Murphy
Mr. Vincent Tippmann
Mr. Scott Malpass
Mr. Joseph Ryan
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