State of the Diocese 2017 Financials by Diocese of Trenton

ANNUAL REPORT 27

FEBRUARY 9, 2017 • TrentonMonitor.com

Diocese of Trenton Financial Statements:

INDEPENDENT AUDITORS' REPORT

INDEPENDENT AUDITOR’S REPORT

For the Years Ended June 30, 2016 and 2015 DIOCESE OF TRENTON StatementsSTATEMENTS ofTHE Financial Position: OF FINANCIAL POSITION

2016

INDEPENDENT Most Reverend David M. O'Connell, C.M., J.C.D. AUDITORS' REPORT Bishop of The Diocese of Trenton Trenton, New Jersey

JUNE 30,

Most Reverend DavidStatements M. O'Connell, C.M., J.C.D. Report on Financial Bishop of The Diocese of Trenton Trenton, Jerseythe accompanying financial statements of The Diocese of Trenton (a nonprofit We haveNew audited organization) which comprise the statements of financial position as of June 30, 2016 and 2015, and the related statements of activities, and cash flows for the years then ended, and the related notes to the financial statements. Report on Financial Statements

2015

ASSETS Cash and cash equivalents Assessments, notes and other receivables, net Pledges receivable, net Prepaid expenses Investments Property and equipment, net TOTAL ASSETS

$ 14,162,132 29,897,649 21,447,069 2,112,464 15,236,784 26,086,054

$ 10,827,965 26,938,371 8,627,437 1,484,056 20,729,443 26,604,443

$ 108,942,152

$ 95,211,715

Management's Responsibility for the Financial We have audited the accompanying financial Statements statements of The Diocese of Trenton (a nonprofit organization) which comprise the statements of financial position as of June 30, 2016 and 2015, and the Management is responsible for and the preparation andthe fairyears presentation of these financial in of activities, cash flows for then ended, and the relatedstatements notes to the related statements accordance with accounting principles generally accepted in the United States; this includes the design, financial statements. implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are freefor from misstatement, Management's Responsibility thematerial Financial Statementswhether due to fraud or error. Auditor's Responsibility Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States; this includes the design, Our responsibilityand is maintenance to express an these financial statements based audits. We implementation, of opinion internal on control relevant to the preparation and on fairour presentation of conducted our auditsthat in are accordance auditing standardswhether generally in error. the United States. financial statements free from with material misstatement, dueaccepted to fraud or Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. Auditor's Responsibility

LIABILITIES AND NET ASSETS LIABILITIES Accounts payable and other accrued liabilities Claims payable Funds held for others Postretirement benefits obligation Total Liabilities NET ASSETS Unrestricted: Property and equipment, net Designated for insurance funds Designated for capital and financing expenditures Undesignated Total unrestricted Temporarily restricted Permanently restricted Total Net Assets TOTAL LIABILITIES AND NET ASSETS

1,932,823 7,380,174 31,731,601 15,212,363 56,256,961

37,012,589

26,121,349 (11,869,673) 581,000 27,101,340 41,934,016

26,582,030 (12,678,561) 3,030,000 29,503,239 46,436,708

9,939,130 812,045

10,950,373 812,045

52,685,191

58,199,126

$ 108,942,152

$ 95,211,715

Operating activities: Operating revenues, gains and other support: Assessments See accompanying notes. Insurance and employee benefit programs Interest and dividend income Donations and pledges Other Net Assets released from restriction: Satisfaction of program restrictions Total operating revenues, gains and other support Operating expenses: Grants and subsidies Seminary tuition and support Claims incurred Insurance premiums Legal and professional Provision for doubtful accounts Personnel Facilities Depreciation Administrative and other costs Total operating expenses Deficiency of operating revenues, gains and other support over operating expenses

Media, Pennsylvania October 26, 2016 Media, Pennsylvania October 26, 2016

Media, Pennsylvania October 26, 2016 THE DIOCESE OF TRENTON STATEMENTS OF ACTIVITIES

See accompanying notes.

Statements of Activities:

An involves performing procedures to obtain audit financial evidence statements about the amounts andour disclosures in Ouraudit responsibility is to express an opinion on these based on audits. We the financialourstatements. The procedures selectedstandards depend on the auditor’s judgment, including the conducted audits in accordance with auditing generally accepted in the United States. assessment of therequire risks ofthat material misstatement of the financial whetherassurance due to fraud or Those standards we plan and perform audits to statements, obtain reasonable about error. In the making those risk assessments, thematerial auditor misstatement. considers internal control relevant to the entity’s whether financial statements are free from preparation and fair presentation of the financial statements in order to design audit procedures that are An audit involves performing procedures to obtain audit of evidence about amounts and disclosures of in appropriate in the circumstances, but not for the purpose expressing anthe opinion on the effectiveness Page 2 the entity’s financial statements. procedures selected on the including the the internal control. The Accordingly, we express no depend such opinion. Anauditor’s audit alsojudgment, includes evaluating the assessment of the risks of material the financial statements, whether due toestimates fraud or appropriateness of accounting policiesmisstatement used and theofreasonableness of significant accounting Opinion error. by In management, making thoseas risk assessments, considers internal control relevant to the Page entity’s made well as evaluatingthe the auditor overall presentation of the financial statements. 2 preparation and fair presentation of the financial statements in order to design audit procedures that are In our opinion, the financial statements referred to above present fairly, in all material respects, the We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Opinion The Diocese of Trenton as of June 30, opinion. 2016 and and includes the changes inPage its net financial position ofcontrol. our opinion. the audit entity’s internal Accordingly, we express no such An2015, audit also evaluating the 2 assets its cash flows for statements the yearsused then ended accordance accounting principles generally appropriateness of accounting policies and the reasonableness of significant accounting estimates In our and opinion, the financial referred to in above presentwith fairly, in all material respects, the accepted in the United States. made by management, as well as evaluating the overall presentation of the financial statements. Opinion financial position of The Diocese of Trenton as of June 30, 2016 and 2015, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally Weour believe thatUnited the financial audit evidence we have obtained is sufficient andfairly, appropriate to provide a basisthe for In opinion, the statements referred to above present in all material respects, accepted in the States. our auditposition opinion. of The Diocese of Trenton as of June 30, 2016 and 2015, and the changes in its net financial assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States.

1,958,744 9,117,485 12,188,965 13,747,395

Unrestricted

$ 9,112,609 42,066,302 415,400 1,043,194 1,572,256

YEAR ENDED JUNE 30, 2016 Temporarily Permanently Restricted Restricted

- $ 3 210,378 4,719,453 -

54,209,761

4,929,831

5,791,049

(5,791,049)

60,000,810

(861,218)

TOTAL

Unrestricted

9,112,609 42,066,302 625,778 5,762,647 1,572,256 59,139,592

8,997,601 40,392,685 611,094 262,345 1,644,437

8,997,601 40,392,685 786,038 5,961,684 1,644,437

6,256,028

(6,256,028)

59,139,592

58,164,190

(381,745)

57,782,445

2,868,223 965,319 3,529,666 34,269,261 1,703,675 4,098,889 9,568,677 1,942,944 1,191,753 3,468,841

3,933,700 1,074,634 7,204,234 34,912,045 1,833,092 4,698,822 8,729,485 1,952,764 1,238,520 3,206,461

63,607,248

68,783,757

(3,606,438)

(861,218)

(4,467,656)

(10,619,567)

(381,745)

(11,001,312)

(16,629) (62,346)

(150,025)

(16,629) (212,371)

7,167 4,800 (65,353) 110,458

(123,556)

7,167 4,800 (65,353) (13,098)

(817,279)

1,812,935

(896,254)

(150,025)

(1,046,279)

1,870,007

(4,502,692) 46,436,708

(1,011,243) 10,950,373

812,045

(5,513,935) 58,199,126

(8,749,560) 55,186,268

See accompanying notes.

(817,279)

See accompanying notes.

174,944 5,699,339 5,874,283

Total nonoperating items

Net assets - end of year

TOTAL

51,908,162

Nonoperating items: Amortization of discount and change in actuarial assumption on split-interest agreements Net gain on sale of property Contribution to retirement home Net realized and unrealized gain (loss) on investments Postretirement benefit changes other than net periodic postretirement benefit cost Change in net assets Net assets - beginning of year

YEAR ENDED JUNE 30, 2015 Temporarily Permanently Restricted Restricted

$ 41,934,016

$ 9,939,130

812,045

$ 52,685,191

$ 46,436,708

(123,556)

(505,301) 11,455,674

812,045

$ 10,950,373

812,045

1,812,935 1,746,451 (9,254,861) 67,453,987 $ 58,199,126

Continued on • 28

THE DIOCESE OF TRENTON THETO DIOCESE OF TRENTON NOTES FINANCIAL STATEMENTS THE DIOCESE OF TRENTON NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 NOTES TO FINANCIAL THE DIOCESE OF STATEMENTS TRENTON FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 • FEBRUARY 9, 2017 NOTES TO FINANCIAL STATEMENTS THE DIOCESE OF THE TRENTON MONITOR FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 1. Summary of Significant Accounting Policies (continued) 1. Summary of Significant Accounting Policies (continued) 1. Summary of Significant Accounting Policies (continued) 1. Summary of Significant Accounting Policies (continued) Allowance Accounts 1. Summaryfor ofDoubtful Significant Accounting Policies (continued) Allowance for Doubtful Accounts THE DIOCESE OF TRENTON Allowance Doubtful Accounts The Dioceseforprovides allowances for each of receivable reported in its financial statements. These NOTES TOtype FINANCIAL STATEMENTS Allowance Doubtful Accounts The Diocesefor provides allowances each type of receivable in its financial statements. These allowances maintained atTHE a for level management considers adequate to provide for subsequent FOR YEARS ENDED JUNE 30,reported 2016 AND 2015 The Dioceseare provides allowances for each type of receivable reported in its financial statements. These allowances are maintained at a level accounts. management adequate to by provide for subsequent Allowance for Doubtful Accounts adjustments and potential uncollectible The considers allowance is increased provisions charged to allowances maintained at a for level management considers adequate to provide for subsequent The Dioceseare provides allowances each type of receivable reported in its financial statements. These adjustments and potential uncollectible accounts. The allowance is increased by provisions charged to the statements of activities and reduced by the amount of receivables written-off. Management has Continued from • 27 adjustments and potential uncollectible accounts. The allowance is increased by provisions charged to allowances are maintained at a for level management considers adequate to provide for subsequent The Diocesethe provides allowances each type of amount receivable in its financial statements. These the statements of activities and reduced by the of reported receivables written-off. Management has determined considering the type of receivables, responsible party, historical collection the statements ofmaintained activitiesby and by the amount of receivables written-off. Management has adjustments andallowance potential uncollectible The allowance is increased by provisions charged to allowances are at areduced level accounts. management considers adequate toand provide for subsequent THE THE DIOCESE OF TRENTON DIOCESE OF TRENTON determined the allowance by considering the type(continued) ofare receivables, responsible party, historical collection 1. Summary of Significant Accounting Policies patterns and comparative aging. These estimates reviewed periodically as changes become determined the allowance by considering the type of receivables, responsible party, historical collection the statements of activities and reduced by the amount of receivables written-off. Management has adjustments and potential uncollectible accounts. The allowance is increased by provisions charged to STATEMENTS OF CASH FLOWS STATEMENTS OF CASH FLOWS patterns and comparative aging. These estimates are reviewed periodically and as changes become necessary, they are charged or credited to operations in the periods in which they become known. patterns andthe comparative aging. These estimates reviewed periodically ashistorical changescollection become determined allowance byand considering the typeamount ofare receivables, responsible and party, the statements of activities reduced by the receivables Management has necessary, they are charged or credited to operations in the of periods in whichwritten-off. they become known. necessary, they are chargedby orconsidering credited to operations the periods responsible in which theyparty, become known.collection patterns and comparative aging. These estimates are reviewed periodically and ashistorical changes become determined the allowance the type ofin receivables, for Doubtful Accounts necessary, they are charged or credited to operations in the periods periodically in which theyand become known. become YEARS ENDED FORFOR THE THE YEARS ENDED Allowance patterns and comparative aging. These estimates are reviewed as changes Investments JUNE 30, 30, JUNE necessary, they are charged or credited to operations in the periods in which they become known. These The Diocese provides allowances for each type of receivable reported in its financial statements. Investments 20162016 20152015 Investments allowances maintained at a level management adequate to provide subsequent The Diocesearecarries investments in equity securitiesconsiders with readily determinable fair for values and all Investments The Dioceseand investments in fair equity securities with readily fair values andand all adjustments potential uncollectible accounts. The is increased provisions charged to investments in carries debt securities at their values in theallowance statements ofdeterminable financialbyposition. Realized The Diocese carries investments in equity securities with readily determinable fair values and all CASH FLOWS FROM OPERATING ACTIVITIES CASH FLOWS FROM OPERATING ACTIVITIES investments in debt securities atincluded their fair values in the statements of Purchases financial position. Realized and Investments the of activities and the amount of activities. receivables written-off. Management unrealized gains and losses are in by the statements of andfair sales of securities investments in carries debt securities at reduced their values in the statements financial position. Realized and Thestatements Diocese investments in fair equity securities with readilyofdeterminable values andhas all unrealized gains and lossesbyare included inthe thetype statements of activities. Purchases and sales of securities the allowance considering of the receivables, responsible party, historical collection are recorded a trade-date basis. Interest income is recorded onofthe accrual basis. Dividends are Change in netinassets $ (5,513,935) $ (9,254,861) Change net assets $ (5,513,935) $ (9,254,861) determined unrealized gains and losses are included in the statements of activities. Purchases and sales of securities investments inon debt securities at their fair values in statements financial position. Realized The Diocese carries investments in Interest equity securities with readily determinable fair values andand all are recorded on a trade-date basis. income is recorded on the accrual basis. Dividends are patterns and comparative aging. These estimates are reviewed periodically and as changes become recorded on the date the dividends are payable. Adjustments to reconcile change in netinassets to nettocash Adjustments to reconcile change net assets net cash are recorded a trade-date Interest is statements recorded onofthe accrualposition. basis. Dividends are unrealized gains and losses arebasis. in values the income statements of activities. Purchases and sales of securities investments inondebt securities atincluded their fair in in the financial Realized and recorded onthey the datecharged the dividends are payable. necessary, or credited to operations therecorded periods inonwhich they become known. usedused in operating activities: in operating activities: recorded ongains the date the dividends are payable. are recorded onare a trade-date Interest income is accrual basis. Dividends are unrealized and losses arebasis. included in the statements ofassets activities. Purchases and sales of securities Investment income earned on permanently restricted net and the certain temporarily restricted net recorded onincome the the dividends are Interest payable. earned onAll permanently restricted netrecorded assets and certain temporarily restricted are net Depreciation 1,191,753 are recorded ondate a as trade-date basis. income is on the accrual basis. Dividends Depreciation 1,191,753 1,238,520 1,238,520 Investment assets is restricted to use. other investment income is unrestricted as to use. Investment income earned on permanently restricted net assets and certain temporarily restricted net assets is restricted asthe to use. All other recorded on the date dividends are investment payable. income is unrestricted as to use. Provision for doubtful accounts 4,098,889 Provision for doubtful accounts 4,098,889 4,698,822 4,698,822 Investments assets is restricted to use.onAllpermanently other investment income unrestricted as to use. Investment incomeasearned restricted netisassets and certain temporarily restricted net assets is restricted as to use. All other investment income unrestricted as to use. Net gain on sale of property (4,800) Net gain on sale of property (4,800) Investment income earned on permanently restricted netisassets and certain temporarily restricted net Diocese carries investments in investment equity securities readily determinable Property and Equipment assets is restricted as to use. All other incomewith is unrestricted as to use. fair values and all Net loss 212,371 12,180 Net on lossinvestments on investments 212,371 12,180 The Property andinEquipment investments debt securities at their fair values in the statements of financial position. Realized and Property and Equipment Real estate development sites have been purchased for future parishes, schools and and sales similar Changes in assets and liabilities: Changes in assets and liabilities: unrealized gains and losses are included in the statements of activities. Purchases of purposes, securities Property and Equipment Real estate development sites havecosts beenon purchased for future parishes, schools and similarWhen purposes, and are carried at cost. Carrying such non-operating properties are expensed. such Assessments and other receivables (6,456,062) Assessments and other receivables (6,456,062) (681,761) (681,761) are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are Real estate development sites have been purchased for future parishes, schools and similar purposes, and are carried at cost. Carrying costs the on such non-operating properties are expensed. When such Property and Equipment properties are transferred to recipients, Diocese treats such transfersschools as outright grants in cases on the date the dividends are payable. and carried at cost. Carrying costs onpurchased such non-operating properties are expensed. When such Realare estate development sites have been for future parishes, and similar purposes, Pledges receivable (12,819,632) Pledges receivable (12,819,632) (7,898,724) (7,898,724) recorded properties areamounts transferred to recipients, the Diocese treats such organization. transfers as outright grants in cases where such will Carrying notrecipients, be reimbursed by non-operating thetreats Diocesan All other property and properties are transferred to Diocese such transfers as grants in cases and are carried at cost. costs on such properties are outright expensed. When such Real estate development have beenthe purchased future parishes, schools similar purposes, Prepaid expenses (628,408) Prepaid expenses (628,408) 1,411,847 1,411,847 Investment where suchare amounts willsites not be reimbursed by thefor Diocesan organization. Alland other property and income earned oncost. permanently restricted net assets and certain restricted net equipment also carried at where such amounts will Carrying not be reimbursed by non-operating the treats Diocesan organization. All other property and properties are transferred to recipients, the Diocese suchproperties transfers astemporarily outright grants in cases and are carried at cost. costs on such are expensed. When such equipment are alsoas carried at cost. Accounts payable and other accrued liabilities (25,921) 384,472 Accounts payable and other accrued liabilities (25,921) 384,472 assets issuch restricted towill use. Allbe other investment income is unrestricted as to use.All other property and equipment are also carried at cost. where amounts not reimbursed by the Diocesan organization. properties are toarecipients, Diocese treats such transfers as ofoutright grants cases Depreciation is transferred calculated on straight-linethe basis over the estimated useful lives the assets, as in follows: Claims payable (1,737,311) Claims payable (1,737,311) (583,595) (583,595) Depreciation equipment also carried at is calculated acost. straight-line basisby over estimatedorganization. useful lives of All the other assets,property as follows: where suchare amounts willon not be reimbursed thetheDiocesan and Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, as follows: Funds held held for others 19,542,636 Funds for others 19,542,636 9,413,644 9,413,644 equipment are also carriedand at cost. Buildings - 74 yearsuseful lives of the assets, as follows: Depreciation isEquipment calculated on aimprovements straight-line basis over the5estimated Property and Buildings improvements 5 Furniture and equipment 3 -- 74 10 years Postretirement benefits obligation 1,464,968 (913,371) Postretirement benefits obligation 1,464,968 (913,371) Buildings and 5 74 yearsuseful lives of the assets, as follows: Depreciation is calculated on aimprovements straight-line basis over the3 estimated Furniture and - 10 years Real estate development sitesequipment have been purchased for35future parishes, schools and similar purposes, Furniture equipment -- 10 Buildings and and improvements 74 years years Net Cash UsedUsed in Operating Activities (670,652) Net Cash in Operating Activities (670,652) (2,177,627) (2,177,627) and are carried Buildings at cost. and Carrying costs such non-operating properties are expensed. When such Furniture and equipment 10 years years THEon DIOCESE OF TRENTON improvements 53 -- 74 properties to recipients, the FINANCIAL Diocese treats such transfers as outright grants in cases Donationsare andtransferred Pledges NOTES TO STATEMENTS Furniture and equipment 3 - 10 years THE DIOCESE OF TRENTON Donations and Pledges where suchand amounts willFOR not THE be reimbursed by the Diocesan organization. other property and CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES YEARS ENDED JUNE 30, 2016 AND 2015 asAll Donations Pledges NOTES TO FINANCIAL STATEMENTS Donations are received, including unconditional promisesOF to TRENTON give, are recognized revenue in the period THE DIOCESE also carried at cost. Purchase of property and equipment (673,364) Purchase of property and equipment (673,364) (1,166,997) (1,166,997) equipment Donations and Pledges FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 Donations received, including unconditional promises toand give, are recognized as revenue in the period received atreceived, fair value.including The Diocese reports gifts of cash other as restricted revenue if they are NOTES FINANCIAL STATEMENTS THETO DIOCESE OFto TRENTON Donations unconditional promises give, areassets recognized as revenue in the period received at fair value. TheFOR Diocese reports gifts of cash and other assets as restricted revenue if they are Proceeds from from sale sale of property 4,8004,800 Depreciation Proceeds of property Donations and Pledges isdonor calculated a straight-line over the estimated useful lives the assets, with stipulations that limit thebasis use of the donated assets. When aof donor restriction expires, THE YEARS ENDED JUNE 30, 2016 AND 2015 NOTES TO FINANCIAL STATEMENTS received at fair value. Theon Diocese reports gifts of cash other as restricted revenue if follows: they are Donations received, including unconditional promises toand give, areassets recognized as revenue inasthe period received with donor stipulations that limit the ENDED use of the donated assets. When a donor restriction expires, that is, when avalue. stipulated time restriction ends orJUNE purpose restriction isrestricted accomplished, temporarily Proceeds from from sale sale of investments 7,929,331 Proceeds of investments 7,929,331 9,941,413 9,941,413 received THE YEARS 30, 2016 AND 2015 with donor stipulations that limit the use the donated assets. When aas donor restriction 1. Summary of Significant Accounting Policies received atreceived, fair TheFOR Diocese reports gifts of(continued) cash and other assets as revenue if expires, they are Donations including unconditional promises to are recognized revenue inof the period that is, when aBuildings stipulated time restriction ends or purpose restriction isin accomplished, temporarily andtime improvements 5give, - 74and years restricted net assets are reclassified to unrestricted net purpose assets reported the statements activities Purchase of investments (2,649,043) Purchase of investments (2,649,043) (2,829,978) (2,829,978) that is, when a stipulated restriction ends or restriction is accomplished, temporarily received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, received at fair value. The Diocese reports gifts of(continued) cash and other assets as in restricted revenue ifactivities they are 1. Summary of Significant Accounting Policies restricted net assets are reclassified to unrestricted net assets and reported the statements of Furniture and equipment 3 10 years as net assets released from restrictions. Support, as well as any related investment income, that is The reports giftsreclassified of time land, restriction buildings and equipment asand unrestricted support unless explicit donor net assets are to unrestricted net assets reported in the statements of activities that Diocese is, when a stipulated ends or donated purpose restriction is accomplished, temporarily received with donor stipulations that limit the use ofin the assets. When a donor restriction expires, Notes and loans receivable (602,105) Notes and loans receivable (602,105) (1,331,653) (1,331,653) restricted as net assets released from restrictions. Support, as well asunrestricted any related investment income, that is 1. Summary of Significant Accounting Policies (continued) restricted by the donor is from reported as anunrestricted increase unrestricted net assets ifsupport the restriction expires in the stipulations specify how the donated assets must beassets used. Gifts of long-lived assets with explicit The Diocese reports gifts of land, buildings and equipment as unless explicit donor as net assets released restrictions. Support, as well as any related investment income, that is restricted net assets are reclassified to net and reported in the statements of activities that is, when stipulated time as restriction endsin or purpose restriction is accomplished, temporarily restricted bythat the donor is the reported anrecognized. increase unrestricted net assets if the restriction expires inused the 1. Summary of a Significant Accounting Policies (continued) reporting period in which support isan restrictions specify the assets are toSupport, be used andwell giftsasofnet cash or other assets thatincome, must be stipulations how the donated assets be used. Gifts of long-lived assets with explicit restricted by the donor ishow reported as increase in unrestricted assets ifin the expires in the as assets released from restrictions. as any related investment that is Thenet Diocese reports gifts ofsupport land, buildings andmust equipment asand unrestricted support unless explicit donor restricted netspecify assets are reclassified to recognized. unrestricted net assets reported therestriction statements of activities Net Cash Provided by Investing Activities 4,004,819 Net Cash Provided by Investing Activities 4,004,819 4,617,585 4,617,585 Donations reporting period in which the is to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about and Pledges restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used reporting period indonor which isan recognized. restricted by specify the isthe reported as increase in unrestricted net assets ifsupport the restriction expires in the stipulations how the donated assets be well used. Gifts of long-lived assets with explicit as net assets released from restrictions. Support, as any related investment income, that is The Diocese reports gifts of support land, buildings andmust equipment asasunrestricted unless explicit donor how long those long-lived assets must be maintained, the Diocese reports expirations of donor restrictions to acquireperiod long-lived assets are reported as restricted support. Absent donor stipulations about reporting in which the support restrictions that assets are topromises bemust used and gifts are ofnet cash orexplicit other assets that must used restricted by the specify donor ishow reported asisanrecognized. increase in unrestricted assets if theas restriction expires in the stipulations specify thethe donated assets be Gifts of long-lived assets explicit Donations received, including unconditional to used. give, recognized revenue inwith thebe period when the those donated orhow acquired long-lived assets are placed in service. how long long-lived assets must the Diocese reports expirations ofthat donor restrictions THE DIOCESE OF TRENTON to acquire long-lived assets areassets reported as restricted support. donor stipulations reporting period in which the support is be recognized. restrictions that specify how the aremaintained, to be used and gifts of Absent cash orexplicit other assets must be about used received at fair value. The Diocese reports gifts of cash and other assets as restricted revenue if they are NET NET CHANGE IN CASH ANDAND CASH EQUIVALENTS 3,334,167 2,439,958 CHANGE IN CASH CASH EQUIVALENTS 3,334,167 2,439,958 THETO DIOCESE OF TRENTON when the those donated or acquired long-lived are placed in service. NOTES FINANCIAL STATEMENTS how long long-lived assets must beassets maintained, Diocese reports expirations donor restrictions to acquire long-lived assets are reported as use restricted support. Absent explicit donorofrestriction stipulations about received with donor stipulations that limit the of thethe donated assets. When a donor expires, NOTES FINANCIAL STATEMENTS THETO DIOCESE OF TRENTON THE DIOCESE OF TRENTON FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 when the donated or acquired long-lived assets are placed in service. how long those long-lived assets must be maintained, the Diocese reports expirations of donor temporarily restrictions that is, when a stipulated time restriction ends or purpose restriction is accomplished, CASH ANDAND CASH EQUIVALENTS -NOTES BEGINNING OF YEAR 10,827,965 8,388,007 CASH CASH EQUIVALENTS - BEGINNING OF YEAR 10,827,965 8,388,007 FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 Fair Value Measurements FINANCIAL THETO DIOCESE OF STATEMENTS TRENTON NOTES TO FINANCIAL STATEMENTS when the donated or are acquired long-lived assets are placed in service. restricted net assets reclassified to unrestricted net assets and reported in the statements of activities FOR THE YEARS JUNE 30, 2016 ANDFOR 2015THE YEARS ENDED JUNE 30, Fair NOTES TO ENDED FINANCIAL STATEMENTS 2016Value AND 2015 as assets released from restrictions. as to well related investment that is Fairnet value isMeasurements defined as the price that would Support, be received sellasanany asset or paid to transferincome, a liability in an CASH ANDAND CASH EQUIVALENTS END OF YEAR $ 14,162,132 $ 10,827,965 CASH CASH EQUIVALENTS END OF YEAR $ 14,162,132 $ 10,827,965 FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 Fair value Value restricted by the donor reported as participants an increase in the unrestricted netasset assets if the orderly transaction between market at measurement date. Accounting a Fair isMeasurements defined asisthe price that would be received to sell an or paid torestriction transferstandards aexpires liabilityinset inthe an 1. Summary of Significant Accounting Policies 7 reporting period in which the is recognized. Fair Value Measurements framework for measuring fairsupport value using a three-tier based date. on the Accounting extent to which inputs set used 1. Summary of Significant Accounting orderly transaction market at thehierarchy measurement See accompanying notes. 7a THEPolicies DIOCESE OF TRENTON Fair value is definedbetween as the price thatparticipants would be received to sell an asset or paid to transferstandards a liability in an 7 in measuring fair value arefair observable in the market. hierarchy based on the extent to which inputs used framework measuring value a be three-tier 1. Summary of Significant Accounting Policies 1. Summary of Significant Accounting Policies NOTES FINANCIAL STATEMENTS orderly transaction between market participants at the measurement Accounting setana Fair value isfor defined as the price thatusing would received to sell an assetdate. or paid to transferstandards a liability in THETO DIOCESE OF TRENTON 7 in measuring fair value are observable in the market. 1. Summary of Significant Accounting Policies FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 framework for1:measuring fairmarket value using a three-tier hierarchy based on theAccounting extent to which inputs set used orderly transaction between participants at measurement standards a Level Quoted prices in active markets forthe identical assets ordate. liabilities. General NOTES TO FINANCIAL STATEMENTS 7 General in measuring value are observable in markets the market. framework forfair measuring fair value using a three-tier hierarchy based the extent to which inputs used Level 1: Quoted prices in active for identical oron liabilities. FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 Levelfair 2: value Observable inputs other than Level 1 prices assets such as quoted prices for similar assets or The Diocese of Trenton (the "Diocese"), a nonprofit General General organization, is affiliated with Catholic parishes, in measuring are observable in the market. The Diocese of Trenton (the "Diocese"), a nonprofit organization, is affiliated with Catholic parishes, Level 1: Quoted prices in active markets for identical assets or liabilities. liabilities, quoted that Level are not or inputs (interestprices rates,for currency schools Level 2: Observable inputsmarkets other than 1 active, prices such as quoted similar exchange assets or Generaland various other social service agencies in Burlington, Mercer, Monmouth and Ocean counties schools and various other (the social service agencies Burlington, Mercer, Monmouth andFunding Ocean counties The Diocese ofSignificant Trenton "Diocese"), a nonprofit organization, is affiliated with Catholic parishes, TheinDiocese of within Trenton (thecounties. "Diocese"), a nonprofit organization, isLevel affiliated with Catholic 1:commodity Quoted prices active markets fornot identical or liabilities. rates, ratesin and yield curves) thatactive, are assets observable or corroborated by observable 1. Summary of Accounting Policies New Jersey, which provide services to the communities located these to support liabilities, quoted prices inparishes, markets that are or inputs (interest rates,for currency exchange Level 2: Observable inputs other than Level 1 prices such as quoted prices similar assets or New Jersey, which provide services to the communities located within these counties. Funding to support schools and various socialis service agencies in from Burlington, Mercer, andCatholic Ocean counties TheDiocese Diocese of Trenton (the "Diocese"), a nonprofit organization, is Monmouth affiliated with parishes, schools and various other social service agencies inbenefit Burlington, Mercer,rates, Monmouth Ocean counties - curves) market data and for substantially the full term of the assets or liabilities.or corroborated by observable the and its other programs primarily received assessments, insurance and employee rates yield that are observable 1. Summary of Significant Accounting Policies liabilities, quoted prices inand markets thatLevel are not active, or inputs (interest rates,forcurrency Level 2:commodity Observable inputs other than 1 prices such as quoted prices similar exchange assets or the Diocese and itsprovide programs is service primarily received from assessments, insurance and employee benefit New Jersey, which services toonthe communities located within these counties. Funding to support schools and other social agencies Burlington, Mercer, Monmouth and Ocean counties NewinJersey, which provide services to the communities located within these counties. Funding to support program fees,various donations and income investments. The accompanying financial statements include the market data for substantially the full term of the assets or liabilities. rates, rates and yieldthat curves) that are observable or corroborated by observable quoted prices markets are active, orand inputs (interest rates, currency exchange Level 3:commodity Inputs areinnot observable in not the market reflect management’s judgment about program fees,and donations and income investments. The accompanying financial statements include theassessments,liabilities, the Diocese its programs is primarily received from assessments, andFunding employee benefit New Jersey, which provide services toonthe communities located within these counties. to support the Diocese and its programs is primarily received from insurance and that employee benefit assets, liabilities, net assets, revenues and expenses of the Diocese ofinsurance Trenton Operating Fund, Trust 7 General market data for substantially the fullcurves) term in of the the assets or liabilities. rates, commodity rates and yield thatmarket areinobservable or corroborated by observable the assumptions that market participants would use pricing the asset or liability. judgment assets, liabilities, net assets, revenues and expenses of the Diocese of Trenton Operating Fund, Trust Level 3: Inputs that are not observable and reflect management’s about program fees, donations and income on investments. The accompanying financial statements include the the Diocese and its programs is primarily received from assessments, insurance and employee benefit program fees, donations and income on investments. The accompanying financial statements include the Funds, Seminary Funds, Plant Fund, Insurance Funds, Custodial Funds, Annual Catholic Appeal Fund market dataOperating for substantially the full term of the assets or liabilities. General Funds, Seminary Funds, Plant Fund, Insurance Funds, Custodial Funds, Annual Catholic Appeal Fund the assumptions that market participants would use in pricing the asset or liability. assets, liabilities, net assets, revenues and expenses of the Diocese of Trenton Operating Fund, Trust The Diocese of Trenton (the "Diocese"), a nonprofit organization, is affiliated with Catholic parishes, program fees, donations and income on investments. The accompanying financial statements include the assets, liabilities, net assets, revenues and expenses of the Diocese of Trenton Fund, Trust and Endowment Campaign Fund which are not separately incorporated under civil law. Level 3: Inputs that are not observable in the market and reflect management’s judgment about and Endowment Campaign Fund whichInsurance are not separately incorporated under civil law. Funds, Seminary Funds, Plant Fund, Funds, Custodial Funds, Annual Catholic Appeal Fund schools and various other social service agencies in Burlington, Mercer, Monmouth and Ocean counties assets, liabilities, net assets, revenues and expenses of the Diocese Trenton Operating Fund, Trust Funds, Seminary Funds, Plant Fund, Insurance Funds, Custodial Funds, Annual Catholic Appeal Fund the assumptions thatare market participantsinwould use in pricing the asset or liability. judgment about Level 3: Inputs that not observable the market and reflect management’s The Diocese of Trenton (the "Diocese"), aare nonprofit organization, is ofaffiliated with Catholic parishes, Certain organizations within the Diocese not included in the accompanying financial statements Tax Status See accompanying notes. and Endowment Campaign FundFund, which are not and separately incorporated under civilwhich law. Seeschools accompanying notes. New Jersey, which provide services to Insurance the communities located within these counties. Funding to support Funds, Seminary Funds, Plant Funds, Custodial Funds, Annual Catholic Fund-incorporated Endowment Campaign Fund are notAppeal separately under civil law. that market participants would use in pricing the asset or liability. the assumptions various other social agencies Burlington, Mercer, Monmouth and Ocean counties Certain and organizations within theservice Diocese are notin included inseparate the accompanying financial statements because they operate independent of the Diocese, maintain accounts and operate their own the Diocese andCampaign itsprovide programs is which primarily from assessments, insurance andFunding employee benefit and Endowment Fund are received not separately incorporated under civil law. 5 5 Tax Status New Jersey, services to located within these counties. to support because theywhich operate independent of the thecommunities Diocese, maintain accounts and operate their own qualifiesfinancial as an organization Certain organizations within the Diocese are not included inseparate the accompanying financial Certain organizations within the Diocese are statements not included the Diocese accompanying statements described in Internal Revenue Code Section 501(c)(3) and, services and programs. Some of these are asaccompanying follows: program fees,and donations and income onorganizations investments. The financial statements include the inThe the Diocese its programs is these primarily received from assessments, insurance and employee benefit services and programs. Somethe of organizations arethey as follows: Tax Status accordingly, isqualifies exempt from income.in The Diocese is also exempt from501(c)(3) state income because they operate independent of the Diocese, maintain separate accounts and operate their own Certain organizations within Diocese are not included in the accompanying financial statements because operate independent of the Diocese, maintain separate accounts and as operate their taxes own on The Diocese anfederal organization described Internal Revenue Code Section and, assets, liabilities, net assets, revenues and expenses of the Diocese of Trenton Operating Fund, Trust program fees, donations and income onorganizations investments. The accompanying financial statements include theas follows: Tax Status is exempt from federal taxes on income. The Diocese is also exempt from state income taxes. services and Some ofFund, these are as follows: because theyprograms. operate of the Diocese, maintain separate accounts and operate theirFund own services and programs. Some of these organizations are accordingly, Priests' and Layindependent Retirement Funds Funds, Seminary Funds, Plant Insurance Funds, Custodial Funds, Annual Catholic Appeal The Diocese qualifies as an organization described in Internal Revenue Code Section 501(c)(3) and, assets, liabilities, net assets, revenues and expenses of the Diocese of Trenton Operating Fund, Trust Priests' and Lay Retirement Funds services and programs. Some of which these organizations are as follows: under civil law. taxes. Catholic Charities and Endowment Campaign Fund are not separately incorporated accordingly, isqualifies exempt from taxes described on income.in The Diocese is also exempt from501(c)(3) state income The Diocese as an federal organization Internal Revenue Code Section and, Funds Held For Others Funds, Seminary Funds, Plant Fund, Insurance Funds, Custodial Funds, Annual Funds Catholic Appeal Fund Catholic Charities Priests'Care and Lay Retirement Funds Priests' and Lay Retirement Health Facilities taxes. Held is accordingly, exempt from federal taxes on income. The Diocese is also exempt from state income and Endowment Campaign Fund which are not separately incorporated under civil law. Funds For Others Health Care Facilities Catholic Charities Certain Cemeteries organizations within the Diocese the accompanying financial statements Priests' and Lay Retirement Funds are not included CatholicinCharities The Diocese receives assets from donors and agrees to use the assets on behalf of or to transfer the taxes. Cemeteries Health Care Facilities becauseParish they operate independent of the are Diocese, maintain separate accounts and operatestatements their own Catholic Charities Health in Care Funds Held For Others and Diocesan Schools assets, the return from assets investment ofdonors those and assets, or both to a the specified beneficiary. Resources received Certain organizations within the Diocese not included theFacilities accompanying financial The Diocese receives from agrees to use assets on behalf of or to transfer the Parish and Diocesan Schools servicesCemeteries and Some of these organizations are as follows: Health Care Facilities Cemeteries Funds Held For Others Campus Ministries under those types of agreements are those measured at fair valuetoand reportedbeneficiary. as Funds held for others in the because theyprograms. operate independent of the Diocese, maintain separate accounts and operate their own assets, the return from investment assets, or both specified Resources received The Diocese receives assets fromofdonors and agrees to usea the assets on behalf of or to transfer the Campus Ministries and Diocesan Schools Cemeteries Parish and Diocesan Schools Special Catholic Ministries statements oftypes financial position. are measured at fair value and reported as Funds held for others in the servicesParish and programs. Some of these organizations are as follows: under those of agreements assets, the return from investment of those assets, or both to a specified beneficiary. Resources received The Diocese receives assets from donors and agrees to use the assets on behalf of or to transfer the Special Catholic Ministries Campus Ministries Priests' and Lay Retirement Funds Parish and Diocesan Schools Campus Ministries Diocesan Parishes statements of financial position. under those typesfrom of agreements measured at fair value reportedbeneficiary. as Funds held for others in the assets, the return investmentare of those assets, or both to and a specified Resources received Diocesan Parishes Special Catholic Ministries Catholic Charities Campusand Ministries Special Catholic Ministries Diocesan Charitable Trusts Funds Priests' Lay Retirement statements financial position. are measured at fair value and reported as Funds held for others in the under thoseof types of agreements Diocesan Charitable Trusts Parishes Health Care Facilities Special Catholic Ministries Diocesan Parishes Catholic Insurance Funds statements of financial position. The Diocese hasCharities financial transactions with these organizations consisting Trusts primarily of grants, subsidies Diocesan Charitable Trusts Cemeteries Parishes Diocesan Charitable Health Care Facilities The Diocese has financial transactions these organizations consisting primarily of grants, subsidies Insurance Funds for operations, new equipment, certain with receivables and is a guarantor for certain notes and mortgages Parish and Diocesan Schools Diocesan Charitable Trusts The Diocese maintains Insurance Funds which are unrestricted net assets and account for the financial Cemeteries for operations, new equipment, certain receivables and is a guarantor for certain notes and mortgages The Diocese hasMinistries financial transactions consisting primarily ofwith grants, subsidies The organizations Diocese has financial transactions these organizations consisting primarily of grants, subsidies 7). these payable by these organizations (see Notewith Campus Insurance Funds The activity theseand funds consists primarily of activity of its two insurance programs Note The Diocese maintains Insurance Funds(see which are9). unrestricted net in assets account for the financial Parish and Diocesan Schools 7). payable by these organizations (see Note for new equipment, certain receivables and is a guarantor for certain notes and mortgages Theoperations, Diocese has financial transactions with these organizations primarily ofreceivables grants, subsidies for operations, newconsisting equipment, certain and is a guarantor forand certain notes and mortgages THE DIOCESE OF TRENTON Special Catholic Ministries Insurance Funds insurance employee benefit program fees from affiliated organizations, investment income, cost of of 9). The activity in theseand funds consists primarily activity of its two insurance programs (see Note Campus Ministries 7). payable by these organizations (see Note The Diocese maintains Insurance Funds which are unrestricted net assets account for the financial for operations, new equipment, certain receivables and is a guarantor for certain notes and mortgages 7). payable by these organizations (see Note NOTES TO FINANCIAL STATEMENTS Diocesan Parishes insurance, and claims incurredbenefit and administrative fees. The assets of the Insurance Funds are currently insurance employee program fees from affiliated organizations, investment income, cost of Special Catholic Ministries 9). The activity in these funds consists primarily of activity of its two insurance programs (see Note 7). payable by these organizations (see Note The Diocese maintains Insurance Funds which are unrestricted net assets and account for the financial FOR THE YEARS ENDED 30, 2016 AND 2015 for Funds Diocesan Charitable Trusts Basis ofDiocesan Presentation internally designated to the insurance programs andJUNE are currently available any other Diocesan insurance, claims incurred and administrative fees. The ofnot the Insurance are currently Parishes insurance and employee benefit program fees from organizations, investment income, cost of of 9). affiliated Theassets activity instatements these funds consists primarily activity of its two insurance programs (see Note Basis of Presentation purposes. Claims are recognized in the accompanying financial at the time the loss is internally to the insurance programs andaffiliated are available for Funds any income, other Diocesan Trusts insurance,designated claims incurred and administrative fees. Thecurrently assets ofnotthe Insurance are Diocesan currently has Charitable financial transactions withhave these organizations primarilybasis of grants, subsidies insurance and employee benefit program fees from organizations, investment cost of The Diocese accompanying financial statements been prepared consisting on the accrual of accounting. Basis of Presentation Basis of Presentation incurred. The provision for claims is based on the best estimate of the ultimate cost of the claims which purposes. Claims are recognized in the accompanying financial statements at the time the loss is The accompanying financial statements have been prepared on the accrual basis of accounting. internally designated to theand insurance programs and The are currently for Funds any other for operations, new equipment, certain receivables and its is afinancial guarantor for certain notes and mortgages insurance, claims incurred administrative fees. assets ofnot theavailable Insurance are Diocesan currently Additionally, the Diocese reports information regarding position and activities according to Basis of Presentation The Diocese has financial transactions with these organizations consisting primarily of grants, subsidies includes a The provision for claims incurred but not (IBNR). incurred. provision for is inbased onrecorded the best estimate ofnot the ultimate cost of the claims which Additionally, the Diocese reports information regarding its financial position and activities to The accompanying financial statements have prepared onfinancial the accrual basisand of according accounting. Thebeen accompanying statements have been prepared on thedesignated accrual basis ofclaims accounting. 7). purposes. Claims are recognized the accompanying financial statements at the time the loss is payable by these organizations (see Note internally to the insurance programs and are currently available for any other Diocesan 1. Summary of Significant Accounting Policies (continued) three classes of net assets: unrestricted net assets, temporarily restricted net assets, permanently for operations, equipment, certain receivables and is a guarantor for certain notesand andpermanently mortgages includes a The provision for claims incurred but three classes ofnew net assets: unrestricted net assets, restricted net assets, Additionally, the Diocese reports information regarding its the financial and activities to The accompanying financial statements have beentemporarily prepared on position thereports accrual basis of according accounting. Additionally, Diocese information regarding its financial position and activities according to not incurred. provision for claims isinbased onrecorded the best (IBNR). estimate of the ultimate at costthe of time the claims which purposes. Claims are recognized the accompanying financial statements the loss is restricted assets. payable bynet these organizations (see Note 7). Change in Accounting Policy restricted net assets. three classesthe of net assets: unrestricted net assets, temporarily assets, and permanently Additionally, Diocese reports information regarding its financial positionnet and activities to three classes of netrestricted assets: unrestricted net according assets, temporarily restricted net assets, andclaims permanently includes aThe provision for claims incurred but not incurred. provision for is based onrecorded the best (IBNR). estimate of the ultimate cost of the claims which restricted net assets. three of net assets: unrestricted net assets, temporarily restricted net assets.restricted net assets, and permanently includes a provision for claims incurred recorded (IBNR). Basisclasses of Presentation In May 2015, the FASB issued ASU but No.not 2015-07 (Topic 820), Fair Value Measurement. This ASU restricted net assets. removes the requirement to categorize within the fair value hierarchy all investments for which fair value is Use ofofEstimates Basis Presentation The of accompanying financial statements have been prepared on the accrual basis of accounting. Use Estimates measured using the net asset value (NAV) per share practical expedient. This ASU also removes the Additionally, the of Diocese reports information regarding itsaccounting financial and activities to The preparation financial statements in conformity principles generally in the Use of Estimates Use ofwith Estimates The accompanying financial statements have been prepared on position the accrual basis accepted of according accounting. requirement to make certain disclosures for all investments that are eligible to be measured at fair value The preparation of financial statements in conformity with accounting principles generally accepted in the threeofclasses of Diocese net assets: unrestricted netestimates assets, temporarily restricted assets, and according permanently United States requires management to make and assumptions thatnet affect the amounts reported Use Estimates Additionally, the reports information regarding its financial position and activities to using the net asset value per share practical expedient. Rather, those disclosures are limited to THE DIOCESE OF TRENTON United States requires management to make estimates and assumptions that affect the amounts reported The preparation of financial statements in conformity with accounting principles generally accepted in the The preparation of financial statements in conformity with accounting principles generally accepted in the restricted net assets. in the classes financial statements andunrestricted accompanying notes. resultsrestricted could differ those estimates. three of net assets: netFINANCIAL assets,Actual temporarily netfrom assets, and permanently investments for which the entity has elected to measure the fair value using that practical expedient. The 8 NOTES TO STATEMENTS in the financial statements and accompanying notes. Actual results could differ from those estimates. United States requires management to make estimates andaccounting assumptions that affect themake amounts reported The preparation of financial statements in conformity principles generally accepted in the United with States requires management to estimates and assumptions that affect the amounts reported restricted net assets. guidance in this ASU is effective for the Diocese's year ending June 30, 2018; however, the Diocese FOR THE YEARS JUNE 2016could ANDand 2015 8 in the financial statements and accompanying notes. Actual results differ from the those estimates. United States requires management to makeENDED estimates and30, assumptions that affect amounts reported in the financial statements accompanying notes. Actual results could differ from those estimates. chose early adoption of this new guidance for the year ended June 30, 2016. The fair value amounts in theofand financial statements and accompanying notes. Actual results could differ from those estimates. 8 Use Estimates Cash Cash Equivalents presented in the tables are intended to permit reconciliation of the fair value hierarchy to the line items Cash and Cash Equivalents 8 presented in the statements of financial position. Use of Estimates Thehighly preparation of financial statements in dates conformity withmonths accounting principles generally accepted in the All investments with maturity of three or less when purchased are considered Cash andliquid Cash Equivalents Cash and Cash Equivalents 1. Summary of investments Significant Accounting Policies All highly liquid with maturity dates of(continued) threeand months or less when purchased are considered United States requires management to make estimates assumptions that affect the amounts reported cash equivalents. In January 2016, the FASB issued ASU No. 2016-01 (Topic 825-10), Recognition and Measurement of Cash and Cash Equivalents The preparation of financial statements in conformity with accounting principles generally accepted in the cash equivalents. All highly liquidstatements investments with maturity dates three months or could less when are considered Allofhighly liquid investments withpurchased maturity dates of three monthsFinancial or less when purchased are considered in the financial and accompanying notes. Actual results differ from those estimates. Assets and Financial Liabilities. This eliminates the requirement for non-public entities to United States requires management to make estimates and assumptions that affect the amounts reported cash equivalents. All highly liquid investments with maturity datescash of three months or less when purchased are considered equivalents. disclose fair value information for financial instruments not measured at fair value in the statements of in the financial statements and accompanying notes. Actual results could differ from those estimates. Allowance for Doubtful Accounts cash equivalents. financial position. Consequently, fair value disclosures are only provided for financial instruments recorded at fair value. The guidance in this ASU is effective for the Diocese's year ending June 30, 2020; CashDiocese and Cash Equivalents The provides allowances for each type of receivable reported in its financial statements. These however the Diocese chose early adoption of this new guidance for the year ended June 30, 2016. allowances are maintained at a level management considers adequate to provide for subsequent Cash andliquid Cashinvestments Equivalentswith maturity dates of three months or less when purchased are considered All highly adjustments and potential uncollectible accounts. The allowance is increased by provisions charged to Continued on • 29 cash equivalents. All liquid investments of amount three months or less when purchased are considered the highly statements of activities with and maturity reduced dates by the of receivables written-off. Management has 6 6 cash equivalents. determined the allowance by considering the type of receivables, responsible party, historical collection Recently Issued Accounting Standards 6 patterns and comparative aging. These estimates are reviewed periodically and as changes become 6 On August 18, 2016, the FASB issued ASU No. 2016-14 (Topic 958), Presentation of Financial 6 necessary, they are charged or credited to operations in the periods in which they become known.

28 ANNUAL REPORT

Diocese of Trenton Financial Statements:

Statements of Cash Flow:

Notes to Financial Statements:

For the Years Ended June 30, 2016 and 2015

Non-lendable Fund Non-lendable Fund

1. Summary of Significant Accounting Policies (continued)

$ 2,928,470 $ $ 2,928,470 $

Daily Daily

1 day 1 day

The Blackrock Equity Index Non-lendable Fund ("Fund") is a privately-held commingled vehicle consisting Index Fund ("Fund") a privately-held vehicle ofThe USBlackrock large cap Equity equities. It isNon-lendable passively-managed with theisgoal of replicatingcommingled the performance ofconsisting the S&P In May 2015, the FASB issued ASU No. 2015-07 (Topic 820), Fair Value Measurement. This ASU of US largeThe capFund equities. is passively-managed with the goalperiod of replicating performance the S&P 500 Index. has Itdaily liquidity with a one-day notice and hasthe a T+3 settlementof process FEBRUARY 9, 2017 •to TrentonMonitor.com removes the requirement categorize within the fair value hierarchy all investments for which fair value is 500 Index. The Fund has daily liquidity with a one-day notice period and has a T+3 settlement process before releasing funds to the client. measured using the net asset value (NAV) per share practical expedient. This ASU also removes the before releasing funds to the client. The following is a description of the valuation methodologies used for investments measured at fair value: requirement to make certain disclosures for all investments that are eligible to be measured at fair value The following is a description of the valuation methodologies used for investments measured at fair value: using the net asset value per share practical expedient. Rather, those disclosures are limited to Mutual funds - Valued at the net asset value of shares held by the Diocese at year-end. Mutual investments for which the entity has elected to measure the fair value using that practical expedient. The Mutual funds - Valued at the asset value shares held the Diocese Mutual funds held by the Diocese are net open-end mutualoffunds that areby registered with at theyear-end. Securities and guidance in this ASU is effective for the Diocese's year ending June 30, 2018; however, the Diocese funds heldCommission. by the Diocese are open-end funds that aretheir registered withand the to Securities Exchange These funds are mutual required to publish daily NAV transact and at THE DIOCESE OFTHE TRENTON DIOCESE OF TRENTON chose early adoption of this new guidance for the year ended June 30, 2016. The fair value amounts Exchange Commission. These funds areDiocese requiredare to deemed publish their NAV and to transact at that price. These mutual funds held byFINANCIAL the to bedaily actively traded. NOTES TO FINANCIAL STATEMENTS NOTES TO STATEMENTS presented in the tables are intended to permit reconciliation of the fair value hierarchy to the line items that price. These mutual funds held by the Diocese are deemed to be actively traded. FOR THE ENDED JUNE 30,fund 2016isAND 201530, FOR THE YEARS ENDED JUNE 2016 presented in the statements of financial position. Mutual fundYEARS - Blackrock Equity Index a mutual fund thatAND is not2015 actively traded; valued at the Mutual - Blackrock fund is aatmutual fund that is not actively traded; valued at the net assetfund value of shares Equity held byIndex the Diocese year-end. In January 2016, the FASB issued ASU No. 2016-01 (Topic 825-10), Recognition and Measurement of net asset value of shares held by the Diocese at year-end. Continued from • 28 THE DIOCESE OF TRENTON Financial Assets and Financial Liabilities. This eliminates the requirement for non-public entities to Common stocks - Shares in companies traded on national securities exchanges are valued at the NOTES TO FINANCIAL STATEMENTS Common stocks - Shares inactive companies on the national securities exchanges are valued at the 1. Summary of Significant Accounting Policies (continued) 2 . Fair Value Measurements disclose fair value information for financial instruments not measured at fair value in the statements of closing price reported in the markettraded in which individual securities are traded. FOR THEfair YEARS JUNE 30, 2015 for financial instruments closing price reported in the active market in which the individual securities are traded. financial position. Consequently, valueENDED disclosures are 2016 only AND provided Change in Accounting Policy The following table sets agency forth by issues level, within the fairon value hierarchy, the quotes Diocese's instruments U.S. government - are based institutional bond andfinancial evaluations based recorded at fair value. The guidance in this ASU is effective for the Diocese's year ending June 30, 2020; U.S. agency issues - are based on institutional bond quotes and evaluations based carriedon at fairgovernment value: various market and industry inputs. however the Diocese chose early adoption of this new guidance for the year ended June 30, 2016. In May 2015, the FASB on issued ASU No. 2015-07 (Topic 820), Fair Value Measurement. This ASU various market and industry inputs. June 2016 removes the requirement Certificates to categorizeofwithin the -fair value hierarchy all investments for30, which fair valueare is estimated using deposit Fair value of fixed-maturity certificates of deposit 1. Summary of Significant Accounting Policies (continued) 1 remaining Level 2 Level 3 Total Certificates ofoffered deposit - deposits Fair practical value of expedient. fixed-maturity certificates deposit are estimated using measured using the net rates asset value (NAV) perforshare This ASU also of removes the currently of Level similar maturities. Change Accounting PolicyStandards rates currently offered for deposits that of similar remaining requirement to make certain disclosures for all investments are eligible to bematurities. measured at fair value RecentlyinIssued Accounting Investments: 3. Assessments, Notespractical and Other Receivables using the net asset value share expedient. Rather, those disclosures are limited to Mutualper funds In 2015,18,the2016, FASBthe issued No. ASU 2015-07 820), Fair Value Measurement.of This ASU 3. Assessments, Notes and Other Receivables OnMay August FASBASU issued No.(Topic 2016-14 (Topic 958), Presentation Financial investments for which the entity has elected to measure the$consist fair2,094,829 value using $ that practical - $expedient. -The $ 2,094,829 Equitynotes Assessments, and other receivables of the following: removes the requirement to categorize within the fair value hierarchy all investments for which fair value is Statements of Not-for-Profit Entities (“Update”). The Update reduces the number of net assetguidance classes from in this ASU is effective for equity the year ending June 30,following: 2018; however, the Diocese Assessments, notes and Diocese's other receivables consist of the International 467,283 467,283 measured using the net asset value (NAV) per share practical expedient. This ASU also removes the three to two, those with donor restrictions and those without, requires all nonprofits to reportchose expenses by early adoption of this new guidance for the year ended8,745,490 June 30, 2016. The -fair value June amounts Fixed income - 30, 8,745,490 requirement to makeand certain disclosures for allpresented investments that arestatements eligible to be atisfair value nature and function improves information in financial andmeasured notes that useful in presented in the tables are intended to permit reconciliation of the fair value hierarchy to the line items 2016 June 30, 2015 Common stocks using the anet asset valueliquidity, per share practical expedient.andRather, thoseThe disclosures limited assessing not-for-profit's financial performance, cash flows. guidance are in this ASUinto isthe statements presented of financial position. THE 30, DIOCESE OF TRENTON 2016 2015 investments for which the entity has elected to measure thefor fair valueperiods using that practical expedient. The 79,440 79,440 Consumer goods and services effective for the Diocese's year ending June 2019, and interim within fiscal years beginning OF NOTES TO STATEMENTS guidance in this15, ASU is effective forTHE the DIOCESE Diocese's yearTRENTON ending 30, 2018; however,InThe the Diocese Assessments January 2016, the FASB issued products ASU No. 2016-01 Measurement Business and services(Topic 825-10), 344,615Recognition and -$ 15,366,424 - $of13,761,479 344,615 after December 2018. Early application of FINANCIAL the amendments inJune this Update is permitted. NOTES TO for FINANCIAL STATEMENTS THE YEARS ENDED 30,June 2016 AND 2015has Assessments $ 15,366,424 $ 13,761,479 chose early inadoption of thisofFOR new guidance the year ended 30, 2016. The not fair elected value amounts Due fromgoods participating organizations Financial Assets and Financial Liabilities. This eliminates for theinsurance requirement for non-public entities is currently the process determining the impact ofJUNE the new standard, and to early Capital 37,951 - 24,887,728 - to21,585,873 37,951 FOR THE YEARS ENDED JUNE 30,of2016 ANDvalue 2015hierarchy to the line items Due from participating organizations for insurance 24,887,728 21,585,873 presented tables are intended to permit reconciliation the fair Notes 13,094,101 disclose fair value information for financial instruments not measured statements implement in thethe amendments. Energy 2,028 at fair value in- the - of12,647,589 2,028 Notes 13,094,101 12,647,589 presented in the statements of financial position. Loans 5,823,287 5,667,424 financial position. Consequently, only provided for financial instruments Financial fair value disclosures are 147,394 147,394 Loans 5,823,287 5,667,424 Seminary tuition 1,315,725 1,230,881 recorded at fair value. The guidance in this ASU is effective for the Diocese's year ending June 30, 2020; Other 34,078 34,078 . Fair Value In 2January 2016,Measurements the FASB issued ASU No. 2016-01 (Topic 825-10), Recognition and Measurement of Seminary tuition of trusts 1,315,725 1,230,881 Due fromadoption charitable 1,657,087 however the Diocese chose early this new guidance for the year ended June 30,1,877,974 2016. 2Financial . Fair Value Measurements International 25,857 25,857 Assets and Financial Liabilities. This eliminates the requirement for non-public entities to Due from charitable trusts 1,877,974 1,657,087 Accrued interest 20,123 22,522 The following table sets forth by level, within the fair value hierarchy, the Diocese's financial instruments disclose fair value information for financial instruments not measured at fair value in the statements of U.S. government agency issues - OF TRENTON 900,324 900,324 THE DIOCESE Accrued interest 20,123 22,522 Other 2,390,765 1,145,105 The following table sets forth by level, within the fair value hierarchy, the Diocese's financial instruments carried at fair value: financial position. Consequently, fair value disclosures are only provided for financial instruments Certificates 827,971 827,971 NOTES TO FINANCIAL STATEMENTS Other of deposit 2,390,765 - 57,717,960 1,145,105 carried at fair value: 64,776,127 Recently Issued Accounting Standards FOR THE YEARS ENDED JUNE 30, 2016 AND recorded at fair value. The guidance in this ASU is effective for the Diocese's 30, 2020; June 30, 2016year ending June 2015 Total fair value 64,776,127 57,717,960 Lessinvestments allowance in forthe doubtful accounts (34,878,478) (30,779,589) THE DIOCESE OF TRENTON June 30,year 2016ended however the Diocese chose early adoption of this new for 2the Level 1 guidance Level Level 3June 30, 2016. TotalAugust 18, 2016, the $ 11,978,965 $ 1,728,295 $ - $(30,779,589) 13,707,260 hierarchy Less allowance for ASU doubtful accounts (34,878,478) On FASB issued No. 2016-14 (Topic 958), Presentation of Financial NOTES TO FINANCIAL STATEMENTS Level 1 Level 2 Level 3 Total Investments: Statements of Not-for-Profit Entities (“Update”). The Update reduces theJUNE number net$asset classes from 29,897,649 $ 26,938,371 FOR THE YEARS ENDED 30,of2016 AND 2015 Investments: measured at those NAV without, requires all nonprofits to report 1,529,524 Mutual funds $ 29,897,649 $ 26,938,371 three to two, those with Investments donor restrictions and expenses by Assessments, Notes and Other Receivables (continued) MutualIssued funds Accounting Standards $ 2,094,829 $ Recently nature and function3.and improves information presented in financial statements and notes that is useful in - $ - $ 2,094,829 Equity 11 Total investments at fair valueperformance, and cash flows. The guidance in this ASU is $ 15,236,784 $ 2,094,829 $ - -$ - -$ 2,094,829 Equity 11 assessing a not-for-profit's liquidity, financial 467,283 As of June 30, 2016, notes totaling approximately $1,688,000 are collectible in the next year and the On AugustInternational 18, 2016,equity the FASB issued ASU467,283 No. 2016-14 (Topic 958), Presentation of Financial effective for the Diocese's year ending June and 30,2 2019, and for interim periods within fiscal years beginning International equity 467,283 - - 467,283 3. Assessments, Notes Other Receivables (continued) Fixed income 8,745,490 8,745,490 remainder are collectible in 9 years; loans are collectible in 2 6 years. As of June 30, 2015, notes Statements of Not-for-Profit Entities (“Update”). The Update reduces the number of net asset classes from after December 15,totaling 2018. $3,220,000 Early application of the amendments in this Update is permitted. The Diocese Fixed income 8,745,490 8,745,490 arenotes collectible in the next year and the remainder are collectible in 2 - 10year years; stocks three toCommon two, those with donor restrictions and those without, requires all nonprofits- to report expenses by of June 30, 2016, totaling $1,688,000 arenot collectible in early the next andloans the is currently in the As process of determining the impact ofapproximately the new standard, and has elected to Common stocks and are collectible in 2 - 6 years. 79,440 in financial statements goods and services nature andConsumer function improves information presented and notes that 79,440 is useful in June 30, 2015 As of June 30, 2015, notes remainder are collectible in 2 9 years; loans are collectible in 2 6 years. implement the amendments. 79,440 - -flows. The guidance - 79,440 Consumer goods and and services Business products services 344,615 344,615 assessing a not-for-profit's liquidity, financial performance, and cash in this ASU is Leveland 2 other Level 3 Total totaling $3,220,000 are collectible in the advanced nextLevel year1and the remainder are collectible in 2various - 10 years; loans Notes and loans receivable are funds to parishes affiliates for purposes. products services 344,615 - periods 344,615 effectiveBusiness for the Diocese's year ending June 30, 2019, within- fiscal years beginning Capital goods and 37,951and for interim 37,951 are collectible in 2 - 6bearing years. notes and loans is recognized over the term of the note or loan and is Investments: Interest on interest Capital goods - 37,951 after December 15, 2018. Early application of37,951 the2,028 amendments in -this The Diocese Energy - Update is permitted. 2,028 Mutualmonthly funds calculated using theare simple-interest method on principal outstanding. Generally, the Notes and loans receivable funds advanced to parishes and amounts other affiliates for various purposes. is currently in the process of determining the impact and has to early Energy 2,028 - - - not elected 2,028 Financial 147,394of the new standard, 147,394 notes and loans are bearing not considered past$loans due orisdelinquent. Management considers notes andand loans 2,238,480 $ - $ - the $ 2,238,480 Equity Interest on interest notes and recognized over the term of the note or loan is implement the amendments. Financial 147,394 - - 147,394 Other 34,078 34,078 to be impaired whenusing the note or loan, or a portion of the or loan, uncollectible based the on: International equity 1,321,727 - is deemed 1,321,727 calculated monthly the simple-interest method on note principal amounts outstanding. Generally, Other 34,078 34,078 International 25,857 25,857 the Diocese's historical collection patterns, the borrower's Management failure- to repay the -note or loan,and adverse Fixed Income 11,711,175 notes and loans are not considered past due or delinquent. considers the11,711,175 notes loans International 25,857 - 25,857 situations thatstocks may affect the or borrower's to ofrepay, the or estimated value of uncollectible underlying orbased potential U.S. government agency issues 900,324 900,324 to be Common impaired when the note loan, or aability portion the note loan, is deemed on: U.S. government agency issues - 900,324 - 900,324 collateral, and current economic conditions. Certificates of deposit 827,971 827,971 122,828 Consumer goods and servicespatterns, the the Diocese's historical collection borrower's failure - to repay the note or 122,828 loan, adverse Change in Accounting Policy

ANNUAL REPORT 29

Diocese of Trenton Financial Statements:

For the Years Ended June 30, 2016 and 2015

Notes to Financial Statements:

Certificates of depositin the fair value Total investments Total investments hierarchy in the fair value hierarchy

827,971 $ 11,978,965 $ 1,728,295 $ $ 11,978,965 $ 1,728,295 $

827,971 - $ 13,707,260 - $ 13,707,260

Energy 6,519 6,519 2015 Financial 203,238 203,238 Other 33,484 33,484 Balance - beginning of year $ 4,354,144 $ 4,336,144 2016 2015 International 41,919 41,919 Increase in allowance for specific notes and loans 18,175 18,000 U.S. government agency issues 901,341 901,341 Decrease in allowance for specific notes and loans (40,000) Balance -ofbeginning Certificates deposit of year 827,760 $ 4,354,144 - $ 4,336,144 827,760 Increase in allowance for specific notes and loans 18,175 18,000 Total investments fair value Balance - end in ofthe year $ 4,332,319 4,354,144Decrease and loans (40,000)- $$ 17,800,973 16,071,872 $ 1,729,101 $ hierarchy in allowance for specific$ notes

Activity in the allowance for doubtful accounts for notes and loans is as follows: 2016

1,529,524 1,529,524 $ 15,236,784 $ 15,236,784

Investments measured at NAV Investments measured at NAV Total investments at fair value Total investments at fair value June 30, 2015 June2 30, 2015 Level 3 Level Level 2 Level 3

Level 1 Level 1

Investments: Investments: Mutual funds MutualEquity funds $ 2,238,480 $ - $ $ 2,238,480 - -$ Equity International equity 1,321,727$ International equity 1,321,727 - Fixed Income 11,711,175 Fixed Income 11,711,175 Common stocks Common stocks goods and services Consumer 122,828 122,828 - Consumer and and services Businessgoods products services 337,080 Business 337,080 - Capital products goods and services 55,422 Capital goods 55,422 - Energy 6,519 Energy 6,519 - Financial 203,238 Financial 203,238 - Other 33,484 Other 33,484 - International 41,919 International 41,919 U.S. government agency issues 901,341 U.S. government agency issues - 901,341 Certificates of deposit 827,760 THE DIOCESE OF TRENTON Certificates of depositin the fair value 827,760 Total investments THETO DIOCESE OF TRENTON NOTES FINANCIAL STATEMENTS Total investments fair value $ FINANCIAL 16,071,872 $ 30, 1,729,101 hierarchy in theFOR NOTES TO STATEMENTS THE YEARS ENDED JUNE 2016 AND$ 2015 $ 16,071,872 $ 1,729,101 $ hierarchy

FOR THE YEARS ENDED JUNE 30, 2016 AND 2015

Investments measured at NAV Investments measured at NAV Total Value investments at fair value (continued) 2. Fair Measurements investments at fair value (continued) 2.Total Fair Value Measurements

Total Total

- $ 2,238,480 - -$ 2,238,480 1,321,727 - 1,321,727 11,711,175 11,711,175 122,828 122,828 337,080 337,080 55,422 55,422 6,519 6,519 203,238 203,238 33,484 33,484 41,919 41,919 901,341 901,341 827,760 827,760 - $ 17,800,973 - $ 17,800,973 -

2,928,470 2,928,470 $ 20,729,443 $ 20,729,443

The following table sets forth additional disclosures for the investments whose fair value is estimated The forth for the investments whose fair value is estimated 10 usingfollowing net assettable valuesets (NAV) as additional of June 30,disclosures 2016 and 2015: 10 using net asset value (NAV) as of June 30, 2016 and 2015:

2016 2016 Blackrock Equity Index Blackrock Equity Index Non-lendable Fund Non-lendable Fund 2015 2015 Blackrock Equity Index Blackrock EquityFund Index Non-lendable Non-lendable Fund

Fair Value Fair Value

Unfunded Unfunded Commitments Commitments

Redemption Redemption Frequency Frequency

Redemption Redemption Notice Period Notice Period

$ $

1,529,524 $ 1,529,524 $

Daily Daily

1 day 1 day

$ $

2,928,470 $ 2,928,470 $

Daily Daily

1 day 1 day

situations thatallowance may affect the borrower's ability repay, estimated value of underlying or potential Business products and services 337,080 337,080 Activity in the for doubtful accounts for to notes andthe loans is -as follows: collateral, and current Capital goods economic conditions. 55,422 55,422

The Blackrock Equity Index Non-lendable Fund ("Fund") is a privately-held commingled vehicle consisting The Blackrock Index Non-lendable Fund ("Fund") is goal a privately-held commingled vehicleof consisting of US large capEquity equities. It is passively-managed with the of replicating the performance the S&P of USIndex. large The cap equities. is passively-managed with the goal period of replicating thea performance of the S&P 500 Fund hasIt daily liquidity with a one-day notice and has T+3 settlement process 500 Index. The Fund daily liquidity with a one-day notice period and has a T+3 settlement process before releasing fundshas to the client. before releasing funds to the client. The following is a description of the valuation methodologies used for investments measured at fair value: The following is a description of the valuation methodologies used for investments measured at fair value: Mutual funds - Valued at the net asset value of shares held by the Diocese at year-end. Mutual Mutual funds Valued at the asset value of shares heldare byregistered the Diocese year-end. Mutual funds held by-the Diocese arenet open-end mutual funds that withatthe Securities and funds held Commission. by the DioceseThese are open-end mutual funds are their registered with the and Exchange funds are required to that publish daily NAV andSecurities to transact at Exchange funds to publish daily NAVtraded. and to transact at that price. Commission. These mutual These funds held by are the required Diocese are deemedtheir to be actively that price. These mutual funds held by the Diocese are deemed to be actively traded. Mutual fund - Blackrock Equity Index fund is a mutual fund that is not actively traded; valued at the Mutual fund - Blackrock Index is a at mutual fund that is not actively traded; valued at the net asset value of sharesEquity held by the fund Diocese year-end. net asset value of shares held by the Diocese at year-end. Common stocks - Shares in companies traded on national securities exchanges are valued at the Common stocks - Shares in active companies traded on national securities exchanges are valued at the closing price reported in the market in which the individual securities are traded. closing price reported in the active market in which the individual securities are traded. U.S. government agency issues - are based on institutional bond quotes and evaluations based U.S. government issuesinputs. - are based on institutional bond quotes and evaluations based on various marketagency and industry on various market and industry inputs. Certificates of deposit - Fair value of fixed-maturity certificates of deposit are estimated using

4 . Pledges Receivable, net Balance -measured end of year $ 4,332,319 $ 4,354,144 Investments at NAV 2,928,470 Pledges receivable consist of the following at June 30, 2016 and 2015: 4Total . Pledges Receivable, net investments at fair value $ 20,729,443 Faith to Move Mountains Endowment Campaign Pledges receivable consist of the following at June 30, 2016 and 2015: In 2015, the Diocese embarked on a Diocesan-wide campaign, "Faith to Move Mountains", seeking to 10 9 Faith Mountains Campaign raise to a Move minimum of $75 Endowment million to secure sustainable endowments needed to meet long-term pastoral and temporal needs, including: Parishes $22.5 million, Diocesan Parish Assistance Fund $7.5 million, In 2015, the Diocese embarked on a Diocesan-wide campaign, "Faith to Move Mountains", seeking to Catechesis and Evangelization - $5 million, Ordainedendowments Ministry - $20 million, Catholic Schools - $15 raise a minimum of $75 million to secure sustainable needed to meet long-term pastoral million, and Social $5 million. Parishes receiveParish 30% Assistance of the cashFund raised from their and temporal needs, Services including:- Parishes - $22.5 million,will Diocesan - $7.5 million, parishionersand up Evangelization to their goal amount, and 70% will be transferred charitable trusts to establish Catechesis - $5 million, Ordained Ministry - $20 to million, Catholic Schools - $15 endowments for theServices aforementioned purposes. Once their goal has30% beenofreached, parishes receive million, and Social - $5 million. Parishes will receive the cash raised will from their 70% of the amount over goal their amount, goal, with the70% trusts the remaining 30%. trusts It is expected that parishioners up to their and willreceiving be transferred to charitable to establish approximately $22.5 million will be returned to the parishes. endowments for the aforementioned purposes. Once their goal has been reached, parishes will receive 70% the 30, amount their goal, the trusts receiving the remaining 30%. It isand expected that 2016 over and 2015, there with are unpaid pledges of approximately $22,321,000 $8,218,000, As ofofJune approximately $22.5 million will2016 be returned to the parishes. $29 million and $10 million, respectively, of and 2015 approximately respectively. As of June 30, cash receivable notthere yet transferred parishesofand charitable trusts is included Funds held and 2015, are unpaidtopledges approximately $22,321,000 andin$8,218,000, As of and Junepledges 30, 2016 for others in the financial and position. 2015 approximately $29 million and $10 million, respectively, of respectively. As statements of June 30,of2016

cash and pledges receivable Annual Catholic Appeal Fundnot yet transferred to parishes and charitable trusts is included in Funds held for others in the statements of financial position. The Diocese conducts its Annual Catholic Appeal each year beginning in January and ending in THE DIOCESE OF TRENTON Annual Catholic Fund December. TheAppeal proceeds of the Appeal are used to support various social service and other programs NOTES TO FINANCIAL STATEMENTS 2015 Appeals was in to administered by the Diocese and affiliated organizations. Theyear goalbeginning of the 2016 The Diocese conducts itsFOR Annual Catholic AppealJUNE each in and January and ending THE YEARS ENDED 30, 2016 AND 2015 raise $7,000,000 each year.of Each parish are receives of its goal if itssocial goal isservice reached, an programs additional December. The proceeds the Appeal used 15% to support various andand other 50% of the amount excess of itsorganizations. target goal. administered by therealized Dioceseinand affiliated The goal of the 2016 and 2015 Appeals was to

raise $7,000,000 each year. Each parish receives 15% of its goal if its goal is reached, and an additional 4. Pledges Receivable, netin(continued) 50% of the amount realized excess of its target goal.

As of June 30, 2016, the Diocese raised 2016 Appeal pledges of approximately $4,700,000 of which approximately $488,000 remained unpaid at that date. As of June 30, 2015, the Diocese raised 2015 Appeal pledges of approximately $5,800,000 of which approximately $627,000 remained unpaid at that 12 date. As of June 30, 2016 and 2015, approximately $799,000 and $1,047,000, respectively, of cash and pledges receivable not yet transferred to parishes is included in Funds held for others in the statements of financial position. 12 Amounts to be received under the Faith to Move Mountains Endowment Campaign and the Annual Catholic Appeal Fund as of June 30, 2016 and 2015 are as follows:

Receivable in less than one year Receivable in one year to five years Receivable in five years or more Total unconditional promises to give Less: Effect of discount to net present value Unconditional Promises to Give - Net

2016 8,008,483 $ 14,650,816 149,329 22,808,628 (1,361,559) $ 21,447,069 $ $

2015 3,124,288 5,720,593 8,844,881 (217,444) 8,627,437

Continued on • 30

5 . Investments A summary of investments by type is reported below: June 30, 2016

June 30, 2015

Appeal pledges of approximately $5,800,000 of which approximately $627,000 remained unpaid at that date. As of June 30, 2016 and 2015, approximately $799,000 and $1,047,000, respectively, of cash and pledges receivable not yet transferred to parishes is included in Funds held for others in the statements of financial position.

30 ANNUAL REPORT

Amounts to be received under the Faith to Move Mountains Endowment Campaign and the Annual Catholic Appeal Fund as of June 30, 2016 and 2015 are as follows: 2016 $ 8,008,483 $ 14,650,816 149,329 22,808,628 (1,361,559) $ 21,447,069 $

not covered by insurance are funded by the affiliated organizations' contributions and the assets of the loss payment fund. The Diocese is involved in several pending legal matters. In the opinion of the Diocese's management, the final resolution of these matters will not have a material adverse effect on the THEhas MONITOR • FEBRUARY 9, 2017 Diocese's financial position. To the extent a liability been determined, a reserve has been accrued at June 30, 2016 and 2015. Medical Fund: The Diocese's medical benefit plan provides reimbursement for the cost of medical expenses, subject to various limits, for Diocesan clergy and lay employees. The Diocese has obtained insurance coverage for these medical costs. The plan also includes a provision for life insurance benefits of $2,000, plus modest disability and dental benefits for Diocesan clergy. THE DIOCESE OF TRENTON Additionally, the plan provides for Long-Term Disability for lay employees. The benefits paid by NOTES TO FINANCIAL STATEMENTS these funds and the insurance premiums are funded by assessments to the participating FOR THE YEARS ENDED JUNE 30, 2015 AND 2014 organizations.

2015 3,124,288 5,720,593 8,844,881 (217,444) 8,627,437

Diocese of Trenton Financial Statements:

Notes to Financial Statements:

Pledges that are due beyond one year are discounted using a discount rate of 2.9%. Pledges receivable at June 30, 2016 and 2015 are reported at net realizable value which is the amount the Diocese expects to collect. 5 . Investments A summary of investments by type is reported below: June 30, 2016 Cost Mutual funds: Equity International equity Fixed income Common stocks U.S. government agency issues Certificates of deposit

June 30, 2015

Fair Value

2,823,142 424,733 8,562,395 344,057 900,286 827,971

$ 13,882,584

Cost

3,624,353 467,283 8,745,490 671,363 900,324 827,971

$ 15,236,784

3,528,743 1,057,742 11,317,488 455,556 899,708 827,760

$ 18,086,997

Fair Value $

5,166,950 1,321,727 11,711,175 800,490 901,341 827,760

$ 20,729,443

Net unrealized loss on investments of $(1,288,246) in 2016 and net unrealized loss on investments of $(1,641,033) in 2015 are included in net realized and unrealized gains on investments in the statements of activities. Investment expense of $25,704 and $28,641 for the years ended June 30, 2016 and 2015, respectively, are included in legal and professional fee expense in the statements of activities. THE DIOCESE OFasTRENTON These investments are exposed to various risks such market volatility, interest rate and credit risks. THE DIOCESE NOTES TO FINANCIAL STATEMENTS Due to the level of risk associated with investments, itOF is TRENTON at least reasonably possible that changes in the NOTES TOnear FINANCIAL STATEMENTS THE YEARS ENDED 30, 2016 2015could materially affect the values of these securities FOR will occur in the termJUNE and that such AND changes FOR THEofYEARS ENDED JUNE 30, 2016 AND 2015 amounts reported in the statements financial position. 6. Property and Equipment 6. Property and Equipment A summary of property and equipment is as follows: A summary of property and equipment is as follows:

June 30, 2016 June 30, 2015 2016 2015 $ 14,835,883 $ 14,718,506 $ 14,835,883 18,869,180 $ 14,718,506 18,640,590 18,869,180 18,640,590 6,136,770 5,809,373 6,136,770 5,809,373 39,841,833 39,168,469 39,841,833 39,168,469 (13,755,779) (12,564,026) (13,755,779) (12,564,026) $ 26,086,054 $ 26,604,443 $ 26,086,054 $ 26,604,443

Real estate development sites Real development sites Land,estate buildings and improvements Land, buildings and improvements Furniture and equipment Furniture and equipment Less accumulated depreciation Less accumulated depreciation Property and equipment, net Property and equipment, net

7. Commitments and Contingencies 7. Commitments and Contingencies The Diocese is a guarantor of debt represented by certain bonds, notes, mortgages and letters of credit of The Diocese a guarantor debt represented by certain bonds, financial notes, mortgages and letters of credit parishes and is other Catholic of agencies and institutions with various institutions with maturities up of to parishes Catholic agencies and institutions with various financial institutions maturities up to 20 years.and Theother Diocese would be obligated to perform under these guarantees if thewith parishes and other 20 years.agencies The Diocese obligated perform under these if the parishes and other Catholic failed would to pay be principal andto interest payments to theguarantees financial institutions when due, meet Catholic agencies failedratios to pay and of interest payments to the would financial when due, meet debt service coverage or,principal in the case construction projects, failinstitutions to have sufficient funds to debt service in 30, the case construction projects, would fail to have sufficient funds to 2016,ofthe Diocese has not been required to perform under these complete thecoverage projects. ratios As of or, June the Diocese in hasprincipal not been perform these complete theSuch projects. As of June 30, 2016, $80,000,000 Theunder Diocese is guarantees. guarantees approximated at required June 30,to2016. 2016.amounts The Diocese is guarantees. guarantees approximated $80,000,000 in principal at June 30,These also a limitedSuch guarantor for one of its Catholic agencies' construction projects. are not also a limited for one of its statements. Catholic agencies' construction projects. These amounts are not included in theguarantor accompanying financial included in the accompanying financial statements. During 2015, the Diocese entered into a contract with a consultant to provide comprehensive campaign During 2015, the Diocese entered into a contract consultant with to provide comprehensive campaign planning, direction, and implementation serviceswith in aconnection the Faith to Move Mountains planning, and implementation services in connection with the will Faithreceive to Move Mountains Campaign.direction, The contract will expire February 2017 and the consultant approximately Campaign. The reimbursement contract will expire February 2017 andthe theterm consultant will receive $3,760,000 plus of certain expenses during of the contract. These approximately payments will $3,760,000 plus reimbursement ofand certain expenses the term the contract. These paymentswith will be offset against the funds raised transferred to during the parishes andofcharitable trusts in connection be offset against transferred the2015, parishes charitable trusts in connection with the campaign. Forthe thefunds yearsraised endedand June 30, 2016 to and total and payments of approximately $1,751,000 the campaign. For the years ended June made 30, 2016 andthe 2015, total payments of approximately $1,751,000 and $1,551,000, respectively, have been toward contract. and $1,551,000, respectively, have been made toward the contract. 8. Notes Payable to Bank 8. Notes Payable to Bank The Diocese had a bank line of credit in the amount of $2,000,000 which expired on April 30, 2016 and THE DIOCESE TRENTON The Diocese had aThe bank linehad of credit in the amount of which accounts expired on April 30, 2016 with and was not renewed. bank a security interest inOF the$2,000,000 Diocese deposit and investments NOTES TO FINANCIAL wasbank. not renewed. The bank hadequaled a security in theSTATEMENTS Diocese deposit andwhich investments with the The interest charged theinterest lesser of bank's prime rateaccounts less 1.5%, was 1.75%, FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 theLIBOR bank. plus The1.25%, interestwhich charged equaled lesser the bank's prime rate less 1.5%, which was 1.75%, or was 1.44% atthe June 30, of 2015. or LIBOR plus 1.25%, which was 1.44% at June 30, 2015.

For the Years Ended June 30, 2016 and 2015

Revenues and expenses for the years ended June 30, 2016 and 2015 and deficit in net assets at June 30, 2016 and 2015 for the loss payment fund and the medical fund, which include the other 9. Insurance Funds (continued) post-retirement benefit obligation costs (see Note 15), are as follows: Revenues and expenses for the years ended June 30, 2015 and 2014 and deficit in net assets at 2016and the medical fund, which 2015 include the other June 30, 2015 and 2014 for the loss payment fund post-retirement benefit obligation costs Loss (see Note 15), are as follows: Loss Payment Medical Payment Medical Fund 2015 Fund Fund 2014 Fund Loss Loss Operating and nonoperating: Revenues $ Payment 10,050,648 $ Medical 32,020,214 $ Payment 8,891,675 $ Medical 31,506,344 Fund OF TRENTON Fund Fund Fund THE DIOCESE Expenses 7,675,017 33,558,257 12,940,859 30,858,315 THE DIOCESE OF STATEMENTS TRENTON NOTES TO FINANCIAL Transfers between funds (28,700) Operating and nonoperating: NOTES TO ENDED FINANCIAL STATEMENTS FOR THE YEARS JUNE 30,(5,384,364) 2016 AND 2015(8,832,240) Deficit in net assets (6,485,309) (3,846,321) $ ENDED 8,891,675 31,506,344 $ 8,228,400 $ 30,296,507 Revenues FOR THE YEARS JUNE$ 30, 2016 AND 2015 Expenses 12,940,859 30,858,315 9,326,708 32,222,249 Deficit in net assets (8,832,240) (3,846,321) (4,783,056) (4,494,350) 10. Temporarily Restricted and Permanently Restricted Net Assets 10. Temporarily Restricted and Permanently Restricted Net Assets 10. Temporarily Restricted and are Permanently Restricted Net purposes Assets and amounts: Temporarily restricted net assets restricted for the following Temporarily restricted net assets are restricted for the following purposes and amounts: Temporarily restricted net assets are restricted for the following purposes and amounts: June 30, June 30, 2015 2016 June 30, 2016 2015 Trust Funds: 2015 2014 Trust Funds: Catholic missions $ 7,347 $ 7,813 $ 2,166,102 7,347 $ 2,420,882 7,813 Catholic missions Senior citizens Trust Funds: Senior citizens 2,166,102 2,420,882 Others 1,032,119 1,034,748 $ 1,032,119 7,813 $ 1,034,748 8,283 Catholic Others missions 3,205,568 3,463,443 Senior citizens 2,420,882 2,596,866 3,205,568 3,463,443 Annual Catholic Appeal: Others 1,034,748 1,005,564 Annual Catholic Appeal: Apostolic ministry and priestly support 1,545,000 1,611,000 3,463,443 3,610,713 1,545,000 1,611,000 Apostolic ministry and priestly support Evangelization and family life 948,000 1,207,000 Annual Catholic Appeal: Evangelization and family life 948,000 1,207,000 Catholic education 1,993,000 2,407,000 1,611,000 1,710,000 Apostolic ministry and priestly support Catholic education 1,993,000 2,407,000 Charitable works and parish needs 1,413,000 1,450,000 Evangelization and family lifeneeds 1,207,000 1,330,000 Charitable works and parish 1,413,000 1,450,000 Other 73,814 95,052 Catholic education 2,407,000 2,460,000 Other 73,814 95,052 15 5,972,814 6,770,052 Charitable works and parish needs 1,450,000 1,470,000 5,972,814 6,770,052 Seminary Other Funds: 95,052 95,213 Seminary Funds: Education of Diocesan seminarians 402,531 358,661 6,770,052 7,065,213 402,531 358,661 Education of Diocesan seminarians Seminary Funds: Operating Funds: 358,661 356,178 Education of Diocesan seminarians Operating Funds: Priests' retirement 60,791 60,791 60,791 60,791 Priests' retirement Catholic schools 290,000 290,000 Operating Funds: Catholic schoolsNeumann 290,000 290,000 Morris Hall/Villa 7,426 7,426 60,791 126,144 Priests' retirement Morris Hall/Villa Neumann 7,426 7,426 358,217 358,217 Catholic schools 290,000 290,000 358,217 358,217 Morris Hall/Villa Neumann 7,426 7,426 $ 9,939,130 358,217 $ 10,950,373 423,570 $ 9,939,130 $ 10,950,373 Permanently restricted net assets are restricted to investment in perpetuity for the following purposes and $ 10,950,373 $ 11,455,674 Permanently restricted net assets are restricted to investment in perpetuity for the following purposes and amounts: amounts: June 30, 2016 June 30, 2015 2016 2015 Trust Funds: Trust Funds: Catholic missions Catholic missions Senior citizens Senior citizens Others Others

$ $

21,467 $ 21,467 $ 296,037 296,037 267,668 267,668 585,172 585,172 Seminary Funds: THE DIOCESE OF TRENTON Seminary 226,873 EducationFunds: of Diocesan seminarians NOTES TO FINANCIAL STATEMENTS 226,873 Education of Diocesan seminarians FOR THE YEARS ENDED JUNE 30, 2016 AND 2015 $ 812,045 $ $ 812,045 $

21,467 21,467 296,037 296,037 267,668 267,668 585,172 585,172 226,873 226,873

812,045 812,045

11. Net Assets Released from Restriction Net assets were released from donor restrictions by incurring expenses to satisfy the restricted program purposes as follows: 2016 Trust Funds Annual Catholic Appeal Operating Fund Seminary Funds

June 30,

127,746 5,654,797 8,506 5,791,049

2015 127,894 6,054,944 65,353 7,837

16 16

6,256,028

9. Insurance Funds

12. Endowment Funds

The Diocese's Insurance Funds consist of the following:

Accounting standards for the classification and disclosure of endowments of not-for-profit organizations provide guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) and require additional disclosures about an organization's endowment funds. The state of New Jersey has adopted UPMIFA. The following disclosures are made as required by accounting standards. The endowment of the Diocese of Trenton consists of 15 donor-restricted endowment funds established for various purposes.

Loss Payment Fund: The Diocese has a modified protected liability and casualty, workers' compensation and property self-insurance program for affiliated organizations described as a "loss payment fund." Under this program, the Diocese has obtained insurance coverage of $40,000,000 for most liability and casualty claims with a deductible of $250,000 per occurrence during the policy period. The Diocese has insurance coverage for property claims to a blanket limit of $75,000,000 per occurrence, with a deductible of $500,000 per occurrence. Actual claims not covered by insurance are funded by the affiliated organizations' contributions and the assets of the loss payment fund. The Diocese is involved in several pending legal matters. In the opinion of the Diocese's management, the final resolution of these matters will not have a material adverse effect on the 14 Diocese's financial position. To the extent a liability has been determined, a reserve has been 14 accrued at June 30, 2016 and 2015. Medical Fund: The Diocese's medical benefit plan provides reimbursement for the cost of medical expenses, subject to various limits, for Diocesan clergy and lay employees. The Diocese has obtained insurance coverage for these medical costs. The plan also includes a provision for life insurance benefits of $2,000, plus modest disability and dental benefits for Diocesan clergy. Additionally, the plan provides for Long-Term Disability for lay employees. The benefits paid by these funds and the insurance premiums are funded by assessments to the participating organizations. Revenues and expenses for the years ended June 30, 2016 and 2015 and deficit in net assets at June 30, 2016 and 2015 for the loss payment fund and the medical fund, which include the other post-retirement benefit obligation costs (see Note 15), are as follows: Loss Payment

2016 Medical

Loss Payment

Management has interpreted New Jersey UPMIFA as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Diocese classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Diocese in a manner consistent with the standard of prudence prescribed by New Jersey UPMIFA. In accordance with New Jersey UPMIFA, the Diocese considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds, (1) the duration and preservation of the fund (2) the purposes of the Diocese and the donor-restricted endowment fund (3) general economic conditions

Continued on • 31

(4) the possible effect of inflation and deflation

2015 Medical

(5) the expected total return from income and the appreciation of investments

THE DIOCESE OF TRENTON endowment funds for a not-for-profit provide guidance on the net asset classification of donor-restricted NOTES TO version FINANCIAL STATEMENTS organization that is subject to an enacted of the Uniform Prudent Management of Institutional FOR THE YEARS ENDEDdisclosures JUNE 30, 2016 2015 Funds Act of 2006 (UPMIFA) and require additional aboutAND an organization's endowment funds. The state of New Jersey has adopted UPMIFA. The following disclosures are made as required by accounting standards. The endowment of the Diocese of Trenton consists of 15 donor-restricted endowment funds established for various purposes. FEBRUARY 9, 2017 • TrentonMonitor.com 11. Net Assets Released from Restriction Management has interpreted New Jersey UPMIFA as requiring the preservation of the fair value of the Net assets from restrictions byendowment incurring expenses to satisfy thedonor restricted program original gift were as of released the gift date of donor the donor-restricted funds absent explicit stipulations to purposes as follows: the contrary. As a result of this interpretation, the Diocese classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent Juneendowment 30, gifts to the permanent endowment and (c) accumulations to the permanent made in 2015 is added accordance with the direction of the applicable donor gift instrument at the2016 time the accumulation to the fund. The remaining portion of the donor-restricted endowment that is not classified in permanently Trust 127,746 $ are 127,894 restricted netFunds assets is classified as temporarily restricted net assets $ until those amounts appropriated Annual Catholic Appeal in a manner consistent with the standard5,654,797 6,054,944by New for expenditure by the Diocese of prudence prescribed Operating Fund 65,353 • 30 OF TRENTON Continued from Jersey UPMIFA. THE DIOCESE Seminary Funds 8,506 7,837 NOTES TO FINANCIAL STATEMENTS InFOR accordance with ENDED New Jersey the Diocese considers the following - factors in making a THE YEARS JUNE UPMIFA, 30, 2016 AND 2015 determination to appropriate or accumulate donor-restricted endowment funds, $ 5,791,049 $ 6,256,028 (1) the duration and preservation of the fund

To satisfy its long-term rate of return objectives, the Diocese relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). At a minimum, the investment performance of endowment assets should achieve an annual return of at least inflation (as measured by the Consumer Price Index [CPI]) plus four (4) percentage points. This should be averaged over rolling three-year periods.

ANNUAL REPORT 31

Spending Policy and How the Investment Objectives Relate to Spending Policy

The Diocese has a spending policy that is primarily demand driven. In determining the amounts appropriated for expenditure, the Diocese considers the accumulated earnings on each of the endowment gifts. In establishing this policy, the Diocese considers the long-term expected return on its endowment.

The target spending rate Years is that which, as partJune of total30, return, satisfies these conditions - (a) permits Diocese of Trenton Financial Statements: For the Ended 2016 and 2015 reinvestment of enough total return to preserve the real purchasing power of current funds, (b) permits a

Notes to Financial Statements:

of Significant Policies (continued) (2) the purposes of the Diocese and the donor-restricted endowment fund 12. Accounting Endowment Funds

Accounting Accounting Policy (3) generalfor economic conditionsand disclosure of endowments of not-for-profit organizations standards the classification provide guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit 5, the FASB issued ASU No. 2015-07 effect (Topic 820), Fair Measurement. This ASU (4) the possible inflation andValue deflation organization that is subject to an of enacted version of the Uniform Prudent Management of Institutional requirement to categorize within the fair value hierarchyTHE all investments forTRENTON which fair value is DIOCESE OF Funds Act of (5) 2006 (UPMIFA) and require additional disclosures about an organization's endowment funds. THE DIOCESE OF TRENTON the expected total return from incomeThis and ASU the appreciation of investments sing the net asset value (NAV) per share practical expedient. also removes the NOTES TO FINANCIAL STATEMENTS The state of New Jersey has adopted UPMIFA. The following disclosures are made as required by NOTES TO FINANCIAL STATEMENTS to make certain disclosures for allresources investments that are eligible to be measured at fairAND value FOR THE YEARS 30, (6) other of the Diocese accounting standards. The endowment of the ENDED DioceseJUNE of Trenton of 15 donor-restricted FOR THE YEARS ENDED JUNE 30, 2016 2016consists AND 2015 2015 et asset value per share practical expedient. Rather, those disclosures are limited to endowment funds established for various purposes. (7) the investment the Diocese for which the entity has elected to measurepolicies the fairof value using that practical expedient. The this ASU isManagement effective for has the interpreted Diocese's year 30, as 2018; however, Diocese of the fair value of the New ending Jersey June UPMIFA requiring the the preservation adoption oforiginal this new guidance the ended June 30, 2016. The fair value amounts as of the for giftFunds dateyear of(continued) the donor-restricted endowment funds absent explicit donor stipulations to 12. Endowment 12.gift Endowment Funds (continued) the tables the are contrary. intended As to permit of the fair hierarchy to the items a resultreconciliation of this interpretation, thevalue Diocese classifies as line permanently restricted net assets Endowment net of assets composition by type type of fund fund endowment, as of of June June 30, 30, 2016 is as as follows: follows: net assets by of as is the statements ofEndowment financial (a) the original position. value gifts composition donated to the permanent (b)2016 the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in 016, the FASB issued ASU No. 2016-01 (Topic 825-10), Recognition and Measurement of accordance with the direction of the applicable donor gift instrument at the Permanently time the accumulation is added Temporarily Permanently sets and Financial Liabilities. This eliminates the requirement for Temporarily non-public entities to to the fund. The remaining portion of the donor-restricted endowment that isRestricted not classified in Total permanently Restricted Restricted Total value information for financial instruments not measured at fair value Restricted in the statements of restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated sition. Consequently, fair value disclosures are only provided for financial instruments for expenditure by the Diocese in a manner consistent with the standard of prudence prescribed by New 17 air value. The guidance Donor-restricted in this ASU is effective for thefunds Diocese's year ending June 30,$ endowment $ 1,794,772 1,794,772 $ 2020; 812,045 $ $ 2,606,817 2,606,817 $ 812,045 Donor-restricted endowment funds Jersey UPMIFA. Diocese chose early adoption of this new guidance for the year ended June 30, 2016. In accordance with New Jersey UPMIFA, the Diocese considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds, sued AccountingChanges Standards inthe endowment netpreservation assets for for the the year ended June June 30, 30, 2016 2016 are are as as follows follows (1)in duration and of year the fund Changes endowment net assets ended 18, 2016, the FASB issued ASU No. 2016-14 (Topic 958), Presentation of Financial (2) the purposes of the Diocese and the donor-restricted endowment fund of Not-for-Profit Entities (“Update”). The Update reduces the number of net asset classes from Temporarily Permanently Permanently those with donor restrictions and those without, requires all nonprofits Temporarily to report expenses by (3) general economic conditions Total Restricted Restricted Restricted Restricted Total unction and improves information presented in financial statements and notes that is useful in (4) the possible effect of inflation and deflation not-for-profit's liquidity, financial performance, and cash flows. The guidance in this ASU is Endowment net assets, assets, beginning of year yearwithin$ $fiscal 1,907,736 $ 812,045 $ $ 2,719,781 2,719,781 he Diocese's year ending June 30, 2019, and return forbeginning interim years beginning Endowment net of 1,907,736 $ 812,045 (5) the expected total from periods income and the appreciation of investments ber 15, 2018. Early application of the and amendments in this Update is permitted. The Diocese Interest dividend 72,213 -72,213 Interest and dividend income income 72,213 72,213 (6) other ofthe the Diocese n the process of determining theresources impact of new standard, and has not elected to early Net realized and unrealized Net realized and unrealized e amendments. (166,017) -(166,017) depreciation (166,017) (166,017) depreciation (7) the investment policies of the Diocese Amounts appropriated appropriated for for expenditure expenditure (19,160) (19,160) Amounts (19,160) -(19,160) Endowment $ 812,045 Endowment net net assets, assets, end end of of year year $ 1,794,772 1,794,772 $ $ 812,045 $ $ 2,606,817 2,606,817

Endowment net net assets assets composition composition by by type type of of fund fund as as of of June June 30, 30, 2015 2015 is is as as follows: follows: Endowment Temporarily Temporarily Restricted Restricted Donor-restricted endowment endowment funds funds Donor-restricted

$ $ 1,907,736 1,907,736

Permanently Permanently Restricted Restricted $ $

812,045 812,045

Total Total $ $ 2,719,781 2,719,781

Changes in in endowment endowment net net assets assets for for the the year year ended ended June June 30, 30, 2015 2015 are are as as follows: follows: Changes Temporarily Temporarily Restricted Restricted

Permanently Permanently Restricted Restricted

Endowment $ 2,009,130 2,009,130 $ $ 812,045 812,045 Endowment net net assets, assets, beginning beginning of of year year $ 9 Interest 48,603 -Interest and and dividend dividend income income 48,603 Net realized and unrealized Net realized and unrealized (131,403) -depreciation (131,403) depreciation THE DIOCESE OF TRENTON Amounts appropriated appropriated for expenditure expenditure (18,594) NOTES TO FINANCIAL STATEMENTS Amounts for (18,594) -FOR THE YEARS ENDED OF JUNE 2016 AND$ Endowment assets, end year $ 1,907,736 812,045 Endowment net net assets, end ofDIOCESE year $30, 1,907,736 $2015 812,045 THEof TRENTON NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 AND 2015

Total Total $ 2,821,175 $ 2,821,175 48,603 48,603 (131,403) (131,403) (18,594) (18,594) $ $ 2,719,781 2,719,781

12. Endowment Funds (continued) Funds with Deficiencies 12. Endowment Funds (continued) At times, the fair value of assets associated with individual donor-restricted endowment funds may fall Funds withlevel Deficiencies below the that the donor requires the Diocese to retain as a fund of perpetual duration. There were no such deficiencies of this nature as of June 30, 2016 and 2015. At times, the fair value of assets associated with individual donor-restricted endowment funds may fall

below level thatand theRisk donor requires the Diocese to retain as a fund of perpetual duration. There were Returnthe Objectives Parameters no such deficiencies of this nature as of June 30, 2016 and 2015. The Diocese has adopted investment and spending policies for endowment assets that attempt to provide Return Objectives andofRisk Parameters a predictable stream funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment Endowment assets include those assets donor-restricted The Diocese has adopted investment assets. and spending policies for endowment assets that of attempt to provide that thestream Diocese must hold in perpetuity. The primary long-term management is the the afunds predictable of funding to programs supported by its endowment while seeking objective to maintain preservation of principal, both in nominal and real terms. purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted

funds that Employed the Diocese must holdObjectives in perpetuity. The primary long-term management objective is the Strategies for Achieving preservation of principal, both in nominal and real terms. To satisfy its long-term rate of return objectives, the Diocese relies on a total return strategy in which Strategies for achieved Achievingthrough Objectives investmentEmployed returns are both capital appreciation (realized and unrealized) and current yield (interest and dividends). At a minimum, the the investment of endowment assetsin should To satisfy its long-term rate of return objectives, Dioceseperformance relies on a total return strategy which achieve an returns annual return of at least inflation measured by the Consumer Price Index [CPI]) four investment are achieved through both(ascapital appreciation (realized and unrealized) andplus current (4) percentage points. This should be averaged over rolling three-year periods. yield (interest and dividends). At a minimum, the investment performance of endowment assets should

achieve annual return least inflation (as measured bySpending the Consumer SpendinganPolicy and How of theatInvestment Objectives Relate to PolicyPrice Index [CPI]) plus four (4) percentage points. This should be averaged over rolling three-year periods. The Diocese has a spending policy that is primarily demand driven. In determining the amounts Spending Policy How the the Investment to Spending Policy on each of the endowment appropriated for and expenditure, DioceseObjectives considers Relate the accumulated earnings gifts. Diocese In establishing policy, the Diocese the long-term expected on its endowment. The has athis spending policy thatconsiders is primarily demand driven. Inreturn determining the amounts

appropriated for expenditure, considers accumulated earnings on conditions each of the- endowment The target spending rate is the thatDiocese which, as part of the total return, satisfies these (a) permits gifts. In establishing this policy, the Diocese considers thepurchasing long-term expected its endowment. reinvestment of enough total return to preserve the real power of return currentonfunds, (b) permits a level target of consistency stability the programs Diocese, is sustainable over time -regardless of The spendingand rate is thatinwhich, as partofofthe total return,(c) satisfies these conditions (a) permits periodic variations in the total levels required to satisfythe (a),real andpurchasing (d) recognizes that preclude reinvestment of enough return to preserve power of circumstances current funds, may (b) permits a achievement of all three objectives in any one year. level of consistency and stability in the programs of the Diocese, (c) is sustainable over time regardless of

periodic variations in the levels 13. Defined Contribution Planrequired to satisfy (a), and (d) recognizes that circumstances may preclude achievement of all three objectives in any one year. Full-time employees hired after the effective date of October 1, 2005, are eligible to participate in a 13. Defined Contribution Section 403(b)(7) Pension Plan Trust and can contribute up to the Internal Revenue Service's dollar limit set by 2016 and 2015. Participants whoare have completed one year law, which is $18,000 for after the years Full-time employees hired the effective date of October 1, 2005, eligible to participate in of a employment are eligible matching contributions by to thethe Diocese up to 5%Service's of the participant's gross Section 403(b)(7) PensionforTrust and can contribute up InternalofRevenue dollar limit set by

level of consistency and stability in the programs of the Diocese, (c) is sustainable over time regardless of periodic variations in the levels required to satisfy (a), and (d) recognizes that circumstances may preclude achievement of all three objectives in any one year.

13. Defined Contribution Plan Full-time employees hired after the effective date of October 1, 2005, are eligible to participate in a Section 403(b)(7) Pension Trust and can contribute up to the Internal Revenue Service's dollar limit set by law, which is $18,000 for the years 2016 and 2015. Participants who have completed one year of employment are eligible for matching contributions by the Diocese of up to 5% of the participant's gross salary. Total employer contributions to the plan was approximately $63,000 and $50,000 for the years ended June 30, 2016 and 2015, respectively. 14. Multiemployer Pension Plans The Diocese of Trenton is a participating employer in two separate multiemployer defined benefit pension THE DIOCESE OFpersonnel. TRENTONThe Pension Plan of The Diocese of plans providing benefits for lay employees and priest THE DIOCESE TRENTON THE DIOCESE OFOF TRENTON NOTES TO FINANCIAL STATEMENTS Trenton, Its Churches, Institutions and Agencies (Lay Plan) EIN: 21-0634970 Plan: 001 and The Diocese NOTES FINANCIAL STATEMENTS NOTES TOTO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30, 2016 AND003 2015 of Trenton Pension PlanFOR for Priests (Priest Plan) EIN: 21-0634970 Plan: qualify as church institutions THE DIOCESE OF TRENTON FOR THE YEARS ENDED JUNE 2016 AND THE YEARS ENDED JUNE 30, 30, 2016 AND 20152015 under the Internal Revenue Code and TO are,FINANCIAL therefore, not subject to the provisions of the Employee NOTES STATEMENTS Retirement Income Security ActTHE of 1974 (ERISA), norJUNE are the benefits FOR YEARS ENDED 30,Plan’s 2016 AND 2015guaranteed by the Pension Benefit Guarantee Corporation. Plan information is not publicly available. 14. Multiemployer Pension Plans (continued) 14. Multiemployer MultiemployerPension Pension Plans (continued) 14. Plans (continued) The Lay Plan is a defined benefit pension plan covering substantially all lay employees of the Diocese. TheLay Lay Planiscosts isa adefined defined benefit pension plan covering substantially all layLay employees of Diocese. the for Diocese. 14. Multiemployer Pension Plans (continued) The Plan benefit pension covering substantially all lay employees the Prior service are amortized over aplan period of twenty-five years. The Planofprovides 100% Priorservice service costsare areamortized amortized over a period of twenty-five years. Lay provides for 100% Prior costs over period ofservice. twenty-five years. TheThe Lay PlanisPlan provides for 100% vesting ofPlan benefits after five years ofa credited The Diocese's policy to fund pension costs The Lay is a defined benefit pension plan covering substantially all lay employees of the Diocese. vestingofofbenefits benefits after five years credited service. Diocese's policy to fund pension vesting after five years of of credited service. The Diocese's is toisfund pension costscosts currently. The Lay Plan provides retirement benefits toThe eligible laypolicy personnel based on employee’s Prior service costs are amortized over a period of twenty-five years. The Lay Plan provides for 100% currently. The Lay Plan provides retirement benefits to eligible lay personnel based on employee’s currently. The Lay Plan provides retirement benefits to eligible lay personnel based on employee’s compensation and years service. Effective October 1, 2005, the Lay Plan was is frozen for, pension and excludes, vesting of benefits afterofof five yearsEffective of credited service. The policy to costs compensation and years of service. Effective October 1, 2005, the was frozen for, excludes, and excludes, compensation and years service. October 1, 2005, the Diocese's LayLay PlanPlan was frozen for,fund and employees hired on orPlan after the effective date. currently. The Lay provides retirement benefits to eligible lay personnel based on employee’s employeeshired hiredononoror after effective date. employees after thethe effective date. compensation years of service. benefits EffectivetoOctober 1, 2005, the Laybased Plan was frozen andof excludes, The Priest Planand provides retirement priest personnel for life on age andfor, years service. 19 ThePriest PriestPlan Plan provides retirement benefits to priest personnel for based life on age and years of service. employees hired on orLay after thePriest effective date. The provides retirement benefits toare priest personnel life on age and that years of service. Contributions to the and Plans made by thefor parish orbased organization employs the lay Contributions to the Lay and Priest Plans are made by the parish or organization that employs the lay Contributions to the Lay and Priest Plans are made by the parish or organization that employs the lay employee or to which the retirement priest is assigned. The Priest Plan provides benefits to priest personnel for life based on age and years of service. employee which the priest assigned. employee oror totowhich the priest is is assigned. Contributions the Lay by and Plans aretotal made by the parish or organization that included employsinthe lay The plans are to managed thePriest Diocese. The pension and retirement plan expense these Theplans plansstatements are managed Diocese. The total pension and retirement plan expense included inended these employee or to which for the priest is assigned. The are managed byby thethe Diocese. The total pension and$621,000 retirement plan$650,000 expense included in these and for the years financial these plans was approximately $621,000 $650,000 for years the years ended financial statements theseplans plans was approximately $621,000 andand $650,000 for the ended financial forforthese was approximately 2016 and 2015, respectively. June 30,statements The plans areand managed by the Diocese. The total pension and retirement plan expense included in these 2016 and2015, 2015, respectively. June30, 30,2016 respectively. June $621,000 and $650,000 for the years ended financial for these plans was approximately The risksstatements of participating in these multiemployer defined benefit pension plans are different from singleTherisks risks ofparticipating participating in these multiemployer benefit pension plans are different from 2016 and 2015,inrespectively. June 30, of The these multiemployer pension plans different frommay singleemployer plans because: (a) assets contributeddefined todefined the benefit multiemployer plan byare one employer besingleused employer plans because: assets contributed to the multiemployer by one employer may be stops used employer plans because: (a)(a) assets to the multiemployer planplan by ifone employer may be used to provide benefits to employees ofcontributed other participating employers and (b) a participating employer The risks of participating in these multiemployer defined benefit pension plans are different from singletoprovide providebenefits benefits toemployees employees other participating if a participating employer stops tocontributing toplan, of of other participating employers andand (b)required if(b) a participating employer stops to the the unfunded obligations ofthe theemployers plan may be to beemployer borne bymay the Diocese employer plans because: (a) assets contributed to multiemployer plan by one be used contributing theplan, plan, the unfunded obligations ofisthe plan be required beplans borne byrecognize the Diocese contributing totothe the unfunded obligations of the plan maymay be required to in betothe borne by the Diocese and the remaining participating employers. There currently noand provision to an to provide benefitsparticipating to employees of other participating employers (b)inif the ainparticipating employer and theremaining remaining participating employers. There is currently no provision the plans to recognize an and the employers. There is currently no provision plans to recognize anstops employer withdrawal. contributing to the plan, the unfunded obligations of the plan may be required to be borne by the Diocese employer withdrawal. employer withdrawal. and remaining employers. There currently multiemployer no provision inpension the plans to as recognize an The the following table participating presents information about the isDiocese’s plans of and for Theyears following table presents information about Diocese’s multiemployer pension of for and for employer withdrawal. The following table presents information about thethe Diocese’s multiemployer pension plansplans as ofas and and 2015: the ended June 30, 2016 2016 and 2015: theyears yearsended endedJune June 30, 2016 and 2015: the 30, The following table presents information about the Diocese’s multiemployer pension plans as of and for 2015: the years ended June 30, 2016 and Total contributions from all

Total contributions from contributions all employers in the from Plan for all the Present value of accumulated Total plan assets as of Contributions for the Total employers in the for31, thePresent Present value of of accumulated TotalDecember plan assets Contributions for in the PlanPlan for the Contributions thethe of accumulated assets as of31,as of years ended December planvalue benefits as January 1, Total plan years endedfor June 30, employers years ended December benefits of January December years ended June ended December 31, 31, years ended June 30,30, years benefits as ofas January 1, 1, December 31, 31, Total contributions from all planplan employers for the Present Total as of Contributions for the 2016 2015 2015 in the Plan 2014 2016value of accumulated 2015 2015 plan assets 2014 years ended December plan2016 benefits as 2015 of January December years June 30, 2016ended 2015 2015 2015 201431, 2015 1, 2015 2015 2016 2015 2014 2016 201431,2014

Pension Pension Pension Fund Fund Fund Pension LayFund Plan $ 491,395 2016 LayPlan Plan 491,395 $ Lay Priest Plan $ $491,395 129,707 PriestPlan Plan 129,707 129,707 Priest Lay Plan $ 491,395 Priest Plan 129,707

$ 501,344 $ 12,156,970 $ 12,830,623 $ 206,235,954 $ 209,318,271 $ 184,857,148 $ 195,046,536 2015 2015 2014 2016 2015 2015 2014 $ 148,931 501,344$ 12,156,970 $ 12,156,970 $ 12,830,623 $ 206,235,954 $ 209,318,271 $ 184,857,148 $ 195,046,536 501,344 $ 206,235,954 $ 209,318,271 $ 184,857,148 $ 195,046,536 1,334,957$ 12,830,623 1,373,000 20,873,620 20,359,642 17,321,214 17,062,276 148,931 1,334,957 1,334,957 1,373,000 1,373,000 20,873,620 20,873,620 20,359,642 20,359,642 17,321,214 17,321,21417,062,276 17,062,276 148,931 $ 501,344 $ 12,156,970 $ 12,830,623 $ 206,235,954 $ 209,318,271 $ 184,857,148 $ 195,046,536 148,931 1,334,957 1,373,000 20,873,620 20,359,642 17,321,214 17,062,276

The funding ratio for the Lay Plan as of January 1, 2016 and 2015, was 90% and 93%, respectively. The Thefunding funding ratio forthe the Lay Plan January 1,2016 2016 and 2015, was 90% and 93%, respectively. The The ratio Lay Plan as ofofof January 1,1,2016 and 2015, waswas 90% andand 93%,84%, respectively. The The and 2015, 83% respectively. funding ratio for for the Priest Plan asas January 2016 and 2015, was 84%, respectively. The fundingratio ratio forthe the Priest Plan as January 1,either and 2015, wasyears 83%83% and and 84%, respectively. The2015. funding for Priest Plan as of of January 1, 2016 2016 and Diocese was not subject to any surcharges from plan for the ended June 30, The funding ratio for thetoLay Plan as of January 1, 2016 andthe 2015, was 90% and 93%, The 2016 and 2015. Diocese wasnot not subject to any surcharges from either plan for years ended June 30,respectively. 2016 and 2015. Diocese was subject any from either plan for years ended June 30, The Diocese's contributions tosurcharges the Priest Plan were over 5% ofthe total plan contributions based upon the 2016 and 2015, was 83% and 84%, respectively. The funding ratio for the Priest Plan as of January 1, TheDiocese's Diocese's contributions the Priest Plan were over of total contributions based The contributions to to the Priest Plan were over 5% 5% of total planplan contributions based uponupon the the 2015 and 2014. plan's years ended December 31, 2016 and 2015. Diocese was not subject to any surcharges from either plan for the years ended June 30, 2015 and 2014. plan'syears yearsended endedDecember December 2015 and 2014. plan's 31,31, The Diocese's contributions to the Plans Priest Plan were over 5% of total plan contributions based upon the 15. Other Postretirement Benefit 15.Other Other Postretirement Benefit Plans 2015 and 2014. plan's years ended December 31,Plans 15. Postretirement Benefit In addition to the Diocese's defined benefit pension plan, the Diocese sponsors an unfunded defined In addition to the Diocese's defined benefit pension plan, Diocese sponsors an unfunded defined Other Postretirement Benefit Plans In15. addition to the Diocese's defined benefit pension the the Diocese sponsors an unfunded defined benefit health care and life insurance benefits plan plan, to retired priests who have been incardinated prior to benefit health careand andlife life insurance benefits plan to retired priests who have incardinated to benefit health care insurance benefits plan toattained retired priests who have beenbeen incardinated prior prior to The their 65th birthday and have worked 10 years and age 70 while in service with the Diocese. In addition to theand Diocese's defined benefit pension plan, thewhile Diocese sponsors an Diocese. unfunded defined their 65th birthday and have worked 10 years and attained age 70 while in service with the Diocese. The their 65th birthday have worked 10 years and attained age 70 in service with the The plan is noncontributory and contains cost-sharing features such as deductibles and coinsurance. The benefit health care andand life insurance benefits plan to retired priests haveand been incardinated prior to planisisnoncontributory noncontributory andcontains contains cost-sharing features such as who deductibles coinsurance. The plan cost-sharing features such as coinsurance. The THE DIOCESE OF TRENTON accounting for the and plan have anticipates future cost-sharing changes to deductibles the written plan and that are with their 65th birthday worked 10cost-sharing years and attained age 70 while inplan service withconsistent theconsistent Diocese. accounting forthe theplan plan anticipates future cost-sharing changes to the written plan are consistent with accounting for anticipates future changes to the written that that are with The NOTES TO FINANCIAL STATEMENTS the Diocese's expressed intent to increase the cost-sharing annually for the expected general inflation rate plan is noncontributory and contains cost-sharing features suchforasthe deductibles andgeneral coinsurance. theDiocese's Diocese's expressed intent to increase the cost-sharing annually for the2015 expected inflation rate the expressed intent topolicy increase cost-sharing annually expected general inflation rateatThe FOR THE YEARS ENDED JUNE 30, 2016 AND for that year. The Diocese's is tothe fund the cost of medical benefits inplan amounts determined the accounting forThe theDiocese's plan anticipates future cost-sharing changes to the written that are consistent for that year. The Diocese's policy is to fund the cost of medical benefits in amounts determined the for that year. policy is to fund the cost of medical benefits in amounts determined at theatwith discretion of management. the Diocese's expressed intent to increase the cost-sharing annually for the expected general inflation rate discretionofofmanagement. management. discretion for that year. The Diocese's policy is to fund the cost of medical benefits in amounts determined at the discretion management. Benefit Plans (continued) 15. Otherof Postretirement The annual measurement date is June 30 for other postretirement benefits. The following tables provide 18 18further information about the Diocese's postretirement benefit plans: Obligations and Funded Status

Benefit obligation Fair value of plan assets Funded status - reported as postretirement benefits obligation in the statements of financial position Employer contributions Participant contributions Benefits paid

June 30, 2016

2015

$ 15,212,363 -

$ 13,747,395 -

20 20 20

$ (15,212,363) $ (13,747,395) $

516,399 $ (516,399)

366,714 (366,714)

Amounts recognized in the statements of activities for the years ended June 30, consist of: 2016 Net (gain) loss $ Amortization of prior service cost and net gain Total postretirement benefit changes other than periodic postretirement benefit cost Net periodic postretirement benefit cost $

2015

862,860 $ (1,694,861) (45,581) (118,074) 817,279 1,164,088 1,981,367

(1,812,935) 1,266,278 $ (546,657)

Net loss (gain) and net prior service cost recognized as changes in unrestricted net assets but not yet included in net periodic benefit cost:

Continued on • 32

$ (15,212,363) $ (13,747,395) obligation in the statements of financial position The following table presents information about the Diocese’s multiemployer pension plans as of and for Employer $ 516,399 366,714 Employer contributions contributions $ 516,399 $ $ 366,714 the years endedcontributions June 30, 2016 and 2015: Participant -Participant contributions Employer contributions $ 516,399 $ 366,714Benefits (516,399) (366,714) Benefits paid paid (516,399) (366,714) Participant contributions Total contributions from all Benefits Contributions paid (366,714) employers in the Plan for the Present value (516,399) of accumulated Total plan assets as of for the Amounts in the of for the ended June 30, of: years ended December plan benefits of January 1, years ended 30, Amounts recognized recognized in June the statements statements of activities activities for31, the years years ended as June 30, consist consist of: December 31,

32 ANNUAL REPORT Pension

Amounts in the statements of activities2014 for the years2016 ended June 2015 30, consist of:2015 Fund recognized 2016 2015 2015 2016 2015 2016 2015 Lay Plan $ 491,395 PriestNet Plan(gain) 129,707 loss

$ 501,344

$ 12,156,970

$ 12,830,623

$ 206,235,954

$ 209,318,271

$ 184,857,148

2014

The health care cost trend- 5%, rates and used2018 to measure the expected 2017 and thereafter - 4.5%.cost of benefits covered by the plan are as follows: fiscal year follows: fiscal year 2017 - 5%, and 2018 and thereafter - 4.5%. Cash Flows: Cash Flows: The Diocese expects to contribute approximately $544,000 to the postretirement benefit plans in the next to the postretirement plans in9, the2017 next The THE MONITOR • benefit FEBRUARY fiscalDiocese year. expects to contribute approximately $544,000 fiscal year. The following benefits, which reflect expected future service, as appropriate, are expected to be paid for The following benefits, which reflect expected future service, as appropriate, are expected to be paid for the years ending June 30: the years ending June 30: 2017 $ 544,000 2017 $ 544,000 2018 624,000 2018 624,000 2019 676,000 2019 676,000 2020 743,000 2020 743,000 2021 778,000 2021 778,000 2022 to 2026 4,492,000 2022 to 2026 4,492,000 Total $ 7,857,000 Total $ 7,857,000 16. Functional Expenses 16. Functional Expenses The costs of providing the Diocese's programs and activities have been summarized on a functional basis The costs of providingcertain the Diocese's programs activities have the beenprograms summarized a functional basis below. Accordingly, costs have been and allocated among andon supporting services below. Accordingly, certain costs have been allocated among the programs and supporting services benefited. benefited.

$ 195,046,536

2016 2015 148,931 1,334,957 1,373,000 20,873,620 20,359,642 17,321,214 17,062,276 $ 862,860 $ Net (gain) loss $ 862,860 $ (1,694,861) (1,694,861) Amortization of prior service cost and net gain (45,581) (118,074) Amortization of prior service cost and net gain (45,581) (118,074) Net (gain) loss $ 862,860 $ (1,694,861) Total benefit changes other than Total postretirement postretirement benefit changes than periodic periodic Amortization of prior service cost and netother gain (45,581) (118,074) • Continued from 31 THE DIOCESE OF TRENTON The funding ratio for the Lay Plan as of January 1, 2016 and 2015, was 90% and 93%, respectively. The 817,279 (1,812,935) postretirement benefit cost 817,279 (1,812,935) postretirement benefit cost NOTES TO FINANCIAL STATEMENTS postretirement benefit changes other than periodic 2016 and 2015, was 83% and 84%, respectively. The funding Total ratio for the Priest Plan as of January 1, Net periodic postretirement benefit cost 1,164,088 1,266,278 Net periodic postretirement benefit cost 1,164,088 1,266,278 FOR THE YEARS JUNE 30, plan 2016for AND 2015 817,279 (1,812,935) postretirement benefit cost ENDEDfrom 2016 and 2015. Diocese was not subject to any surcharges either the years ended June 30, $ 1,981,367 $ (546,657) $ 1,164,088 1,981,367 $ 1,266,278 (546,657) Net periodic postretirement cost were over 5% of total The Diocese's contributions to the benefit Priest Plan plan contributions based upon the $ 1,981,367 $ (546,657) plan's years ended December 31, 2015 and 2014.

Diocese of Trenton Financial Statements:

Notes to Financial Statements:

1. Summary of Significant Accounting (continued) changes in unrestricted net 15. Other Postretirement BenefitPolicies Plansrecognized Net Net loss loss (gain) (gain) and and net net prior prior service service cost cost recognized as as changes in unrestricted net assets but not yet included in net periodic benefit cost: assets not included net periodic benefit cost: ChangeNet inaddition Accounting Policy In to yet the Diocese's defined benefit pension the in Diocese sponsors lossbut (gain) and net priorinservice cost recognized asplan, changes unrestricted net an unfunded defined benefit but health care and life in insurance benefits plan to retired priests who have been incardinated prior to not yet included netNo. periodic benefit cost: In May assets 2015, the FASB issued ASU 2015-07 (Topic 820), Fair Value Measurement. ThisDiocese. ASU their 65th birthday and have worked 10 years and attained age 70 while in service with2015 the The 2016 2016 for which fair 2015 removesplan the is requirement to categorize within the fair value hierarchy all investments value is noncontributory and contains cost-sharing features such as deductibles and coinsurance. The measured using thefornet value (NAV) per share practical expedient. also the 2016ASU 2015 accounting theasset plan anticipates future cost-sharing changes to theThis written plan thatremoves are consistent with Net loss (gain) $ 388,658 $ (490,293) requirement to make certain disclosures all investments that areannually eligible to 388,658 be measured at(490,293) fair value Net loss (gain) $ for $ general the Diocese's expressed intent to for increase the cost-sharing the expected inflation rate using the asset value per share practical expedient. those disclosures are determined limited to at the Prior service cost 212,143 273,814 Prior service cost 212,143 273,814 for net that year. The Diocese's policy is to fund the cost Rather, of medical in amounts Net loss (gain) $ benefits 388,658 $ (490,293) THE DIOCESE OF TRENTON investments for which the entity has elected to measure the fair value using that practical expedient. The Amounts previously recognized in unrestricted net discretion of management. previously recognized inTO unrestricted netTRENTON THE DIOCESE OF service cost 212,143 NOTES FINANCIAL STATEMENTS guidance in Prior thisAmounts ASU is not effective for the Diocese's year ending June 30, 2018; however, the273,814 Diocese assets, yet recognized as periodic postretirement assets, not yet as periodic postretirement NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED JUNE 30,30, 2016 AND 2015fair$value Amounts previously recognized in unrestricted netJune chose early adoption of cost this newrecognized guidance for the year ended 2016. The amounts $ 600,801 benefit $ AND 600,801 $ the(216,479) (216,479) benefitare cost FORtoTHE YEARS ENDED JUNE 2015 to assets, not intended yet recognized as periodic postretirement presented in the tables permit reconciliation of the30, fair2016 value hierarchy line items $ 600,801 $ (216,479) benefit costof financial position. presented in the statements The estimated net loss, and prior service cost that will be amortized from changes in net The estimated net loss, and prior service cost that will be amortized from changes in unrestricted unrestricted net In January 2016, the FASB issued ASU No. 2016-01 (Topic 825-10), Recognition and Measurement of 15. Other Postretirement Benefit Plans (continued) 2017 are $54,088 and $61,671, respectively. assets to net periodic benefit cost in 15. Other Postretirement Benefit Plans (continued) 2017 are $54,088 and $61,671, respectively. assets to net periodic benefit cost in Financial Assets and Financial Liabilities. This eliminates the requirement for non-public entities to The estimated net loss, and prior service cost that will be amortized from changes in unrestricted net Assumptions: discloseassets fair value for financial instruments not measured at fair value in the statements of are $54,088 and $61,671, respectively. to netinformation periodic benefit cost in 2017 Assumptions: 20 financialThe position. fair valuethe disclosures are only provided for4.15% financial instruments discountConsequently, rate used to determine postretirement benefit cost was and 4.05% for the years recordedThe at fair value. The guidance in this ASU is effective for the Diocese's year ending June 30, 2020; discount rate used to determine the postretirement benefit cost was 4.15% and 4.05% for the years ended June 30, 2016 and 2015, respectively. howeverended the Diocese chose of this new guidance for the year ended June 30, 2016. 2016early and adoption 2015, respectively. June 30, The discount rate used to determine the postretirement benefit obligation was 3.29% and 4.15% for the The rate 30, used to determine postretirement benefit obligation was 3.29% and 4.15% for the 2016 and 2015, the respectively. yearsdiscount ended June years ended June 30, 2016 and 2015, respectively. Recently Issued Accounting Standards The health care cost trend rates used to measure the expected cost of benefits covered by the plan are 21 as 21 The health care cost trend- 5%, ratesand used to measure the expected of benefits covered by the plan are as 2018 4.5%.cost follows: year On August 18, fiscal 2016, the2017 FASB issued ASU and No.thereafter 2016-14 - (Topic 958), Presentation of Financial 21 follows: fiscal year 2017 - 5%, and 2018 and thereafter - 4.5%. Statements of Not-for-Profit Entities (“Update”). The Update reduces the number of net asset classes from three to Cash two, those Flows:with donor restrictions and those without, requires all nonprofits to report expenses by nature and function Cash Flows:and improves information presented in financial statements and notes that is useful in assessing not-for-profit's liquidity, financial performance, and cash The guidancebenefit in thisplans ASUinisthe next Thea Diocese expects to contribute approximately $544,000 to flows. the postretirement the postretirement plans in the next Diocese expects contribute effectiveThe for the Diocese's yeartoending Juneapproximately 30, 2019, and$544,000 for interimtoperiods within fiscal benefit years beginning fiscal year. fiscal year. after December 15, 2018. Early application of the amendments in this Update is permitted. The Diocese Theinfollowing benefits, which reflect expected future service, as appropriate, are expected to be paid for is currently the process of determining impact of the service, new standard, and has not The following benefits, which reflectthe expected future as appropriate, are elected expectedtotoearly be paid for the years ending June 30: implement the amendments. the years ending June 30: 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2022 to 2026 2022 to 2026

$ $

544,000 544,000 624,000 624,000 676,000 676,000 743,000 743,000 778,000 778,000 4,492,000 4,492,000

Total $ 7,857,000 Total $ 7,857,000 16. Functional Expenses 16. Functional Expenses The costs of providing the Diocese's programs and activities have been summarized on a functional basis The costs of providingcertain the Diocese's programs activities have the beenprograms summarized a functional basis below. Accordingly, costs have been and allocated among and on supporting services below. Accordingly, certain costs have been allocated among the programs and supporting services benefited. benefited. For the Years Ended June 30, For the Years Ended2015 June 30, 2016 2016 2015 Program Services Program Services Management and General Management and General Fundraising Fundraising Total Operating Expenses Total Operating Expenses

$ 51,501,471 $ $ 51,501,471 $ 10,759,298 10,759,298 1,346,479 1,346,479

55,866,579 55,866,579 11,685,102 11,685,102 1,232,076 1,232,076 9 $ 63,607,248 $ 68,783,757 $ 63,607,248 $ 68,783,757

17. Related Entities 17. Related Entities The Diocese and the Diocese of Trenton Charitable Trust for Catholic Education and Religious Formation The Diocese and the Diocese of Trenton Charitable Trust for Catholic Education Religious share a common purpose of supporting the religious education programs of theand Diocese. In Formation 2016 and share common purpose of $67,000 supporting the year religious education of the and Diocese. In 2016 and 2015, athe Trust contributed each to the Dioceseprograms for education religious formation 2015, the administered Trust contributed programs by the$67,000 Diocese.each year to the Diocese for education and religious formation programs administered by the Diocese.

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For the Years Ended June 30, 2016 and 2015

For the Years Ended June 30, For the Years Ended2015 June 30, 2016 2016 2015 $ 51,501,471 $ $ 51,501,471 $ 10,759,298 10,759,298 1,346,479 1,346,479

Program Services Program Services Management and General Management and General Fundraising Fundraising Total Operating Expenses Total Operating Expenses

55,866,579 55,866,579 11,685,102 11,685,102 1,232,076 1,232,076

$ 63,607,248 $ 68,783,757 $ 63,607,248 $ 68,783,757

17. Related Entities 17. Related Entities The Diocese and the Diocese of Trenton Charitable Trust for Catholic Education and Religious Formation THECharitable DIOCESE OF TRENTON The Diocese and the Diocese Trenton Trust for Catholic Education Religious share a common purpose of of supporting the religious education programs of theand Diocese. InFormation 2016 and THE DIOCESE TRENTON NOTES TO FINANCIAL STATEMENTS share common purpose of $67,000 supporting the religious education of the and Diocese. In 2016 and 2015, athe Trust contributed each year to OF the Dioceseprograms for education religious formation NOTES TO FINANCIAL STATEMENTS THE YEARS ENDED JUNE 30, 2016 2015 and religious formation 2015, the administered Trust contributed each year to the Diocese forAND education programs by FOR the$67,000 Diocese. THE YEARS ENDED JUNE 30, 2016 AND 2015 programs administered by FOR the Diocese. 18. Financial Instruments - Concentrations of Credit Risk 18. Financial Instruments - Concentrations of Credit Risk As of June 30, 2016, the Diocese held financial instruments, which exceeded federally insured deposits by As of June 30, $14,048,000. 2016, the Diocese held financial instruments, which exceeded federally deposits by approximately The financial instruments consist primarily of savings andinsured checking accounts 22 approximately $14,048,000. The financial instrumentsCorporation consist primarily of savings and checking accounts which are insured by the Federal Deposit Insurance and money market accounts that are not 22 which areinsured insured by by the the Federal Deposit Insurance Corporation money market that are any not federally Corporation.and The Diocese hasaccounts not experienced federally by the instruments. Federal Deposit Insurance believes Corporation. The Diocese has not experienced any losses in insured such financial Management the Diocese is not exposed to any significant losses in such financial instruments. Management believes the Diocese is not exposed to any significant credit risk related to cash and cash equivalents. credit risk related to cash and cash equivalents. 19. Subsequent Events 19. Subsequent Events Subsequent to June 30, 2016, the Diocese transferred $1,000,000 to the Diocese of Trenton Charitable Subsequent to June 2016, the Diocese $1,000,000 to newly the Diocese Trenton of Charitable trust for Aged, Infirm30,and Disabled Priests,transferred and $4,500,000 to the formedofDiocese Trenton trust for Aged, Infirm Disabled and Formation, $4,500,000 as to the Trenton Endowment Trust for and Seminary andPriests, Diaconate part newly of theformed Faith Diocese to Move of Mountains Endowment Trust for Seminary and Diaconate Formation, as part of the Faith to Move Mountains Endowment Campaign (see Note 4). Endowment Campaign (see Note 4). In preparing these financial statements, management has evaluated events and transactions for potential In preparingor these financial statements, management has evaluated events and transactions for potential October 26, 2016, the date the financial statements were available to be recognition disclosure through recognition or disclosure through October 26, 2016, the date the financial statements were available to be issued. issued.

BACKES & HILL Attorneys at Law

Serving the Diocese of Trenton for over a century Personal Injury Real Estate Wills and Estates Business & Corporate Law Land Use Law Employment Law Guardianships 3131 Princeton Pike Bldg. 5 – Suite 114 Lawrenceville, NJ 08648 (609) 396-8257 (609) 844-0300

EndowmEnt moniEs AvAilAblE Requests are presently being accepted for grants from the Bishop George W. Ahr Endowment Fund. There are no application forms. The applicant should describe the project or program for which the grant is being requested and indicate how much money is being sought. This endowment is available to any church, office, apostolate or ministry attempting to provide services for vulnerable and/or poor families/individuals within their community. All requests are to be forwarded to: Rev. Msgr. Thomas N. Gervasio Pastoral Center P.O. Box 5147, Trenton, NJ 08638 Requests must be received on or before May 15, 2017. There will be approximately $10,000 available for distribution.

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