November 19, 2015
The Catholic Spirit • 1B
Archdiocesan Chancery Corporation Annual Financial Report • 2015
“T
Good stewardship in challenging times
he next archbishop is going to have to be up to the task of guiding the Archdiocese through its financial challenges.” “He’s going to have to be a great administrator who knows how to take advantage of the considerable lay expertise in this area.” “He’s going to have to put a premium on transparency.” These are all responses that I heard repeatedly during the 10 listening sessions held around the archdiocese in recent weeks. In listing the qualities that he looks for in a bishop, Pope Francis has repeatedly indicated that he’s hoping to name bishops who are joyful and prayerful witnesses to Christ’s resurrection, men with pastoral hearts who are “neighbors and servants” who will be “gentle, patient and merciful” shepherds for Christ’s flock. At the same time, he has recognized that it is “certainly helpful” that those shepherds “have the shrewdness of an administrator.” Being a good steward is
Archbishop Bernard HEBDA
part of being a good shepherd. The 2015 Annual Financial Report of the Archdiocese of St. Paul and Minneapolis published in this issue would surely confirm the common perception that the next archbishop is going to be confronted with some pressing financial challenges as he begins his ministry of service to this local Church. At the same time, the annual report illustrates that much is already being done to address those considerable challenges and to lay the groundwork for a return to long-term stability. I recognize that those positive developments are unfortunately overshadowed by the magnitude of the extraordinary costs, outside our normal operating budget, that are indicated in this year’s annual report. While our financial report refers to them as “Special Issues expenses,” they are more easily understood as the expenses associated with the bankruptcy process and the resolution of the civil and criminal claims that have been made against the archdiocese. The good news is that they are not annual costs that would be recurring in the future; the bad news, however, is that they are substantial. In any bankruptcy, the party petitioning for Reorganization bears the costs not only of its own attorneys, but also those of the creditors. I can assure you that those costs
are carefully scrutinized by the bankruptcy court as well as by our creditors. I can attest, moreover, that the archdiocese monitors those costs closely and is working with attorneys on all sides to try to minimize costs where we can. While the expenses associated with reorganization are great, the experience in other dioceses and similar situations suggests that these expenditures should best be seen as a solid investment not only in an efficient and equitable resolution of claims, but also in a Church that is better positioned to fulfill her mission. In the five months that I have been serving here as apostolic administrator “sede vacante,” I have been consistently impressed by the Archdiocese’s commitment to good stewardship. The members of the Corporate Board of Directors, the Archdiocesan Finance Council and the College of Consultors have all generously recognized that extraordinary times require extraordinary efforts. Their openness to new opportunities for collaboration has already brought about a fruitful exchange of ideas and experience that is proving to be invaluable in addressing head-on the serious challenges before us. They ask tough questions, set high standards, and are relentless in
making sure that in the midst of all the numbers and financial analysis we’re never losing sight of the moral imperative. As I have become acquainted with the community leaders serving in those roles, it is obvious to me that the archdiocese is benefiting from real expertise as well as good will. I am confident that a perusal of the annual report will highlight for you, as it did for me, the strides that are already being taken by the archdiocesan staff to help restore financial health to our operations. Our department managers attend monthly budget meetings to carefully review their expenditures in an effort to be as efficient and responsible as possible. While the current financial realities have necessitated a significant reduction in the size of the staff, the various archdiocesan offices have somehow managed to respond professionally to the needs of this local Church. Their joy and commitment to the Church have been great motivators for me. I realize that the archdiocese is only able to continue its good work because of your generosity. I thank you for that support and encourage you to read the annual report and to continue your prayers that the Lord will bless this local Church with a wise and prudent shepherd after his own heart.
Financial Officer Report Author’s note: The following comments elaborate on the financial statements of the Archdiocese of St. Paul and Minneapolis Chancery Corporation (“Archdiocese”) that ended June 30, 2015. Condensed financial statements are included in this issue of The Catholic Spirit. The Management Discussion and Analysis and Financial Statement are posted at www.archspm.org on the Administration and Finance page. By Thomas Mertens, CFO
Introduction Since I last reported to you on our annual financial statements in November 2014, our Archdiocese filed for Reorganization under the Bankruptcy Code (January 2015). The path to this difficult decision has received much publicity, but bears review. At the time of release of our financial statements last year, the Archdiocese was facing an unknown number of claims due to the lifting of the civil statute of limitations for sexual abuse of minors until May 2016. The Archdiocese was considering all options to address this situation and archdiocesan leaders sought the best path to ensure fairness for victims of clergy sexual abuse and fairness for the faithful whose stewardship has made archdiocesan ministry possible. Archdiocesan leaders consulted with various representative clergy and lay leadership groups and with outside professionals about the decision regarding Reorganization. Archdiocesan leaders concluded that Reorganization was and is a way to respond to all victims by allowing the available funds to be equitably distributed to all who have made claims, not just those who have the earliest trial dates or settlements. The process we’re in now is actually bringing together the victims, the Archdiocese, parishes and insurers to come up with a fair and just settlement for all who have been abused and made claims. Compared to other diocesan bankruptcies nationally, it’s an unprecedented comprehensive process that has all sides working toward the same goal of healing and hope for a better tomorrow. Further, Reorganization would allow the Archdiocese a fresh start to adhere to reforms made to minimize the threat of this circumstance ever happening again and to continue its service and support of the faithful and the stewardship that makes archdiocesan ministry possible.
Before the Archdiocese filed for Reorganization in January, we had begun efforts to significantly reduce operating expenses and to be better stewards of the monies parishes contribute through assessments and other contributions received directly by the Archdiocese every year. In addition, we knew in order to weather the Reorganization process we would need to conserve our resources because much would be consumed as we engaged legal and other professionals in preparing for Reorganization and to assist with negotiating with insurance carriers and plaintiffs counsels. In November 2014, we made the painful and necessary decision to reduce our workforce and non-personnel expenses. These reductions resulted in almost $5 million in expense reductions, which was 20 percent of our entire annual operating expense budget. Total Operating Expenses, without Special Issues expenses, decreased from $30.5 million in 2014 to $22.9 million in 2015, a 25 percent reduction. After much analysis and consultation, the Archdiocese also made the difficult but necessary decision to place the Chancery, Archbishop’s Residence, Hayden Center, Dayton Building and the Hazelwood property on the market for sale. These buildings, which are located across from and behind the Cathedral of St. Paul and in Northfield, are being aggressively marketed for sale by Cushman & Wakefield/NorthMarq, and we have a signed purchase agreement for $4.5 million on the Hayden Center. The proceeds from their eventual sales will generate cash with the hope of and desire to help us move through Reorganization efficiently. Because our buildings have not yet sold, a new facility, which we would lease, has not been selected. It is our commitment to find property in an area where the Church’s presence can be an integral part of a neighborhood revitalization and renewal effort. We anticipate that the annual expenses of leasing office space will be neutral to current costs of maintaining our existing facilities. The reason we do all of these things is simple: To make sure the Archdiocese can continue its unique role in the Church’s mission by forming and assigning priests, ensuring those in hospitals and prisons are ministered to, providing parishes the support they need and ensuring people of all cultures and languages are evangelized and catechized. It is important to understand that this financial report
does not cover parishes, schools or other Catholic entities within the 12-county area that comprises the Archdiocese of St. Paul and Minneapolis. All of those organizations are separate legal entities and prepare their own financial accounting reports. It has been our practice since the year ended June 30, 2013, to release our full audited financial report to be transparent and accountable to our many stakeholders among the Catholic faithful. Indeed, almost 65 percent of our support for our valuable missions comes from parish assessments, which are the result of contributions to the local Church by parishioners. It is for this reason that Archbishop Hebda, the Archdiocesan Finance Council and I continue to support full transparency and timely reporting of our financial results. As you may recall, Fiscal Year 2014, which ended June 30, 2014, was the first year we did not receive an unqualified opinion from our certified public accounting firm. They issued a disclaimer of opinion and a going concern qualification as a result of our inability to provide an estimate of our liability related to ongoing litigation and claims of sexual abuse. At that time, we had pending claims and a significant number of notices of claims, with each claim being unique and requiring factual development to determine the liability, if any, that existed. As a result of our continued inability to estimate our liability related to sexual abuse claims at June 30, 2015, of which 416 sexual abuse claims were filed by the Aug. 3, 2015, timely filing deadline, we are not able to have an audit of our financial statements for the year ended June 30, 2015. In consultation with the Archdiocesan Finance Council and Corporate Board of Directors, we filed a motion with the Bankruptcy Court, and were granted approval, to allow our CPA firm to perform Agreed Upon Procedures on the Fiscal Year 2015. These procedures do not represent an audit and as a result you will not see an Independent Auditor’s Report attached to our financial statements. The Agreed Upon Procedures were developed by management in consultation with our CPA firm and will assist us in governance of the Archdiocese by requiring attestation procedures on key balance sheet accounts and internal controls. Our financial records are submitted on a monthly basis to the Bankruptcy Court and United States Trustee and are subject to their review. When we emerge from Reorganization, we intend to return to the standard practice of annual independent Continued on next page
2B • The Catholic Spirit
November 19, 2015
Archdiocesan Chancery Corporation Annual Financial Report • 2015 Archdiocese of St. Paul and Minneapolis Chancery Corporation Operating Revenue FY 2015: $22.4 Million
Archdiocese of St. Paul and Minneapolis Chancery Corporation Operating Expense FY 2015: $22.9 Million* Community Services $ 0.2 Marriage, Family & Life Development & Stewardship $ 0.9 $ 0.6
Other Income $ 0.6 Contributions $ 3.1 Investment Income, net $ 0.04
Parish Assessments Parish Services and & Outreach $ 14.2 Parish Services Outreach, $2.0$ 2.0
Special Issues Exp
Central Services Central Services, $5 $ 5.7
Communications $ 2.2
General & Administrative General & Administration, $ 3.4
Fees & Program Revenues $ 4.5
Evangelization &
Clergy Services Clergy Services , $5.0 $5.0
Evangelization & Catechesis $ 0.5
Catholic Education $2.4 * Operating Expense before Special Issues expense
Continued from previous page audits and will continue our practice to promptly release our financial statements and auditor’s report upon completion.
Financial Condition For the year ended June 30, 2015 (our Fiscal Year 2015), we incurred a loss from operations before Special Issues expenses of $516,542 as compared to a loss from operations before Special Issues expenses of $4,940,448 in FY 2014. Our loss from operations in FY 2015 was $5,750,086 and compares favorably to a loss of $9,120,676 for FY 2014. Special Issues expenses were $5,233,544 and $4,180,228 in FY 2015 and FY 2014, respectively. In addition, in Fiscal Year 2014 we had a $4.7 million negative impact to our operating activities as a result of two unusual items, of which $1 million was a write-off that did not negatively impact our cash. After adjusting for these two unusual items, our deficits, before Special Issues expenses, in FY 2015 and FY 2014 were comparable. The Special Issues expense of $5,233,544 incurred by the Archdiocese during FY 2015 related predominately to both legal fees incurred by attorneys representing the Archdiocese in the Reorganization and the Ramsey County charges, as well as legal counsel representing the unsecured creditors committee and the parish committee. Within Reorganization, the Archdiocese is referred to as the “Debtor in Possession” and as such, it is responsible for paying all legal fees incurred both by our legal counsel and the legal counsel representing the plaintiffs or victims of sexual abuse. This is generally not the case with the defense of claims in civil law and is unique to Reorganization. Our legal counsel and staff have spent thousands of hours going through clergy files, conducting investigations, and reviewing claims and financial records to assist us in the goal of a fair, just and expedient Reorganization. Resources were also spent on working with numerous insurance carriers that issued policies to the Archdiocese over the past seven decades dating back to the late 1940s. We are working closely with the insurance carriers to determine coverage for claims and to find equitable settlements for those who
were abused. Reviewing and investigating sexual abuse claims against the Archdiocese, which now total 416, is expensive, as are the costs of legal notifications in national, regional, state and local publications. Special Issues expenses are substantial but necessary in order to achieve the goal of obtaining the most resources for those sexually abused by clergy. We clearly recognize that we cannot sustain this level of spending for Special Issues indefinitely and that is why it is imperative that we negotiate a fair and just resolution to this Reorganization in the near term.
including personnel reductions implemented in November 2014. On an annual basis, those reductions will equate to almost $5 million and highlights that we are willing to make the tough decisions to operate going forward (postReorganization) with some surplus that will allow us to build reserves as we anticipate that little to no liquid assets will be available after we emerge from Reorganization. For more detailed explanations of the Operating Expense, please see “Supporting the Mission of the Church” on page 3B.
Revenue
Non-Operating Activity – General Insurance Program
Total Operating Revenue in 2015 was $22,430,660 as compared to $25,525,732 in 2014. The major reason for this decline is a decrease in Investment Income and Contributions, offset by a slight increase in Parish Assessments. The decline in Investment Income is the result of the Archdiocese selling investments prior to filing for Reorganization. U.S. Bankruptcy Court rules required us to sell investments and convert them to cash or low-risk investments such as government-backed securities, and we chose to convert most of our investments to cash. Parish Assessments, our primary source of revenue which is generated from the 187 parishes within the Archdiocese, increased by 3.4 percent to $14,246,426 in 2015 from $13,776,682 in 2014. Assessments are calculated and billed on a two-year lag which means the parish financial results for the years ended June 30, 2013, and 2012 formed the basis for the Parish Assessment revenue for the years ended June 30, 2015, and 2014, respectively. Sunday collection revenue at the parishes, the most significant driver of the assessment calculation,
increased from 2012 to 2013.
Operating Expense Our Operating Expense, without Special Issues in 2015, totaled $22,947,202 as compared to $30,466,180 in 2014, a 25 percent decrease. After adjusting the 2014 Operating Expense for the two unusual items mentioned earlier, Operating Expenses in 2014 were $25,772,538. That almost $2.8 million or 11 percent decrease is due to the significant expense reductions in program expenses
The General Insurance Program of the Archdiocese of St. Paul and Minneapolis provides comprehensive, uniform coverage to all of the parishes, Catholic schools and certain other Catholic entities within the Archdiocese, as well as the Chancery Corporation. The coverage provided by the General Insurance Program includes commercial general liability and workers’ compensation. The General Insurance Program is maintained for the benefit of the participants who have contributed those funds in exchange for obtaining insurance coverage. The General Insurance Program had a deficit from operations of $972,739 in 2015 as compared to a deficit from operations of $131,124 in 2014. The decrease year over year was due to billing credits effective from Jan. 1, 2014, through June 30, 2014, and a reduction of premiums charged to participating parishes, schools and other Catholic entities from July 1, 2014, through June 30, 2015, because the reserves were larger than required by professionals engaged to determine the appropriate reserve for outstanding and incurred claims.
Non-Operating Activity – Priest Benefits The Archdiocese coordinates a self-insured health and dental benefit fund for active priests and seminarians within the Archdiocese. The Archdiocese invoices parishes, Catholic schools and other Catholic entities Continued on next page
November 19, 2015
The Catholic Spirit • 3B
Archdiocesan Chancery Corporation Annual Financial Report • 2015 Supporting the Mission of the Church Despite reductions in most departments, the Archdiocese of St. Paul and Minneapolis remains committed to serving Catholics and the greater community. The following narrative explains the function of each department and the funding level for FY 2015. See also the chart on page 2B that illustrates the expenditures, as compared to other departments.
Catholic Education – $2,393,136 June 30 of 2015 saw the close of the Office of Catholic Schools (OCS) and the transition to the Office for the Mission of Catholic Education. The OCS supported the education and formation of children at Catholic schools within the Archdiocese of St. Paul and Minneapolis. The support included Catholic identity review and support, leadership development and assistance in implementing academic programs. The OCS also provided programmatic oversight to promote innovation and excellence in local urban Catholic schools. The new Office for the Mission of Catholic Education continues those functions with a new emphasis on forming a new generation of Catholic students while teaming up with the newly-formed Catholic Schools Center of Excellence and other private partners.
Central Services – $5,665,950 The Department of Central Services provides support and services to the archdiocesan staff and the parishes. The department includes the offices of the chancellors of civil and canonical affairs, computer services, the Metropolitan Tribunal, human resources and benefits, the Parish Accounting Services Center and maintenance. Also covered in this category are administrative services to the General Insurance Program, the lay and priest pension funds, and the Archdiocese Medical Benefit Plan Trust, as well as dues to the Minnesota Catholic Conference and the U. S. Conference of Catholic Bishops.
Clergy Services – $4,984,442 The role of this office is to provide support and formation for priests and deacons in all aspects of ministry and pastoral care. Services provided by this office include the following: Seminary Formation: There are currently 52 men in formation for the priesthood for service in our Archdiocese. While the number changes throughout the discernment process, our Archdiocese has one of the largest enrollments of seminarians of any diocese in the country. Expenses include a portion of the cost of tuition, room and board for men at The St. Paul Seminary School of Divinity and St. John Vianney College Seminary. Center for Clergy Formation: The Institute of Ongoing Formation for Clergy and the Institute of Diaconate Formation comprise the Center for Clergy Formation. Each entity of the center provides an integrated approach to priestly and diaconate formation, Continued from previous page based on clergy assignments and pays benefit providers directly for any claims. Priest Benefits generated a slight income in both 2015 and 2014.
Financial Position Net Assets of the Archdiocese were $26,056,959 on June 30, 2015, as compared to $32,540,508 in 2014, a $6,483,549 or 20 percent decrease as a result of the Statement of Activities deficit in 2015. The increase in Cash to $15,304,260 in 2015 from $3,861,917 in 2014 is the result of converting Investments to Cash as required by the U.S. Bankruptcy Court. Of the total Cash on June 30, 2015, of $15,304,260, $8,726,282 represents Unrestricted Cash. The remaining Cash is Board Designated and Restricted. The categories of Board Designated and Restricted and their
including gatherings and support for newly ordained priests, programs to assist new pastors in their role, and ongoing formation opportunities for priests and deacons throughout the Archdiocese. Continuing Education: This includes continuing education opportunities, a sabbatical program, international enculturation and a biennial presbyteral assembly. Ministerial Standards and Safe Environment: The mission of the Office of Ministerial Standards and Safe Environment is to work with our community to address the devastating societal problem of the sexual abuse of minors and vulnerable adults by implementing abuse prevention programs, immediately reporting allegations of abuse to law enforcement and/or child/adult protection officials and cooperating fully with their investigations, and helping those affected by abuse in their healing journey. Priest Support: This includes support for priests who are not in ministry due to personal health issues or a disciplinary leave of absence and those who have been permanently removed from ministry. Chaplaincies: There are 22 priests and 19 deacons in full or part-time ministry at hospitals and correctional facilities throughout the Archdiocese who are supported by the Archdiocese. There are many other priests and deacons throughout the Archdiocese who provide pastoral care at health care or correctional facilities, either as a ministry of their parish or through volunteer work. They offer the sacraments and spiritual support during some of the most difficult times in peoples’ lives. Last year, thousands of people throughout our community were served by chaplains. Specialized Ministries: This includes the Office of Vocations, support for international clergy, and retired clergy.
Communications – $2,238,271 The Office of Communications helps convey the teachings of the Church and fosters communications between the Archdiocese and the faithful, parish and school leaders and staff, and others in our community. It does this through The Catholic Spirit, multiple websites, social media, e-newsletters, printing services and other communications. The office also conducts media training for clergy and other representatives of the Archdiocese, and works with secular TV and radio stations, as well as print and online publications.
Community Services – $225,000 The Archdiocese helps men, women and children most in need within our local community, including the poor, hungry and homeless, primarily through cash support to Catholic Charities.
Evangelization and Catechesis – $535,580 The Office of Evangelization and Catechesis was established in 2014 to help create opportunities for people to encounter Jesus Christ and to make the truth of Christ and his Church clearly understood and
availability for operations will be determined at a future date by the U.S. Bankruptcy Court. Total Cash and Investments on June 30, 2015, were $16,367,039 compared to a balance on June 30, 2014, of $19,172,616, and decreased by $2,805,577 or 15 percent, mainly as a result of the cash outlay for Special Issues expenses. The Litigation Reserve of $4,600,000 did not change from 2014 to 2015 as a result of management’s inability to estimate our liability related to ongoing litigation and claims of sexual abuse as each of the 416 claims are unique and require factual development to determine financial exposure. It is important to understand that the value of the assets and liabilities on the Condensed Statements of Financial Position are not necessarily reflective of the outcome of Reorganization. With the exception of the Litigation Reserve, they are based on Generally Accepted
accessible. Evangelization and catechesis efforts are created and experienced in cooperation with parishes and Catholic schools and the many ministry groups throughout this local Church.
Marriage, Family and Life – $888,429 This department assists the laity and parishes through programs supporting marriage preparation, family education programming, respect life, pro-life groups, biomedical ethics, and outreach for people with disabilities. The office of Marriage, Family and Life also sponsors the annual Archdiocesan Youth Day that brings together hundreds of local high school-aged teens to praise God, grow in the faith and find fellowship. In addition, this office helps coordinate local representatives attending World Youth Day, the National Catholic Youth Conference and other youth events.
Parish Services and Outreach – $1,990,116 The Office of Parish Services provides consultation, planning, and leadership development opportunities to parishes throughout the Archdiocese. The Archdiocese supports outreach ministry to various groups and members of the archdiocesan community, including Latino ministry, Indian ministry, the Commission on Black Catholics, the Venezuelan mission, the Archdiocesan Council of Catholic Women, deaf ministry, and other groups and coalitions. For example, there are more than 20 Latino ministry parishes throughout the Archdiocese that receive support from the Office of Latino Ministry. These Latino ministry parishes offer the sacraments, catechesis and spiritual support to tens of thousands of Spanish-speaking people throughout the local Church. The Office of Latino Ministry also oversees special days of celebration of the faith and family throughout the year. In addition, biblical, catechetical and pastoral leadership formation institutes are provided for members of the Latino community to assist them in growing in the faith.
Support Services General and Administrative – $3,415,146 The offices of the archbishop, retired archbishop, bishops, vicar general, accounting, finance and general administration are included in the General and Administrative category. Over half of this category of expense supports salaries and benefits of staff. Also included are expenses incurred as part of the staff reductions, non-bankruptcy related legal fees, and bad debt expense.
Development and Stewardship – $611,132 This office works with parishes and Catholic schools to help grow a culture of stewardship in local communities and to support parish and school development efforts. The office also engages in outreach to benefactors who wish to support specific ministries or programs of the Chancery Corporation.
Accounting Principles. Assets, particularly Land, Property and Equipment, are recorded at their net book value, which may not reflect their fair market value. Final determination of the value of the assets and liabilities will be at the discretion of the U.S. Bankruptcy Court.
Looking Forward Shortly after we filed for Reorganization in January 2015, Judge Robert Kressel ordered the parties into mediation. Although I am not able to speak about the mediation in detail, it is our hope to continue to work with insurance carriers, victims’ counsel, creditors, parishes and other Catholic entities to obtain a fair and just settlement of victim claims. At that time, the next step for us would be to file a Plan and Disclosure Statement and obtain Confirmation of a Plan from the U.S. Bankruptcy Court. Archdiocesan leadership is taking the
necessary steps to ensure that our financial situation is resolved fairly and just compensation is received for victims of clergy abuse while honoring the gifts of stewardship of past and present faithful in pursuit of the mission of the Church. This has not changed and has been our goal since this chapter of the Church’s history began a few years ago. Our focus has been and will continue to be fairness to victims of clergy abuse and adherence to reforms. I once again would like to thank all the clergy and lay leaders, staff, volunteers, parishioners and others throughout our local Church who continue to work in these challenging times to strengthen sustainability in support of our shared mission.
Mertens is the Chief Financial Officer of the Archdiocese of St. Paul and Minneapolis.
4B • The Catholic Spirit
November 19, 2015
Archdiocesan Chancery Corporation Annual Financial Report • 2015 Condensed Statements of Activities Condensed Statements of Activities (Unaudited) • Years Ended June 30, 2015 and 2014 2015 OPERATING REVENUE Contributions $3,117,446 Parish Assessments 14,246,426 Fees and Program Revenues 4,465,302 Investment Income, Net 37,925 Other Income 563,561 Operating Revenue 22,430,660 ‘ OPERATING EXPENSE Program Services: Catholic Education 2,393,136 Central Services 5,665,950 Clergy Services 4,984,442 Communications 2,238,271 Community Services 225,000 Evangelization & Catechesis 535,580 Marriage, Family and Life 888,429 Parish Services and Outreach 1,990,116 Total Program Services 18,920,924 Support Services: General and Administrative 3,415,146 Development and Stewardship 611,132 Total Support Services 4,026,278 Total Operating Expense before Special Issues Expense
Notes to Condensed Financial Statements 2014 $3,895,992 13,776,682 4,957,004 1,607,862 1,288,192 25,525,732
4,753,327 7,247,153 5,685,981 2,676,251 1,534,072 328,686 1,054,818 2,337,966 25,618,254 3,183,337 1,664,589 4,847,926
22,947,202
30,466,180
Change in Net Assets from Operations before Special Issues Expense
(516,542)
(4,940,448)
Special Issues Expense
5,233,544
4,180,228
Change in Net Assets from Operations
(5,750,086)
(9,120,676)
NON-OPERATING ACTIVITY General Insurance Program Revenues General Insurance Program Expenses Priest Benefit Revenues Priest Benefit Expenses
5,674,873 (6,647,612) 3,050,633 (2,811,357)
6,700,775 (6,831,899) 3,058,037 (2,755,324)
(733,463)
171,589
$(6,483,549)
$(8,949,087)
Change in Net Assets from Non-Operating Activities CHANGES IN NET ASSETS
Condensed Statements of Financial Position Condensed Statements of Financial Position (Unaudited) • Years Ended June 30, 2015 and 2014 2015 2014 Assets Cash $15,304,260 $3,861,917 Contributions Receivable, Net of Allowances 597,553 714,516 Accounts Receivables, Net of Allowances 4,972,445 5,542,489 Loans and Notes Receivable, Net of Allowances 1,037,286 1,245,775 Investments 1,062,779 15,310,699 Beneficial Interest in Perpetual Trusts 1,485,029 1,551,285 General Insurance Program Assets 8,963,083 10,220,349 Prepaid Expenses and Other Assets 1,170,449 740,954 Land, Property and Equipment, Net 8,207,566 8,978,417 Total Assets $42,800,450 $48,166,401
The Archdiocese The Archdiocese of St. Paul and Minneapolis (the Archdiocese) was first established as a diocese by the Holy See in 1850 (originally Minnesota and the Dakotas) and elevated to an archdiocese 38 years later. Now comprising a 12-county area, there are 187 parishes and 90 Catholic schools (including elementary and high schools) within the Archdiocese. The Archdiocese is home to roughly 825,000 Catholics, hundreds of clergy and religious men and women, and thousands of lay leaders, employees and volunteers who serve in parishes, Catholic schools and many other ministries. The mission of the Archdiocese is to make the name of Jesus Christ known and loved by promoting and proclaiming the Gospel in word and deed through vibrant parish communities, quality Catholic education, and ready outreach to the poor and marginalized.
Petition for Relief under Chapter 11 On Jan. 16, 2015, the Archdiocese of St. Paul and Minneapolis (the “Debtor-inPossession”) (the “Debtor”) filed a petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court (the “Court”) for the District of Minnesota. Under Chapter 11, certain claims against the Debtor in existence prior to the filing are stayed while the Debtor continues business operations as a Debtor-inPossession. These claims are reflected on the June 30, 2015, Statement of Financial Position as “Pre-Petition Accounts Payable and Accrued Liabilities” within the liabilities section of the statement. Additional claims may arise subsequent to the filing date resulting from rejection of executory contracts and a determination by the Court of allowed claims. The timely filing deadline for the filing of claims of sexual abuse and general creditor claims was Aug. 3, 2015. The Debtor received permission from the Court to pay or otherwise honor certain of its pre-petition obligations, including the costs of employee wages, benefits and expense reimbursements.
Nature of Organization
LIABILITIES AND NET ASSETS Liabilities Accounts Payable and Accrued Liabilities, Pre-Petition $628,257 Accounts Payable and Accrued Liabilities, Post-Petition 5,615,681 Litigation Claims Payable, Net of Insurance Recovery of $700,000 4,600,000 General Insurance Program Claims Payable and Other Liabilities 5,035,301 Amounts Held for Others Under Agency Transactions 122,032 Parish Demand Deposits 679,304 Deferred Revenue 62,916 Total Liabilities 16,743,491
$4,387,768 — 4,600,000 5,240,134 119,786 1,209,075 69,130 15,625,893
Net Assets Unrestricted: General Insurance Program Undesignated Total Unrestricted
16,679,939 4,729,579 21,409,518
17,651,756 10,219,907 27,871,663
Temporarily Restricted Permanently Restricted Total Net Assets
2,642,520 2,004,921 26,056,959
2,597,668 2,071,177 32,540,508
$42,800,450
$48,166,401
Total Liabilities and Net Assets
The Management Discussion and Analysis and Financial Statements with footnotes are posted at www.archspm.org on the Administration and Finance page.
The financial statements include all administrative and program offices and departments of the Chancery Corporation.
Parishes, Catholic schools and other separately incorporated and operated Catholic entities within the 12-county area of the Archdiocese are not under the fiscal or operating control of the Chancery Corporation and therefore, in accordance with generally accepted accounting principles, are not included in the Chancery Corporation’s financial statements.
Basis of Presentation The financial statements of the Chancery Corporation have been prepared on the accrual basis of accounting. The Chancery Corporation reports information regarding its financial position and activities according to three classes of net assets: unrestricted net assets; temporarily restricted net assets; and permanently restricted net assets, based on the existence or absence of donor-imposed restrictions.
Financial Statements The financial statements of the Chancery Corporation for FY 2015 were not audited by an independent certified public accountant as a result of our inability to estimate our liability related to sexual abuse claims at June 30, 2015, due to each claim being unique and requiring factual development to determine the financial exposure. For FY 2014, our auditors issued a disclaimer of opinion and a going concern qualification on the sole basis of the uncertainty of the financial impact due to sexual abuse litigation and our resulting inability to provide sufficient evidence to form a basis for an audit opinion on litigation matters. The accompanying condensed Statement of Financial Position and condensed Statement of Activities were prepared from our internal financial statements and in the interest of brevity, do not contain a similar level of detail and are not accompanied by complete explanatory footnotes. In order to see the full footnotes, please refer to the archdiocesan website at www.archspm.org on the Administration and Finance page.
Other The Chancery Corporation acts as a conduit for special collections in the parishes designated by the U. S. Conference of Catholic Bishops or for local purposes. During 2015, $1,485,000 was contributed by parish communities for such collections and sent to the Chancery Corporation for remittance to the intended recipient. This amount includes $192,000 for service of debt at the Cathedral parish resulting from the building restoration.