November 24, 2016 The Catholic Spirit • 1B
Archdiocesan Chancery Corporation Annual Financial Report • 2016
Report shows God continues to provide, even in hard times
H
ow appropriate that the 2016 Annual Financial Report of the Archdiocese of St. Paul and Minneapolis is being published as we prepare to celebrate Thanksgiving. While the figures reflect the fragility that one would expect amidst the uncertainties that accompany a declaration of bankruptcy, the 2016 Report also serves as a wonderful reminder of the many ways in which the Lord continues to provide for this local Church, even in the Archbishop most difficult of times — and for that Bernard I am most thankful. HEBDA In the course of the past fiscal year, and in spite of the precarious financial situation in which we find ourselves, the Archdiocese has nonetheless managed to continue to facilitate and support the work of our Catholic faithful who in this Jubilee Year have made the merciful face of Christ present throughout this local Church, as they proclaim the Gospel, form our youth, support our married
couples and families, and reach out to our brothers and sisters in need. While Archdiocesan staffing and programming remains at the low level necessitated by the bankruptcy, I am grateful that work of the Church has continued. Anyone in attendance at the Rite of Election and Call to Continuing Conversion last Spring, when more than 600 were welcomed into the Church, or those who celebrated the Eucharist with our Catholic school students at CHS Field, or those who witnessed the enthusiasm of our high school students and confirmation candidates at Archdiocesan Youth Day all know that the Holy Spirit continues to bring life to our Church. While a financial report speaks in terms of “expenses,” I hope that you will share my conviction that those expenditures are “investments” in a Church with a strong future. While Pope Francis has repeatedly stated that he is not looking for bishops who see themselves as corporate CEO’s or bureaucratic managers, he is equally clear in teaching that a bishop needs to be a good steward of the resources that have been entrusted to him. As he reminded a group of recently ordained bishops, that necessarily requires that bishops make good use of their Priest Council,
Consultors and Finance Council. Here in the Archdiocese, I am assisted in the area of financial administration not only by a very competent professional staff, but also by the extraordinarily well-prepared laity and clerics who serve on the Archdiocesan Finance Council and Corporate Board and who, along with the priests who serve on the College of Consultors and Presbyteral Council, have been valued collaborators as we together face the task of restoring stability to the Archdiocese. The extraordinary circumstances in which we find ourselves have been matched by the exceptional commitment of these collaborators. They have had to go the proverbial “extra mile” and have done so with distinction. I am impressed with the amount of time that they routinely dedicate to the review of not only the financial data presented in the Report but also of the decisions that I have to make that can be expected to have an impact on both our financial situation and the health of this Archdiocese. The Archdiocesan Finance Council and Corporate Board have committed themselves to increased coordination and collaboration and have met jointly throughout this past year, providing
invaluable guidance in the Ramsey County matters and in the bankruptcy litigation. They have been briefed and involved in the decisions that have resulted in the litigation costs that appear as “Special Issues Expenses” in the Financial Report. Given both the magnitude of those costs and the importance of those issues to the future of the Archdiocese, the discussions have been lively, detailed and informative. What a blessing it is to have women and men around the table who are not only able to share such broad experiences in finance, law, accounting, banking, nonprofit administration and parish leadership, but who also are intimately acquainted with the mission of the Church, our desire to be transparent and our hope to make restitution for past wrongs. I invite you to join me in giving thanks to God for their dedication. The members of those bodies, moreover, never fail to remind me that every asset on our financials can be traced to the generosity — past and present — of the faithful of this Archdiocese. The Archdiocese isn’t a producer of goods and we don’t provide for-profit services. Everything that the Please turn to ARCHBISHOP on page 4B
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, 2016. Condensed financial statements are included in this issue of The Catholic Spirit. The Management Discussion and Analysis and Financial Statements are posted at www.archspm.org on the Administration and Finance page. By Thomas Mertens, CFO
Introduction Fiscal Year 2016 began July 1, 2015, and ended June 30, 2016. It was a year of continuing financial challenges for the Archdiocese of St. Paul and Minneapolis, and it was our first full year in Reorganization in U.S. Bankruptcy Court. But it was also a year of clarity, hope and positive developments. As you may remember, after much consultation, the Archdiocese filed for Reorganization Jan. 16, 2015, due to the increasing number of claims of clergy sexual abuse of minors against the Archdiocese following adoption of the Minnesota Child Victim Act in 2013. After the Aug. 3, 2015, claim filing deadline, we learned that there were more than 400 claimants, a number Archbishop Bernard Hebda called “breathtaking.” Effort began in earnest at that time, and continues to the present, to engage more than a dozen insurance companies that covered the Archdiocese since the 1940s and contribute to a proposed trust that will eventually compensate those who have been harmed. Mediation efforts involving Archbishop Hebda, Bishop Andrew Cozzens, members of our Corporate Board and Finance Council, and attorneys representing the Archdiocese, the parishes and claimants have been positive and productive. All involved agree on common goals: to ensure that all people are safe in our churches and schools, that those who have been harmed receive fair compensation, and to ensure that the Archdiocese can continue to fulfill its core missions. Our Plan of Reorganization filed Nov. 15, 2016, contains a proposed Trust with more than $130
million, with almost $100 million from Archdiocese carriers, the single highest amount provided by insurance carriers in any diocesan bankruptcy to date. This Plan includes proposed settlement offers from more than 10 different carriers. At this point, there are only two carriers that have not agreed to a settlement with the Archdiocese. The Plan provides for the appointment of an independent Bankruptcy Courtappointed trustee to determine how much compensation each claimant receives from the Trust. We believe the settlement offers incorporated in the plan are fair and reasonable. The Plan will be submitted to claimants and other creditors following Court approval of a disclosure statement, at which time these parties will have an opportunity to vote on the Plan. Settlements with most of the carriers are contingent on approval of the proposed Archdiocese Plan. If the Plan is not approved due to opposition by claimants’ counsel, the Archdiocese may have no choice but to file an amended Plan without the insurance settlements and other proceeds, which would leave a relatively small sum for the victims. Those remaining proceeds could be largely exhausted by professional fees incurred before and after Plan confirmation. In early FY 2016, the Archdiocese commenced discussions with the Ramsey County Attorney’s Office directed towards resolution of pending criminal and civil charges. County Attorney John Choi said a key goal of his was to make sure that processes, protocols and practices were put into place in the Archdiocese to ensure children were safe in our churches and schools. We wholeheartedly agreed with that goal. After lengthy discussions that included Archbishop Hebda, members of the Archdiocese’s Office of Ministerial Standards and Safe Environment, and outside legal counsel, we reached what Choi called a “landmark agreement.” That agreement gives a district court judge oversight of our safe environment practices and requires reviews in court every six months through February 2020. Choi said he believed the agreement could serve as a prototype for child protection far beyond the Church. After the civil Settlement Agreement with Ramsey County, our team continued to make changes to
promote safe environments and continued to engage the Ramsey County Attorney’s Office in dialogue to resolve the criminal case against the Archdiocese. Choi announced July 20, 2016, that he was pleased with the Archdiocese’s policies, protocols and practices to protect children and dismissed the criminal charges. The extensive legal efforts in FY 2016, described above, drove much of the Archdiocese’s spending and continue to do so into FY 2017. Legal and professional fees, referred to as “Special Issues Expense” in our Statement of Activities, totaled $7.9 million, up from $5.9 million in FY 2015, partially a result of a full year of bankruptcy expenses in FY 2016 as compared to FY 2015. It is important to note that these fees include charges from not only the Archdiocese’s legal counsel and advisors but also the fees of professionals representing parishes and abuse claimants. Significant amounts were spent opposing a motion to consolidate the assets of over 200 Catholic entities into the bankruptcy and addressing issues raised by a Plan of Reorganization proposed by counsel for abuse claimants. While our Special Issues Expense grew in 2016, our effort to continue minimizing our Operating Expense was successful. Our Operating Expense before Special Issues Expense in 2016 was $18.6 million, down from $22.9 million in 2015. In 2014, Operating Expense before Special Issues Expense was $30.5 million. In the past three years, we have cut our expenses by approximately $12 million, a decrease of 39 percent, while still offering parishes and schools valuable services and resources to better carry out the mission of this local Church. In 2016, we sold Archdiocesan real estate not directly involved with our mission. The Hayden Center, which is home to more than 100 Archdiocesan employees, was sold to the Minnesota Historical Society in February for $4.3 million. The Chancery and Archbishop’s Residence, located across the street from the Cathedral of St. Paul, were sold to a real estate group for $3.2 million in April. In addition, the Hazelwood property near Northfield, used as a weekend retreat, was sold in March for Continued on next page
2B • The Catholic Spirit
November 24, 2016
Archdiocesan Chancery Corporation Annual Financial Report • 2016 Archdiocese of St. Paul and Minneapolis Chancery Corporation Operating Revenue FY 2016: $20.8 Million
Contributions $ 2.4
Archdiocese of St. Paul and Minneapolis Chancery Corporation Operating Expense FY 2016: $18.6 Million* Community Services $ 0.05 Marriage, Family & Life Development & Stewardship $ 0.8 $ 0.5
Other Income $ 1.2 Parish Assessments $ 14.8
Parish Services & Outreach $ 1.7
Central Services $ 5.2
Investment Income, net $.01 Communications $ 2.0 Fees & Program Revenues $ 2.4 General & Administrative $ 2.4
Clergy Services $4.3
Evangelization & Catechesis $ 0.3
Catholic Education $1.3
* Operating Expense before Special Issues Expense
Continued from previous page approximately $350,000. Those proceeds are in a separate account, designated to be used in our Plan and noted on the Statement of Financial Position as Cash – Restricted by Bankruptcy. We added approximately $875,000 more with the sale of the Dayton Building, home to our Offices of Communications and Evangelization and Catechesis, in August. While we were selling our properties, the Court approved our lease of 777 Forest St., on St. Paul’s East Side. It was built in 1939 and was the original headquarters of 3M. All Archdiocesan employees will be moving into the space in February 2017. It will be the first time in decades that all employees will be working in the same location. We are confident it will lead to better communication, collaboration and service to the parishes, schools and faithful. Renting is expected to provide cash savings to the Archdiocese, considering the amount of needed deferred maintenance to the buildings we currently occupy. 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 70 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. For the second straight year, because of our ongoing Reorganization, the Archdiocese, in consultation with the Archdiocesan Finance Council and Corporate Board of Directors, filed a motion with the Bankruptcy Court, and was granted approval, to allow our independent accounting firm to perform Agreed Upon Procedures on our financial statements for FY 2016. 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 the Audit and Risk Assessment Committee of the Corporate Board and our independent accounting firm, and they 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 audits and will continue our practice of release promptly after completion of our financial statements and auditor’s report.
Financial Condition For the year ended June 30, 2016 (our FY 2016), we generated a profit from Operations before Special Issues Expense of $2,165,075 as compared to a loss from Operations before Special Issues Expense of $464,014 in FY 2015. Our loss from operations in FY 2016 was $5,772,467 and compares favorably to a loss of $6,401,017 for FY 2015. Special Issues Expense was $7,937,542 and $5,937,003 in 2016 and 2015, respectively. The Special Issues Expense of $7,937,542 incurred by the Archdiocese during 2016 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, we are 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 Bankruptcy Reorganization. Our legal counsel has spent hundreds of hours working with numerous insurance carriers who issued
policies to the Archdiocese over the past seven decades. We are working closely with the insurance carriers to determine coverage for claims and to find equitable insurance settlements for abuse claims. Special Issues Expense is substantial, but necessary in order to achieve the goal of obtaining fair compensation for sexual abuse claimants. We recognize that we cannot sustain this level of spending for Special Issues Expense indefinitely and that is why it is imperative that we negotiate a fair resolution to this Reorganization in the near term. While Special Issues Expense to date is significant, this spending has resulted in the Archdiocese’s insurance carriers contributing almost $100 million into the Plan of Reorganization and has moved the process closer to resolution.
Revenue Total Operating Revenue in 2016 was $20,780,084 as compared to $22,483,188 in 2015. The major reason for this decline is a decrease in Contributions and Fees and Program Revenues, offset by a slight increase in Parish Assessments and Other Income. Fees and Program Revenues decreased as a result of lower revenue generated from The Catholic Spirit, and Other Income increased due to a court approved settlement with a software vendor. Parish Assessments, our primary source of revenue, are generated from the 187 parishes within the Archdiocese, increased by 4.1 percent to $14,826,794 in 2016 from $14,246,426 in 2015. Assessments are calculated and billed on a two-year lag which means the parish financial results for the years ended June 30, 2014 and 2013 formed the basis for the Parish Assessments revenue for the years ended June 30, 2016 and 2015, respectively. Assessments increased as a result of increased parish income and an increase in dollars received from capital campaigns. Continued on next page
November 24, 2016 The Catholic Spirit • 3B
Archdiocesan Chancery Corporation Annual Financial Report • 2016 Supporting the Mission of the Church
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 assessments to the Minnesota Catholic Conference and the United States Conference of Catholic Bishops.
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. OMSSE Director Tim O’Malley and his team worked with the Ramsey County Attorney’s Office to strengthen existing practices and establish new child protection policies and protocols as part of the Settlement Agreement announced last December. 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 26 priests and 27 deacons in full-time and 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 healthcare 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 and support for international clergy and retired clergy.
Clergy Services • $4,302,642
Communications • $2,044,509
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 57 men in formation for the priesthood for service of our Archdiocese — an increase of five from last year. While the number changes throughout the men’s 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: 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, 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
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 consultation and training for clergy and other representatives of the Archdiocese, and works with secular TV and radio stations, as well as print and online publications.
Continued from previous page
received of approximately $7,849,000 and a book gain from the sales of $4,266,719.
June 30, 2016, and lower than expected claims.
Non-operating Activity – General Insurance Program
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 based on clergy assignments and pays benefit providers directly for any claims. Priest Benefits generated a slight loss in 2016 and a slight income in 2015.
The Archdiocese of St. Paul and Minneapolis serves Catholics and the greater community. The following narrative explains the function of each department and the funding level for FY 2016. There also is a chart that illustrates the expenditures, as compared to other departments.
Catholic Education • $1,304,156 FY 2016 saw the first full year of operation for the Office for the Mission of Catholic Education. The OMCE provides support for Catholic schools and parish faith formation programs in the Archdiocese by focusing on Catholic identity, leadership development and assistance in implementing academic programs. A particular area of emphasis is providing programmatic oversight to promote innovation and excellence in local urban Catholic Schools. The OMCE is focused on forming a new generation of Catholic students by teaming up with private partners like the Aim Higher Foundation and the Catholic Schools Center of Excellence.
Central Services • $5,147,631
Operating Expense Our Operating Expense, without Special Issues Expense in 2016, totaled $18,615,009 as compared to $22,947,202 in 2015, an 18.9 percent decrease. The decrease is due to the significant expense reductions in Program Service expenses including personnel reductions implemented in November 2014 which the full year impact was realized in 2016. These reductions were necessary to enable the Archdiocese to continue to operate knowing that Special Issues Expense would be significant and required. Every Program and Support Service category saw a reduction in expenses from 2015 to 2016.
Non-operating Activity – Gain on Sale of Assets As previously mentioned, the Archdiocese sold three properties in 2016. These sales resulted in cash
Community Services • $46,108 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 • $332,701 The Office of Evangelization and Catechesis creates opportunities for people to encounter Jesus Christ and to make the truth of Christ and his Church clearly
The General Insurance Program of the Archdiocese of St. Paul and Minneapolis provides comprehensive, uniform commercial general liability and workers’ compensation coverage to all of the parishes, Catholic schools and certain other Catholic entities within the Archdiocese, as well as the Chancery Corporation. 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 surplus from operations of $3,090,775 in 2016 as compared to a deficit from operations of $846,211 in 2015. The increase year-over-year was due to an increase of premiums from participating parishes, schools and other Catholic entities from July 1, 2015, through
understood and 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. OEC’s initiatives include Women in the New Evangelization and Catholic Watchmen.
Marriage, Family and Life • $806,161 This department assists the laity and parishes through programs supporting marriage preparation, family education programming, respect life, pro-life groups, biomedical ethics and outreach to people with disabilities. The office of Marriage, Family and Life also sponsors the annual Archdiocesan Youth Day that brings together more than 1,000 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, the March for Life and other youth events.
Parish Services and Outreach • $1,724,992 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 23 Latino Ministry parishes throughout the archdiocese which 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 evangelization.
Support Services General and Administrative • $2,421,347 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 staff salaries and benefits. Also included are expenses incurred for non-bankruptcy related legal fees and bad debt expense.
Development and Stewardship • $484,762 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.
Non-operating Activity – Priest Benefits
Financial Position Net Assets of the Archdiocese were $26,739,817 on June 30, 2016 as compared to $25,479,177 in 2015, a $1,260,640 or 4.9 percent increase as a result of the Statement of Activities Changes in Net Assets in 2016. The increase in Cash to $18,092,712 in 2016 from $15,304,260 in 2015 is the result of the sale of Continued on next page
General Insurance Program Revenues General Insurance Program Expenses Priest Benefit Revenues Priest Benefit Expenses
9,659,854 (6,569,079) 2,738,972 (3,063,927)
4B • The Catholic Spirit Change in Net Assets from Non-Operating Activities
6,847,405 (7,693,616) 3,050,633 (2,772,503)
November 24, 2016
7,033,107
(568,081)
$1,260,640
$(6,969,098)
Archdiocesan Chancery Corporation Annual Financial Report • 2016 CHANGES IN NET ASSETS
Condensed Statements of Financial Position
Condensed Statements of Activities Condensed Statement of Activities (Unaudited) • Years Ended June 30, 2016 and 2015 2016 2015 OPERATING REVENUE Contributions $2,379,452 $3,117,446 Parish Assessments 14,826,794 14,246,426 Fees and Program Revenues 2,348,287 4,465,142 Investment Income, Net 7,043 37,237 Other Income 1,218,508 616,937 Operating Revenue 20,780,084 22,483,188 OPERATING EXPENSE Program Services: Catholic Education Central Services Clergy Services Communications Community Services Evangelization & Catechesis Marriage, Family and Life Parish Services and Outreach Total Program Services Support Services: General and Administrative Development and Stewardship Total Support Services
1,304,156 5,147,631 4,302,642 2,044,509 46,108 332,701 806,161 1,724,992 15,708,900
2,393,136 5,884,442 4,984,442 2,238,271 225,000 535,580 888,429 1,990,116 19,139,416
2,421,347 484,762 2,906,109
3,196,654 611,132 3,807,786
18,615,009
22,947,202
Change in Net Assets from Operations before Special Issues Expense
2,165,075
(464,014)
Special Issues Expense
7,937,542
5,937,003
Change in Net Assets from Operations
(5,772,467)
(6,401,017)
NON-OPERATING ACTIVITY Gain on Sale of Assets General Insurance Program Revenues General Insurance Program Expenses Priest Benefit Revenues Priest Benefit Expenses
4,267,286 9,659,854 (6,569,079) 2,738,972 (3,063,927)
— 6,847,405 (7,693,616) 3,050,633 (2,772,503)
7,033,107
(568,081)
$1,260,640
$(6,969,098)
Total Operating Expense before Special Issues Expense
Change in Net Assets from Non-Operating Activities CHANGES IN NET ASSETS
ARCHBISHOP continued from page 1B Archdiocese has comes from the faithful and flows from their commitment to our shared mission as the Church. I hope that same commitment will30, lead you take Condensed Statements of Financial Position (Unaudited) • Years Ended June 2016 andto 2015 the time to examine this year’s report and to pray that the Holy Spirit will guide me 2016 2015 and Assets those who share in the leadership of this Archdiocese. In the six months that I have served as Archbishop, I have been repeatedly Cash - Unrestricted and Board Designated $7,515,128 $12,768,089 astounded by the generosity of our Catholic community and the support that is Cash - Restricted by Bankruptcy 7,855,560 — shown for Christ’s Church, even in difficult times. That gives me even greater Cash - Restricted by Donors 2,722,024 2,536,171 motivation for being a good steward of our Archdiocesan resources. I have Contributions Receivable, Net of Allowances 502,018 597,553 confidence in the financial report that is published today, and I hope that with Receivables, Net of Allowances 4,972,445 your Accounts continued help and prayers the Archdiocese will4,538,350 be in a position to present an Notes Receivable, Net ofIn Allowances even Loans more and favorable report in 2017. the meantime,1,053,609 please know that1,037,286 you will be 979,597 in myInvestments thoughts and prayers as I count my blessings this Thanksgiving.1,062,779 Beneficial Interest in Perpetual Trusts 1,370,187 1,485,029 General Insurance Program Assets 11,992,782 8,963,084 Prepaid Expenses and Other Assets 418,996 1,170,448 Land, Property and Equipment, Net 4,054,110 8,207,566 Total Assets $43,002,361 $42,800,450 Liabilities and Net Assets Liabilities Accounts Payable and Accrued Liabilities, Pre-Petition Accounts Payable and Accrued Liabilities, Post-Petition Litigation Claims Payable, Net of Insurance Recovery of General Insurance Program Claims Payable and Other Liabilities Amounts Held for Others Under Agency Transactions Parish Demand Deposits Deferred Revenue Total Liabilities
Condensed Statements of Financial Position (Unaudited) • Years Ended June 30, 2016 and 2015 2016 2015 Assets Cash - Unrestricted and Board Designated $7,515,128 $12,768,089 Cash - Restricted by Bankruptcy 7,855,560 — Cash - Restricted by Donors 2,722,024 2,536,171 Contributions Receivable, Net of Allowances 502,018 597,553 Accounts Receivables, Net of Allowances 4,538,350 4,972,445 Loans and Notes Receivable, Net of Allowances 1,053,609 1,037,286 Investments 979,597 1,062,779 Beneficial Interest in Perpetual Trusts 1,370,187 1,485,029 General Insurance Program Assets 11,992,782 8,963,084 Prepaid Expenses and Other Assets 418,996 1,170,448 Land, Property and Equipment, Net 4,054,110 8,207,566 Total Assets $43,002,361 $42,800,450 Liabilities and Net Assets Liabilities Accounts Payable and Accrued Liabilities, Pre-Petition Accounts Payable and Accrued Liabilities, Post-Petition Litigation Claims Payable, Net of Insurance Recovery of General Insurance Program Claims Payable and Other Liabilities Amounts Held for Others Under Agency Transactions Parish Demand Deposits Deferred Revenue Total Liabilities
$239,741 5,459,256 4,600,000
$628,257 6,252,052 4,600,000
4,915,635 106,164 679,304 262,444 16,262,544
4,976,711 122,032 679,304 62,916 17,321,272
Net Assets Unrestricted: General Insurance Program Undesignated Total Unrestricted
19,896,322 2,270,004 22,166,326
16,805,547 4,026,189 20,831,736
2,683,413 1,890,078 26,739,817
2,642,520 2,004,922 25,479,178
$43,002,361
$42,800,450
Temporarily Restricted Permanently Restricted Total Net Assets Total Liabilities and Net Assets
Continued from previous page properties and the deficit from operations of $5,772,467 due to Special Issues Expense. Of the total Cash on June 30, 2016, of $18,092,712, $3,366,138 represents Unrestricted Cash and $4,148,990 is Board Designated. Cash Restricted by the Bankruptcy is $7,855,560 and Cash Restricted by Donors is $2,722,024. The availability of Cash for operations will be determined at a future date by the U.S. Bankruptcy Court. The significant decrease in Land, Property and Equipment from $8,207,566 to $4,054,110 is due to the sale of the three properties. General Insurance Program Assets increased as a result of an increase in cash due to the increased premiums and lower than expected claims. It is important to understand that the value of the assets and liabilities on the Condensed Statements of Financial Position are not reflective of the outcome of Reorganization. With the exception of the Litigation Reserve, they are based on Generally Accepted 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 The Archdiocese is hopeful that our Plan of Reorganization will be quickly approved so this local Church is able to continue to carry out its core mission of spreading the Gospel message of Jesus Christ. I continue to be thankful to all the clergy, lay leaders, staff, volunteers, parishioners and others throughout the Archdiocese for their commitment to God’s people during these challenging times of uncertainty. It is only together that we will be strong enough to chart a new course for this local Church to healing and reconciliation. Mertens is the Chief Financial Officer of the Archdiocese of St. Paul and Minneapolis.
$239,741 5,459,256 4,600,000
$628,257 6,252,052 4,600,000
4,915,635 106,164 679,304 262,444 16,262,544
4,976,711 122,032 679,304 62,916 17,321,272