Statement from Thomas Mertens, Chief Financial Officer
Archdiocese of Saint Paul and Minneapolis Chancery Corporation
“Today, the Archdiocese of Saint Paul and Minneapolis is releasing the full audited financial report for the Chancery Corporation for the fiscal year ended June 30, 2014.
Net assets of the archdiocesan Chancery Corporation were $32,540,508, which is $8,949,087 less than a year earlier. The financial outcome of Chancery Corporation operating activities in 2014 resulted in a deficit of $9,120,676. The deficit can be attributed to significant expenses that are not anticipated to be ongoing in the long-term, including special issues expense, the transition of the Catholic Services Appeal (CSA) to a separate non-profit, and the write-off of software.
The special issues expense of $4,180,228 incurred by the Chancery Corporation during the year ended June 30, 2014 related to addressing issues arising primarily from the lifting of the civil statute of limitations on sexual abuse. Third party professional services were needed for review of priest files, investigation of insurance coverage and analysis of financial options. The CSA transition to a separate non-profit organization on January 1, 2014 resulted in a net negative impact to our operating activities of approximately $3.7 million. This CSA transition will result in a reduction of administrative expense for the Chancery Corporation going forward. The Chancery Corporation wrote off $993,642 of software that did not meet specifications identified in the Report and Recommendations of the Safe Environment and Ministerial Standards Task Force. New software to meet these needs has been developed, implemented and continues to be enhanced.
This year, for the first time, the Chancery Corporation did not receive an unqualified opinion from our auditors. The independent certified public accounting firm of CliftonLarsonAllen LLP issued a disclaimer of opinion and a going concern qualification. This is solely because we were not able to provide the auditors with an estimate of our liability related to ongoing litigation and claims arising under the Minnesota Child Victims Act and the potential impact of the liability on our future financial stability.
All options are being considered in order to resolve the number of claims we are facing due to the lifting of the statute of limitations. Our first concern is fairness: fairness for victims of clergy sexual abuse and fairness for the faithful whose stewardship has made archdiocesan ministry possible. Reorganization under the bankruptcy code would be a way to respond to all victims/survivors 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. No decision regarding whether to pursue reorganization has been made.
Leadership has determined that significant Chancery Corporation budget reductions are necessary because reserves have decreased. Last week, we announced a 20% cut to the FY 2015 operating budget, resulting in reductions in operating expenses and the layoff of 11 Chancery Corporation employees. We are determined to achieve a balanced budget beyond 2015 and will evaluate our budget going forward as needed, while maintaining essential programs and services.
The Chancery Corporation exists to help fulfill the mission of the Church in our community through supporting the archbishop in bringing together the faithful, ensuring true teaching of the faith, and reaching out to share the Gospel message of Jesus Christ. In practical terms, the Chancery Corporation carries out chancery functions such as clergy formation and assignment, hospital and prison chaplaincy, support for parish evangelization and catechesis efforts, Latino ministry and other specialized ministry, as well as other centralized functions within the Archdiocese of Saint Paul and Minneapolis.
The Chancery Corporation, a not for profit entity, is a separate legal entity from parishes, Catholic schools and other local Catholic entities. The financial report covers the activities of the archdiocesan Chancery Corporation. Parishes and other Catholic entities, as separate corporations, independently report financial information to their stakeholders.
This is the second time the Chancery Corporation has released the full financial report. Condensed financial statements and other summary financial information have been communicated in The Catholic Spirit for more than two decades.”
The financial statements, footnotes to the statements, and the independent auditors’ report, as well as an article from The Catholic Spirit analyzing the report are posted on the Administration and Finance page of the archdiocesan website.