ARTICLES

Diocese takes steps to address current economic concerns

At the direction of Bishop Francis X. DiLorenzo, members of the Bishop’s Administrative Advisory Council as well as Pastoral and Finance Office staff, have been keeping a watchful eye on the current economic conditions. With this in mind, steps are being taken to ensure that the Diocese maintains its stability given the current economy.

Recommendations have been received from these advisors for consideration and implementation.

The first recommendation to be implemented will be the postponement of any new construction by parishes and schools. Building renovations and other capital improvements may continue after a thorough review by the Diocesan Building & Renovation Commission with the respective pastor and parish lay leaders, or school board and/or finance committee.

In addition, Bishop DiLorenzo and his staff sought ways to reduce costs for the current fiscal year due to the diminishing economy. Therefore, the second cost reduction implemented in the current fiscal year is the reduction of the Pastoral Center administrative offices operational budget as follows:

• The reduction in the number of personnel in the Office of Christian Formation; the postponement of replacing the personnel in the Office of Campus & Young Adult Ministry; the postponement of establishing an Office of Asian Ministry; the postponement of priests’ sabbaticals and various ecumenical works; and the reduction of non-personnel costs in some cost centers.

• The elimination of the separate office of We Walk by Faith (the key elements of this program have been incorporated into another office at no additional cost).

• All Diocesan Commissions expense budgets were reduced to $1,500 each.

• These reductions and postponements have resulted in a savings of over $453,000 in this current fiscal year.

Cathedraticum Tax & Revenue:

Going forward, Bishop DiLorenzo and his staff will initiate additional budgetary changes responding to the current economic conditions. If necessary, additional expense curtailment will include not increasing the funds for attending National Conventions currently $1,500 to $2,000 per professional staff member as planned. This elimination will decrease budgetary expenditures by $35,100 for fiscal year 2009–2010.

In the past, the revenue from the Cathedraticum has generally increased 5 percent each year due to the growing economy. However, due to the current conditions, in the upcoming budget process for fiscal year 2009–2010, the Diocese will budget no more than the previous year’s actual Cathedraticum.

The current Increased Offertory Program will be reviewed to determine what effects would inure to the fiscal 2009-2010 Diocesan budget.

Investments

The Administrative Offices’ annual operating budget receives a substantial amount of revenue from draws on the Diocesan investment accounts. Historically, these draws are based on the prior year’s March 31 market value. The draw itself is 6 percent of that market value.

In order to conservatively estimate potential reductions in revenue ahead of the normal budgetary cycle of February 2009, the Diocesan Finance Office will preliminarily calculate the draws on the market value at December 31, 2008.

The Diocesan Finance Council, with the Bishop and his advisors, continues to carefully monitor the changes in the stock market and the investment portfolio. Diocesan investments are managed by six separate investment managers. Each investment manager does not hold more than 17.5 percent of the investments utilized for the day-to-day operations of the Diocese. The investments are diversified with approximately 65 percent invested in equity securities and 35 percent invested in fixed income securities.

The Diocese does not directly invest in derivative investments and maintains minimal international investments (i.e., not more than 5 percent of the total investment portfolio).

Pension Plans

Following the quarter ending June 30, 2008, the Diocesan Finance Council reviewed the investments of the Diocese and its associated pension plans with the individual investment managers in face to face interviews. These interviews are held semi-annually following the December and June quarters.

At June 30, 2008, the overall return of the Diocesan Pooled Investment Fund was a -3.46 percent versus the combined market benchmark of -6.08 percent overall return (35 percent Lehman Brothers, 65 percent S&P plus 50 basis points).

As of September 30, 2008, the same Diocesan Pooled Investment Fund overall return was 13.83 percent versus the combined market benchmark of 11.35 percent overall return.

Overall Accountability

The funds entrusted by the people of the Diocese, and the utilization of those funds in a manner which is fiscally responsible is of critical importance. Other mechanisms to further reduce the Diocesan operating budget are under consideration.

During the past year, the Office of Information Technology installed web camera systems at 14 locations throughout the Diocese, allowing colleagues to conduct meetings without incurring any unnecessary travel expenses, or extraordinary telephone costs. As time progresses and if the current economic climate continues, other cost saving measures will be considered.

We take these issues very seriously, our proper perspective is always with profound appreciation for the lay faithful and the clergy who faithfully and generously support their parishes and schools with their time, their talent, and their treasure. Yet we know that God will not be outdone in generosity.

May he continue to bless this Diocese, and may his Holy Spirit be our guide in this time of uncertainty.

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