First operating gain in years for the Archdiocese of Philadelphia
The central office and parishes benefited from the fulling funded status of the priests' pension fund.
For the first time in at least six years and possibly much longer, the Archdiocese of Philadelphia's central administrative office had an operating gain in the year ended June 30, officials said Tuesday.
The chief financial officer of the archdiocese, Timothy O'Shaughnessy, called the better-than-break-even result gratifying. He said he expected a similar result in the current fiscal year.
The key driver in the swing to a $1.3 million core operating gain for the Office for Financial Services from a $1.7 million loss the year before was a 12.25 percent increase in an assessment paid by parishes on their operating income, up from 10.5 percent. Parishes paid in aggregate 98.3 percent of the amount billed in fiscal 2018.
The higher assessment has put pressure on parishes, said the Rev. Christopher M. Walsh, pastor of St. Raymond of Penafort Parish in the East Mount Airy section of Philadelphia, but the assessment remains lower here than in some dioceses.
"There have been additional costs passed on to parishes as well. There's a charge for centralized accounting systems. There's an assessment for schools, for Catholic education, as well. It's been the assessment plus other additional fees," Walsh said. "It's been a hardship. My finance council is always feeling it."
At the same, Walsh said, he is glad to see a balanced budget at the central office. "That's how I operate the parish. That's how most business certainly seem to operate. I rejoice in that," he said.
The central office and parishes also benefited from the fully funded status of the priests' pension fund. That fund had a $10.3 million surplus at the end of fiscal 2018, compared with a $90 million deficit on June 30, 2012. That means less money had to be put in the fund.
That pension improvement, propelled by the sale of businesses and real estate, was part of a $271.9 million improvement in the condition of the archdiocesan balance sheet over the last six years — from a deficit of $354.4 million in insurance trusts, pension funds, and an internal bank on June 30, 2012, to a deficit of $82.5 million at the end of fiscal 2018.
The archdiocese still owes $26.2 million to the archdiocesan bank, down from $82 million six years ago. Money from the entity, which took deposits and made loans to parishes and other archdiocesan entities, was used under Cardinal Justin F. Rigali, Archbishop Charles J. Chaput's predecessor, to subsidize parishes and other archdiocesan programs that couldn't pay their bills.
Since February 2017, the deposit and loan program has had a moratorium on taking deposits and making loans.
"I think we proved we weren't able to run a bank," said O'Shaughnessy, who started working for the archdiocese in early 2012. "I didn't like it from the beginning. The position that we're taking now is that if a parish or a ministry needs to borrow money, it ought to be able to go to a third party and convince that third party to lend to them."
The eventual sale of 213 acres in Marple Township, Delaware County, is expected to fill the remaining gap in the trust and loan fund or least get "within striking distance," O'Shaughnessy said.
The archdiocese published the following explanation of fiscal 2018 financial results. The full audited financial statement is available here.