Spreading the Gospel in challenging times

[The following statement was issued by the diocese on April 1.]

The Diocese of Paterson is committed to its mission to spread the Gospel through its parishes, educational programs and Catholic Charities. We are deeply committed to serving all in the diocese, especially those with special needs. These needs encompass both spiritual support and services to the poor, the ill, disenfranchised and educational programs, including schools. All of these programs are tremendously worthwhile and deserving of support. Bishop Serratelli, with diocesan staff, boards, and councils, is actively looking at balancing these priorities against very challenging financial realities.

Dialogue is now underway with pastors and others to discuss the situation and develop recommendations. This process is in a very early stage and no decisions have been made. All programs and operations are being reviewed. The financial outlook is very challenging and it is anticipated that reductions will need to occur.

The greatest challenge is expressed quite simply: How do we do the important work of bringing the message of Jesus Christ to as many people as possible during a time of economic difficulty? Every family must live within its means. This also applies to the diocese. Hundreds of thousands of persons are helped through the work of the diocese, parishes, schools, and agencies every single day. We have to become more focused on our mission - realizing that, while we cannot do everything, we must be unceasing in doing everything possible to support the work of the Church within our financial reality. As we go through this process, we are committed to transparency and accountability in all of our ministries and operations.

In the city of Paterson itself, there has been an ongoing process to work with the parishes so that we can provide the best long-term service for our people. This process began with a two-day meeting several years ago where all of the parish staffs worked together to identify and implement ways in which the parishes could work together.

During the past several months, under the guidance of the National Roundtable for Church Management, extensive data was gathered on each parish in the city of Paterson. This was also helpful in considering the challenges facing Paterson Catholic High School.

Now it is time to consider the ways in which we can journey together as a Church. Like any family, we should be living within our means. In the past, the diocese functioned as a safety net for parishes, schools, and agencies that could not meet their budgets. While that process worked on a short-term basis, over the long-term it has hurt the financial health of the diocese. Bishop Serratelli and the Diocesan Finance Council are preparing new policies that will require reductions in many areas of diocesan life and parish life.
As a diocese, the generosity in covering bills not paid by parishes, schools, and agencies was well-placed, but short-sighted. There can be no increases in debt throughout the Diocese. We are also taking steps to gradually bring down the overall debt of the Diocese.

The Diocese commits to enhanced communication and will actively engage the appropriate parties during this process. The financial outlook is challenging. But fulfilling the mission of Jesus Christ is even more challenging and that guides us in whatever decisions we make. Our goal is to do the most good with the funds available.

Facts and Figures

The Diocese of Paterson is experiencing serious cash flow problems resulting in compelling financial difficulties for the diocese. More than $37 million of debt from operations over the last decade has developed in order to sustain parishes, schools and social services that have experienced needs and costs growing exponentially, threatening their mission.

The mission of the Diocese of Paterson is evangelization of the people of God. The Diocese has a fundamental commitment and mandate to serve the poor and all people in its diverse geographic area that includes 111 parishes in cities, suburbs and rural areas in the three counties of Passaic, Morris and Sussex Counties. The Diocese is committed to transparency and accountability in all of its ministries and operations.

Revenue of the Diocese comes from:

Parish Assessments.
Self-insurance Premiums for benefits and other insurance.
Endowments produce a reliable designated amount of income for specific diocesan entities.
The Bishop's Annual Appeal produces income for the diocese of an amount determined by each year's giving.
Other income: This includes cemetery, rental and interest income.

Expenses of the Diocese are:

Self-insurance costs for benefits and other insurance.
Diocesan Center: Overhead costs including, administration, legal, financial, etc. in order for the diocese to operate.
Programs: Catechetical programs, seminarians, priest retirement, etc.
Subsidies to Schools and Catholic Charities, some parishes.
Maintenance and operation of various buildings and properties.

So what has happened when there have been excess expenses?
The Diocese has spent all of its reserves and then borrowed additional funds to pay for overruns by parishes, schools and agencies. We estimate that the amount of accumulated shortfall will be $37.2 million by June 2008.

The Diocese has borrowed money in order to fund the entities which can't pay their assessments, benefit costs or overrun their budgets. In some instances, these entities cannot pay the money back in the near future.

What could this financial crisis mean for the Diocese?

Some parishes may be combined.
Some schools may be united.
Programs will be reduced and eliminated.
Diocesan budgets will be significantly reduced.
All areas of Diocesan operations will have to sacrifice.

High School debt breakdown as of June 2007:

Paterson Catholic High School $4.4 million (projected to be $5.2 million by fiscal year end).
Morris Catholic debt is $2.4 million, which is gradually being paid.
DePaul carries $795,000 in debt, which is also being paid off.
There is still $3.1 million of debt on the books from Bayley-Ellard.
Pope John High School has no debt.

Tuition in Urban Catholic Schools

The tuition model no longer works in inner city schools, per capita income is too low to some to pay significant tuition.

Sadly, Catholic schools are closing throughout the country.

Paterson Catholic is the last traditional urban diocesan high school in New Jersey, all others have closed or changed into different models because of the lack of funding.

Paterson Catholic tuition is $5,500; we collect an average of $2,700; yet our actual cost is more than $10,000 per pupil.

All of these factors have resulted in a difficult cash flow and weakened the overall financial position of the Diocese of Paterson. Plans are underway to control the rising costs and cope with financial adversity. Difficult decisions are absolutely necessary and the Diocese is carefully looking at the number and location of its parishes and schools, and is considering reconfigurations, mergers and closings.

It is difficult for many to think of the Church in such financial terms; however the hard facts are that the Church, like any other organization that functions in the real world, while pursuing its mission for evangelization, education, charity and service to the faithful, must meet financial requirements to operate effectively.

Paterson pastors meet regarding future of ministry in the city

PATERSON - For the past three years, parishes and staffs within the city of Paterson have been looking at ways to join their resources, to work more collaboratively, and to develop ways to serve their people more effectively. Within the past six months, an extensive demographic study has taken place to consider the entire city of Paterson: where parishioners worship, where they live, living patterns, education, income, etc.

On Friday March 28, the pastors from the City Of Paterson met to discuss ways in which these analyses and discussions can now be used to set forth the future of ministry in the city. Sixteen parishes have been serving the city for over one hundred and fifty years. "The Catholic faith is alive and well in the city," said Msgr. Mark Giordani, rector of St. John Cathedral. "Baptisms, confirmations, marriages and Mass attendance continue to grow at the cathedral," he said. "This bears witness to the presence of Christ among our people." Today the city has a much greater Hispanic population than ever before which enriches the life of the Church in Paterson and has unique needs.

Pastors agree that cooperation in the area of worship and service is essential to the well being of Catholic families. A list of factors including the number of families, proximity to other parishes, finances, and condition of the physical plant will influence the future configuration of parishes in Paterson.

As a group, the pastors agreed to have the end of June as a target for recommendations and necessary changes. During this time, there will be consultation and information shared about all areas of parish life in the city of Paterson. The Catholic schools are also undertaking a process to consider their own structures in light of these areas: enrollment, condition of buildings, future projections and the stability of the parish. The Diocesan School Office is also centralizing certain functions of these schools so that they can better serve their students.

Specific questions regarding Paterson Catholic High School answered

Q. Is Paterson Catholic being reviewed?
A. Yes, as well as all other diocesan programs, services and agencies.

Q. What is the future of Paterson Catholic?
A. Paterson Catholic is a wonderful high school with sound academics, enrollment and athletic programs. Like other diocesan programs, it has been subsidized annually by the Diocese for a number of years. The Diocese is facing a financial shortfall as costs for Paterson Catholic and other outstanding programs increase. $400,000 is included in the Paterson Catholic budget as subsidy from the Diocese. The school has not been able to run without incurring additional budget overruns. The school may have a total debt of more than $5 million by the end of this year.

Q. What is being done to assist Paterson Catholic?
A. The debt for Paterson Catholic will ultimately have to be covered by all the parishes of the Diocese. Beyond the annual $400,000 in the diocesan budget as assistance for Paterson Catholic, no additional diocesan funds are available. The board of the Tri-County Scholarship Fund is presently working with diocesan leadership in four areas: fund-raising, short-term plans; long-term plans; budget. The issue facing the committee is how to cover the overrun for this current year and to come up with a concrete demonstrated plan so that the school will have available the necessary funding in the future. The school is also sharing the situation with the school community. Appeals have also been sent to the alumni.

Financial transparency and accountability
The Diocese of Paterson is committed to transparency and accountability in all of its ministries and operations. The Diocese has covered the cost of financial settlements with victims of sexual abuse, including the ongoing cost of counseling. The Diocese has apologized to the victims, redoubled its efforts to prevent abuse, and trained and re-educated more than 21,000 diocesan volunteers, employees, priests, deacons and religious in sex abuse identification and prevention programs.

The source of the funds that the Diocese used to cover these costs was excess revenue that was generated from its self-insurance operation. The Diocese combines the insurance needs of all the parishes, schools, programs, agencies and related entities by pooling all the money for premiums, paying a portion of each claim up to a certain threshold and reinsuring the remainder of the claim. The parishes, schools, programs, agencies and entities benefited from self-insurance because they paid a lower rate for insurance than they would have in "the marketplace."

As of April 2008, the total of all the cost relating to sexual abuse is $12,857,926. All costs have been paid in full. The payment of costs for sexual abuse settlements came from diocesan insurance reserves. It is important to note that no donations, including the Bishop's Annual Appeal, Prepare the Way, and other capital campaigns, were used for any settlements.

The Diocese is pursuing reimbursements from outside insurance companies whenever possible.