PROVIDENCE — Diocesan Chief Finance Officer Michael F. Sabatino and Controller J. Timothy Kocab agreed during an interview of the annual financial report of the Diocese of Providence that finances enjoyed moderate growth during the past fiscal year. They stated that while challenges still exist, diocesan finances remain healthy because of a good annual return rate on investments, the prudent use of resources, and the generosity of countless individuals who support diocesan charities and programs.
The report was published based upon the findings of an independent audit conducted by the accounting and consulting firm Tofias PC of Central Administration Funds and Diocesan Cemetery Operations that included the following corporations: Diocesan Administration Corporation; Catholic Charity Fund; Catholic Foundation of Rhode Island; Catholic Cemeteries; Seminary of Our Lady of Providence; Inter-Parish Loan Fund; Vision of Hope Fund, Inc.; Roman Catholic Bishop of Providence, a corporation sole; Parish Investment Group; DiMed Group; Financial Aid for Catholic Education of RI?(F.A.C.E. of Rhode Island); and the Diocesan Service Corporation.
“We had a good financial year,” remarked Sabatino “We are satisfied with the year-end numbers and are happy to report more than a $15 million increase in our total net assets of the various separate corporations for the year ending June 30, 2007.”
Sabatino noted that there are more than 250 separate corporations through which the diocese serves the religious, charitable and educational needs of the state. Some corporations provide fund raising and general and administrative support for other organizations.
In reviewing highlights of the report, Sabatino noted that overall unrestricted net assets increased by $5.4 million from last year. He attributed the growth to a 16 percent return on investments, which he deemed a “healthy return.”
Kocab said that another factor that contributed to the growth was an internally-generated effort to start to reduce insurance costs by under-taking a self-funded medical and prescription drug program.
“By doing this we are trying to stabilize future increases in our medical program,” Kocab added.
Kocab noted that the diocese already has self-funded programs for worker’s compensation, property and liability insurance programs. He added that the diocese is part of National Catholic Employee Benefit Buying Alliance for Group Benefit Programs, a pool of approx 20 dioceses throughout the United States and growing.
“The Catholic Church in the United States has over a million employees,” said Kocab. “On a national level, you can obtain better rates with numbers.”
Sabatino noted that diocesan temporary and permanently-restricted assets increased by approx. $10 million - a growth that he attributed to a high yield on investments, the generosity of many individuals to various institutions in the diocese, and wise counsel provided by financial experts.
"The Catholic Foundation reported a strong year thanks to the selfless generosity of those who support the mission of the Catholic Church,” Sabatino said, also offering his gratitude to the Catholic Foundation of Rhode Island Board for the group’s careful oversight of fund assets. He noted that the foundation’s assets grew by $6.5 million as of this past June.
He also praised the work of the Diocesan Investment Committee, a group of financial advisors who meet quarterly to advise diocesan officials concerning the Catholic Investment Trust, Inc., which holds the investment portfolios of numerous corporations in the diocese.
“We are very blessed to have wise and talented individuals serving not only on this committee but on all of our committees,” Sabatino acknowledged. “Without those healthy returns, we would not be able to meet the ministry needs of the diocese.”
The Chief Finance Officer said that the General Fund, which finances administrative programs, enjoyed a net gain of $239,000. Sabatino noted that part of the gain can be attributed to department heads who continually bring their operations in under budgeted subsidy levels. He again thanked the directors for their tireless efforts in delivering services and constant monitoring of their subsidy levels.
“This is the fourth year in a row of net positive operational results for this fund,” he noted.
Sabatino added that another highlight of the diocese’s fiscal year was the success enjoyed by the annual Catholic Charity Fund Appeal, whose results he described as “very positive.
“It was the highest goal ever set and in reaching this goal, our many ministries are able to provide services to those experiencing great financial hardship,” he noted, adding that the campaign exceeded its goal by a few thousand dollars. Sabatino credited pastors, lay volunteers and donors for meeting the newly-established goals for the 2007 Appeal.
Sabatino noted that Bishop Thomas J. Tobin began some new initiatives in the annual Appeal, which piqued the interest of the pastors and donor base — a development that directly lead to the Appeal’s success.
The Chief Finance Officer stated that diocesan cemeteries also enjoyed a successful year financially and are in the process of implementing a number of renovations to enhance and expand various facilities, specifically at St Ann's Cemetery in Cranston.
Another fund which enjoyed a net gain was the Inter-Parish Loan Fund, Inc., whose sole purpose is to utilize excess reserves from parishes, institutions and agencies, and provide loans to similar corporations to help fund capital renovation projects. Diocesan corporations receive 4 percent interest on investments, while those that borrow pay 5 percent interest on loans. The one percent surplus is used to cover administrative costs and leaves some flexibility in administering the fund.
“That’s the major way we help our parishes and agencies to finance critical capital projects,” said Sabatino, who added that all loans are secured by the fundraising campaigns or collateral such as property.
Other central administration funds, such as the Vision of Hope Fund, Inc., which realized a net gain of $254,989 and the Seminary of Our Lady of Providence Fund, Inc., enjoyed net gains. Sabatino attributed much of the success to the generosity of donors who make either restricted or unrestricted gifts to individual funds.
He noted that despite the diocese's successful financial gains, there are still struggles and challenges that must be overcome including an outstanding line of credit for $6.5 million as a result of the prior settlements made in the sexual misconduct cases.
Sabatino emphasized that current department operational budgets still remain a concern.
Catholic Charity Fund Appeal funded departments were forced to take a 5 percent budget cut during this current fiscal year. Three years ago, Approx. 20 employees were laid off from Diocesan Administration Corporation in an effort to curb overspending in the general fund.
“Our agencies need more funding to provide critical services to those in need,” Sabatino noted. “This is a constant struggle that we strive each day to resolve.”
He added that lay and priests’ retirement programs remain a concern to diocesan leaders. The lay pension program currently has an unfunded net liability of $28 million, while the priests’ retirement fund has a similar net liability of $5.7 million.
“Changes have been made to the lay retirement program which should stem the shortfall over time,”
Sabatino said. He added that the priests’ pension program is under review by Rev. Raymond B. Bastia, Vicar for Planning and Financial Services and the Priests’ Benefits Advisory Committee, which will forward recommendations to Bishop Tobin. Sabatino noted that Father Bastia would like to have these changes in place by the Spring of 2008.
“It is no secret what is occurring in the United States with traditionally established pension plans. More and more corporations and entities are favoring 401(K) and other similar plans. We don't have to look any further that our own State government and the changes being proposed to their plan. Diocesan leadership is committed to maintaining the high quality plan we have in place for both clergy and lay.
It is a struggle but one we continuously monitor,” Sabatino noted.
Kocab said one of highlights of Fiscal Year 2007 was the establishment of Financial Aid for Catholic Education of RI (F.A.C.E. of Rhode Island), which has been certified by the State Department of Taxation to receive from Rhode Island corporations, tax credits which in turn will be used for support of students who attend Catholic schools.
To view a copy of the audit, please visit http://www.dioceseofprovidence.org/?id=36
