You will find in this issue of The Catholic Herald (pages 14-15) the audited financial statements of the central pastoral and administrative offices of the Diocese for the fiscal year 2005. As many of you already know, the Diocese of Sacramento experienced significant challenges to our finances this past year.

First, I want to thank all the people of the Diocese for your financial generosity to your parish and to the Diocese, as well as for your witness of faith and service. Your contributions to the Diocesan capital campaign, Preserving our Past...Building our Future also has been outstanding. The several ways you support the ministries of both the 100 parishes and the Diocese in our 20 far-flung counties gives glory to God. I am pleased by your response to the needs of the Church.

Second, let me say that, under my direction, the monies received by the Diocese are managed and invested by professionals with impeccable credentials in the area of finance. Highly-experienced people within a range of viewpoints and professional expertise ensure that our assets and resources are responsibly and prudently managed. We strive to facilitate and maintain a system of financial integrity, good management, and fiscal transparency at both the parish and diocesan level.

The competent personnel of our Finance Office are tasked with updating diocesan fiscal policies, providing support and guidance to pastors and parish finance councils, and bookkeepers who oversee the financial affairs of parishes. Our Chief Financial Officer acts as lead staff person to the Diocesan Finance Council, which is made up of financial experts and is the primary diocesan consultative body for financial matters. He and his staff, with the guidance of the Diocesan Finance Council, oversee the various diocesan financial entities, e.g., General Operating Fund, New Parish Fund, Insurance Fund, Properties Committee, and Investment Committee. Budgets are carefully prepared, monitored, and tracked to ensure good financial stewardship. I have confidence in the personnel of our Finance Office and Finance Council and work closely with them.

However, we have experienced a number of extraordinary financial challenges that have nearly depleted our accounts: 1) the $35 million in legal settlements for the clergy misconduct claims (some 80% not covered by insurance); 2) a reduction in earnings on our investments due to market conditions; 3) an increase in Worker’s Compensation premiums and claims; and 4) the significant cost of the Cathedral restoration.

In response to these challenges, we painfully reduced the annual budget by $3 million over three years. This reduction resulted in 30 staff positions being eliminated. (However, the extraordinary burden on the part of the remaining staff will need to be relieved.) In addition, as the figures will show, there are inadequate reserves now in the General Operating Fund, the New Parish Fund, and no reserves in the Insurance Fund.

(On a different note, let me say that several years ago, our Diocese established a group of independent corporations to invest and manage parish charitable assets and revenues. This has resulted in a better stewardship of these parish assets. Essentially, these are parish banks that are managed by experienced, senior banking professionals who volunteer their services, as well as experienced pastors. Parishes deposit money; these funds are invested and loans are then made to parishes and schools for needed parish projects. These corporations have separate financial statements and are not included in the information provided at this time. There is oversight of all of these entities, however, by fiduciary boards composed of competent and experienced individuals.)

With this overview in mind, it is my prayerful hope and firm expectation that, over time, we will be able to: 1) rebuild the depleted reserve for the acquisition of property for new parishes; 2) replenish the Insurance Fund and General Operating Fund; and 3) cover unfunded $12.5 million of the Cathedral restoration costs.

I am most grateful for your generosity and sacrifices. Together, we must continue to minister effectively to the 600,000 Catholics in our portion of the Lord’s vineyard. We have a pastoral charge and a Gospel mandate to pass on the faith, to educate the young, to feed the hungry, to clothe the naked, to give shelter to the homeless, and, especially, to give glory to God and nurture our spiritual growth. I pray that I can count on your continued financial generosity and your faith-filled witness of Catholic life.

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