Recent articles have reported that many U.S. dioceses have had incidences of embezzlement or other misuse of funds in a number of parishes — and occasionally at a diocesan level. Could this happen in our diocese? Given human frailty, I suppose so. But, I want you to know that we now have in place policies and procedures which should prevent most financial abuse, as well as quickly to identify and stop abuse should it occur. The responsible stewardship of the financial resources of the diocese and our parishes is of great importance to me.

Please note in the sidebar pertinent quotes from some of the statutes of our recently-updated diocesan law, which provide for careful financial stewardship and accountability. You may examine these further online. Our very detailed “Parish Financial Management Handbook” is also available on the diocesan website (www.diocese-sacramento.org). All the proper checks and balances and appropriate financial procedures are required of all parishes and of the diocese itself.

Key to a parish’s full compliance with all these requirements are an effective Parish Finance Council, knowledgeable parish staff, adequate reporting to the parishioners and accountability to diocesan review. The names of Finance Council members and the dates of their meetings are to be made known to the parish, and also to the Bishop’s Office. Parish financial records are to be maintained in a standard format on standard software.

For all expenditures over $15,000, the diocese must give approval, following a review and recommendation by the Parish Finance Council. Major construction projects also must pass review and approval of the Parish Finance Council and then also by the diocese. An annual budget must be followed and a full financial report submitted to the parishioners and to the Bishop’s Office. At least every three years, diocesan finance staff perform a financial operations review on site at the parish. An outside, independent, financial review is now to be done every third time. Compliance with recommendations of either review is required within 180 days. Recently, the same financial reviews are also being done on parish schools.

The same kinds of requirements and procedures have long been in place at the diocesan level. In this issue of The Catholic Herald (pages 12-13), you will find the annual audited financial statements for the Central Administrative Offices of the Diocese of Sacramento, as of June 30, 2006. The “good news” is that we finished the fiscal year with a balanced budget and that we are solvent. The “bad news” is that our reserves are not what they should be and the Self-Insurance Fund and the New Parish Fund need to be rebuilt.

The sexual misconduct settlements were a major negative factor. The most significant financial transaction during the last fiscal year was the sale of a large, income-producing property so as to pay the settlements. Actually, we faired better than many dioceses. Other factors: investment market downturn and significant workers compensation losses early in the decade; and $12.5 million of unfunded Cathedral restoration costs.

Thankfully, we have had in place a good financial infrastructure and careful oversight by an excellent Diocesan Finance Council, with its adjunct committees, plus a talented Diocesan Finance Office staff. Their expertise and foresight enabled us to make difficult decisions in recent years to keep our operating budget balanced. This included $3 million in budget cuts and a 30% downsizing of diocesan staff.

I have no doubt that we will be able gradually to rebuild. Our parishes are strong; our people are generous. Many wonderful things are going on in our diocese. God is blessing us in so many ways. How could we not be encouraged?

At both diocesan and parish levels, although much good work has been done in establishing good financial stewardship and proper accountability, we must continue to strive for an ever higher level of stewardship, accountability, and transparency that you all deserve, who make such generous sacrifices to support the works of the Church.

Our recent diocesan synod process challenged us to be ever more accountable and collaborative, and identified pastoral priorities that will motivate us to further build our financial resources so as to meet real pastoral needs. I urge you to continue to be faithful to the Gospel call to generous stewardship of your time, expertise, and financial resources. Together with my staff and advisors, I will continue to work to earn and retain your trust. And I am confident that God, who is never outdone in generosity, will grant to you abundant blessings.

Diocesan Law

Statutes of the Third Synod of the Diocese of Sacramento

“The diocese is to involve lay expertise from various professions in the management of the temporalities of the diocese…” Statute 129

“The annual financial statements…shall be subject to an annual audit by an independent accounting firm.” Statute 130

“A report of diocesan finances is to be made to the faithful annually…” Statute 131

“…the Diocese…shall have formal investment policies and guidelines [which]…shall comply with the USCCB Guidelines for Social Responsibility…” Statute 132

“A functioning Parish Finance Council is required in each parish…The names of the Chair, members and meeting schedules are to be made known to the parishioners and to the Diocesan Bishop…” Statute 59

“Each parish shall conduct its financial operations in accord with an annual parish operating budget…” Statute 145

“…The Parish Finance Council assists the Pastor in the preparation of: the annual operating budget; long-term financial planning; the annual parish financial report to be submitted to the Diocesan Bishop; annual and periodic financial reports to the faithful. The Parish Finance Council advises the Pastor on all expenditures in excess of $15,000, before permission is requested from the Diocesan Bishop…” Statute 146

“…a full report of parish finances shall be made to parishioners annually…” Statute 147
“Diocesan Finance staff shall perform a Parish Financial Operations Review for each parish…every three years, as well as upon a change in Pastor and at the term renewal for a Pastor. Recommendations…are to be implemented…within six months…An independent third party is to be engaged…every third time…” Statute 148

“A parish may not expend on any one item or related items (that are part of a single project) a total amount greater that $15,000, without the pastor having first consulted the the Parish Finance Council and subsequently received formal diocesan approval.” Statute 152.

The Diocesan Statutes in their entirety as well as the Parish Financial Management Handbook are available at the Diocesan Web site: www.diocese-sacramento.org.

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