Audited report shows net assets dropping $7.4 million
as pledge payments wane, parishes receive distributions
The Diocese of Rochester posted total revenue of $30.9 million and expenses of $38.3 million — a decrease of $7.4 million in net assets — for the fiscal year ending June 30, 2005, according to figures recently released by James Rinefierd, diocesan chief financial officer.
Condensed information from the financial report is presented in a four-page supplement found after page B8 of this edition. The full report was prepared by Bonadio and Co. LLP of Pittsford, an independent accounting firm that audited the diocesan books and records. The complete financial statement may be viewed on the diocesan Web site, www.dor.org.
Though the Partners in Faith capital campaign concluded more than a year ago, it continues to significantly impact the diocesan financial picture. Partners in Faith revenue was just $1.3 million during 2004-05, compared to $32.6 million for 2003-04 “when we were at the height of the campaign,” Rinefierd said. That year, the diocese posted a $12.9 million gain in net assets, with total revenues of $53.3 million and $40.4 million in expenses.
Expenses for Partners in Faith fell from $13.4 million in 2003-04 to $5.7 million in 2004-05. Rinefierd said this is reflective of cash flow related to payments on pledges. Half of parish Partners in Faith contributions go back to parishes for their own programs and projects. As of June 30, 2005, $11.5 million had been distributed to parishes.
Timing differences between the recording of pledge revenue in prior years and spending for campaign goals as pledges are paid account for the majority of the reduction in net assets in 2004-05, Rinefierd said. Despite the decline in net assets, he said that the financial picture as related to Partners in Faith is very positive, due to numerous diocesan and parish initiatives that have already been enhanced by the campaign.
Rinefierd said approximately $22 million in outstanding Partners in Faith pledges remains to be collected. The campaign generated pledges of nearly $56 million to support parishes as well as such ministries as Catholic schools, Catholic Charities, faith formation, building projects and the priests’ pension fund.
The largest revenue increase contained in the 2004-05 financial report came from the Thanks Giving Appeal, which resumed in 2004-05 after a one-year hiatus during the Partners in Faith campaign. During 2004-05, it brought in $5.2 million, making up approximately 49 percent of the Pastoral Center’s operating budget.
Rinefierd termed as “challenge areas” three elements of the financial report — the diocesan self-insurance program, the priests’ pension fund and amounts receivable from parishes.
Revenues for the self-insurance fund rose from $3 million in 2003-04 to $3.8 million in 2004-05, as the diocese increased premiums to parishes and affiliated agencies to stem deficits from the program, Rinefierd said. He added that over the same period, expenses related to the fund rose from $3.9 million to $5.1 million.
“The premiums we pay to insurance companies have nearly doubled in a five-year period, including 20 percent in the last year,” he said.
He added that of the $5.1 million in expenses, $3.2 million is related to claim expense for such issues as workers’ compensation, liability, fire damage and structural damage.
Revenues for the priests’ pension fund rose from $363,520 to $707,268 as mandatory parish contributions were raised. Rinefierd said these increases were made in light of a projected obligation of $18.6 million, while assets in the fund stood at only $10 million. A portion of Partners in Faith is earmarked for priests’ pensions, but he said that money alone “is not going to solve the problem.”
Though Partners in Faith was extremely successful — going 10 percent over its original goal — Rinefierd said the campaign doesn’t offset all the diocese’s financial dilemmas.
“It’s important that the good work of Partners in Faith continues through payment of outstanding pledges. However, at the same time, the diocese and parishes face fiscal challenges beyond what Partners in Faith addressed,” he said.
Rinefierd pointed out one new development that resulted from recommendations from the prior audit and the Finance Committee of the Bishop’s Stewardship Council that, although not specifically reflected in the annual report, factors significantly into the diocesan financial picture. Effective July 1, 2005, Bishop Matthew H. Clark implemented an interest charge for parishes that owe past-due balances to the diocese. This move, according to Rinefierd, has greatly helped expedite payments.
Rinefierd noted several other interesting changes in this year’s financial report:
* An increase from $2 million the prior year to $6.2 million in 2004-05 in diocesan support for parishes. The largest chunk of this support went to the renovation of Sacred Heart Cathedral, which reopened in early 2005.
* A rise from $4.7 million to $6.7 million in gifts and bequests. The leading factors were a bequest, and a major restricted gift toward the purchase of a new organ at Sacred Heart Cathedral.
* An increase in investment income from $3.6 million to $4 million. “Overall, our investment program returned 10.5 percent for the fiscal year,” Rinefierd said.
The financial report reflects Pastoral Center operations and associated funds. However, Rinefierd stressed, it does not reflect the financial health of diocesan parishes or schools, which are reported in individual financial statements.
