A turnaround in the stock market helped boost income for the Diocese of Rochester by nearly $1.5 million during the 2009-10 fiscal year, producing an increase in net assets of more than $3 million compared to the prior year, according to Lisa Passero, diocesan chief financial officer.
"Overall, 2010 represented a strong financial performance by the diocese," she said.
One of the biggest factors contributing to this strong financial performance was an improvement in the stock market, which was much healthier than during the prior fiscal year, when the value of diocesan investments fell by $7.5 million. In contrast, the diocese’s net investment income climbed to $4.2 million during the 2009-10 fiscal year, according to an audited financial report prepared by the Pittsford-based independent auditing firm Bonadio and Co. LLP. Bonadio’s full report is available at the diocesan website, www.dor.org.
Several sources of diocesan revenue shifted significantly compared against prior-year results. Among these is the line item for charges to parishes for employee benefits. An apparent decline of $4.4 million in diocesan revenue related to employee benefits actually reflects a change in how parishes and other agencies are billed for employee benefits, and was offset by a corresponding decline in employee-benefits costs.
"We’re not billing (benefits to parishes) anymore, so obviously we don’t have that expense … so you see the revenue go down and the expenses go down," Passero said.
Mary Ziarniak, diocesan director of financial services, explained that Paychex has assumed from the diocese the responsibility for billing parishes and related agencies for employee benefits, and that the change was accomplished at minimal cost. The diocese also was able to negotiate for improved benefit plans, she added.
A similar revenue and expense shift with no real effect on the diocese’s bottom line relates to the National Catholic Youth Conference, which takes place every other autumn. More than 600 diocesan teens, chaperones and officials attended the biennial conference in Kansas City, Mo., in November 2009. Participation fees to NCYC as well as participants’ reimbursement of those fees to the diocese both passed through diocesan accounts, contributing to both increased revenue and increased expenses, Passero said.
"What you see coming in as fees and charges, the increase is directly related to NCYC," Ziarniak added.
Those costs show up again as part of $1.03 million in faith-formation expenses, which were just $830,062 in the 2008-09 fiscal year, Ziarniak said. Much of the additional 2009-10 faith-formation expenses were related to the conference, she noted.
The diocese posted a decrease in revenue from premiums related to the diocesan self-insurance program, which brought in $6.55 million in 2008-09 but just $3.49 million in 2009-10. This decrease relates to a decision by Catholic Charities to pull out of the diocesan self-insurance program last year and obtain its own insurances, Passero said.
Although the program no longer generates a revenue stream from Catholic Charities, the diocese still had expenses related to reserves for claims made prior to July 1, 2009, Ziarniak said, spending $2.84 million on the program in 2009-10, as compared to $1.86 million in 2008-09.
Revenue also declined in the area of gifts and bequests, which dropped from $2.43 million in the previous fiscal year to just $371,521. This roughly $2 million decline largely reflects the conclusion of a longstanding annual gift from the Wegman family, which had been used to support inner-city Catholic schools, Ziarniak said.
The conclusion of the 2003 diocesan Partners in Faith capital campaign likewise contributed to a reduction in diocesan revenues, she added. Campaign contributions accounted for $782,310 in revenue in 2008-09, but just $194,768 in 2009-10. However, she noted, the winding down of the campaign also is responsible for a reduction in Partners in Faith expenses, which have consisted primarily of payments to parishes for their shares of donations. Such expenses accounted for $1.12 million in 2008-09, but just $158,276 in 2009-10.
Ziarniak said one-time revenues of approximately $500,000 related to the sale of a property during 2008-09 contributed to a decline in the "Other" category of diocesan revenues, which were only $267,746 in 2009-10.
In addition to boosting the diocese’s annual operating results, the stock market turnaround also enhanced the position of the diocesan lay-employees pension fund. In previous years, falling stock prices negatively had affected the fund, but progress has been made in that area, Ziarniak said.
"We are still underfunded but are on track to meet scheduled pension obligations," Ziarniak said.
Overall, Passero said diocesan officials are pleased with the diocese’s financial performance during 2009-10, and are optimistic about the current fiscal year, which ends June 30, Passero said.
"We would expect a similar performance next year," she said. "This will be the fourth year in a row where the performance has been very strong. I think the markets will continue to improve."
