The 2014-15 fiscal year was a positive one for the Diocese of Rochester, according to diocesan officials.
"We’re in a good financial position and have been for the last few years," said Lisa Passero, diocesan chief financial officer. The diocese maintained this strong position despite rising pension costs and investment returns that were depressed by a lackluster stock market, she said.
Before a $7 million discretionary contribution to pension trusts, the diocese had an operating surplus of $1.6 million, compared to a surplus of $9 million last year, according to the diocesan financial statement for 2014-15. The report, which was audited by Bonadio & Co.LLP, a certified public accounting firm in Pittsford, is available in full at www.dor.org/index.cfm/news/financial-reports/.
The pension contribution, which decreased the diocese’s overall net assets from $55.9 million to $49 million, was made to "dilute the impact" of a funding gap that widened slightly in 2014-15 due substantially to newly adopted mortality tables issued by the Society of Actuaries, Passero explained.
"People are living longer," she said, noting that the revised actuarial tables make a "significant" impact because they show the diocese will need to make pension payments to retirees for more years than previously expected.
A few years ago, the diocese anticipated the effect of increased retiree longevity and began planning to meet rising costs. A major aspect of those plans was the Legacy capital campaign, which created a revenue stream for retired priests’ benefits, Passero said. Also as part of its planning process, the diocese made a $10 million discretionary contribution to the Lay Pension Fund near the end of the 2012-13 fiscal year.
"We’ve been working on getting the pensions to a more fully funded position," Passero noted. "The diocese remains financially strong, continuing to make good progress in closing the gap on the lay employees’ and priests’ pension plans."
After this year’s $7 million contribution, the two pension trusts — one for priests, the other for lay employees — are 80-percent funded, she added.
As of June 30, 2015, net assets for the Lay Pension Plan were approximately $99.6 million against at projected benefit obligation $126.8 million. This compares to $94.5 million in net assets and $116.6 million in projected benefit obligation at the end of the 2013-14 fiscal year. A 1-percent increase in the discount rate — the rate of return at which annuities can be purchased — would decrease the projected benefit obligation by about $16 million.
And even though performance on diocesan investments was flat, Passero said, the value of the investment portfolio dropped by just 6 percent to $50.3 million from $53.4 million in 2013-14, which was a banner year for the diocese, she said.
Overall assets rose 8 percent, from $12.8 million in 2013-14 to $13.9 million in 2014-15. This increase included the receipt of a $2.8 million insurance payment related to the January 2015 fire at St. Pius Tenth Church in Chili. St. Pius’ building is being razed and rebuilt due to extensive structural damage caused by the fire, and the diocese is holding the insurance payment for the parish, explained Mary Ziarniak, diocesan finance director.
The value of second-collection donations, which pass through the diocese to other groups such as Catholic Relief Services, rose nearly 18 percent from $500,635 in 2013-14 to $589,563 in 2014-15. Ziarniak said such increases are hard to explain or predict.
"Second collections … rely upon the generosity of our parishioners," Ziarniak said, adding that it is possible more parishioners are feeling financially confident this year.
Due in large part to the year-to-year decline in investment income, overall diocesan revenues were down more than 28 percent compared with the prior year.
Yet revenue from payments of Legacy-campaign pledges rose by 68 percent, from $156,793 in 2013-14 to $263,954 in 2014-15. Gifts and bequests income increased to slightly more than $1 million from $367,260, Passero said, noting that the diocese received a couple of "extraordinary" gifts this year.
Expenses, such as personnel costs, were down 1.42 percent, to $17.8 million from $18 million the year before.
"We managed our budget very closely," Passero said, adding that "Bishop (Salvatore R.) Matano is very supportive of living and managing within our means."
The cost of providing benefits for the diocese’s approximately 135 retired priests rose 32 percent from $522,479 to $690,523 as a result of Medicare plan increases.
"Overall, we’re able to absorb health-care cost increases and cost-of-living increases by carefully managing our cost structures," said Passero, adding that a bequest also has enabled the diocese to create a separately designated fund to cover rising post-retirement health-care costs for priests.
The CFO added that "staffing (levels) and cost controls are under constant monitoring."
To hold overhead costs stable, the diocese also has used temporary staffing in certain departments, including Information Technology, Ziarniak explained. Personnel costs declined by 2.52 percent, from $7.6 million in 2013-14 to $7.4 million in 2014-15.