The 2012-13 fiscal year was a good one for the Diocese of Rochester, according to Lisa Passero, diocesan chief financial officer. Strong stock-market performance and rising interest rates allowed the diocese to strengthen its Lay Pension Fund, while the success of the "Our Legacy, Our Future, Our Hope" capital campaign continued to provide funds for the Priests’ Pension Trust, she said.
This news is particularly welcome because it comes on the heels of public speculation via a March 2013 article in the Rochester Democrat and Chronicle about the diocese’s ability to fulfill its pension obligations. At that time Passero had sought to reassure Catholics that the capital campaign and strong interest-rate and stock-market environments would help close the gaps between the pension funds’ assets and obligations.
"That’s all come true," Passero recently told the Catholic Courier. "All of our plans are now in excess of 70-percent funded. I think we’re in decent shape, and we’ve improved from the previous year."
The marked improvement in the status of the pension funds is one of the highlights of the diocese’s 2012-13 financial statements, which were independently audited by Bonadio & Co., LLP, a certified public accounting firm in Pittsford. The statements are now available on the diocesan website.
The Priests’ Pension Trust had $11 million in available assets in 2011 when the diocese embarked on the Legacy campaign with the goal of decreasing the trust’s funding gap while also providing a revenue stream to pay the rising educational costs of a growing crop of seminarians. By June 30, 2012, the Priests’ Pension Trust had $14.8 million in assets and a projected benefit obligation of $18.8 million, which meant the trust was 79-percent funded. That funding level has held fairly steady over the past year despite an increase in the benefit paid to priests, which slightly increased the trust’s projected obligation, Passero said. As of June 30, 2013 , the trust had assets of $15.6 million, or 76 percent of its projected $20.6 million obligations.
The funding level for the Lay Employees’ Pension Fund meanwhile rose 15 percent during the 2012-13, fiscal year. As of June 30, 2012, that fund was only 53-percent funded, with assets of $63.7 million vs. a projected obligation of $120 million. But by June 30, 2013, the trust was 68-percent funded, with assets of $81.8 million compared to a projected obligation of $118.8 million. This sharp increase in the plan’s funding level is largely due to a $10 million discretionary contribution from the diocese, which had been saving unrestricted contributions for this purpose, said Mary Ziarniak, diocesan finance director.
Rising interest rates and strong stock-market performance also helped the diocese narrow the gap in the lay pension fund, and hopefully will continue to do so in the future, Passero added. Particularly helpful in that regard was a half-point increase in the discount rate, which is the rate at which annuities may be purchased and directly impacts the projected obligation of the pension funds. As this rate rises, the projected obligation decreases, so the gap shrinks.
"An increase in the discount rate will help to decrease the gap. For every point (increase) in the discount rate, our liability is decreased by $12.8 million. That’s huge. We only had a half-point change this year. Next year another half-point would be another $7 million or $8 million," she said.
Total investment income for the diocese rose 263 percent during the 2012-13 fiscal year, according to the financial statements.
Other items of note reflected in the statements are:
* The Pastoral Center had total revenues of $26.9 million in the 2012-13 fiscal year, up 6 percent from $25.3 million in the previous year. Total expenses for the 2012-13 fiscal year were $18.6 million, down 6 percent from the $19.7 million reported the previous year. There was little change in the Pastoral Center’s net assets, which were reported at $47.6 million in 2011-12 and $47.7 million in 2012-13.
* During the 2012-13 fiscal year the former Christ the King School, now known as St. Kateri School, reverted back to parish control, leaving Siena Catholic Academy in Brighton as the only school remaining under diocesan control. The financial effects of this transition are reflected in revenue from fees and charges and grants and aid, as well as in personnel costs. The Pastoral Center no longer is involved in collecting the school’s tuition, receiving aid for state-mandated school services or paying St. Kateri’s employees, for example.
* A 32-percent increase in expenses for ministerial education and formation relates to the diocese’s success in recruiting a large number of seminarians — currently 19 — studying for the diocesan priesthood.
* Revenues related to the Legacy campaign in 2012-13 declined by 10.7 percent compared to the previous year, as the capital campaign wound down in the spring of 2013. Contributions to the campaign were recorded in the year in which they were pledged, rather than when they are received, Ziarniak explained. Legacy funds also show up in the liabilities column as contributions payable because campaign donations are designated for disbursement to the priests’ education and pension funds.
* The diocese’s accumulated, unfunded obligation for priest retirees’ health and dental benefits was $5.4 million as of June 30, 2013. The diocese planned to use $5.7 million in donor-restricted assets available for this purpose, so this fund for postemployment benefits actually is overfunded, Passero said.