Parishes show better bottom line but
still have a deficit, report says

Overall, parishes in the Archdiocese of Chicago showed financial improvements but still operated at a deficit last year, according to the archdiocese’s annual financial report.

At the same time, the Pastoral Center--the ministerial and administrative arm of the archdiocese--saw its operating deficit grow because of substantial investments in information technology, development and the Jubilee celebration for the millennium in the fiscal year that ended June 30, 1999.
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“They are new investments that have significantly increased the Pastoral Center deficit,” said Thomas Brennan, the archdiocese’s director of finance. “We refer to them as investments because the archdiocese believes that, while the funds being spent now may cause deficits, these expenditures will strengthen our church in the coming years.”

The 378 parishes and/or the 267 elementary and eight high schools that are supported by the parishes or the archdiocese collectively increased their revenues by 5.7 percent last year, to $477.2 million. Expenses were up 4.2 percent, to $492.3 million. That resulted in a deficit of $15.2 million, which is down from the $21.6 million deficit in 1998.

At the same time, the parishes increased their net assets by 10.1 percent, to $648 million, Brennan said.

Another encouraging sign is the decrease in the number of parishes operating with a deficit, Brennan said. In 1999, 186 parishes outspent their revenues--12 fewer than in 1998. That’s important to note, Brennan said, because according to church law, a financial surplus in one parish may not be directly used to make up for the deficit in another parish. Instead, parishes must make up for their deficits out of accumulated savings.

Also, fewer parishes relied on the archdiocese for financial support last year. In fiscal 1998, the archdiocese made grants to 74 parishes; in 1999, it made grants to 70 parishes.

Still, 63 percent of the parishes either received a grant or operated at a deficit.

A major factor in the deficit continues to be the archdiocese’s commitment to Catholic education, Brennan said. Rising costs and declining enrollments over the past three decades have made that commitment costly.

The overall cost of operating the schools increased 3.5 percent to $265 million last year. About 80 percent of the cost, or $215 million, is covered by tuition, fees and fund-raising. Parishes and the Pastoral Center subsidize the rest, with the Pastoral Center making $20.7 million in grants to schools.

But Brennan sees a rosier financial future.

“The archdiocese has taken significant steps in the past year to secure the financial future of Catholic education in Cook and Lake counties,” Brennan said, pointing to the creation of a planning and implementation team that worked for a tuition tax credit law. The law went into effect Jan. 1.

The team also made preliminary plans for a major gifts campaign to support Catholic schools in the archdiocese and is developing an aggressive marketing program to increase enrollment.

At the Pastoral Center, the deficit climbed from $2.8 million in the 1998 fiscal year to $12.2 million in the 1999 fiscal year. In 1999, the Pastoral Center had $159.2 million in revenue and $171.4 million in expenses.

Much of the deficit is attributed to upgrading technology and to higher health and property insurance costs.

At the same time, investment gains fell from $18.3 million in fiscal 1998 to $11.3 million in fiscal 1999.

Adding the lower investment gains to decreases in other non-operating accounts, such as the sale of property and the transfer of funds to capital grant account, led to a decrease of $830,000 in net assets for the Pastoral Center.

“Last year’s investment gains were a significant boost to the long-term financial health of the archdiocese, but archdiocesan leadership understood that we need to rely on more predictable sources of funding for annual programs, and this year’s lower results indicate why,” Brennan said.