BRIDGEPORT—Bishop Frank J. Caggiano and the Finance Council of the Diocese of Bridgeport have approved a fiscal year ending June 30, 2024 operating budget with a total of $24,432,690 in revenues and $24,413,694 in expenditures, representing an $18,976 projected surplus.
The approved budget projects revenues and expenses to increase approximately $2.7 million. Increased revenue and expenses of approximately $1.4 million are associated with restricted contributions for specific programs which are offset by related expenses. An additional $1 million of revenue is related to projected increased contributions, bequests and interest income, which will support various other expenses.
Good Stewardship
“We are stewards of all funds entrusted to us as we continue fiscally responsible and prudent decision making at all levels of the diocesan management team,” said Michael Hanlon CPA, Chief Financial Officer (CFO). “Additionally, we continue our practice of financial transparency called for by Bishop Caggiano as we outline our diocesan budget and release audited financial statements annually.
Hanlon said the prior-year budget adopted for fiscal year ending June 30, 2023 reported a projected surplus, totaling $43,189.
“Last year, we continued our policy of fiscal prudence to support operations and that budget reflected that,” said Hanlon, who added that preliminary financial reports for fiscal year ending June 30, 2023 projects a surplus.
“This surplus was realized as additional contributions and bequests were received throughout the diocese from our generous donors for designated programs and other support. Additionally, unbudgeted interest earnings increased revenue and some budgeted expenses were not utilized during this fiscal year,” said Hanlon.
Hanlon said the development of this fiscal year budget ending June 30, 2024 was equally as difficult as prior year’s with continued uncertainty related to contributions and other revenue sources, and inflationary pressures on expenses.
This year Bishop Caggiano and Deacon Patrick Toole, Chancellor and Episcopal Delegate for Administration, developed a new model to examine Curia operations by categories:
1. Central ministries and services that are unique to the Ministry of the Bishop and only the diocese can provide
2. Administrative services that must support the central ministries (whether provided by the diocese directly or outsourced)
3. Services provided to parishes, schools and other institutions, while respecting the principal of subsidiary
4. Diocesan-sponsored charities that help realize the threefold function of the Bishop’s Office: teaching, sanctification and governance (including charity)
Central Ministries budgeted revenue and expenses total $7,694,595, or 31.5 percent of the total budget. Administrative Services budgeted revenue and expenses total $7,859,208, or 32.2 percent of the total budget. Services provided to related entities budgeted revenue and expenses total $4,412,431, or 18.1 percent of the total budget. And diocesan-sponsored charities budgeted revenue total $4,466,456, and expenses total $4,447,460, or 18.2 percent of the total budget.
Bishop’s Appeal
The Annual Bishop’s Appeal (ABA) and Cathedraticum tax are the major sources of revenue for the annual operating budget, totaling approximately 60 percent. The ABA supports diocesan mission-related programs, and Cathedraticum is the traditional assessment on parishes to support the administration and operating costs of the diocese, he said.
Joseph Gallagher, Chief Development Officer, and his team continue to focus their work on achieving annually the ABA budgeted goal, totaling $8.1 million for the June 30, 2024 budget.
Cathedraticum revenue is projected at $6.3 million for fiscal year ending June 30, 2024, a slight increase over the prior year amount. This is a positive trend after several years of decreased amounts related to the pandemic and parish offertory.
Cemeteries’ operational success under the leadership of Dean Gestal is projected to provide diocesan-budgeted support totaling $1.5 million, a $100,000 increase from the prior year.
Additionally, with the current attractive interest rate environment, a cash management program was implemented within the finance department, to maximize the use of cash balances, with approximately $1 million budgeted from these earnings.
Salaries and benefits represent approximately 53.7 percent of the overall budget, Hanlon said, noting, “market-rate salary increases have been budgeted for January 1, as our employees are dedicated to their work and are always doing more than expected. Inflationary pressures and a reduction of the eligible employment pool is increasing salaries for new employees and we need to be fair to our long term dedicated employees. Several new much needed positions within Curia operations have been budgeted to be filled.
Grants
Contributions and grants allocated from the Annual Bishop’s Appeal to diocesan mission-related entities represent approximately 9 percent of this budget. These contributions and grants support the missions of Catholic Charities of Fairfield County, St. Catherine Center for Special Needs, the Catholic Academy of Bridgeport, the Cardinal Shehan Center and the Bishop’s Scholarship Fund within Foundations in Education. Additionally, these funds support vocations, seminarians and retired priests.
Grants from restricted contributions to support school initiatives and physical improvements totals approximately 11 percent of total expenses.
Pastoral and mission related programs are always an imperative part of the diocesan budget, as Bishop Caggiano’s seeks to revitalize our faithful. This year, as the bishop continues to launch “The One” this funding reaches heighten importance on the success of his mission. Initial investment funds are provided to fund “The One”.
“Although the diocesan goal has been not to use one-time revenue sources within our budget to support operations, this year’s budget includes approximately $575,000 of one-time revenue sources to support this renewal,” he said.
Budget Planning
During the budget planning process department leaders submitted their preliminary budgets to finance and after initial review, proposed expenses were adjusted to reduce requested expenses to minimums necessary to functionally operate based on estimated revenue and a balanced budget.
A recent presentation by Bishop Caggiano to the Diocesan priests, a “Report on Diocesan Finances” during his tenure, reveals trends on many areas of support and expenses. This presentation clearly concludes that the revenue trend over the last eight years has been flat and expenses have been controlled. Expenses, adjusted for inflation, over the last eight years, would be millions higher. (This report is available at www.tinyurl.com/financeDOB).
A special Finance Council meeting will be held at the end of October to address the conclusions reached from this presentation and develop a multi-year plan. Investments funds are needed to support “The One” and other important mission related programs to rebuild the church with the diocese.
The diocese continues to focus on its challenges which include post pandemic reduced church attendance and offertory as well as the funding status of the lay pension plan.
The diocese is exploring partnering with parishes on an enhanced giving program in 2024 to assist parishes increase offertory and support as they continue to recover and plan for continued financial needs and investments.
The long-term underfunded liability obligations related to the frozen diocesan lay employee pension plan (frozen since 2008) continue to be a major area of concern and challenge for the diocese.
A major step in resolving the lay pension underfunding status was achieved during this budget cycle. After years of exploring all alternatives the only option remaining was increased funding. All diocesan entities pension funding assessment increased by 25 percent this budget cycle with another 10 percent projected for fiscal year 2025. The diocese and cemeteries operations will also contribute an additional $700,000 of lay pension funding.
The funding required annually to fulfill all future pension benefit payments to pension participants is being monitored by several committees of the Diocesan finance council. Requirements for additional funding maybe recommended to ensure the solvency of this frozen plan and fulfill all future obligations.
Employee Retention Credit
The federal Payroll Protection Program (PPP) pandemic relief loans were received previously by all our schools and 70 parishes totaling approximately $14.6 million. All but $60,000 was forgiven. An additional $3 million in PPP 2 funding was received by several schools who met new eligibility requirements.
“This large infusion of onetime cash allowed our parishes and schools to remain financially solvent during an extremely difficult period.
A change in the law which allowed entities who received PPP funds to also apply for Employee Retention Credits will allow for additional cash infusion into our Diocesan entities. One eligibility criteria is if an entity was affected by governmental shutdown orders during certain measurement periods. A governmental shutdown order applied to all parishes and schools within Connecticut.
The diocese engaged a preferred consultant to assist parishes, school and other related entities to determine eligibility on the CARES ACT—Employee Retention Credit (ERC). This credit offers the opportunity for significant tax refunds to the diocese, our parishes, schools and other affiliate entities. Most entities have applied or are in the process of applying, with projected payroll tax refunds received or to be received expected to exceed $9 million in total. This additional infusion of cash assists in the recovery from the pandemic and provides additional financial stability to our entities.
Managing Healthcare Costs
Healthcare benefits costs have increased greatly over the last several years.
The diocese continues to work to manage and control healthcare related expenses and benefits while providing affordable comprehensive coverage for employees and their families.
On January 1, 2023 the diocese engaged Reta Trust to provide these benefits, after years of providing benefits on a “self-insured” basis.
Reta Trust (a not-for-profit trust) has operated for more than 45 years providing health coverage that aligns with the teachings of the Catholic Church, to employees and religious staff of Catholic institutions. Many U.S. dioceses have joined, and members total in excess of 350,000. This provides purchasing power for benefits that was lacking with our current plan. As a not-forprofit trust annually dividends are returned to each diocese that should control future increases in medical premiums.
Andrew Schulz, Director of Real Estate, and Anne McCrory, Chief Legal and Real Estate Officer, have continued to identify new areas of revenue sources while overseeing the diocesan property portfolio.
“They continue to do a remarkable job in identifying opportunities to generate alternative sources of revenue from property leases by marketing vacant diocesan owned buildings for use,” he said.
In December 2013, Bishop Caggiano took a major step toward financial transparency when he released the audited financial statements for years 2010, 2011 and 2012. Audited financial statements for the subsequent periods ending December 31, 2013 and 2014, as well as financial statements for the periods ending June 30, 2016 through June 30, 2022 have been released annually. All reports can be found online.
(To learn more, visit: www.bridgeportdiocese.com/financialreports.)
