BRIDGEPORT—In the continued practice of full transparency, the Diocese of Bridgeport has released its Consolidated Financial Statements for the Fiscal Year ending June 30, 2019.
The consolidated audited report is posted online on the diocesan website. The diocese has continued its strategy of prudent management and stewardship as it reports positive operational results for another year. The audit report presents a strong financial position with an increase in assets and net assets and a slight decrease in liabilities. “We are striving towards our goal of long-term financial sustainability for the diocese in which transparency is key. We are charged with the responsibility of ensuring that we are good stewards of all resources entrusted to us and prudent decision making on the use of those resources,” said Michael Hanlon, CPA, chief financial officer of the diocese. The release of this report should give confidence to our faithful Catholics who want to learn how their donations are being used to fulfill the diocesan works of mission and administration.
“Our priorities continue to be the presentation of clear, timely and comprehensive financial picture of the diocese, particularly as Bishop Caggiano continues his vision for the Diocese with completing initiatives, mission-related programs and investments in the future,” Hanlon said. The audit report was issued by our auditors on December 19, 2019, meeting the issuance deadline established by the diocesan audit committee.
The diocesan fiscal policy continues to focus on a strategy of financial stability, viability, long-term growth and sustainability, he added.
Hanlon said he was again pleased to learn that the diocese of Bridgeport ranked again near the top of a recently released Voice of the Faithful (VOTF) nationwide annual report on diocesan financial transparency practices and policies.
The VOTF study reviewed the financial transparency and accountability of 145 dioceses and 32 archdioceses by analyzing transparency practices and policies. On a scale of 0-100, the Diocese of Bridgeport received a score of 92 for its policies and disclosures toward financial transparency. The only deduction (8 points) is related to the diocesan policy for parish collection count teams and collection bags. The diocese will evaluate the need to change these policies within the issuance of an updated “Parish Finance Manual” this spring.
The VOTF analysis affirms the fact that we continue to follow transparency and not-for-profit industry best practices mandated by Bishop Frank J. Caggiano upon his arrival in 2013. Under Bishop Caggiano’s leadership, we remain committed to full financial transparency and best practices,” he said.
The newly released consolidated financial statements as of June 30, 2019 reports operational revenues, support and other changes totaling $44.2 million ($46.4 million – June 30, 2018), and total expenses from operations before depreciation of $41.0 million ($43.5 million – 2018), resulting in income from operations before depreciation of $3.2 million ($3.1 million – 2018).
Hanlon explained that major changes in revenue related to the strategic parish goal reduction in the Annual Catholic Appeal (from $11 million to $9.7 million) and a decrease in revenue from contributions and bequests, where an unexpected large bequest was received in the prior year. The major decrease in expenses is related to employee benefits and insurance programs.
Nonoperating activities report additional revenues from gains on sale of assets ($1.5 million) and contributions from dissolved entities ($1.4 million). Major nonoperating activity decreases are related to pension related activity ($2.9 million) and support to schools and the independent accountability report (($1.3 million). The consolidated “Statement of Activities” reports an increase in net assets totaling $1.7 million for June 30, 2019.
With the success of the We Stand with Christ (WSWC) capital campaign the Diocese plans strategic parish goal reductions in the annual Catholic Appeal in future years. Our donors have been overly generous to the campaign. WSWC distributions to the three foundation’s: Education, Faith and Charity will greatly supplement diocesan support and enhance various mission related programs. This will provide much needed endowment assets to these foundations and secure permanent annual funding sources for mission related programs.
Diocesan operations for the year ending June 30, 2019 reports total revenue and support and other changes of $22.8 million ($24.6 million – 2018), resulting in a $2.1 million ($3.6 million – 2018) surplus from operations. The audit reports positive operational results for the third consecutive year, a goal targeted by the Bishop and the Diocesan finance council several years ago as part of the turn-around strategy.Additional revenues and other changes from non-operating activities and other pension-related expenses, resulted in an increase of net assets totaling $1.8 million for the year ending June 30, 2019 compared to an increase in $7.8 million for the year ending June 30, 2018, on a consolidated basis This large decrease is related to the prior year contribution related to the sale of the Augustana Homes elderly housing facilities and the dissolution of those related entities in December 2018.
Employee benefits and insurance programs continue to be the largest expense recorded within the diocesan financial statements totaling $17.5 million, or 42.6% of $41.0 million in total expenses before depreciation ($20.1 million, or 46.3% of $43.5 million – 2018). Religious and lay personnel costs totaled $10.7 million or 26.2% of total expenses ($10.4 million or 23.9% – 2018). And grants and contributions totaled $5.5 million or 13.4% of total expenses ($5.0 million or 11.5% – 2018).Grants and contributions to support seminary formation, mission related, educational and youth programs include the St. John Fisher and Redemptoris Mater Seminaries, Bishops Scholarship Fund within Foundations in Education, Catholic Charities, the Cardinal Shehan Center, St. Catherine’s Center for Special Needs and other diocesan-related programs.
The consolidated diocesan statement of financial position reports as of June 30, 2019 total assets of $96.6 million ($95.7 million – 2018), liabilities of $43.9 million ($44.8 million – 2018) and total net assets of $52.6 million ($50.9 million – 2018).
The Diocese continues its commitment to reduce outstanding debt as the the Knights of Columbus loan was further reduced to $3.5 million at June 30, 2019 from $6.0 million at June 30, 2018 (down from the original $15 million note). A plan has been established to eliminate the remaining debt balance in the near term. This will save approximately $140,000 annually in interest expense from the diocesan operational budget.
Additionally, a funding strategy will be developed for the post-retirement medical benefits for our retired priest. Although the priest pension plan is sufficiently funded, their post-retirement medical benefits are paid as incurred and future liabilities account for approximately $14.1 million or 32.1% of total liabilities as of June 30, 2019 ($13.8 million or 30.8%as of June 30, 2018) This increase is related to costs of actuarial projections for future medical costs and a reduction in the retirement age for priests (from age 73 to 71.The multi-employer lay pension plan, will continue to be a focus of a sub-committee of the Diocesan Finance Council which was formed early during 2017 to explore alternatives and develop recommendations to resolve the underfunding of the lay pension plan. As of June 30, 2019 and 2018, the lay plans projected benefit obligation exceed the fair value of its assets by approximately $92.5 million and $79 million, respectively. A decrease in a discount rate used in actuarial valuations, an annual adjustment based on discount rates, resulted in the increase in this liability. This liability is only required to be disclosed in the Diocesan and related entities audited financial statements due to accounting rules for a multi-employer plan.
“As we continue on our path of stability, viability and sustainability we continue to search for alternative sources of revenue, examine all operational expenses, to eliminate our outstanding debt and seek solutions to the underfunded status of the multi-employer lay pension plan,” Hanlon said Deacon Patrick Toole, the episcopal delegate for administration, has continued his review of all Catholic Center departments, to ensure efficient and effective operations.His recent evaluation of cemetery operations resulted in the termination of an agreement with Catholic Management Services as the projected revenue growth did not materialize. The reorganization of cemetery operations will focus on pastoral needs, physical and other improvements to our cemeteries, efficiencies in operations and a strategic vision for enhanced resources to support the 15 diocesan cemeteries in Fairfield County. During the spring of 2020 a much needed mausoleum addition within the Gate of Heaven cemetery in Trumbull will break ground.
Hanlon said the continued work of the school Education Commission, which is partnering with the schools is finalizing proposals for reorganization and/or operational viability, as well as a strategic plan to solidify Catholic education for our Diocesan students.
Programs included within the diocesan financial statements include: the Catherine Dennis Keefe Queen of Clergy Retirement Home for Diocesan Priests; the Newman Center at Western Connecticut State University; Teresian Towers and Carmel Ridge Estates, life use and rental properties for elderly residents: pastoral care services for residents in nursing homes formerly owned by the diocese and cemetery operationsHanlon said the diocese will continue to address ongoing challenges including medical and benefit costs, caring for a growing number of retired priests, the continued development and implementation of viability plans for schools and parishes, mission -related initiatives and programs and finding solutions for long term lay pension liabilities.
(The complete audited reports are available online. To learn more, visit the diocesan website: www.bridgeportdiocese.com/financialreports.)