Commentary on Diocesan Disaggregated Condensed Combined Financial Statements for the Years Ended December 31, 2012, 2011 and 2010

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The disaggregated financial statements for The Bridgeport Roman Catholic Diocesan Corporation (the Diocese) are provided to allow a concentrated analysis of the “ordinary” operations within the Diocese separately from the impact of the Pension Plans and Retired Priests Healthcare obligations.

The Diocese continues to meet all of its ongoing pension and retired priest obligations (defined benefit obligation) and fully anticipates continuing to meet these obligations in the future. Defined benefit obligations are required to be reported in the combined statement of financial position based on the amounts the Diocese would have to pay a third party to assume those obligations. The Bridgeport Diocesan Pension Plan for (lay employees) was frozen effective July 31, 2010, i.e. participants earn no further benefits under the plan after that date. This plan is part of the defined benefit obligation mentioned above. A new plan, called the defined contribution plan, replaced the old one and based on certain qualifiers, a set percentage of an employee’s salary is contributed for their retirement benefit. Since the Diocese has no intention of transferring the defined benefit obligations to a third party and these obligations are of a long-term nature, this commentary evaluates the current position of the Diocese with the defined benefit obligation presented separately.

Results of Activities Revenues and gains

Overall revenue and gains improved in 2012 compared to 2011 by $1.6M, primarily driven by investment income. The investment returns in 2012, $1.8M, were dramatically improved from the volatile market and subsequent loss of $80K for the Diocese during 2011.

    The Annual Bishop’s Appeal, along with other contributions and bequests, has remained steady over the past three years at approximately $11M, with a one time increase of $1.1M in 2011 for contributions related to the future expansion of the Catherine Dennis Keefe Queen of Clergy retirement home for Diocesan priests. When combined with Appeal contributions that are not included in the Diocesan financial statements, (that go directly to Catholic Charities and Diocesan schools), the total for the Appeal and other contributions and bequests was $12.4M in 2012, $14.4M in 2011 and $12.3M in 2010.
    The Diocesan employee benefit and insurance programs is a reimbursable arrangement between the Diocese and most Diocesan entities. It is also the largest source of funds to the Diocese. The employee benefit programs (health, pensions, and workers compensation) cover all lay and clergy employees of the Diocese and most Diocesan entities (parishes, schools, Catholic Charities, Cardinal Shehan Center) who work the required minimum hours per week. The insurance program is for property, casualty and liability insurance for Diocesan entities.The reimbursement revenues from those programs represent amounts billed to the other Diocesan entities to cover their portion of the related expenses with the objective of “breaking even.” Unfortunately, those revenues were reduced by approximately $1.7M in 2012, $2M in 2011 and $2.3M in 2010 for uncollectible amounts, primarily from parishes and schools unable to pay the amounts due for the good and dedicated people who serve you and your families in parish and school offices and ministries. Through concerted efforts and focus on the underlying problems that created this situation of uncollected revenue, the Diocese has been able to reduce those amounts each year.
    Cemeteries and other operating revenues have declined approximately $1M each year since 2010. New construction of mausoleums in 2010, and the revenue streams created by those projects increased typical sales revenue over a two-year period of time. No new large construction occurred during 2012, which reduced revenue as compared to earlier periods. Evaluations of new opportunities within Diocesan cemeteries are underway, with a focus on creating increased revenue streams for the future.


In addition to the parishes contributions to the Diocese through Cathedraticum, our parishes continue to provide financial support to achieve our goals through an additional offertory contribution that has translated into an annual contribution of $100,000 for each of the 25 elementary schools not located in Bridgeport. Although the Diocese facilitates the collection of these monies, it is not included in the Revenue and Gains of the Diocesan Statement of Activities since it is an asset of the Bridgeport Diocesan Schools Corporation. The Bridgeport Catholic Academies receives support from the Bridgeport parishes and other contributions specifically directed to those schools.


Including expenses related to pensions and retired priest’s healthcare, the Diocese has reduced its expenses from $54.6M in 2010 to $48.1M in 2012, with almost $4M in regular operations savings alone. The largest savings, over $2.5M, comes from the employee benefit and insurance programs. During the past three years, the Diocese has recognized savings from:

  • Annual review of benefits, both healthcare and other, along with fostering employee participation in wellness to keep expenses manageable.
  • Sexual abuse claim settlement payments were made as follows: 2010 – $0K, 2011 – $595K and 2012 – $920K. Expense accruals for future payments were reduced from almost $2M in 2010 to $1.45M in 2011 to $1M in 2012. Portions of revenue from property sales, both past and ongoing, have been held in reserve and used to fund settlements.


Other expenses were reduced continuously over the past three years in Administration and General, down over $700K, and services and contributions to other Diocesan entities and other parties, down over $500K. The Diocese has taken measures each year to cut payroll and benefit expenses, along with evaluating each program’s administrative costs to operate as efficiently, yet effectively, as possible.

Financial Position

Total assets declined in 2012 by approximately $4M as compared to 2010 and by approximately $3M as compared to 2011. There are two main reasons for this reduction: investments and property and equipment. Investments, principally representing the Faith in the Future Fund, declined by approximately $3.5M in 2011. Advances from the Faith in the Future Fund were made to the Diocese to fund excess expenses over revenue largely brought on by the uncollectibility of schools’ and parishes’ employee benefit insurance programs. As schools and parishes are able to pay down their amounts due to the Diocese for these benefits, or other revenue streams increase, the Diocese has in turn, returned the funds to Faith in the Future for the benefit of the schools affected. During FY2013, the Diocese has been able to return all but $1.7M to Faith in the Future from property sales completed in the current year. Collection of owed monies and proceeds from future property sales will assist in repaying the remaining outstanding balance.

The second cause for the decline in assets is depreciation expense related to property and equipment. Approximately $1.8M in depreciation expense is recognized annually. Typically, about $800K in new assets, primarily related to construction in cemeteries, is added to property and equipment each year, leaving a net reduction in property and equipment of about $1M each year.

Receivables in 2012 grew approximately $1.5M over 2011, solely due to workers compensation insurance due from excess carriers to cover claims recognized in Diocesan liabilities (see further notation under heading of Promissory Note section below).

In 2012, cash and cash equivalents, while consistent with 2010 levels, grew about $4M during 2011 due to proceeds from a financial institution loan (see Liabilities below) that were not yet fully utilized.


The largest growth in Diocesan obligations occurred from the following:

  • Pension and other Retirement obligations
  • Notes payable to financial institutions
  • Payables due to other Diocesan entities
    Pension and other retirement obligations continue to be the largest Diocesan liability. The original decline in pension assets initially arose in the eighteen- month period ended December 31, 2009, primarily from investment losses incurred in the global economic downturn between September 2008 and March 2009. Compounding those losses, as previously discussed, defined benefit obligations are required to be reported in the combined statement of financial position based on the amounts the Diocese would have to pay a third party to assume those obligations, even when there is no intention to transfer them. The interest rate that is used in these calculations is equal to current interest rates for high quality corporate bonds of comparable maturities. As these rates fluctuate, so too does the liability the Diocese has for the retirement plans.<As depicted in the charts below, while the plan assets have not changed dramatically, the benefit obligations, due primarily to the change in interest rates, have increased substantially in 2012.


  • These declines have no near term impact on pension payments to retirees. Pension payments are funded out of current investments and shortfall funding. (In July of 2011, a lay pension shortfall funding plan was implemented by the Diocese whereby each existing Diocesan entity contributes a percentage of their prior year’s payroll dollars to assist in recovering from this underfunded status.)
    The second largest increase in Diocesan liabilities over the past three years is from notes payable to financial institutions, up $7M from 2010. The promissory note to the Knights of Columbus was issued in December 2011 and the proceeds were used to repay, in full, the loan issued from another financial institution as well as partially reduce other payables. Lastly, 2012 payables, other than notes, were consistent with 2010 figures, but up $2.6M compared to 2011. The primary increase was a result of workers’ compensation claims (partially offset with insurance, see Asset Receivable section above), and payables due to other Diocesan entities.
Net Assets

Net Assets decreased by $5.4M in FY 2012, $6.9M in FY 2011 and $5.8M in FY 2010, excluding pensions and retired priests health care. As discussed herein, the operating deficits, have been and continue to be addressed. For example, the Diocese has implemented a Bridgeport inner-city school reorganization, ongoing review of benefits, and a retirement incentive plan in 2013 at the schools as well as at the Catholic Center. The Diocese will continue similar efforts in 2014 and beyond to improve its overall financial position.

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