SCRANTON – For the first time in years the Diocese of Scranton released a financial statement for its administrative budget that has some good news – a small surplus overall, and a dramatic reduction in bad debt.
There’s still a lot of red ink splashed across the pages, but if the diocese hasn’t quite turned the corner, at least the corner seems to be in sight.
The bottom line looks dramatically healthier at first glance. The diocese saw an increase in net assets of $424,266. By comparison, net assets decreased in 2009 by $15.3 million.
The diocese saw a similarly dramatic decline in bad debt write-offs. In 2009, the “provision for bad debt” total was $7.1 million; in 2010 it was almost one-tenth of that, $735,604.
Thanks to the slow economic turnaround that has pushed stock prices back up, the diocese also saw improvement in investment returns. Returns on paper (“unrealized gains”) hit $3.1 million, while actual monetary gains were $263,036. In 2009, the diocese saw a total loss in investments of $5.3 million.
But the numbers were not all positive. In a letter accompanying the financial statements published in Thursday’s Catholic Light – the diocesan newspaper – Bishop Joseph Bambera pointed out the diocese still ran an operational deficit of $648,898.
Bambera cited three big changes as contributing factors: $529,845 less in interest, $490,104 more paid out in unemployment claims, and $400,988 less in donations to the Diocesan Annual Appeal fund drive.
The diocese also realized a paper loss in its pension fund by revising expected interest downward.
The move was made to more accurately reflect the market interest rates, and it pushed the unfunded liability of the pension fund up by $2.6 million.
The 11-county diocese has also begun reporting a separate line on both revenue and expenses from the diocesanwide church restructuring – dubbed Called to Holiness and Mission – that has led closed about half the churches in Luzerne County alone.
Where the money goes once a church closes and assets are sold has been a bone of contention among some parishioners in ethnic parishes, those built by specific immigrants rather than built as “territorial” parishes to serve a given area.
The diocese has made clear that assets from ethnic parishes that close and merge with territorial parishes are split between the remaining parish and the diocese, which gets about 42 percent of the total. The diocese, in turn, uses that money first to pay off any debt from the closed parish.
The financial statements show the diocese received $5.1 million from the closing of churches, and spent almost $4.1 million on debt reduction. There is no such line item for 2009.
The diocese also saw a sharp drop in one-time donations and bequests, a line item that, by its very nature, is unpredictable. The amount in 2010 was $57,507. In 2009, it was $1.4 million.
In his letter, Bambera cited several specific challenges and changes.
Unemployment compensation claims have risen, and a plan is being devised to eliminate the unfunded pension liability. The diocese previously reduced the amount it requires parishes to pay toward the school system, which in turn should help struggling parishes reduce their own debt.
And Bambera recently announced new plans to put the Catholic school system on firm financial footing. Despite extensive consolidation and closing done by former Bishop Joseph Martino, some schools are still struggling.
“While financial challenges remain, with your help and through the dedicated effort of Diocesan management and staff working with the Diocesan Finance Council, I feel confident that solutions to these challenges will be found,” Bambera wrote.