December 9, 2005

2005 Accountability Report

Chief Financial Officer’s Report

The 2004-2005 fiscal year was one of break-even financial operations, growing stewardship, steady investment returns and challenging employee-benefit and facilities expenses. The people of the archdiocese continue to generously support the ministries of the Church. This report highlights several significant areas of our financial operations.

Chancery 2004-05 Operating Results

The chancery and agencies of the Archdiocese of Indianapolis completed 2004-05 with a $213,000 surplus vs. a budgeted surplus of $129,000, a positive variance of $84,000. This represents the first such surplus for the archdiocese since the mid-1990s and a 2005-06 budget of $221,000 (positive) seems to indicate that the archdiocese has likely achieved a more stable footing than in recent years.
I must offer two cautions about the positive operating results: first, the surplus is very small relative to the total overall budget—only about one-half of 1 percent of operational expenses; second, any surpluses must be used to “repay” the deficit spending of recent years. In other words, we will still need to continue to hold expenses down; this is not the time to increase budgets, even for human and material resources that agencies have been doing without for a number of years.

Called to Serve: Parish Stewardship and United Catholic Appeal

Parish stewardship, through Sunday and holy day collections, continued to grow, although at a slightly slower pace than the Indiana economy. Total parish Sunday and holy day collections throughout the archdiocese grew at a rate of 1.9 percent. This compares with a growth rate
of 3.0 percent in parish Sunday and holy day
collections for 2003-2004.
The 2004 United Catholic Appeal received pledges of $5.65 million. This compares to pledges of $5.57 million for the 2003 United Catholic Appeal, an increase of 1.5 percent.

St. Francis Xavier Home Missions Fund

June 2005 brought the fifth year of allocations of the St. Francis Xavier Home Missions Fund. The allocations committee, consisting of 11 members—pastors and parish life coordinators—aided by two archdiocesan staff members, made recommendations to Archbishop Buechlein for home missions grants based on applications received from 34 parishes. Approximately $436,000 was awarded to 30 parishes.
Home missions grants are supported through the generosity of parishes that pledge some or all of the money they raise in excess of their Called to Serve/ United Catholic Appeal goal to the St. Francis Xavier Home Missions Fund and through distributions from the Catholic Community Foundation’s Archdiocesan Home Missions Endowment Fund, which was established through the Legacy of Hope: From Generation to Generation capital and endowment campaign. While we’ve improved our funding to support needy parishes, parish needs still far outweigh available resources. Grant requests exceeded $868,000 during the year. This means that only 50 percent of the grant dollars requested was able to be awarded.

Schools Consortium

Six center-city Indianapolis elementary schools joined to form the Archdiocesan Schools Consortium in order to more effectively improve educational standards, raise support and manage expenses. The financial deficit for these schools for 2004-05 was approximately $1.2 million. It is the goal of the consortium to break even financially through improved development efforts.

Expenses Related to Sexual Misconduct

In fiscal year 2005, approximately $87,000 was spent to provide counseling for victims of sexual misconduct perpetrated or alleged to have been perpetrated by priests or lay employees of the archdiocese. Approximately $59,000 was spent for these purposes in fiscal year 2004.

Insurance Plans and Parish Services

The archdiocese operates several insurance plans, employee benefit plans and other services on behalf of parishes, schools and employees. Two of the most significant plans are the lay employee health insurance plan and the property insurance plan. Both have seen significant changes in recent years.
The lay employee health insurance plan experienced a $1.75 million surplus. This surplus eliminates an accumulated loss in the health plan since 1995 and creates a $318,000 accumulated plan surplus. Health care costs continue to challenge parish, school and agency budgets. While we attempt to design a health care plan that will continue to provide appropriate benefits to employees and their families in coming years, we did make one significant change that had a dramatic effect in 2004-05: the requirement for employees to be eligible for participation in the plan increased from 1,000 hours worked per year to 1,500 hours worked per year. This change reduced the number of employees participating in the plan and enabled total health care costs billed to parishes, schools and agencies to decline slightly from the 2003-04 year despite an increase in the cost of health care per employee.
In 2003-2004, the parish, school and agency property insurance plan structure also changed dramatically: the archdiocesan insurance plan transitioned to a self-insured plan from what had previously been a high-deductible plan. The plan surplus of $2.3 million in these first two years has begun funding a reserve account to protect against potential future large property insurance claims or rate increases from external insurance companies.

Catholic Community Foundation, Inc.

The Catholic Community Foundation’s total assets topped $129.3 million at June 30, 2005, an increase of 23 percent from the previous year. Investment returns, following five years of volatile markets, achieved a very “normal” rate of 8.9 percent. Foundation investments have returned a very respectable 9.4 percent (annualized) since the inception of the current investment structure in January 1995. Parishes, schools and agencies of the archdiocese added 21 new endowments during the year, bringing the total number of endowments held in the foundation to 305. Catholic Community Foundation endowments distributed $4.7 million last year to support parish, school and agency ministries. This growth in distributions from $3.9 million in 2003-04 demonstrates the ability of endowments to provide long-term funding for ministries.

2005-06 Operating Budget

We enter the 2005-06 fiscal year with an operating budget of $221,000 (surplus) on approximately $40 million of total operating expenses. We anticipate the most significant challenges to include:
• Health care and employee benefit costs that are increasing much faster than Sunday collections
• Construction and facilities costs (such as property insurance and heating costs) that are increasing quickly due to high national demand in the wake of hurricane damage and other factors.

On the other hand, we have several positive opportunities:
• A trend of positive growth in Sunday collections and the annual United Catholic Appeal
• The formation of a schools consortium to address financial operations of Indianapolis center-city Catholic schools
• Two consecutive years of strong investment returns
• The upcoming Legacy for Our Mission campaign, which has seen strong positive results among the pilot wave of parishes conducting this effort.
While the budgeted surplus is certainly small relative to the total operating budget, it is our belief that we are seeing the beginning of stable operations that will help us recoup deficit operational spending from previous years.

Accountability

Accountability is an important part of our stewardship responsibilities. Each year, the archdiocese subjects itself to the scrutiny of an independent audit. The firm of Deloitte & Touche LLP performed the audit for the last fiscal year. The audited financial statements are available for inspection through the Office of Accounting Services or at www.archindy.org/financial_information.
Archbishop Buechlein has established and regularly confers with the Archdiocesan Finance Council. The council, whose existence is required by canon law, focuses on financial policies, procedures and activities of the Church in central and southern Indiana. Current members of the Archdiocesan Finance Council are:

  • Most Rev. Daniel M. Buechlein, O.S.B., archbishop, chairman
  • Rev. Msgr. Joseph F. Schaedel, vicar general, vice chairman
  • David Milroy, president
  • Clark Byrum, vice-president
  • Jackie Byers, secretary
  • Patrick Carr
  • Michael Dilts
  • Dale Gettelfinger
  • Kenneth Hedlund
  • Mary Horn
  • Phil McKiernan
  • Timothy Robinson
  • Jeffrey D. Stumpf, chief financial officer, staff.

This past fiscal year marked continuing financial recovery for the parishes, schools and agencies of the Archdiocese of Indianapolis as we worked to build a sounder financial footing. Stewardship grew, investment returns were strong, and expenses generally fell in line with budget expectations. Now, we look with hope toward the Legacy for Our Mission campaign. We continue to place great emphasis on improving the financial stability of those parishes experiencing deficit operations. May God lead us toward continued success in our ministries.

Respectfully submitted,

Jeffrey D. Stumpf, M.B.A., C.P.A., CFA
Chief Financial Officer

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