Diocese says budget was balanced in 2010

But church faces fiscal hurdles

By Lisa Wangsness
Globe Staff / April 15, 2011

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The Roman Catholic Archdiocese of Boston reported yesterday that it balanced its $29.8 million budget last year for the first time since Cardinal Sean P. O’Malley arrived in 2003, as church leaders said they are making progress in addressing financial concerns created by a sour economy and the clergy sexual abuse crisis.

Regular collections from parishioners held steady, despite the sluggish economy. Investment income increased. And a new financial system, designed to help parishes raise more money and share it with the archdiocese, was off to a promising start.

Still, the annual report suggests that significant financial challenges remain. One-third of parishes are operating in the red, the same proportion as in fiscal 2009. Contributions to the archdiocese’s annual fund-raising drive, the Catholic Appeal, were down 14 percent last year from the year before. And many parishes had to cut spending to stay solvent.

The Rev. Richard M. Erikson, vicar general of the archdiocese, said the balanced budget was an important achievement and that while the archdiocese faces a host of difficulties, financial and otherwise, it is working on many fronts to find solutions. It has launched a campaign aimed at bringing inactive Catholics back to church, for example, and it is studying ways to cope with a severe shortage of priests.

“That type of focus was not possible several years ago, when the diocese was doing crisis management,’’ Erikson said.

Mass attendance was up slightly, 2.6 percent, in 2010. It was the first time the annual parishioner count, taken on one Sunday each October, had increased since 2004.

Although enrollment in Catholic schools dropped by almost 2 percent in the current school year, the decline was smaller than it had been in the 2009-10 school year.

The report is posted on, the archdiocese’s website, for the year that ended June 30. The archdiocese releases reports annually as part of a commitment to greater transparency following the sexual abuse crisis.

The archdiocese trimmed its expenses, laying off 11 employees and leaving nine other positions unfilled.

Archdiocesan employees received no cost-of-living raise for the fourth year in a row.

But the archdiocese’s highest-paid officials, those earning more than $100,000 a year, saw salary reductions imposed last year restored. The archdiocese provided a much fuller disclosure of top salaries this year than in years past.

Mary Grassa O’Neill, secretary for education and the highest-paid archdiocesan official, earned $320,000 last year. Twenty officials earned more than $100,000, four of whom took home more than $200,000, according to the report.

Erikson said O’Malley has tried to attract top talent to the archdiocese, which carries a cost.

“It’s an investment that the cardinal is happy to make, and the fruits of that investment are seen in all aspects of our operation,’’ he said.

Most other top archdiocesan officials are clergy or members of religious orders who earn about $40,000 a year or less. O’Malley’s salary was about $41,000, $34,000 of which was paid to his order, the Capuchin Priests and Brothers, and $7,200 to the Cathedral of the Holy Cross for his housing.

The archdiocese is also in the process of establishing a compensation committee to review general pay practices and specific salaries of highly paid employees.

And it has hired EthicsPoint Inc. to host a telephone bank and Internet site so that employees can confidentially report violations of the archdiocese’s code of conduct and conflict-of-interest policy.

James P. McDonough, chancellor of the archdiocese, said those moves are “simply adopting the best practices, as we see them, in the nonprofit world and in the corporate world.’’

The archdiocese said it settled 30 sexual abuse cases in fiscal 2010, three more than the year before, and spent $2.1 million on settlements with victims.

To date, the Archdiocese of Boston has spent $147 million settling 1,127 sexual abuse cases; 49 are pending.

The church’s pension funds remain underfunded, but both the lay retirement fund and the clergy retirement fund saw improvements.

The lay pension fund, which the church is in the process of freezing as it moves to a 401(k)-style plan was 78.1 percent funded on June 30, up from 74.6 percent the year before.

The clergy retirement fund expects to finish the year with $31 million in assets. Projected liabilities amount to more than $100 million.

But contributions to the fund in two annual collections at Christmas and Easter and a large fund-raising dinner held for the first time last year rose by more than $3 million, allowing the church to fully pay for retired priests’ expenses without further depleting the clergy retirement fund, officials said.

McDonough said he was particularly heartened by results of a pilot program designed to stabilize the archdiocese’s finances and replace a confusing patchwork of taxes and fees on parishes with a simpler model in which all parishes contribute to the archdiocese 18 percent of their weekly offertory, major fund-raising drive proceeds, and net rental income.

Parishes in the pilot program were urged to step up their fund-raising in a variety of ways. In the 33 parishes that volunteered, contributions increased 17 percent, on average, in the first quarter of 2011, according to yesterday’s report. Forty-four parishes have signed up for the next round of the program.

“They’re doing more to help us, and we’re doing more to help them,’’ McDonough said.

Lisa Wangsness can be reached at