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After scandal, fiscal troubles deepen for US Catholic Church

WASHINGTON -- First came the sex scandal. Then the lawsuits. Now the bankruptcies.

And some economic analysts believe this could be just the beginning of the financial fallout from widespread charges of clerical sexual abuse within the US Catholic Church.

Nearly 11,000 people have accused priests of child sexual abuse from 1950 through 2002, according to a church-commissioned study released this year. There could be thousands more who have not yet come forward.

The US Conference of Catholic Bishops has acknowledged this as its worst scandal and vowed to "heal the hurt that has happened," in the words of departing conference president Bishop Wilton Gregory.

The question is how to pay for it.

"Even without the sex abuse scandal, the Catholic Church was in deep financial difficulty," said Charles Zech, an economics professor at Villanova University who monitors church finances.

Zech said the church's money troubles include the costs of deferred maintenance on church properties, the aging of its low-cost work force of priests and nuns, and its disproportionate holdings in real estate -- often run-down urban buildings that are hard to sell.

Frank Butler, president of a group of major donors to Catholic institutions, said the problems may go deeper.

"Many of the archdioceses are very marginal operations, and the reason for that is they have a very aging infrastructure that includes the parishes and schools," Butler said from the Washington-based Foundations and Donors Interested in Catholic Activities, known as FADICA.

In addition, American Catholics give less per person to their individual churches than Protestants or Jews do, Butler said, adding that those who do give are getting older.

"Their donor base would seem to be shrinking," he said.

Added to these long-term problems are expected payments that could total billions of dollars nationally to victims of priest sexual abuse.

Nearly three years after the pedophile scandal erupted in Boston, that archdiocese has sold real estate to help pay $87 million in claims by 541 people. The diocese in Orange, Calif., recently settled claims of 87 alleged abuse victims that reportedly will total more than the Boston settlement, with an average $1.1 million payment per plaintiff.

Los Angeles, the largest archdiocese in the United States, could face hundreds of lawsuits, with some estimates putting a possible total settlement there at $1 billion or more.

This is a small fraction of the US Catholic Church's annual revenue, which in 2001 was an estimated $102 billion. For individual dioceses, though, such settlements can be devastating.

Three dioceses -- Spokane, Wash.; Portland, Ore., and Tucson -- have filed for protection from creditors under Chapter 11 of the US bankruptcy code.

Joseph Harris, a Seattle-based management specialist who has analyzed the US Catholic Church's revenues, said he was initially surprised to learn of the bankruptcy filings -- but not after he checked the numbers in the Portland case.

"If I was working as a financial manager . . . I don't know what you do with $341 million in claims," as there were in the Portland diocese, Harris said in a telephone interview. "We are going into uncharted territory."

Some US bishops have stressed that the choice to file for bankruptcy or reach a negotiated settlement puts all plaintiffs on an equal footing, as opposed to the first-come, first-served procedure that would favor the first to file individual claims and leave those who come forward later at a disadvantage.

But these paths also mean that it will be up to a bankruptcy judge to decide who actually owns church property -- a question that caused dissent in the 19th century -- and what can be sold off to pay victims' claims.

The bishops have said they do not own church property but hold it in trust for parishioners. If bankruptcy judges find that parishioners themselves own church property and can dispose of it as they see fit, that would be a major shift, Zech said.

Until the 19th century, Catholic parishioners in the United States had financial control of their churches. But in a move aimed at allowing priests to act with autonomy, the Vatican Council of 1869-1870 gave the pope ordinary jurisdiction in every Catholic diocese.

"If you start telling parishioners they own church property, they're going to insist on all kinds of things that the bishops aren't prepared to give them: the right to hire their own pastor, the right to dispose of property . . . far more possibility than they currently have," Zech said.

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