Boston  Globe

Diocese uses cash of closed parishes

With giving off, funds used for operations

By Michael Paulson, Globe Staff  |  February 25, 2005

The beleaguered Roman Catholic Archdiocese of Boston is using funds from the closing of parishes to finance its general operations, a step that the archdiocese itself describes as undesirable but necessary because of its ongoing financial crisis resulting from the clergy abuse scandal.

In a financial statement being released today, the archdiocese says it has spent all the money taken from the bank accounts of closed parishes to pay for archdiocesan programs previously supported by fund-raising. And the archdiocese says it will use a portion of the proceeds from selling church buildings for the same purpose.

The practice is ''not, on a long-term basis, acceptable," but it is necessary, Chancellor David W. Smith said in a telephone interview.

Smith insisted that the archdiocese is honoring Archbishop Sean P. O'Malley's promise to use the proceeds of parish closings to pay for parish needs, as well as his pledge not to use the money to pay for settlements with abuse victims.

''Every member of the finance council recognizes, and every good businessman recognizes you don't sell assets to pay ongoing operating expenses, so that needs to be turned around, and that is what we are going to do," Smith said. ''But the alternative is to close parishes in the inner city or not to supply services. So there was no viable alternative."

The archdiocese is publishing today in the church's newspaper, The Pilot, the first of what it says will be monthly reports accounting for the money raised by closing parishes. The archdiocese has closed 50 of its 357 parishes since last July and plans to close another 30. Many closings have gone smoothly, but seven closed parishes have been occupied for months by parishioners who refuse to leave.

According to the report, the archdiocese collected about $2.8 million from the bank and investment accounts of closed parishes that did not file appeals. The archdiocese is not taking the bank holdings of parishes that have appealed their closings while those appeals are considered by the Vatican.

But by far the largest source of revenue from parish closings is expected to result from the sale of scores of buildings owned by closed parishes, including rectories, convents, schools, and parish halls, as well as churches.

None of the first 16 properties put up for sale has been sold, but the archdiocese is reviewing bids.

A portion of the money from parish closings -- $678,255 through Jan. 31 -- has been spent on severance for 141 employees who lost their jobs as the result of the closings. Most laid-off church employees, who include secretaries and lay ministers, are given one week's pay per year of employment and are placed on a list for use by pastors hiring at other parishes.

The parish funds are also being used to pay for the salaries and benefits of the people who are overseeing the parish closings at the chancery, as well as to pay unpaid parish bills and to manage the properties of closed parishes.

But the biggest expense being paid with parish funds, according to Smith, is about $600,000 a month to offset the archdiocese's estimated $10 million operating deficit this year.

Smith said the archdiocesan Finance Council deemed it appropriate to use parish funds to pay expenses including the cost of supporting low-income parishes, providing emergency aid to parishes, supporting parish schools and religious education programs, and paying for a portion of the offices of the archbishop, the regional bishops, and a variety of chancery programs.

The archdiocese is already running a deficit in its parish reconfiguration fund, charging it for more expenses than the parish closings process has generated. But that deficit should be erased as the archdiocese begins selling parish property.

David Castaldi -- the chairman of a parish reconfiguration fund oversight committee, a group of laypeople named by O'Malley to review the spending -- said, ''We believe that they are being consistent with their commitment to use the funds only for the past, present, and future obligations of parishes, but we believe many of our fellow Catholics will be disheartened by the use of capital funds to support ongoing budget deficits."

Archdiocesan officials decided against publicly releasing a broader set of financial statements that would fully describe the church's financial picture, according to two individuals privy to those conversations. Smith said that he plans to release data in a few weeks describing at least a portion of the church's budget for the fiscal year that ended last summer.

The president of Voice of the Faithful, Boston University management professor James E. Post, criticized the decision to use funds from parish closings to offset the archdiocese's operating deficit.

''It plays fast and loose with the promise that was made to the public," Post said. ''It may be technically in compliance, but it is not consistent with the spirit of the archbishop's promise that the funds would be used exclusively for the needs of parishes."