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Diocese in O.C. Awash in Red Ink

Bishop reports losing $14 million for second straight year. Budget cuts are ordered.

November 04, 2002|William Lobdell | Times Staff Writer

The Roman Catholic Diocese of Orange has lost more than $14 million for a second straight year, in part because of losses in the stock market, and is ordering a second round of 5% budget cuts, church officials announced Sunday.

The back-to-back losses are the first in the diocese's 27-year history. Three years ago, it reported a surplus of $21.5 million, thanks largely to a windfall from stock investments.

Bishop of Orange Tod D. Brown, who released the report on the 2001-02 fiscal year to worshipers at Sunday services, said the losses over the last two years have been caused by a variety of factors: besides a sagging stock market, an unexpected rise in insurance costs, $12 million spent on critical needs at poor parishes, and $3.6 million to settle molestation claims.

To help cope with the decline, Brown in July had ordered department heads to reduce expenses 5%, and he asked for another 5% reduction last week. Combined, the cuts will bring back $1 million to the bottom line, officials said. To date, about a dozen jobs have been frozen or eliminated, with two employees laid off.

The report did contain a silver lining: The church's molestation scandals don't appear to have hurt giving by parishioners. Philip J. Reis, director of finance for the Orange diocese, said revenue from the churches' collections was up nearly 5% from the previous year.

The public airing of finances contrasts in style, if not substance, with the much larger Archdiocese of Los Angeles. Church officials in Los Angeles have not publicly released figures for even the previous fiscal year, which are now eight months overdue.

The four-page financial report given to Orange County Catholics included articles, color graphs, financial tables, charts and a note on where to find the complete audited statement.

The losses in Orange of more than $28 million over the last two years have depleted nearly two-thirds of available reserves. The diocese does have an additional $90.6 million in reserves designated for specific purposes. Stock market declines have lowered the value of the diocesan investment portfolio from $227 million three years ago to about $182 million by the end of September.

The Catholic Church's molestation scandal and the poor economic climate have again delayed the diocese's ambitious $100-million capital campaign to raise money for, among other things, a new parish and cathedral in Santa Ana and retirement housing for priests. The campaign was first announced more than two years ago.

For Brown, who oversees a rapidly growing flock that now numbers about 1 million, the financial troubles are vexing.

"It's tremendously frustrating," he said. "[But] it makes me more reliant on God. God, in time, will provide the funds we need to continue our mission. I'm not concerned about that. But I might not like the timing."

Brown said he feels compelled to publicly disseminate the financial information, a practice he started three years ago.

"People give money for specific causes," he said.

"We should try to let people know how the money is spent and where it goes," he continued. "I think that kind of information makes people have a certain comfort level."

The bishop also presented the news at diocesan headquarters last week for priests, laity and others.

Father Bill Barman, pastor of Our Lady of La Vang in Santa Ana, said he was especially pleased that the bishop invited lay members of each parish finance council.

"They asked the majority of questions," Barman said. "It was a very peaceful meeting, and a brilliant move. It makes the finances a nonissue. There was no subterfuge."

In Los Angeles, officials have declined to publicly release their 2000-01 report -- scheduled for publication last March in the Tidings, the archdiocesan newspaper -- or answer basic questions about church finances.

"Rapidly changing financial conditions and subsequent events related to the sexual-abuse crisis in the spring of 2002 made the publication of financial results from June 30, 2001, not relevant to current conditions," church officials said in a prepared statement released to The Times on Sunday.

Church officials did say that the report for the fiscal year ending in June of this year will be published in the Tidings early next year, ahead of the usual March or April deadline, and will contain information from the unreleased 2000-01 report. Financial reporting for the archdiocese always lags behind Orange because of budget complexities brought on by size and different accounting methods, church officials said. The archdiocese serves 5 million parishioners, about five times as many as Orange.

The archdiocese is in the middle of a budget crisis that led in September to the surprise elimination of seven church ministries, retrenchment in others and layoffs of at least 60 workers one week after the opening of the $189-million Cathedral of Our Lady of the Angels.

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