June 29, 2009 - Archdiocese Reports to Boston Priests on History of Clergy Funds

Clergy Fund Study Is Part Of Unprecedented Consultation To Secure And Strengthen The Fund

Braintree, MA - At the request of the priests of the Archdiocese of Boston, and at the direction of Cardinal Seán P. O’Malley, the Archdiocese commissioned a thorough study to review the financial history of the Clergy Funds from their beginning in 1972 through June 2008.  This study is one of several steps in the overall effort to understand the current situation and to stabilize the Clergy Funds, which provide for the retirement, medical and financial needs of our priests, and bring the Clergy Funds to full health as soon as possible.

Very Reverend Richard M. Erikson, Vicar General & Moderator of the Curia, said, “Cardinal Seán considers the stabilizing of the Clergy Funds to be one of his top priorities as Archbishop.  The great effort undertaken in recent months by many talented people is bearing much fruit for our priests.  This process has been one of the most consultative and transparent initiatives undertaken by the Archdiocese. We welcome the continued input of our priests for whom we serve through this important work and the committed lay leaders who are assisting us in this endeavor.”

The study was conducted by Joel Aronson, CPA, and his team from Alexander, Aronson, Finning & Co. (AAF), one of the largest full-service public accounting and consulting firms in New England.   The Clergy Funds study is the result of a significant amount of effort by AAF with the assistance of more than 30 priests and staff of the Archdiocese over the past six months.  The full study was mailed to priests of the Archdiocese of Boston during the week of  June 22.  All priests were invited to attend presentations and discussions about the report at any of three locations in the Archdiocese on June 29th and 30th.

The Archdiocese noted that the study clearly shows that over its 37-year history, the Clergy Funds have, as reported by AAF, experienced a dramatic increase in expenditures due to an aging population of priests and the rising cost of health care and housing.  AAF also noted that while “operating revenues have increased over the years, they have not increased at the same pace as expenses.” 

In addition, AAF stated that "we did not identify any use of Clergy Benefit Trusts Funds that were outside the scope of benefits and related costs covered by the trust agreements or any diversion of funds." Church officials concur with this determination and believe that the money collected was used appropriately for the care of the priests of the Archdiocese. 

Current estimates point to a Clergy Funds unfunded liability for future anticipated retirement expenses to be in excess of $114 million.  If not addressed, the Funds will run out of money in 2011.  In a letter to the priests, Chancellor James P. McDonough said, “We are simply not going to allow that to happen.”  He added, “From the start Cardinal Seán has made clear that he is absolutely committed to provide for the care of our priests.  You have earned this respect from a lifetime of giving so much during your ministry to the people of God.  To that end, working together, we will not fail you in this endeavor.” 

The Archdiocese stated that the reasons for the deficit include, among others: the Christmas and Easter collections have remained relatively flat for the past several years; investment returns have fallen below actuarial projections; and there have been dramatic increases in health care and housing costs while the percentage of the priests’ population comprised of senior priests has increased from 16% to 36%. 
More specifically, the Clergy Funds Operating Budget is receiving approximately $5.5 million per year from the Christmas and Easter collections but the Church is spending in excess of $15 million per year for retired and disabled priests’ stipends, housing costs, and medical/dental benefits.

Under the guidance and direction of the Cardinal, the following initial steps are being implemented to stabilize the Clergy Funds:

Strengthening the Organization

• As announced in September 2008, Mr. Joseph D'Arrigo is providing his many years of expert knowledge in this area to our efforts and will be leading the work ahead as we restore the Clergy Funds to
  strength.
• The Cardinal is expected to affirm the appointment of a Board of Trustees shortly that will incorporate expert professionals, lay Catholic leaders and pastors from across the Archdiocese. 

Enhancing Revenue

• A second collection was authorized to be taken the second Sunday in June to support the Clergy Funds.  On years where the second Sunday of June is Pentecost the Archdiocese will move the Clergy Funds
  collection to a Sunday close to the second Sunday in June.  Also, this collection will be a regular second collection and will not replace the first collection for the parish. Initial reports from parishes indicate
  parishioners were very generous in their support of the Clergy Funds through their donations in June of this year.
• Planning is well underway for a major fundraiser in September 2009 that will raise money specifically for the Clergy Funds.  We will utilize this being the “Year for Priests” and the Cardinal’s 25th anniversary
  as a Bishop to encourage greater participation by parishes and benefactors when the event is held.
• A strengthened effort for the Christmas and Easter collections will be launched this December and next Spring. 

Reducing Costs

• As a result of a consultative process, we have introduced new policies regarding compensation for priests not assigned to active ministry and for priests’ housing.

The Chancellor said, “From the beginning of our work, the Cardinal has asked us to develop and execute a plan that guarantees the financial future of the Clergy Funds for our priests.   The work ahead is challenging, but I have faith that we will be successful in attaining our goal of stabilizing the Clergy Funds.”

Draft Housing Policy Considered

As part of the overall effort to stabilize the Clergy Funds, new housing policies for senior priests have been proposed and the input from consultation with priests at regional meetings and at the Presbyteral Council is being considered.  The major change is asking priests to enroll in programs of governmental support to which they are entitled like all Americans, such as Medicaid.  This change is consistent with most large dioceses around the country. 

The escalating cost of housing for senior priests living in assisted living, nursing homes or at the Regina Cleri residence is one of the major challenges facing the Clergy Funds.  The Clergy Funds will continue to subsidize the cost of these facilities. 

The cost of housing to the Clergy Funds is as follows:

• 1991-2008  Cost of Housing:    $ 43.0 Million
• Cost Last 7 Years (02-08):     $ 34.0 Million
• 2008 Cost of Housing:     $ 5.5 Million

This increase has occurred as the percentage of senior priests of the entire priests population has increased from 16% to 36%.

Clergy Funds facilitator Rev. James Flavin said, “Our objective is to treat all senior priests justly and fairly across the Archdiocese.  These changes are necessary for the Clergy Funds to be stabilized.  Housing
has represented a very significant cost that must be controlled while not diminishing the level of care or available resources for our priests.  We are asking our senior priests to work with us to make new
resources available to assist us so that the Clergy Funds will avoid running out of money in two years.”

Mr. D'Arrigo added, “We seek to maintain Regina Cleri as a wonderful home for senior priests needing such a facility. We have hired a consulting and management company, Covenant Healthcare Systems, to manage Regina Cleri and to create a fitting living arrangement for our senior priests who require such care.”

The changes to the stipend policies and the proposed changes in the housing policies for senior priests are consistent with policies in many large dioceses around the United States where retired priests utilize Medicaid for assisted living and nursing home care. 

Mr. D'Arrigo said, “These new policies have been developed with input from priests across the Archdiocese.  The Clergy Funds will utilize Federal and State programs consistent with similar sized dioceses in the United States, apply to Medicaid for those eligible, and engage the services of a long-term care attorney.” 

About the Archdiocese of Boston: The Archdiocese of Boston was founded on April 8, 1808 and was elevated to Archdiocese in 1875. Currently serving the needs of nearly 2 million Catholics, the Archdiocese of Boston is an ethnically diverse and spiritually enriching faith community consisting of 292 parishes, across 144 communities, educating approximately 46,000 students in its Catholic schools and 156,000 in religious education classes each year, ministering to the needs of 200,000 individuals through its pastoral and social service outreach and in support of a health care ministry that meets the needs of some 1 million patients each year.   Mass is celebrated in nearly twenty different languages each week. For more information, please visit www.BostonCatholic.org.