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Archdiocese running almost $4M deficit, spent $8.8M in decade on priest misconduct

By Emily Gurnon

ST. PAUL -- The Archdiocese of Saint Paul and Minneapolis has for the first time publicly released its full audited financial report for 2013 — which notes a $3.87 million deficit.

The report, posted Thursday on the archdiocese website and the website of its official newspaper, the Catholic Spirit, also contains information not previously released on the accounts used to pay victims of child sexual abuse and other priestly misconduct, as well as the priests themselves.

Over the last 10 years, the archdiocese has spent more than $8.8 million through those accounts, the report said.

“We are doing this (disclosure) because we are accountable to the people we serve,” Auxiliary Bishop Lee Piche wrote in an accompanying statement. “Without the time, talent and treasure of the hundreds of thousands of Catholics who support the ministry of this local Church, we could not live out our mission to make the name of Jesus Christ known and loved.

“Thanks to you, support for ministry across this local Church remains strong,” Piche said. “Catholics understand that the tragic moral failure of a few does not define who we are as Catholics.”

Total operating revenue for the fiscal year ending June 30, 2013, was almost $35.5 million. Operating expenses came in at almost $39.4 million, resulting in the deficit of $3.87 million.

But Thomas Mertens, chief financial officer for the archdiocese, said that deficit can be attributed to the increase in reserves of $3.95 million to cover potential liability related to civil litigation. The financial health of the archdiocese remains “solid,” Mertens said in a written statement.

The archdiocese also reported total assets in 2013 of $59.3 million, an increase from $55.9 million in 2012.

Parishes and schools operate as separate corporations and are not included in the financial statements, Piche said.

The separate accounts 1-515 and 1-516 describe monies spent on victims of child sexual abuse and problems stemming from priests’ alcohol or gambling addictions or sexual activity with adults.

The archdiocese spent $532,000 in 2013 for those payments, which include victim counseling, settlements, legal services and payments made to priests no longer in ministry because of their behavior. In 2012, that number was $406,000.

“The cost of living expenses of men in ministry is ordinarily covered by the parish or other organization where he is serving,” a statement on the website said. “When a man is removed from ministry, the archdiocese assumes that expense. The archdiocese is required under Church (canon) law to care for such men. Christian compassion also calls us to care for these men.”

Those numbers do not reflect all money paid for clergy sexual abuse cases; payments by the archdiocese’s insurance company for legal services and victim settlements are not included.

Critics questioned the accounting.

“We suspect the real figure is significantly higher,” said Frank Meuers of Plymouth, a leader of the Survivors Network of those Abused by Priests, in a statement.

“And we suspect Catholic officials are using these figures to begin convincing people that they’re poor so they can pressure victims to file fewer lawsuits and settle those cases more quickly and cheaply,” Meuers said.

If the archdiocese would stop fighting victims, hiding “secrets” and protecting predator priests, the expenditures would be much smaller, Meuers said.

The $8.8 million is money spent from 2004 to 2013, said archdiocese spokesman Jim Accurso.

Mertens acknowledged in his Thursday statement that losses from yet-to-be-filed sexual abuse lawsuits could be “substantial.”

“We will tender the defense of these claims to our insurers whenever possible,” he wrote. “However, claims can go back to a time period in which insurance may not have been available or coverage limits were minimal.”

He said most lawsuits filed “to date” pertain to alleged incidents from 20 to 30 years ago.

About 20 suits have been filed since May 2013 as part of a temporary lifting of the statute of limitations for such cases. A 2013 Minnesota law, the Child Victims Act, created a three-year window to file civil lawsuits by victims of child sexual abuse whose deadline had previously expired.

Victims’ attorney Jeff Anderson of St. Paul joined in criticism of the report, saying it fails to present a complete picture.

There are several other entities and assets, such as parishes, schools, hospitals, fundraising organizations and cemeteries, that the archdiocese controls, he said.

Accurso acknowledged that those other entities are not reflected in the financial report because they keep separate books.

Anderson also said he suspects the greater disclosure of this year’s report is a prelude to an announcement — either of impending bankruptcy or a “cry of poverty.”

Some Catholics have complained that they don’t feel comfortable supporting the archdiocese in the wake of allegations of improper handling of abusive priests.

Mertens said in his report Thursday that, beginning in 2014, all contributions to the Catholic Services Appeal will go to an independent foundation.

“CSA contributions will be used for the benefit of designated ministries of the (foundation) and for no other purposes, honoring donor intent,” he wrote.

The CSA and parish assessments are the two primary sources of archdiocese revenue. Total CSA revenue jumped by 6 percent in 2013; the parish assessments rose by 4 percent. The increase reflects increased contributions at parishes “during the modest economic recovery that began in 2010,” Mertens said.

Mertens, who arrived at the archdiocese in late 2012, said he has worked to improve transparency and adhere to financial best practices.

A former financial worker, Scott Domeier of Cottage Grove, embezzled more than $670,000 from the archdiocese. He is serving a prison term.

The archdiocese is made up of 825,000 Catholics in 188 parishes and 91 schools over a 12-county area.

Archdiocese of Saint Paul and Minneapolis financials

  • Out-of-pocket payments for child sex abuse victims, FY 2004-2013: $2,332,859
  • Out-of-pocket payments for victims of other priest misconduct, same time period: $176,500
  • Payments for living expenses for priests accused of child sex abuse, FY 2004-2013: $1,523,210
  • Payments for living expenses for priests accused of other misconduct, same time period: $1,708,970

(Above totals do not include payments made by insurance carrier.)

Source: Archdiocese of Saint Paul and Minneapolis