Archdiocese balances budget for past two years

Surpluses of $1.6 million, $1.2 million reverse years of operating deficits

DETROIT — After years of running deficits totaling tens of millions of dollars, Archbishop Allen H. Vigneron announced Feb. 25 that the Archdiocese of Detroit had balanced its budget the past two fiscal years.

In a letter to the faithful and an accompanying informational document, the archbishop said an approximate $1.6 million operating surplus in 2011-12 and a $1.2 million surplus in 2010-11 showed that “we have stabilized and marginally improved our financial situation.”

The report revives the archbishop’s “Sharing the Light” communication series designed to provide transparency into the archdiocese’s operations, the first of several promised in the months ahead.

The small surpluses are a significant achievement for the archdiocese, which had been running operational deficits for several years before a series of reforms starting in 2009. Archbishop Vigneron had pledged to balance the archdiocese’s budget by July 2012, a promise that was met earlier than expected, the recent figures show. The Michigan Catholic had previously reported a projected $6-7 million loss for the 2010-11 fiscal year.

The archbishop, however, cautioned that more work lay ahead.

“While we have made significant progress toward operating within a balanced budget, our efforts and diligence must continue,” he wrote. “Please be assured we are striving, every day, to be good stewards of that which the Lord has given to us.”

The financial turnaround is due in major part to reduced spending and reforms associated with some of the archdiocese’s major assets and operations. A restructuring of archdiocesan Central Services, the downtown “headquarters” of the local church, in 2009 — which included layoffs and program cutbacks — has resulted in significant savings, and the sale of the Pope John Paul II Cultural Center in Washington, D.C., to the Knights of Columbus in October 2011 recovered nearly $20 million of the archdiocese’s initial $52 million investment in the center. Ending subsidies to the cultural center and other archdiocesan entities such as the Retreat Center at St. John’s in Plymouth has saved the archdiocese approximately $1.78 million a year.

Addressing another major expense, the archdiocese in December 2011 also refinanced a bond of approximately $11.6 million, which was originally issued to help Pontiac-area parishes and schools.

Including the refinanced bond, the archdiocese carries total debts amounting to about $50.4 million, much of it being associated with the Loan Deposit Program. The Loan Deposit Program is a cooperative savings, investment, and lending program into which archdiocesan Catholic parishes, schools and other institutions make deposits and apply for loans – similar to a credit union exclusively for local Catholic entities.

Because of declining Mass attendance and collections in recent years, many parishes have been unable to repay loans taken out for expansions and other projects.

The yearly operational surpluses will go toward paying down the total debt balance, which is expected to take several years, the archbishop said.

Archbishop Vigneron is expected to release a separate “Sharing the Light” communication on the Loan Deposit Program in the coming months.

The archbishop said reforms taken since 2009 will help ensure the financial situation of the archdiocese remains on a positive trend.

Some of those reforms include better financial reporting systems at the parish and archdiocesan levels, as well as a greater emphasis on transparency and accuracy, he said.