By now it is well known that the fiscal year reports for 2008 and 2009, so long overdue, have been released by the Diocese of Springfield. Details of diocesan reorganization remain secret for the moment, so it's hard to say what it all means. The summary, in my understanding: "We're pretty much broke.....but it's not our fault".
The financial meltdown was reported as the weekend got underway by WWLP22 TV, which has emerged as the go-to news organization for the Diocese. The Springfield Republican will probably dig deeper into the story in time, though they seem only mildly interested these days in Diocesan stories.
The Catholic Observer which came out on Friday had an insert with balance sheets and summary. I was troubled by the front page comments of Bishop McDonnell.
It's now clear that the parish-closing program which began in earnest in March of 2007 is a large part of this picture. At the time, parishioners were reassured that finances had "nothing to do" with the closings. Over the next three years at least 25% of the parishes in the Diocese were closed or altered, all while parishioners were flying blind with no access to the most basic financial information about the Diocese. Now, after the closings, we learn that our bishop considers "parish debt" to the Diocese as one of the top 3 factors of the financial shortfall.
Again we see, as in the abuse crisis, the corrosive effects of secrecy. This tendency of bishops to stonewall when under pressure was memorably described as the "narcotic of secrecy" by the folks at Christifidelis and although we don't always agree with their positions, here they hit a home run.
McDonnell stated that the 8.5 million settlement amounts were covered "in large part" by the insurance companies, and that this fact should put to rest the perception that the settlements had a part in the financial woes of the diocese.
Number one, the 8.5 settlement is not just about money. It is mainly about acting justly and with integrity. The legalistic hair-splitting and the reluctance displayed by church officials in settling accounts with over 100 victims of sexual abuse is a long, sad story. This drama has been playing out on center stage in Springfield for over a decade. Despite ample opportunity to do so, church officials have not changed their tune in all this while, and continue to claim that somehow no one in charge knew anything about abuse, even though it's clear that this is no longer believable.
This conduct is the main reason, in my opinion, why many thousands of faithful Catholics in Western Massachusetts do not trust the diocese and do not support its churches. That is a recipe for a financial crisis, and guess what? We have a financial crisis.
When it comes to who paid what, the Bishop is referring to the fact that the 8.5 million dollars earmarked for victims came from insurance companies, and not directly from Diocesan funds.
This much is true. But, it only tends to raise more questions.
For example, if the Diocese spent 7.75 million on the first round of 46 victims and sued the insurance companies for full reimbursement right up until the 11th hour of the lawsuit, and if the insurance lawyers found no hint of supervisory negligence during discovery, then why did the Diocese settle for only 3.5 million in reimbursement, instead of holding out for the full 7.75?
And, if 5 million was allotted for the second round of 59 victims, why was only 4.5 million awarded? What happened to the remaining .5 million?
Also, what about the costs that were not reimbursed? They amount to a significant amount of money. How can the Bishop say that these costs played no role in the financial meltdown?
It is no exaggeration to say that direct and associated costs are likely to be more than 10 million dollars. They may be as high as 20 million. It is astonishing that the Bishop would seek to downplay figures of this magnitude. Here is a short narrative about those costs:
The diocese expended $7.75 million (7 in cash, .75 in real estate) for the first round of victims in 2004, an average of 168,478 per victim, and got reimbursed 3.5 million in 2008, after a bruising 3-year insurance trial, resulting in a loss of 4.25 million. The expectations of the Diocese that the insurance companies would pay the entire tab of 7.75 million persisted until the end, as documented in Paper 111.1.
The remaining 5 million of the insurance settlement (remember, the total settlement was 8.5 million) was earmarked for the second round of victims. But only 4.5 million went to the 59 victims, an average settlement of about 77,203. There has been no accounting for what happened to the remaining .5 million. It could have gone to the arbitration company, to the lawyers, or to the chancery treasury. At one time it was stated that it might go for "future counseling" but there is no way to verify if that happened, or if so, how much has been spent.
Incidentally, when we say an average of "77,203" was awarded to each victim, you have to remember that around 30 to 40% of this amount is usually given to their lawyers as a contingency fee for the litigation. And, that 2,000 was paid to the arbitration company for each claim, 1,000 from the victim, and 1,000 from the diocese, respectively.
To the direct Diocesan loss of 4.25 million must be added the lawyers' fees specific to the settlement, found under "Civil and Canonical Fees" in the Child Protection heading in annual reports:
Civil and Canonical Fees
The 2005 diocesan report on abuse by Laura Reilly included these figures for Jan. 2004 - Jan. 2005:
payment for priests counseling 112,452
payment for victims counseling 145,470
Also, there was an initial grant for future counseling to Behavioral Health Network in 2004 of $50,000. It is not known if this is a recurring annual expense.
totals: 4,250,000 + 1,422,123 + 257,922 + 50,000 = $5,980,045.00
Thus, the cost to the Diocese for these figures is nearly $6 million.
The "clergy on involuntary leave" category of the annual budget was $676,705 for the period 2004-2007, 135,686 for FY2008, and 120,433 for FY2009.
When the total of this last category (932,824) is added in, we have a new total of 6,912,869.
Then we come to a few more items.
The first settlement for 17 victims of Richard Lavigne in 1994 (handled by Attorney Michael Wiggins of the Boston area) was 1.4 million, so that brings the total up to around 8.5 million. It was said at the time that this amount came only from insurance funds. However, this amount had ballooned to 1.7 million by the 2005 report from Reilly, so clearly, other payments were being made. It is not known who paid them, or who got them.
At this point we start to run out of gas, because counseling costs for clergy and victims in subsequent diocesan budgets are hard to trace. We now know that there were other confidential settlements, like the one to Danny Croteau's brother in around 1996 or so, but these remain sealed. And, the most recent revelations, in June of 2010, about settlements concerning the Rev. Al Blanchard in the 90's, are yet another part of the picture. We are left with saying "at least 10 million, and probably more".
The last category to mention is perhaps the most mysterious (and possibly the most enraging for many Catholics). I am referring to the benefits for Bishop Dupre, which began when he fled the Diocese in February of 2004. These benefits have not ceased, as far as anyone knows. Although on several occasions Diocesan spokesmen have admitted paying for his support, they have never said how much.
Again, it is not so much the dollar amount that hurts. It is more damaging to the health of the Diocese that there is no explanation offered by officials to faithful parishioners of the Diocese: no transparency, no oversight, and no responsibility taken for the former Bishop. Go to the Diocesan web site right now and you will find a complete void concerning Bishop Dupre.
For these reasons we can say that the total of direct and associated costs must be more than 10 million, but how much more is anyone's guess.