Bishop of San Jose Patrick McGrath drew praise from charity groups and parishioners Tuesday for his quick decision amid public outcry to sell a $2.3 million house bought with diocesan funds for his retirement. But other Catholics were dismayed it took public outcry to change his mind.
McGrath acknowledged in a statement late Monday that he “erred in judgment” in buying the five-bedroom home in San Jose’s tony Willow Glen neighborhood, which some critics noted came as the diocese faces a staggering longterm financial shortfall of $247 million.
McGrath’s change of heart came a day after this news organization revealed the purchase, raising ire from many parishioners struggling with Silicon Valley’s high-priced housing market. McGrath said that after he “heard from many on this topic,” he decided to sell the house and donate any profit to Charities Housing, a division of Catholic Charities of Santa Clara County.
News of McGrath’s retirement home buy came after the diocese in April asked parishioners to donate to ease a financial shortfall in funds for clergy retirement.
In fact, a summary of the diocesan financial picture distributed at a recent priest retreat and shared with this news organization describes a $247 million “financial hole.” That included lay pensions underfunded by $140 million, clergy pensions underfunded by $17 million, cathedral maintenance underfunded by $20 million, insurance reserves underfunded by $55 million and $11 million in debt for the chancery, or diocesan headquarters.
Liz Sullivan, communications director for the diocese, said that $247 million shortfall “is something we are dealing with over the long haul,” a “20-year process.” Much of the shortfall, she said, “comes from our Chancery having to financially carry many of the parishes and schools.” The summary, she added, was “part of a two-hour presentation and is a complex financial document that was for internal use only.”
Full story at San Jose Mercury News.
” For internal use only” Remember, Bishop, who ultimately pays the bills. Just keep us in the dark and feed us the usual ‘stuff’
I refuse to give PJ one cent.
One thing’s for sure, the food budget is amply funded.
Michelle, Your comment is cheaply, nasty and unnecessary.
The chancery has to financially carry many of the parishes and schools?
I thought the parish youth groups and CCD programs and Catholic schools and high schools were doing such an excellent job of forming students in faith. If that’s been true as the diocese has claimed for the past twenty years, then why aren’t those now-adults going to Mass and contributing to the parishes?
The answer is that the diocese, parishes, schools and the superintendent have been lying all this time. Parish schools, high schools, faith formation, Confirmation prep are all a total failure. Waste of money. Kids are not being formed in faith, they are leaving the faith. So why spend the money on youth programs anymore? What about all those “vibrant”…
David: You are right. Attendance in the diocese, as in many other dioceses, is down and many Catholics dont or arent able to give as much as they used to.
But the key problem in San Jose is the vast future pension liability, especially of the lay employees as they reach retirement (“..lay pensions underfunded by $140 million, clergy pensions underfunded by $17 million..”). Additionally, this diocese has always terribly overspent, as if the income would always be limitless. That is all coming to a crashing end. —From a long-time DSJ resident.
Sounds like the diocese should start playing PowerBall and MegaMillions.
A priest leaked the confidential financial statement to the press? Seems there’s discontent in the ranks.
Archbishop Vigano found millions in hidden accounts. Let’s use that money.
No wonder the diocese goes out of its way to pretend that everything under the sun is now “okay” with Catholic teaching. They need $$$$$. So sad.
*sigh*
How long, O Lord, how long?
This seems an astounding figure. Since most of it is in the form of future obligations and not current actual debt to a bank, which is a lot harder to hide, I’m guessing those priests were unaware of the tsunami. Makes me wonder how much my own diocese is in the hole– we know our debts, but I’m not aware of publicly-available information about our liabilities. Yikes!
Fr. Michael,
Your observation is keen. Much of the indebtedness is based on the actuarially computed present value fo future obligations. This is the common practice for private and public pension systems pursuant to the requirements oo generally accepted accounting principles.
These are not current liabilities.
A better indication of the actual solvency of the diocese would be its statement of cash flows rather than the information publicized.
Great observation, Mr Iggy: but it (the statement of cash flows vs. present annualized costs and expenses) is not likely to be much prettier. Fundraising and income to the DSJ is not likely to increase, perhaps exponentially as it would need to, in order to cover these mushrooming pension and insurance liabilities. At some point, these required expenditures could consume nearly all the DSJ budget.
Of course, this is all academic, because this diocese is renowned for waste and profligate spending. And as someone else commented, the members of the diocese are, like mushrooms (mushrooming debt, remember) kept in the dark and fed the best Bandini fertilizer. As you know, this only came out in a ‘leaked document’.
Anonymous 2,
See my response to mike m below.
It is not a speculative academic exercise if you know where to look and have an ability to analyze financial information.
Besides, there is no obligation, canonical or civil for the diocese to publish its audited financial statements. Therefore, one needs to be resourceful in obtaining the information from available sources.
Based upon the objective data obtained, one can reach a conclusion that is not based on hearsay or speculation.
The reason people do not know the amount of unfunded liabilities for pensions each Diocese has is that most Dioceses do NOT publish full audited financial statements. Is the Church being honest with its workers — who are entitled to their wage, including pomised retirement.
How ironic the Bishop is dedicating a new church in the photo. Why not make the church a bit plainer and save say 10% of the cost, contributing that to fund in CASH a small part of the unfunded liability?
What is the greater glory of God?
Unlike publicly-held companies, which are legally subject to SEC rules regarding published financial statements, no doicese is under such an obligation.
For those dioceses and other Church organizations which have been granted tax exempt status, they must file an annual information return on Form 990 with the IRS. These information returns are quite detailed and inclide information on compensation paid, as well as comparative balance sheets and income statements.
Copies of those filings are publuc information and available, by lay, from the organization on reqiest.
better question: why do some bishops impose an extravagant social justice on others, while paying their own employees less than a competitive [that is, a just] wage???
Thanks for info re IRS Form 990. I was not familiar with that document. The real question is whether the Diocese would readily release the document. Or would they stonewall, forcing one into expensive legal action to obtain the document?
Mike,
One of the requirements for tax exempt status is that the exempt organization must firnish it on demand.
There is also a website which accumulates the Form 990s for all exempt organizations at:
http://www.guidestar.org
Catholic Charities files thete also.