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Insurer files countersuit

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BC buys diocese headquarters
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Archdiocese cites $14m loss

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Spotlight Report

Archdiocese cites $14m loss in central fund for 2002-03

By Steve Kurkjian, Globe Staff, 4/3/2004

Weakened by a decline in contributions from major donors, as well as in gifts and bequests, the central fund of the Boston Archdiocese lost nearly $14 million in the fiscal year 2003, according to the fund's 2003 annual report.

The fund, which pays for the archdiocese's central operations and outreach programs to minorities and young adults, had an overall deficit of $13.9 million in the fiscal year that ran from July 2002 to June 2003, according to the annual report published in this week's edition of The Pilot.

The fund showed nearly $24 million in total revenues, gains, and other support, but logged about $38 million in expenses. In the fiscal year ending June 2002, the fund had a $12 million deficit.

"Despite the generosity of many, our support and revenue for the year 2003 was significantly lower than in prior years, resulting in a significant operating shortfall that was funded through a combination of debt and cash reserves," said David W. Smith, chancellor of the archdiocese, in a written statement published in The Pilot, the newspaper of the archdiocese.

The annual Catholic Appeal, the church's principal fund-raising account, dropped to $7.6 million last year, down from $9 million in 2002 and $16.2 million the year before that. Other contributions, bequests, and grants fell to $2.8 million last year, down from $8.6 million in 2002, according to the financial report.

To avoid an even more serious deficit in the overall $44.7 million budget, the church made deep cuts in its spending on education and pastoral programs. The annual report showed that spending on support services for youth, family life, and ethnic apostolates was slashed from $11.7 million to $7.4 million. In addition, support for parochial schools was cut from $4.6 million in 2002 to $1.8 million in 2003.

The Rev. Christopher J. Coyne, spokesman for the archdiocese, said the financial report reflected the overall decline that the church has experienced in Mass attendance and parish collections. During the past two years, he said, collections at the parish level, which finance the operations of the local churches, have dropped by 13 percent, and Mass attendance has declined by 18 percent.

Archbishop Sean P. O'Malley has cited the financial crunch as a principal reason for the need for the archdiocese to close churches. O'Malley is scheduled to announce next month which ones he intends to close.

The archdiocese is not using money from its central fund to finance the $85 million settlement it reached last year to resolve the claims of 540 alleged victims of clergy sexual abuse. Instead, O'Malley announced in December that the settlement would be funded in part by selling off 28 acres of land the archdiocese owns near the Brighton-Newton line, including the cardinal's residence. O'Malley has already moved his home to the rectory of the Cathedral of the Holy Cross in the South End. The archdiocese last month filed suit in US District Court to force past insurance companies to pay for a portion of the settlement.

David Castaldi -- the leading financial analyst for Voice of the Faithful, the lay group that has urged reforms of the church -- praised the archdiocese for issuing a straightforward financial report, despite the negative results.

"I believe that this is a good first step towards transparency, but more than anything else it reflects the church's need to restore the trust among parishioners that it has lost in recent years," said Castaldi, who served as chancellor for six months in 2001. "Only through rebuilding trust will lay people feel comfortable [in] returning to the church and giving as they had in the past."

Stephen Kurkjian can be reached at kurkjian@globe.com.


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