Cleansing Fire

Defending Truth and Tradition in the Roman Catholic Church


Diocesan Lay Pension Underfunded

March 22nd, 2013, Promulgated by Dr. K

From Gannett:

“Battered by years of historically low interest rates, the pension fund for current and retired lay employees of the Roman Catholic Diocese of Rochester is underfunded to the point that its obligations nearly double its assets, raising concerns about the future of those benefits.

Diocesan financial records for the fiscal year ending in 2012, the most recent year for which records are available, show the fund is only 53 percent funded, with $120 million in future payouts and assets of about $64 million. The diocese publishes the records on its website.

The fund covers about 1,000 retirees and 1,000 current employees, including school teachers and parish and cemetery workers, according to the diocese.

“A funding level of 50 percent is a serious level of underfunding,” said Nancy Hwa, of the Pension Rights Center, an advocacy group in Washington, D.C. “I think the employees and retirees should be concerned, and they should ask the diocese what it’s planning to do (to bolster the fund).”

Diocese Chief Financial Officer Lisa Passero acknowledged the underfunding is concerning, but she said steps were being taken to address the shortfall.

Passero cited parishes and other diocesan employers being made to raise their contribution levels beginning in July and the diocese depositing more unrestricted bequests into the fund [Oh really…?]. She added that the diocese plans to deposit about $10 million into the fund by the end of the year, and that the fund has seen $7 million in investment returns since last summer.

Passero said the fundraising campaign for priests was launched by design — the diocese currently has 25 men preparing for ordination — and that the diocese will shift efforts for lay employees as the priests’ plan becomes fully funded.

To quote the Rev. Jeremiah Wright, the Diocese of Rochester’s “chickens have come home to roost.” You wanted a bloated lay hierarchy, Bp. Matthew Clark and diocesan powers that be? Now you have to pay for it. Of course the buck will be passed on to the lay faithful, as it always is. While it’s disappointing that the pension shortfall could hurt Catholic school teachers, I’m shedding no tears over the Sr. Joan’s, Nancys, and Anne-Maries of this diocese who shouldn’t have been employed in the first place.

If the diocese is serious about addressing this problem and avoiding it in the future, then cut the bloated lay hierarchy!

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19 Responses to “Diocesan Lay Pension Underfunded”

  1. avatar Richard Thomas says:

    I still wonder what was done with the money from the sale of Churches and other assets.

    I don’t think there are many individuals at the parish level making 6 figure salaries. So how many people are employed per parish? Does this figure also include teachers from the ever dwindling number of Catholic schools?

  2. avatar Dr. K says:

    I’ve decided to delve into the salary issue in a future post. More research needs to be done.

  3. avatar militia says:

    I figure the DOR has taken millions of dollars from the people by taking their churches and schools away. And now they want more? Where is the accounting? Not a penny more until there is some transparency in the financial reporting.

  4. avatar Scott W. says:

    Should lobby the new bishop for full salary disclosure like the Archdiocese of Boston, where part of the outrage came from the fact that some layman were pulling down over 300k a year.

  5. avatar mary agnes says:

    Thank you for bringing this situation out in the open. Pension underfunding of this magnitude does not happen overnight. One wonders who has been providing “management oversight” and why the underfunding was allowed to continue. Whether or not we think that the Diocese needs so many lay people, many of these good people have worked under the assumption that the benefits that they were promised would be provided. Its not clear that the actions planned for the next fiscal year will rectify the issue soon enough for lay people who wish to retire within the next several years.

  6. avatar Interstate Catholic says:

    The volunteer laity are the backbone of the parish anyway. The paid church laity just take all the credit.

    Fewer churhes and schools equal fewer lay employees paying into the retirement system. It is “top heavy”.

  7. avatar Richard Thomas says:

    This is analogous to the abortion issue.

    Fewer babys mean fewer individuals growing up and contributing to the economy. With fewer individuals contributing, there are less resources, people and money, to care for the aging population.

    Sadly, the situation will be: less medical care for the elderly and eventually, euthanasia

  8. avatar Gretchen says:

    Where oh where to begin? Pastoral administrators, pastoral associates, faith formation directors, youth ministers, cemetery bookkeepers, business managers and on and on and on. While the salaries in our parish are mostly modest by corporate standards, when you have 16 of ’em, the cost to the parish becomes prohibitive. And to justify the salaries/positions, all kinds of Protestant-style programs are birthed, few of which are successful by any objective standards.

    Isn’t it always about the money in the DOR, one way or another? The drive to laicize the running of the diocese has met that thing called reality–they have run out of other people’s money, both for those who have been giving and to those who have retired.

    Gretchen from SOP

  9. avatar annonymouse says:

    I hate to be the defender of the Buffalo Road people, but it is simply untrue to say that the diocese has no financial tranparency – the diocese’s annual financial statements are published and readily available to anyone, and the pension status is clearly spelled out in them.

    It seems to me that the valid criticims lain by this site lose credibility when every single thing that goes on in our diocese is immediately assumed to be of evil intent.

    Now, perhaps there is an actuary who posts here who can explain where the pension deficit actually came from (it seems to me that the blame can be put on the artificially low interest rates – thank you Mssrs. Obama and Bernancke).

  10. avatar Scott W. says:

    I hate to be the defender of the Buffalo Road people, but it is simply untrue to say that the diocese has no financial tranparency

    I didn’t say the DoR had no transparency, but is it full transparency as in, “Joe Blow, Administrator of Whatchacallit Catholic School, receives blah, blah thousand dollars and yada yada cents per year in wages.”? I didn’t think many dioceses broke it down that far for public consumption, but maybe I’m wrong.

  11. avatar Diane Harris says:

    Please let me “weigh-in” on the meaning of full financial transparency. It does NOT mean down to the detail level of individual salaries, except of course within the inner bookkeeping of the particular department or organization. “Full” should be understood in terms of generally acceptable accounting principles, which includes proper categorization so as to understand the impact of various expenses (e.g. don’t mix repairing the church with the payments for saying Masses, with health insurance for staff.)

    It also means a consistency of accounting principles so that comparisons from one time period to another (e.g. month to month or year to year) are using the same definitions; e.g. one shouldn’t switch the cost of hymnals from a choir account one year to a liturgy account the next year and to a church maintenance account in a third year.)

    Transparency means accounting for unusual items with amounts and footnotes to the financial statements; e.g. if a church property was sold, how much did it bring in and where did the income go? If a parking lot is repaved once in ten years, it is a substantial enough expense for a parish to be called out as a separate item.

    Transparency means keeping faith with the people who contribute and with the purposes for which they contributed, especially if funds are restricted; e.g. a special donation for roofing repair must be used for that purpose.

    Full transparency, i.e. accurate reporting which communicates the essentials rather than hiding them, is necessary to build trust. That is why there are watchdog agencies like the SEC for the financial statements of public companies. Unfortunately, in churches, it is often what the hierarchy can get away with, and that damages trust.

    If DoR had adequate transparency in prior financial statements we would know where the income went from selling (or renting) properties no longer used, and this VERY serious departure from the requirements of the PBGC (Pension Benefit Guaranty Corporation) would not have become a surprise when Bishop Clark retired. What is now being experienced is a great demonstration of lack of financial transparency.

    I will soon post a list of questions that do need to be answered, but here are three for starters:
    1)regardless of how poorly the pension funds may have been invested, how can the market be at or near an all time high yet have the pension fund at half of where it should be? If there were financial transparency we would know the answer.
    2) when priests are allowed to retire earlier (hey- I thought they were priests forever according to the order of Melchisedek!) there is a double whammy on pensions: fewer years of paying in and more years to pay out. What role did that play in the debacle? If we had financial transparency, we’d know.
    3) what happened to the Partners in Faith monies which were supposed to include some pension funding? It was at the same time as Cathedral wreckovation — could that have had an effect?

    The DoR financial statements are available; they have been published and on line. That does not mean they are adequately (let alone fully) transparent.

  12. avatar Scott W. says:

    Thanks Diane, that helps alot.

    It does NOT mean down to the detail level of individual salaries, except of course within the inner bookkeeping of the particular department or organization.

    Fair enough. Would you find such objectionable? Maybe it makes me a radical transparentist (I just made up that word :)), but I’d be perfectly o.k. with it. I can see the downside of it in the sense of a bishop’s office being flooded with letters asking why we are paying this guy so much for scut work that the rest of the planet that pays half for.

  13. avatar Diane Harris says:

    Hi Scott, just in case I wasn’t clear — I am in full support for transparency, and we aren’t getting it. When I give anything substantial to not-for-profits I look at the financial statements. It is a reasonable and steward-like thing to do. Who knows? Maybe with our churches and schools being taken, we’ve already given enough. I know I have.

  14. avatar Diane Harris says:

    Whoops, Scott….maybe I misunderstood your question. Would I be ok with a detail level down to individual salaries? I think it is one thing for parish finance committee to know about a particular individual, but I wouldn’t want a diocesan report that was 500 pages of detail. The trees would obscure the forest. I think there are issues which do need to be addressed. For example, for 3 or 4 years there is a person who works (presumbably) at St. Louis in Pittsford and also at St. Michael’s in Penn Yan. It would appear that somebody has had to pay a lot of mileage expense. How are healthcare and benefits allocated? What are the conditions of such “sharing?” Many questions….. There is another person who works at St. Michael in Penn Yan and also at St. Michael in Newark? How exactly does that work? Especially when it is in finance and requires oversight of one’s own job split?

    I think detail of people who are paid by parishioners need some disclosure and some oversight. I agree with Gretchen. Seems to be a lot of unneeded staff. As long as we keep paying, they will keep large staffs. Must be some kind of prestige factor. Trouble is that many pastors are very poor managers of people, hence think they need more. The very business of management detracts from where they are most needed, and where they should most serve: saying Mass and hearing confessions, which no one else can do. Hope I’ve better replied in case my first answer missed the mark.

  15. avatar annonymouse says:

    Diane – the statements are audited by a firm that is, I presume, reputable. That firm’s audit says that the statements are accurately and fully presented, I presume. It seems as if you are asking for more detail and information than the acconting rules seem to require.

    I don’t know if the DoR can be blamed if we aren’t sufficiently versed in matters financial to read and interpret their financial reports.

    I disagree with Gretchen – for I would like to know how, if some of those roles were left unfilled (i.e. cemetery bookkeeper), the jobs would get done. I’m no expert in cemetery rules and such, but I’m pretty sure there is a fair amount of government oversight in cemetery operations – who does that work if not a hired staffperson? So Gretchen, which staff job on your list can the parish do without, and in what order do you start cutting?

    If anything, I would say that Catholics’ niggardly giving habits prevent parishes from having the kind of staffs and paying the kind of wages and benefits that would allow the parishes to effectively carry out their missions of catechesis, worship and sacraments, charitable service and evangelization.

  16. avatar annonymouse says:

    Diane – in answer to your first question (although I’m no actuary, I do know how to use excel) – as the article indicates, it’s at least partially a matter of the interest rate assumption used in the calculation of the future obligation. Assuming a payout over forty years, a pension that is fully funded using an interest rate assumption of 3% is 30% underfunded using an interest rate assumption of 1%.

    And it appears to be explained in Note 13 of the diocese financial statement, which is found on the home page of

    I note also that the newspaper article is based on statements from last June 30 – the Dow Jone average is up about 13% since then, so assuming the funds are invested in stocks, that will have erased part of the funding shortfall.

  17. avatar Diane Harris says:

    Annonymouse, thank you for introducing the dialogue in your two posts above. You say: “statements are audited by a firm that is, I presume, reputable.” I had some experience with Bonadio back in Our Lady of the Lakes, and spent nearly two hours with their account manager on issues raised by parishioners (I had been on Finance Council as well as a Trustee and saw more than I wish I had.) He agreed with me that there were errors (such as an arithmetic “error” by the business manager which turned the planning group’s votes against a parish by showing its plan in the red, when it wasn’t.) However, he stressed how narrow the auditor’s responsibility really is and that he couldn’t do much about most of the complaints raised as they were in operations and not in the scope of the audit. However, Bonadio did do a small audit as a result. Fr. Ring read excerpts for 15 minutes from the pulpit before Sunday Mass with 22 children twitching in the pews) and gave himself a gold star, but the excerpts only dealt with issues I’d never raised and weren’t the source of the complaint. Go figure. I was told the Finance Council did not even get to see the report. That’s what I mean by lack of transparency, for example.

    You write: “That firm’s audit says that the statements are accurately and fully presented, I presume.” No, actually they don’t. Their words are also very limited, saying explicitly that “These financial statements are the responsibility of the Diocese of Rochester’s Management.” Auditors disclaim responsibility, and their engagement letters are usually drawn very narrowly. Words like fully and accurately are not used, but rather say “free of material misstatement” (often means +/- 10% of the total), or “reasonable assurance” or “present fairly.” They use “tests” which is really only sampling of a very small percentage of transactions, and they many not sample one that would be a problem. This is how auditors usually work.

    You said: “It seems as if you are asking for more detail and information than the acconting rules seem to require.” The issue is transparency, not “information.” For example, can you tell from reading the statements how much cash was in the schools turned over to the diocese and how much was in the schools which were given back to parish control and if the diocese kept any of the cash and, if so, where did it go? Can you tell from the audit report what proerties were sold and for how much and where that money went? Usually Audit reports give some detail on the nature of lawsuits; Bonadio’s does not. I could give you a dozen questions like that; perhaps you could find some of the answers, but there is a difference between between clear communications and overt obscurity. Yes, this is “more information” but not for the sake of information but for the sake of a clearer picture of the financial structure to which most of us contribute.

    I don’t know about the points you bring up with Gretchen, but cemetery is a hot button in NYS and some do not meet the state guidelines for reserves. However, the question could be full or part time, or outsourcing of certain functions. People who have given as volunteers for years get shunted aside for a paid employee who does much less. It is disheartening to many, e.g. religious education teachers, youth group leaders, even neighbors who mow the lawn, who give from their heart and then get their fingers slapped.

    You mention “Catholics’ niggardly giving habits” but I applaud anyone who is a good steward of what God has given them, and who requires the same of their religious leaders and institutions. We can do much good without having to create more in-parish jobs which makes for high administrative costs and not much to administer.

    Your second post mentioned an “interest rate assumption used in the calculation of the future obligation”. Actually, it is not interest rate, it is discount rate, which is based on the cost of capital. Interest rate is only one part of that calculation. You are correct, however, that a slight change in the discount rate makes big changes in the over or under funding of a pension plan. That is why there could be big errors in either direction in what the diocese is saying it needs to raise. That is also why auditors do’t use words like “accurately.” With $47-$50 million in “Investments” perhaps DoR should have more to say about the structure of its balance sheet and the planned utilization of these investments?

    You wrote: “assuming the funds are invested in stocks, that will have erased part of the funding shortfall.” I would hope that is true. That will, of course, vary by day, but if the markets stay up, yes that too would affect what needs to be raised. These are just initial reactions regarding what you addressed to me; more thought and examination may create some other input. Thanks for the chance to discuss; I hope others will add their thoughts.

  18. avatar annonymouse says:

    Diane, I guess I am at a loss to understand exactly what the DoRs financial statements would look like to satisfy you. the footnote pertaining to pensions complies, I presume, with the accounting rules. if you have additional questions, have you called the Finance Office?

    You seem to be mixing dissatisfaction with the level of detail presented and dissatisfaction with the depth of a financial audit. Which is it?

    I reiterate my original sentiment – CFs posters lose credibility when EVERYTHING to do with Buffalo Road is criticized.

  19. avatar Eliza10 says:

    “Diane, I guess I am at a loss to understand exactly what the DoRs financial statements would look like to satisfy you…. if you have additional questions, have you called the Finance Office?”

    How can you “be at a loss to understand” what would be satisfactory. She just explained it, quite clearly.

    “…if you have additional questions, have you called the Finance Office?”

    Wow, I bet they would be real transparent and helpful!

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