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ParishesArchdiocese

of Chicago
Combined Financial Statements as of and for the
Years Ended June 30, 2015 and 2014, and
Independent Accountants Review Report

PARISHESARCHDIOCESE OF CHICAGO
TABLE OF CONTENTS

Page
INDEPENDENT ACCOUNTANTS REVIEW REPORT

COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE


YEARS ENDED JUNE 30, 2015 AND 2014:
Statements of Financial Position
Statements of Activities
Statements of Cash Flows
Notes to Combined Financial Statements

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36
7
820

INDEPENDENT ACCOUNTANTS REVIEW REPORT


Most Reverend Blase J. Cupich
Archbishop of Chicago:
We have reviewed the accompanying combined financial statements of the ParishesArchdiocese of
Chicago (the Parishes), which comprise the combined statements of financial position as of June 30,
2015 and 2014, and the related combined statements of activities and cash flows for the years then ended,
and the related notes to the combined financial statements. A review includes primarily applying
analytical procedures to managements financial data and making inquiries of the Parishes management.
A review is substantially less in scope than an audit, the objective of which is the expression of an
opinion regarding the combined financial statements as a whole. Accordingly, we do not express such an
opinion.
Managements Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the combined financial statements
in accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of combined financial statements that are free from material misstatement whether due to
fraud or error.
Accountants Responsibility

Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting
and Review Services promulgated by the American Institute of Certified Public Accountants. Those
standards require us to perform procedures to obtain limited assurance as a basis for reporting whether we
are aware of any material modifications that should be made to the combined financial statements for
them to be in accordance with accounting principles generally accepted in the United States of America.
We believe that the results of our procedures provide a reasonable basis for our conclusion.
Accountants Conclusion

Based on our reviews, we are not aware of any material modifications that should be made to the
accompanying combined financial statements in order for them to be in conformity with accounting
principles generally accepted in the United States of America.

March 28, 2016

PARISHESARCHDIOCESE OF CHICAGO
COMBINED STATEMENTS OF FINANCIAL POSITION
AS OF JUNE 30, 2015 AND 2014
(Dollars in thousands)
2015

ASSETS
CASH AND CASH EQUIVALENTS

DEPOSITS WITH ARCHDIOCESAN PASTORAL CENTER


PLEDGES RECEIVABLE:
TTWCI
Other
Pledges receivablenet
OTHER RECEIVABLESNET
GIFT ANNUITIES RECEIVABLE
LAND, BUILDINGS, AND EQUIPMENT:
Land
Buildings and equipment
Accumulated depreciation

121,336

2014

248,353

207,256

25,790
14,311

16,603
13,160

40,101

29,763

10,222

1,053

364

389

162,096
1,842,510
(1,147,235)

Land, buildings, and equipmentnet


TOTAL

116,426

162,096
1,826,054
(1,104,459)

857,371

883,691

$ 1,277,747

$ 1,238,578

LIABILITIES AND NET ASSETS


LIABILITIES:
Loans from Archdiocesan Pastoral Center
Interest payable on loans from Archdiocesan Pastoral Center
Accounts payable and other liabilities
Accrued postretirement liability
Asset retirement obligations
Total liabilities
NET ASSETS:
Unrestricted
Temporarily restricted
Total net assets
TOTAL

154,413
32,708
114,637
120,896
68,402
491,056

451,271

698,234
88,457

696,856
90,451

786,691

787,307

$ 1,277,747

$ 1,238,578

See independent accountants review report and notes to combined financial statements.

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171,912
28,436
75,502
107,940
67,481

PARISHESARCHDIOCESE OF CHICAGO
COMBINED STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2015
(Dollars in thousands)

Unrestricted

REVENUES:
Parish operations:
Collections and bequests
Other revenues
Return on deposits with Archdiocesan Pastoral Center
Total parish operations

$ 214,441
106,417
1,401
322,259

Educational activities:
Tuition and fees
Other revenues

Temporarily
Restricted

Total

$ 214,441
106,417
1,401

322,259

251,131
56,068

251,131
56,068

Total educational activities

307,199

307,199

Total revenues

629,458

629,458

EXPENSES:
Parish operations:
Salaries, wages, and benefits
Utilities, repairs, and insurance
Religious education (CCD)
Archdiocesan assessments
Office, printing, and postage
Depreciation
Other expenses
Interest expense

124,623
84,842
20,241
25,283
9,183
30,577
37,425
8,585

Total parish operations

340,759

Educational activities:
Salaries, wages, and benefits
Utilities, repairs, and insurance
Books and instructional materials
Depreciation
Other expenses

266,652
30,942
13,974
13,106
22,794

124,623
84,842
20,241
25,283
9,183
30,577
37,425
8,585
-

340,759
266,652
30,942
13,974
13,106
22,794

Total educational activities

347,468

347,468

Total expenses

688,227

688,227
(Continued)

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PARISHESARCHDIOCESE OF CHICAGO
COMBINED STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2015
(Dollars in thousands)

CHANGE IN NET ASSETS BEFORE GRANTS,


OTHER OPERATING ACTIVITIES, AND
POSTRETIREMENT-RELATED CHANGES
GRANTS FROM ARCHDIOCESAN PASTORAL
CENTER

Unrestricted

Temporarily
Restricted

$ (58,769)

(49,273)

OTHER OPERATING ACTIVITIES:


Gains on land, buildings, equipment salesnet
TTWCI revenues
Annual Catholic Appeal revenues
Building fund revenues
Accretion expense of asset retirement obligations
Net assets released from restrictions

8,822
21,774
5,132

CHANGE IN NET ASSETS BEFORE


POSTRETIREMENT-RELATED CHANGES
POSTRETIREMENT-RELATED CHANGES OTHER
THAN NET PERIODIC POSTRETIREMENT COST
CHANGE IN NET ASSETS

20,811

(921)
22,805

(22,805)

8,339

(1,994)

(6,961)
(1,994)

696,856

NET ASSETSEnd of year

$ 698,234

See independent accountants review report and


notes to combined financial statements.

(49,273)
8,822
21,774
5,132
20,811
(921)

6,345
(6,961)

1,378

NET ASSETSBeginning of year

$ (58,769)
9,496

9,496

CHANGE IN NET ASSETS BEFORE OTHER


OPERATING ACTIVITIES AND
POSTRETIREMENT-RELATED CHANGES

Total

(616)

90,451

787,307

88,457

$ 786,691
(Concluded)

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PARISHESARCHDIOCESE OF CHICAGO
COMBINED STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2014
(Dollars in thousands)

Unrestricted

REVENUES:
Parish operations:
Collections and bequests
Other revenues
Return on deposits with Archdiocesan Pastoral Center
Total parish operations

$ 215,904
108,070
12,353
336,327

Educational activities:
Tuition and fees
Other revenues

Temporarily
Restricted

Total

$ 215,904
108,070
12,353

336,327

242,643
50,238

242,643
50,238

Total educational activities

292,881

292,881

Total revenues

629,208

629,208

EXPENSES:
Parish operations:
Salaries, wages, and benefits
Utilities, repairs, and insurance
Religious education (CCD)
Archdiocesan assessments
Office, printing, and postage
Depreciation
Other expenses
Interest expense

136,577
85,463
20,879
23,115
9,294
30,477
34,094
8,206

Total parish operations

348,105

Educational activities:
Salaries, wages, and benefits
Utilities, repairs, and insurance
Books and instructional materials
Depreciation
Other expenses

255,250
29,146
11,960
13,062
21,555

136,577
85,463
20,879
23,115
9,294
30,477
34,094
8,206
-

348,105
255,250
29,146
11,960
13,062
21,555

Total educational activities

330,973

330,973

Total expenses

679,078

679,078
(Continued)

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PARISHESARCHDIOCESE OF CHICAGO
COMBINED STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2014
(Dollars in thousands)

Unrestricted

CHANGE IN NET ASSETS BEFORE GRANTS,


OTHER OPERATING ACTIVITIES, AND
POSTRETIREMENT-RELATED CHANGES

$ (49,870)

GRANTS FROM ARCHDIOCESAN PASTORAL


CENTER

Temporarily
Restricted

(39,959)

OTHER OPERATING ACTIVITIES:


Gains on land, buildings, equipment salesnet
TTWCI revenues
Building fund revenues
Accretion expense of asset retirement obligations
Net assets released from restrictions

1,171
22,731
(940)
19,323

CHANGE IN NET ASSETS BEFORE


POSTRETIREMENT-RELATED CHANGES

2,326

POSTRETIREMENT-RELATED CHANGES OTHER


THAN NET PERIODIC POSTRETIREMENT COST

4,128

CHANGE IN NET ASSETS

6,454

NET ASSETSBeginning of year

$ 696,856

See independent accountants review report and


notes to combined financial statements.

(39,959)

19,069

1,171
22,731
19,069
(940)
-

(19,323)
(254)

2,072
4,128

(254)

690,402

NET ASSETSEnd of year

$ (49,870)
9,911

9,911

CHANGE IN NET ASSETS BEFORE OTHER


OPERATING ACTIVITIES AND
POSTRETIREMENT-RELATED CHANGES

Total

6,200

90,705

781,107

90,451

$ 787,307
(Concluded)

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PARISHESARCHDIOCESE OF CHICAGO
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
(Dollars in thousands)
2015

CASH FLOWS FROM OPERATING ACTIVITIES:


Change in net assets
Adjustments to reconcile change in net assets to net cash
provided by operating activities:
Depreciation and accretion
Postretirement changes other than net periodic postretirement cost
Gains on land, buildings, and equipment salesnet
Realized and unrealized gains on investments
Noncash grants from Archdiocesan Pastoral Center
Contributions for acquisition and construction of parish property
Change in assets and liabilities:
Interest payable on loans from Archdiocesan Pastoral Center
Accounts receivable
Accounts payable and other liabilities
Accrued postretirement liability

(616)

2014

6,200

44,603
6,961
(8,822)
(31)
(5,344)
(29,999)

44,479
(4,128)
(1,171)
(11,144)
(4,764)
(36,725)

4,272
(18,356)
39,135
5,995

5,348
16,611
6,890

37,798

21,596

9,099
(17,639)

1,171
(18,873)

(41,066)

(6,552)

(49,606)

(24,254)

(1,151)
29,999
25
3,219
(15,374)

(8,263)
36,725
(38)
4,890
(8,809)

16,718

24,505

4,910

21,847

116,426

94,579

CASH AND CASH EQUIVALENTSEnd of year

$ 121,336

$ 116,426

SUPPLEMENTAL DISCLOSURE OF CASH FLOW


INFORMATIONCash paid during the year for interest

Net cash provided by operating activities


CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of land, buildings, and equipment
Purchases of land, buildings, and equipment
Net (deposits) withdrawals from deposits with
Archdiocesan Pastoral Center
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Pledges receivablenet
Contributions for acquisition and construction of parish property
Gift annuities receivable
Loan borrowings from Archdiocesan Pastoral Center
Loan repayments to Archdiocesan Pastoral Center
Net cash provided by financing activities
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTSBeginning of year

4,313

See independent accountants review report and notes to combined financial statements.

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2,858

PARISHESARCHDIOCESE OF CHICAGO
NOTES TO COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED JUNE 30, 2015 AND 2014
(See independent accountants review report)
(Dollars in thousands)

1.

NATURE OF OPERATIONS
ParishesArchdiocese of Chicago (the Parishes) include the parishes, schools, and various shrines
and oratories of the Archdiocese in Cook and Lake counties of Illinois. These sites minister to the
spiritual, social, and educational needs of the faithful. They provide catechesis for people at all age
levelsfrom young children to the elderlyas part of the educational ministry of the church. The
Parishes fiscal operations include sacramental services, religious education training, formal preschool
through 12th grade educational instruction, fund-raising, and investment of reserve funds. Operating
support is derived primarily from parishioners contributions, tuition and fees, and fund-raising
activities.
These combined financial statements only reflect the operations of Parishes and do not reflect the
operations of the other agencies and organizations that also are a part of The Catholic Bishop of
Chicago, a corporation sole.

2.

SIGNIFICANT ACCOUNTING POLICIES


PresentationCertain 2014 balances have been reclassified to conform to the 2015 presentation.
Use of EstimatesThe preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Subsequent EventsParishes evaluated subsequent events through March 28, 2016, the date the
combined financial statements were available for issuance.
Cash EquivalentsCash equivalents are defined as all highly liquid debt instruments with original
maturities of three months or less and are stated at cost, which approximates fair value.
Land, Buildings, and EquipmentLand, buildings, and equipment are carried at cost. Where
historical cost is unavailable, Parishes buildings are carried at reported insurable value as of July 1,
1980, with subsequent major additions recorded at cost. Land associated with these properties is carried
at the estimated fair value at July 1, 1980, with subsequent additions recorded at cost.
Depreciation is computed using the straight-line method based upon the following lives:
Land and building improvements
Buildings (new construction)
Equipment, furniture, fixtures, and contents

20 years
5075 years
25 years

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Repairs and maintenance that do not extend the life of the applicable assets are charged to expense as
incurred.
Asset Retirement ObligationsManagement records all known asset retirement obligations for which
the fair value can be reasonably estimated. A liability is initially recorded at fair value if the fair value of
the obligation to retire an asset can be reasonably estimated. Parishes has recorded a liability for asset
retirement obligations related to asbestos remediation of $68,402 and $67,481 as of June 30, 2015 and
2014, respectively.
Asset ImpairmentManagement reviews the carrying amount of long-lived assets by comparing the
future cash flows expected from the asset to the carrying value of the asset when certain conditions exist
or events occur. In managements opinion, no impairment exists as of June 30, 2015 or 2014.
Classification of Net AssetsIn accordance with Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 958, Not-for-Profit Entities, resources are classified
into three classifications of net assets according to donor-imposed restrictions:
UnrestrictedNet assets that are expendable for any purpose in performing the primary objectives of
the organization.
Temporarily RestrictedNet assets whose use is limited by donor-imposed restrictions that either expire
with the passage of time or can be removed by fulfillment of the stipulated purpose for which the
donation was restricted. When a restriction expires, temporarily restricted net assets are reclassified to
unrestricted net assets and reported in the combined statements of activities as net assets released from
restrictions. Temporarily restricted net assets as of June 30, 2015 and 2014, represent building fund
pledges used to assist in the financing of capital projects for parishes.
Permanently RestrictedNet assets donated with stipulations that they be invested to provide a
permanent source of income; such restrictions can neither expire with the passage of time nor be
removed by fulfillment of a stipulated purpose. There are no permanently restricted net assets as of
June 30, 2015 or 2014.
Revenue RecognitionUnconditional promises to give cash and other assets to Parishes are reported at
fair value at the date the promise is received. Conditional promises to give and indications of intentions
to give are reported at fair value at the date the contribution is received. Cash received through parish
collections or fundraisers is recognized when received. Tuition and fees for educational activities are
recognized during the related academic year.
Tax StatusThe agencies that comprise Parishes are tax-exempt organizations under Section 501(a) as
organizations described in Section 501(c)(3) of the Internal Revenue Code.
Accounting Standards Update (ASU) AdoptedIn April 2013, the FASB issued ASU No. 2013-06,
Services Received from Personnel of an Affiliate, to specify the guidance that not-for-profit entities
apply for recognizing and measuring services received from personnel of an affiliate. The amendments
in this update require a recipient not-for-profit entity to recognize all services received from personnel of
an affiliate that directly benefit the recipient not-for-profit entity. Those services should be measured at
the cost recognized by the affiliate for the personnel providing those services. However, if measuring a
service received from personnel of an affiliate at cost will significantly overstate or understate the value
of the service received, the recipient not-for-profit entity may elect to recognize that service received at

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either (1) the cost recognized by the affiliate for the personnel providing that service or (2) the fair value
of that service. The new guidance is effective for reporting periods beginning after June 15, 2014. The
adoption of this ASU did not have a material effect on the combined financial statements.
ASUs Issued Not Yet AdoptedIn April 2014, the FASB issued ASU No. 2014-08, Reporting
Discontinued Operations and Disclosures of Disposals of Components of an Entity. ASU No. 2014-08
changes the requirements for reporting discontinued operations. A disposal of a component of an entity
or a group of components of an entity is required to be reported in discontinued operations if the
disposal represents a strategic shift that has (or will have) a major effect on an entitys operations and
financial results when the component of an entity or group of components meets the criteria to be
classified as held for sale, is disposed of by sale, or is disposed of other than by sale (for example, by
abandonment or in a distribution to owners in a spin-off). ASU No. 2014-08 also requires an entity to
present, for each comparative period, the assets and liabilities of a disposal group that includes a
discontinued operation separately in the asset and liability sections, respectively, of the statement of
financial position. ASU No. 2014-08 is effective for the Parishes beginning on July 1, 2015. ASU
No 2014-08 is not expected to have an impact on the combined financial statements as no disposals are
contemplated.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU
No. 2014-09 creates Topic 606, Revenue from Contracts with Customers, and supersedes the revenue
recognition requirements in Topic 605, Revenue Recognition. ASU No. 2014-09 requires an entity to
recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or
services. The guidance also specifies the accounting for some costs to obtain or fulfill a contract with a
customer and indicates an entity should disclose sufficient information to enable users of financial
statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising
from contracts with customers. ASU No. 2015-14 deferred the effective date of ASU No. 2014-09. ASU
No. 2014-09 is now effective for the Parishes beginning on July 1, 2018. The Parishes have not yet
determined the impact on its combined financial statements.
3.

DEPOSITS WITH ARCHDIOCESAN PASTORAL CENTER


The Archdiocesan Finance Council and its investment committee oversee a pooled investment fund for
various entities in the Archdiocese, including Parishes. The deposits made by Parishes are invested in
the pooled investment fund. The pooled investment fund invests with a number of investment managers
in various equity and fixed-income products. A portion of the investments is in nonmarketable
investments through limited partnerships. Parishes owns investments through participation in the
Archdiocese pooled investment fund. Deposits other than savings accounts are stated at fair value.

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Deposits at June 30, 2015 and 2014, consisted of the following:


2015

Savings account

2014

$ 147,924

$ 105,173

8,598

9,375

5,533

6,654

Fixed income mutual funds

26,781

12,194

Alternative investments:
Marketable alternative equity
Fixed income
Marketable energy and commodities
Private equity

35,269
12,002
1,350
10,896

42,421
14,516
1,637
15,286

59,517

73,860

100,429

102,083

$ 248,353

$ 207,256

Investments:
Invested cash
Common stock and equity mutual funds

Total alternative investments


Total investments
Total

Returns on deposits with Archdiocesan Pastoral Center for the years ended June 30, 2015 and 2014, are
as follows:
2015

2014

Interest income on savings accounts and investments


Realized/unrealized gain on investmentsnet

$ 1,370
31

$ 1,209
11,144

Total

$ 1,401

$ 12,353

Investments, in general, are exposed to various risks, such as interest rate, credit, and overall market
volatility. Due to the level of risk associated with certain investments, it is reasonably possible that
changes in the values of investments will occur in the near term and that such changes could materially
affect the amounts reported in the combined statements of financial position and in the combined
statements of activities.
4.

CAPITAL CAMPAIGN (TTWCI)


The To Teach Who Christ Is (TTWCI) capital fund-raising campaign is an effort to raise $350,000 in
funds to support parishes, Catholic education, and Faith Formation initiatives over a five-year period.
The campaign is being managed in two distinct areas: a major gift portion with a fundraising goal of
$100,000 and a parish phase seeking $250,000. Within the parish phase, 60% of the goal amount
($150,000) will be retained at parishes for parish-specific needs and 40% ($100,000) will be allocated to
Archdiocese of Chicago-level needs. Overall, the campaign is expected to provide $150,000 for
parishes, $150,000 for a scholarship endowment, $30,000 for urgent capital repairs, $12,000 for

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religious education programs, and $8,000 for academic excellence in Catholic schools. An independent
trust, Catholic Education Scholarship Trust (CEST), has been established to oversee and manage the
scholarship endowment.
As of June 30, 2015 and 2014, Parishes have remaining uncollected unconditional TTWCI pledges
totaling $25,790 and $16,603, respectively. Pledges are mostly expected to be collected within one year.
5.

OTHER PLEDGES RECEIVABLE


The Annual Catholic Appeal (the Appeal) supports the work of the schools, programs, agencies, and
ministries of the Archdiocese that serve the educational, physical, and spiritual needs of its people.
Through Catholic Relief Services, the Appeal also serves those overseas devastated by natural disasters,
illness, wars, and famine. Parish goals for the Appeal are set at 6% of their offertory income. Donations
received by a parish in excess of its goal are returned to the parish as a rebate.
As of June 30, 2015, Parishes has remaining uncollected unconditional Appeal rebates totaling $4,160.
The rebates are expected to be collected within one year.
In addition, from time to time, individual parishes solicit funds from parishioners to assist in the
financing of parish capital projects. Management makes significant assumptions regarding the
outstanding pledges and ultimate collectibility of these receivables. Actual results could differ from
those estimates. As of June 30, 2015 and 2014, Parishes has remaining uncollected unconditional
pledges totaling $10,150 and $13,160, respectively. Pledges are expected to be collected within one
year.
The valuation of pledges receivable at June 30, 2015, are as follows:
Appeal

Building
Fund

Total

Gross rebates / pledges receivable


Less allowance for uncollectible pledges

$ 4,160

$ 11,033
(883)

$ 15,194
(883)

Pledges receivablenet

$ 4,160

$ 10,150

$ 14,311

The valuation of pledges receivable at June 30, 2014, are as follows:


Building
Fund

Total

Gross rebates / pledges receivable


Less allowance for uncollectible pledges

$ 14,304
(1,144)

$ 14,304
(1,144)

Pledges receivablenet

$ 13,160

$ 13,160

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6.

FAIR VALUE MEASUREMENTS


Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The following fair value
hierarchy is used in selecting inputs, with the highest priority given to Level 1, as these are the most
transparent or reliable:
Level 1Quoted prices for identical instruments in active markets.
Level 2Quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active, and model-derived valuations in which all significant inputs
are observable in active markets.
Level 3Valuations derived from valuation techniques in which one or more significant inputs are not
observable.
Parishes attempts to establish fair value as an exit price in an orderly transaction consistent with normal
settlement market conventions. Parishes is responsible for the valuation process and seek to obtain
quoted market prices for all securities. When quoted market prices in active markets are not available,
Parishes uses independent pricing services to establish fair value.
Assets Measured at Fair ValueAssets, inclusive of those investments through participation in the
Archdiocese pooled investment fund, measured at fair value on a recurring basis as of June 30, 2015 and
2014, are as follows:
2015

Level 1

Invested cash

$ 8,598

Common stock and equity mutual funds


Fixed income mutual funds

Level 3

Total

8,598

5,533

5,533

26,781

26,781

Alternative investments:
Marketable alternative equity
Fixed income
Marketable energy and commodities
Private equity
Total alternative investments
Total

Level 2

$ 40,912

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14,196
8,386
598

21,073
3,616
752
10,896

35,269
12,002
1,350
10,896

23,180

36,337

59,517

$ 23,180

$ 36,337

$ 100,429

2014

Level 1

Invested cash

$ 9,375

Common stock and equity mutual funds


Fixed income mutual funds

Level 3

Total

9,375

6,654

6,654

12,194

12,194

Alternative investments:
Marketable alternative equity
Fixed income
Marketable energy and commodities
Private equity
Total alternative investments

Total

Level 2

$ 28,223

20,483
8,626
925

21,938
5,890
712
15,286

42,421
14,516
1,638
15,286

30,034

43,826

73,860

$ 30,034

$ 43,826

$ 102,083

The Parishes investment balance includes $100,429 and $102,083 of investments through participation
in the Archdiocese pooled investment fund as of June 30, 2015 and 2014, respectively. These balances
include $36,337 and $43,826 of Level 3 investments as of June 30, 2015 and 2014, respectively. The
table below presents a reconciliation for total Archdiocese pooled investment fund assets measured at
fair value on a recurring basis using significant unobservable inputs (Level 3), and presents changes in
unrealized gain or losses recorded in changes in net assets for the years ended June 30, 2015 and 2014,
for Level 3 assets:
2015

2014

Balance as of July 1
Purchases
Sales
Realized and change in unrealized gainsnet

$ 465,939
43,900
(61,682)
17,402

$ 419,529
49,822
(67,124)
63,712

Balance as of June 30

$ 465,559

$ 465,939

The amount of total net gains for the year attributable


to the change in unrealized gains or losses relating to assets
still held at June 30

$ 14,093

$ 20,585

Investments that Parishes is able to fully redeem at the net asset value (NAV) in the near term have
been classified as Level 2 investments. Investments that cannot be fully redeemed at the NAV in the
near term have been classified as Level 3. Parishes has determined that investments that are not able to
be redeemed at the NAV in the near term are investments that generally have one or more of the
following characteristics: gated redemptions, all or a portion of the investment is side-pocketed, or have
lock-up periods greater than 90 days. Certain investments may be split between Level 2 and Level 3 if
different share classes have different redemption or liquidity characteristics. As of June 30, 2015 and
2014, Parishes did not have any investments split between Level 2 and Level 3 in the fair value
hierarchy.

- 14 -

A summary of the nature and risk of Parishes alternative investments by major category as of June 30,
2015 and 2014, is as follows:
2015

Marketable alternative
equity (a)
Fixed income (b)
Marketable energy and
commodities (c)
Private equity (d)

Fair

Unfunded

Redemption

Redemption

Side Pocket

Lockups/

Value

Commitments

Frequency

Notice Period

Investments (e)

Gates

$ 35,269
12,002
1,350

1 day36 months
112 months

1120 days
1065 days

112 months
N/A

2290 days
N/A

$ 77

1/3 annually rolling


1/3 annually rolling
1/3 annually rolling
N/A

10,896

2,807

Total

$ 59,517

$ 2,807

Fair

Unfunded

Redemption

Redemption

Side Pocket

Lockups/

2014

Value

Commitments

Frequency

Notice Period

Investments (e)

Gates

Marketable alternative
equity (a)
Fixed income (b)
Marketable energy and
commodities (c)
Private equity (d)
Total

$ 42,421
14,516

$ -

1,637
15,286

4,121

$ 73,860

$ 4,121

$ 77

1 day36 months
112 months

1120 days
1065 days

112 months
N/A

2290 days
N/A

$ 160

1/3 annually rolling


1/3 annually rolling
1/3 annually rolling
N/A

$ 160

(a)

Marketable alternative equity investments are comprised of investments in fund of funds and hedge funds which invest primarily in
marketable equity securities and equity-related underlying securities.

(b)

Fixed income alternative investments are comprised of hedge fund investments, which invest primarily in fixed income securities and fixed
income-related underlying securities.

(c)

Marketable energy and commodities are comprised of limited partnerships and hedge funds, which invest in marketable securities of the
energy and commodity sectors.

(d)

Private equity includes investments in limited partnerships and private equity funds primarily invested in the oil and gas, natural gas, and
real estate sectors. These investments are not redeemable periodically at the discretion of the investor. Instead, the nature of the
investments in this category is that distributions are received through the general partners liquidation of the underlying assets of the fund.
It is estimated that the underlying assets of the fund would be liquidated in 7 to 15 years.

(e)

Parishes may participate in side-pocket investments, either at Parishes discretion or that of the investment adviser who manages the
investment fund in which Parishes invest. A side-pocket investment is generally less liquid than others in an investment fund and will be
subject to different terms and conditions, including more significant restrictions on redemptions.

The following section describes the valuation methodologies used to measure different assets at fair
value, including an indication of the level in the fair value hierarchy in which the asset is generally
classified. Parishes uses prices and inputs that are current as of the measurement date, obtained through
a third-party custodian from independent pricing services or the underlying investment managers.
Invested cash includes money market mutual funds and are generally categorized in Level 1 of the fair
value hierarchy.
Common stock is valued based on quoted prices from an exchange. To the extent these securities are
actively traded, valuation adjustments are not applied and they are generally categorized in Level 1 of
the fair value hierarchy.

- 15 -

Equity mutual funds and fixed income mutual funds are valued based on the NAV as computed once per
day based on the quoted market prices of the securities in the funds portfolio, and are generally
categorized in Level 1 of the fair value hierarchy.
Marketable alternative equity investments are comprised of investments in fund of funds and hedge
funds. Marketable alternative equity investments that cannot be fully redeemed at the NAV in the near
term are investments that cannot be redeemed at its NAV within 90 days after combined statement of
financial position date. The marketable alternative equity investments that can be redeemed within the
near term are categorized in Level 2 of the fair value hierarchy. The marketable alternative equity
investments that cannot be redeemed within the near term are categorized in Level 3 of the fair value
hierarchy. These investments are valued using estimates developed by external investment managers and
are accepted or adjusted through a valuation review performed by management.
Fixed income alternative investments are comprised of hedge fund investments, which invest in
primarily fixed income securities and fixed income-related underlying assets. Fixed income alternative
investments that cannot be fully redeemed at the NAV in the near term are investments that cannot be
redeemed at its NAV within 90 days after combined statement of financial position date. The fixed
income alternative investments that can be redeemed within the near term are categorized in Level 2
of the fair value hierarchy. The fixed income alternative investments that cannot be redeemed within the
near term are categorized in Level 3 of the fair value hierarchy. These investments are valued using
estimates developed by external investment managers and are accepted or adjusted through a valuation
review performed by management.
Marketable energy and commodities are investments in marketable alternative equity fund of funds and
hedge funds with a concentration in the energy and commodities sectors. Marketable energy and
commodities that cannot be fully redeemed at the NAV in the near term are investments that cannot be
redeemed at its NAV within 90 days after combined statement of financial position date. The marketable
energy and commodities investments that can be redeemed within the near term are categorized in
Level 2 of the fair value hierarchy. The marketable energy and commodities investments that cannot be
redeemed within the near term are categorized in Level 3 of the fair value hierarchy. These
investments are valued using estimates developed by external investment managers and are accepted or
adjusted through a valuation review performed by management.
Private equity investments include investments in limited partnerships and private equity funds invested
in oil and gas, natural gas, and real estate. These investments are valued using estimates developed by
external investment managers and are accepted or adjusted through a valuation review performed by
management. Private equity investments are generally categorized in Level 3 of the fair value hierarchy.

- 16 -

7.

LOANS FROM ARCHDIOCESAN PASTORAL CENTER


The Archdiocesan Pastoral Center has a parish loan program, which lends at rates generally believed to
be below the prevailing commercial interest rate. At June 30, 2015 and 2014, there were loans from
Archdiocesan Pastoral Center aggregating $154,413 and $171,912, respectively. Interest rates on such
loans were 0% to 8.55% for both 2015 and 2014. Total principal payments are due as follows:
Years Ending
June 30

8.

2016
2017
2018
2019
2020
Thereafter

110,073
10,747
7,623
4,922
4,632
16,416

Total loans from Archdiocesan Pastoral Center

154,413

COMMITMENTS
At June 30, 2015 and 2014, contractual commitments on construction in process amounted to $18,086
and $19,576, respectively. The Archdiocese has entered into contracts with third parties to purchase
substantially all of its electricity needs until December 2015.

9.

RETIREMENT BENEFITS
Employee BenefitsThe Archdiocese of Chicago has noncontributory pension plans covering
substantially all priests and eligible lay employees of the Archdiocesan Pastoral Center (the Pastoral
Center), Parishes, and participating agencies. The name of the lay employees plan is the Retirement
Plan for Full-Time Lay Employees of the Catholic Bishop of Chicago, A Corporation Sole (the Lay
Employees Plan) and the name of the priests plan is the Retirement Plan for Priests Retirement and
Mutual Aid Association (the Priests Plan). The Lay Employees Plan provides retirement benefits
(over and above normal social security benefits) based on length of service and annual salary. The
Priests Plan provides level benefits at normal retirement (age 70) and also covers disability prior to
retirement. Priests are also able to participate in a defined contribution plan with a match funded from
the Priests Retirement & Mutual Aid Association (PRMAA) assessment. During 2007, the Lay
Employees Plan was amended, effective July 1, 2007, to freeze benefit accruals and participation as of
that date.
Parishes are assessed for fringe benefits by the Pastoral Center based on the parish payroll. The
assessment for these costs was $19,013 and $18,615 for 2015 and 2014, respectively, and is included in
salaries, wages, and benefits on the statements of activities.
Parishes are also assessed for health and medical benefits related to priests by the Pastoral Center. The
assessment for these costs was $7,479 and $7,354 for 2015 and 2014, respectively, and is reflected in
parish operationssalaries, wages, and benefits in the combined statements of activities.
Since the pension plans cover many agencies, benefit and asset information applicable to Parishes is not
available. The Pastoral Center has recorded the total pension liability in its combined statements of
financial position. Parishes is responsible for its related costs. This liability may be transferred to
Parishes in the future.
- 17 -

Postretirement BenefitsCertain insurance (medical, life, and auto) and other aid are provided to
retired priests. Retired priests do not contribute to the cost of these benefit plans, and the plans are
currently not funded. These benefits are administered and partially funded through the PRMAA.
Summary information for the priests postretirement benefit plan at June 30, 2015 and 2014, is as
follows:
2015

2014

Change in benefit obligation:


Benefit obligationbeginning of year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Retiree drug subsidy reimbursement

$ 107,940
3,229
4,881
8,249
(3,484)
81

$ 105,178
3,174
5,267
(2,270)
(3,519)
110

Benefit obligationend of year

$ 120,896

$ 107,940

3,484
(3,484)

3,519
(3,519)

Fair value of plan assetsend of year

Funded statusend of year

$ (120,896)

$ (107,940)

Net accrued benefit cost

$ (120,896)

$ (107,940)

Amounts recognized in the combined statements of financial


positionaccrued postretirement cost

$ (120,896)

$ (107,940)

Change in plan assets:


Fair value of plan assetsbeginning of year
Employer contributions
Benefits paid

The components of net periodic benefit cost for the years ended June 30, 2015 and 2014, are as follows:
2015

2014

Components of net periodic benefit cost:


Service cost
Interest cost
Recognized net actuarial loss

$ 3,229
4,881
1,288

$ 3,174
5,267
1,858

Total net periodic benefit cost

$ 9,398

$ 10,299

- 18 -

The postretirement plan items not yet recognized as a component of periodic postretirement cost, but
included as a separate benefit to net assets during 2015 and 2014, are as follows:
2015

2014

Actuarial (gain) loss arising during the period


Reclassification adjustment for recognition of actuarial gain

$ 8,249
(1,288)

$ (2,270)
(1,858)

Total recognized as a separate (benefit) charge to net assets

$ 6,961

$ (4,128)

The postretirement plan accumulated net actuarial loss not yet recognized as a component of periodic
postretirement cost but accumulated in unrestricted net assets as of June 30, 2015 and 2014, is $39,437
and $32,476, respectively. An estimated $1,630 of net actuarial loss will be included as a component of
periodic postretirement cost in 2016.
Actuarial assumptions for the plan as of June 30, 2015 and 2014, are as follows:
2015

2014

Weighted-average assumptions used to determine benefit obligations


as of June 30:
Discount rate
Expected return on plan assets
Rate of compensation increase

4.70 %
N/A
N/A

4.60 %
N/A
N/A

Weighted-average assumptions used to determine benefit cost


for the years ended June 30:
Discount rate
Expected return on plan assets
Rate of compensation increase

4.60 %
N/A
N/A

5.10 %
N/A
N/A

For measurement purposes, 7% net health care trend rate was used for fiscal year 2015 and 8% was used
for 2014. Trend rates were assumed to decrease gradually to 4.5% in fiscal year 2025 and remain at this
level beyond.
The benefit payments, which reflect expected future services, as appropriate, expected to be paid as of
June 30, 2015, are as follows:
June 30

Amount

2016
2017
2018
2019
2020
20212025

$ 3,657
3,902
4,201
4,549
4,905
30,365

- 19 -

10. TRANSACTIONS WITH RELATED PARTIES


Archdiocesan AssessmentsEach parish is assessed annually from the Pastoral Center for the support
of Pastoral Center activities. This assessment is computed as 10% of operating revenue from two years
prior. For example, the 2015 assessment was 10% of 2013 operating revenue. Archdiocesan assessments
were $25,283 and $23,115 in 2015 and 2014, respectively.
PRMAA AssessmentsEach parish is assessed annually from the Pastoral Center to reimburse the
PRMAA for health and medical benefits for current and retired priests. This assessment is computed as
3.5% of prior-year ordinary income. PRMAA assessments were $7,479 and $7,354 in 2015 and 2014,
respectively, and were recorded in parish salaries, wages, and benefits.
Insurance ProgramParishes participates in a self-insurance program coordinated by the Archdiocese.
In 2015, Parishes incurred expenses of $65,257 to the Archdiocese for insurance which are reflected in
utilities, repairs, and insurance as well as in salaries, wages and benefits in the statements of activities. In
the event that Parishes withdraw from participation in the program, amounts may be payable to the
Archdiocese for residual liabilities relating to historical claims experience or for claims incurred but not
yet reported.
GrantsCertain parishes receive financial assistance from the Pastoral Center.
Deposits with and Loans from Archdiocesan Pastoral CenterGenerally, deposits bear interest at
rates that are contingent upon the amount and availability of the deposit. During both 2015 and 2014, the
interest rates paid on deposits ranged from 0.7% to 1.7%. Parishes may invest in pooled investment
accounts that are in various investments and whose returns are dependent upon market conditions. The
estimated fair values of investments that do not have readily determinable fair values, and of other
investments, are based on estimates provided by external investment managers and are examined
through a valuation review process performed by management. A range of possible values exists for
these investments and; therefore, the estimated values may differ from the values that would have been
used had a ready market for these securities existed.
Loans bear interest at rates believed to be below the prevailing commercial interest rates.
******

- 20 -