Being accountable to the people we serve

Archbishop John Nienstedt has not yet returned to writing his column. Bishop Lee Pich, auxiliary bishop of St. Paul and Minneapolis, offers the following guest column for this issue. This year, for the rst time, the archdiocese is releasing its full audited nancial report, as has been planned for months and communicated publicly in December 2013. We are doing this because we are accountable to the people we serve. Without the time, talent and treasure of the hundreds of thousands of Catholics who support the ministry of this local Church, we could not live out our mission to make the name of Jesus Christ known and loved. The Catholics throughout this local Church are the Church. The nancial information contained in this edition of The Catholic Spirit and posted online covers the 2013 and 2012 scal years, which ended on June 30, 2013 and 2012. Thanks to you, support for ministry across this local Church remains strong. Local Catholics steadfast support for ministry to fulll the mission of the Church speaks to the unwavering faith of those who make up this local Church. Catholics understand that the tragic moral failure of a few does not dene who we are as Catholics. First, please note a few structural facts that may not be known to everyone. The most important thing for you to know is that the archdiocesan nancial report covers the activities of the archdioceses Chancery Corporation. Each parish, as well as certain other Catholic GUEST COLUMN entities located within the 12 counties of the archdiocese, is a separate Minnesota corporaBishop Lee Pich tion. This means parishes, as well as Catholic entities like Catholic Charities, most Catholic high schools and other Catholic organizations, operate as separate corporations and report their own nancial information to their stakeholders. Its also critically important that you are aware that since March 2012, new internal controls have been put in place. They are enforced strictly. Another important point is this: The information in this issue of The Catholic Spirit, as well as the information posted online, including the full audited nancial report, while more expansive than that shared in the past, is still summary by its very nature. Please know that independent auditors had access to all of our nancial accounts before issuing an unqualied opinion on our scal year 2013 nancial statements. An unqualied opinion means that an independent auditor nds that an institutions nancial statements are fairly and appropriately presented, and in accordance with generally accepted accounting principles. In addition to the full audited nancial report posted online, in this issue of The Catholic Spirit you will see an article describing nancial activities in detail, condensed nancial statements and accompanying notes, and additional information about certain nancial accounts that have elicited particular interest in recent months. Auditors had access to line items rolling up into those accounts, 1-515 and 1-516, (see statement Detailed Accounting of Accounts 1-515 and 1-516, page 19), just as they had access to line item detail for all other archdiocesan accounts. The archdiocese wishes to thank members of the Archdiocesan Finance Council, the corporate board, and the College of Consultors for their continued diligence in nancial oversight and counsel. The Catholics of this local Church are generous and their generosity makes possible the many good works carried out by the Church across our archdiocese, including: Support for seminarians studying to become priests for this archdiocese; Support for Catholic schools, tuition assistance for families, organizational support through the Ofce of Catholic Schools, and campus ministry; For the annual Support for youth ministry programs that build report of the up the faith of our young people; including Archdiocesan Youth Day, which brings together hundreds archdioceses of area high school youth every year to praise God, Chancery grow in the faith, and nd fellowship; Support for Latino ministry outreach to meet the Corporation, spiritual needs of local Spanish-speaking Catholics at 23 parishes across the archdiocese; please see Support for the work of Catholic Charities to pages 17 to 20. help the hungry, the homeless, the elderly, immigrants and at-risk youth; Support for the many marriage, family and life programs and events that serve to strengthen marriage, build up families and promote the dignity of life from conception to natural death; Support for the Rediscover: evangelization and catechesis initiative, which reaches out with joy to invite others to a full life in the faith. The release of our full audited nancial report, as well as additional information to explain particular points of interest, is part of our ongoing commitment to improve transparency and accountability, evidenced not only in our ongoing disclosure of clergy with credible claims of abuse of minors, but also through our commitment to improved nancial reporting. We are taking these steps because they are the right thing to do because they help us to protect the young and vulnerable, care for victims of abuse, and restore trust among the laity, as well as our clergy who are serving honorably. We have made a commitment to transparency because we are accountable to the people we serve. The archdioceses Chancery Corporation exists to support the people, parishes, Catholic schools, religious education programs and other Catholic organizations of our community in fullling the mission of the Church. Thank you.

From the Bishop

One year later, Pope Benedict enjoying retired life

Catholic News Service In retirement, Pope Benedict XVI follows a daily schedule similar to that of any retired bishop or religious: He prays, reads, strolls, talks with people and offers them spiritual advice, the Vatican spokesman said. Although he lives in a low-key way, without public attention, that does not mean hes isolated or enclosed in a strict cloister, Jesuit Father Federico Lombardi told Vatican Radio. Marking the one-year anniversary of Pope Benedicts resignation Feb. 11, Father Lombardi and Archbishop Georg Ganswein, the retired popes longtime personal Pope secretary, spoke about the very normal BENEDICT daily life of a man who is in the unusual position of being a retired pope. Archbishop Ganswein, who continues as Pope Benedicts personal secretary while also serving Pope Francis as prefect of the papal household, summarized the retired popes day as lled with prayer most of all, with study, with personal correspondence and visits. The day begins with Mass, then with the breviary, followed by breakfast, he told Famiglia Cristiana, a Catholic magazine. The morning usually is dedicated to prayer and study, to the mail and to receiving guests. Archbishop Ganswein and the consecrated laywomen who assist the retired pope join him for lunch at 1:30 p.m., and a nap always follows, he said. Pope Benedict spends the afternoon dealing with his correspondence and listening to music until 4 p.m., when he and the archbishop recite the rosary while walking in the garden behind the former Vatican convent where he lives. They eat dinner at 7:30 p.m. and watch the evening news at 8 p.m. Archbishop Ganswein said Pope Benedict had told him he was retiring long before the Feb. 11 announcement, but under the strictest secrecy. Instinctively, I said, No, Holy Father, its not possible, but I realized immediately that he wasnt communicating something he wanted to discuss, but a decision already made. The archbishop said the VatiLeaks scandal, which saw the publication of condential papal correspondence and internal Vatican documents, did not cause or even inuence the resignation. The pope did not ee a responsibility, but was courageous enough to realize he no longer had the strength to carry out the papal ministry, he said. Archbishop Ganswein also conrmed that Pope Francis and Pope Benedict speak frequently on the telephone.

OFFICIAL
His Excellency, the Most Rev. John C. Nienstedt, has announced the following appointments in the Archdiocese of Saint Paul and Minneapolis. Effective February 8, 2014 Most Reverend Andrew Cozzens, appointed ad nutum episcopi as parochial administrator of the Church of the Assumption in Richeld. Bishop Cozzens succeeds the Rev. Charles McCarthy, OFM Conv., who was transferred to another assignment outside of the Archdiocese. Most Reverend Lee Pich, appointed ad nutum episcopi as parochial administrator of the Church of Saint Boniface in Minneapolis. Bishop Pich will cover pastoral responsibilities while the current pastor, Rev. Mark Wehmann, is on a leave of absence. Most Reverend Lee Pich, appointed ad nutum episcopi as parochial administrator of the Church of Saint Cecilia in Saint Paul. Bishop Pich succeeds Bishop Cozzens as administrator.

February 13, 2014 The Catholic Spirit

Archdiocesan Chancery Corporation Annual Report 2012 2013

Financial ofcer report

The following comments elaborate on the nancial statements of the Archdiocese of St. Paul and Minneapolis Chancery Corporation for the scal year ended June 30, 2013. Condensed nancial statements are included in this issue of The Catholic Spirit. The full audited nancial statements with footnotes and auditors opinion are posted at archspm.org on the Administration and Finance page.
By Thomas Mertens, CFO, Archdiocese of St. Paul and Minneapolis

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Since I arrived at the archdiocese in late 2012, along with the Archdiocesan Finance Council (AFC), I have made recommendations regarding nancial best practices, including measures to improve transparency regarding nancial data of the archdiocesan Chancery Corporation. Work was underway in this area when I arrived, and I have Whats new this year? made it my top priority to continue this important The archdioceses Chancery Corporation has effort. shared summary nancial information in various To this end, we are formats in The Catholic Spirit since 1988. releasing our full audited Heres how the archdioceses Chancery nancial report for the Corporation nancial information shared in this issue rst time. I believe this is is different from what was shared in past years: critically important in

audits were performed by two different rms during that 15-year time period. It also is important to note that since March 2012, new internal controls have been put in place to safeguard assets and these controls are enforced strictly. Archdiocesan leaders have made a rm commitment to create a culture of transparency and continue to make strides in this regard, as evidenced now by the release of our full audited nancial report for the rst time in our history.

investment philosophy to pursue continued growth in assets without unnecessary exposure to volatility. For this reason, we primarily are invested in xed income mutual funds, which did not see the growth equities enjoyed in 2013.

Operating expenses
Operating Expense totaled $39,366,000 in 2013 as compared to $30,672,000 in 2012. Program Services costs increased $2,650,000 while Support Services costs increased $6,044,000, year over year. The increase in Program Services costs relates to an expansion of the Communications and Community Relations ofce, which brought The Catholic Spirit into the Chancery Corporation and resulted in expenses related to its production being included in archdiocesan nancials. This increase also was due to costs related to the Rediscover: evangelization and catechesis initiative, and continued improvements to data, fundraising, and accounting systems at the archdiocesan level that benet parishes and Catholic schools across the archdiocese. The archdiocese did not provide $1,000,000 of support to the Cathedral of St. Paul parish to reduce debt, as it did in 2012, which explains the decrease in Community Services expenses. The increase in Support Services costs year over year is due to the $5,000,000 increase in Litigation Reserve Expense. This $5,000,000 change is the result of the 2013 expense of $3,950,000, due to an increase in reserve and the 2012 negative expense of $1,050,000, due to a reduction in the prior year reserve. The Chancery Corporation is involved in various lawsuits relating to claims of alleged sexual abuse. For known claims there is no practical means to determine the likelihood of outcome. Under accounting standards, when no amount within a particular reserve range is a better estimate of a particular outcome than any other amount, we are required to use the minimum amount of the range for our accrual. We have not accrued any amount for unknown claims as these cannot be reasonably determined due in part to the unprecedented third open window for civil sexual abuse claims in Minnesota. We are not able to look to dioceses in other states for guidance because no other state has had as many open windows during which the civil statute of limitations has been lifted. These accruals are managements estimates and not intended to be indicative of the actual legal outcomes of the individual cases. Losses from unknown claims could be substantial. We will tender the defense of these claims to our insurers whenever possible. However, claims can go back to a time period in which insurance may not have been available or coverage limits were minimal. Most cases which have surfaced to date relate to alleged incidents 20-30 years ago; some are related to incidents alleged to have occurred more than 50 years ago. In addition, Support Services costs increased year over year as a result of expenses related to the transition in leadership for the Chancellor for Civil Affairs and the Chief Financial Ofcer, in which the incumbent and new leaders were each drawing salaries for a period of time. Following is a narrative that explains the services the various ofces and programs of the archdiocese provide to serve Catholics and our larger community in support of the mission of the Church. Accompanying the narrative is a chart depicting the expenditures by program. Report continued on next page

Financial condition
At June 30, 2013, the nancial condition of the archdiocese is solid even with the contingent liability related to litigation stemming from the unprecedented third open window in the civil statute of limitations for alleged sexual abuse. The nancial result of operating activities in 2013 resulted in a decit of $3,872,000. The decit can be attributed to the increase in reserves of $3,950,000 to cover potential liability related to civil litigation.

assuring our many > For the rst time, the archdiocese will share the stakeholders that we are full audited nancial report for the Chancery accountable to them and Corporation, which can be found on archspm.org, we are good stewards of including: the gifts entrusted to us in  Statements of Financial Position, Statements of service of the mission of Activities, and Statements of Cash Flows; the Church. The recommendation to  Full notes to nancial statements including release the full audited information on litigation claims payable and nancial report is detailed nancials of the General Insurance supported fully by the Program Trust; archbishop and the AFC, a  The independent auditors report. body made up primarily of lay accounting and >T  he archdiocese is also sharing in a separate nance professionals. The statement more detailed information than what is Revenue AFC unanimously in the full audited nancial report regarding Total Operating approved the accounts that have become the subject of public Revenue for 2013 was recommendation in interest: accounts 1-515 and 1-516. Outside $35,494,000 as compared October 2013 at its independent auditors had access to line items to $32,179,000 in 2012. monthly meeting. As has rolling up into accounts 1-515 and 1-516, just as Fees and Program Revenue been the practice for more they had access to line item detail for all other increased $2,551,000, due than 25 years, in February, archdiocesan accounts. to revenue generated by the archdiocese releases The Catholic Spirit after it nancial information became part of the regarding the previous Chancery Corporation on July 1, 2012. scal year and publishes it in The Catholic Spirit. For the past several years, condensed nancial statements The primary sources of revenue, Parish Assessments and related notes have been published. This year, we and the Catholic Services Appeal (CSA), were up 4 again are including the condensed nancial statements percent and 6 percent respectively in 2013. The increase and notes, along with this commentary article, but in assessments reects increased contributions at encourage you to go online to archspm.org to see the parishes during the modest economic recovery that full audited nancial report. began in 2010. CSA revenue, as reported, is after deductions for rebates to parishes and allowances. On a The archdiocesan nancial report covers the activities of the archdioceses Chancery Corporation. Each parish, pre-deduction basis, the CSA generated $10,118,000, which was $174,000 more than the CSA generated the as well as certain other Catholic entities located within previous year ($9,944,000 pre-deduction). The growth the 12 counties of the archdiocese, is a separate in net CSA income speaks to the consistent generosity Minnesota corporation. This means parishes, as well as of the local Catholic community to the designated Catholic entities like Catholic Charities, most Catholic ministries supported by the CSA. high schools, and other Catholic organizations operate as separate corporations and report their own nancial It is very important to note that beginning with the information to their stakeholders. 2014 CSA, all contributions to the CSA will be held by the Catholic Services Appeal Foundation (CSAF), an Our nancial statements were audited by the independent 501(c)(3) organization which was independent certied public accounting rm of CliftonLarsonAllen LLP, who have issued an unqualied established recently. CSA contributions will be used for the benet of designated ministries of the CSAF and for opinion. An unqualied opinion means that an no other purposes, honoring donor intent. Funds used independent auditor nds that an institutions nancial to prepare for potential litigation costs do not come statements are fairly and appropriately presented, and from contributions through the CSA. More information in accordance with generally accepted accounting is available at csafspm.org. principles (GAAP). For at least the past 15 years, the earliest for which Contributions through unsolicited gifts and bequests records are readily available, independent accountants decreased slightly and unrealized losses and lower have been given full access to all of our nancial records income from mutual fund xed income investments in order to perform an audit, in each case giving us an resulted in a decrease of $608,000 in Investment unqualied opinion on our nancial statements. These Income. The archdiocese maintains a conservative

February 13, 2014 The Catholic Spirit

18

Archdiocesan Chancery Corporation Annual Report 2012 2013

Archdiocese of St. Paul and Minneapolis Operating Revenue FY 2013 (in Millions) $35.5 Million

Archdiocese of St. Paul and Minneapolis Operating Expense FY 2013 (in Millions) Program and Support Services $39.4 Million

Continued from page 17

Program Services
Clergy Services - $8,364,000 The role of this ofce is to assist the archbishop with support and formation for priests and deacons in all aspects of ministry and pastoral care. Seminarian Formation: There are currently 65 men in formation for the priesthood in service of our archdiocese. While this number changes throughout the discernment process, our archdiocese has one of the largest enrollments of seminarians of any diocese in the country. Expenses include a portion of the cost of tuition, room and board for men at The Saint Paul Seminary School of Divinity and St. John Vianney College Seminary. Center of Clergy Formation: Institute of Ongoing Formation for Clergy and the Institute of Diaconate Formation comprise the Center of Clergy Formation. Each entity of the center provides an integrated approach to priestly and diaconate formation, including gatherings and support for newly ordained priests, programs to assist new pastors in their role, and ongoing formation opportunities for priests and deacons throughout the archdiocese. Continuing Education: This includes continuing education opportunities; a sabbatical program; international enculturation; and a biennial presbyteral assembly. Chaplaincies: There are 10 priests and one deacon in full- or part-time ministry at hospitals and correctional facilities throughout the archdiocese. Numerous other priests and deacons volunteer their time in this ministry. They offer the sacraments and spiritual support during some of the most difcult times in peoples lives. Last year, thousands of people throughout our community were served by archdiocesan chaplains. Specialized Ministries: This includes the Ofce of Vocations, support for international clergy, and retired clergy. Accounts to support priests credibly accused of sexual abuse and other misconduct, as well as those struggling with addiction and other behavioral issues, and provide services to victims of clergy misconduct are included in Clergy Services. (See Statement from the Archdiocese regarding accounts 1-515 and 1-516 on page 19 for more information.) Community Services - $2,438,000 The archdiocese helps men, women and children

most in need within our local community, including the poor, hungry, homeless, and those with special needs. The archdiocese does this through cash and noncash support to Catholic Charities and CommonBond Communities (a housing agency for low- and moderateincome families, the elderly, and the disabled). In addition, emergency support is provided to parishes stressed by debt or operational issues. Catholic Education - $6,547,000 The Ofce of Catholic Schools supports the education and formation of children at Catholic schools within the Archdiocese of St. Paul and Minneapolis. This support includes: Catholic identity review and support, leadership development and assistance in implementing academic programs. The Ofce of Catholic Schools also provides programmatic oversight to promote innovation and excellence in local urban Catholic schools. Parish Services - $2,238,000 The Ofce of Parish Services provides consultation, planning and leadership development opportunities to parishes throughout the archdiocese. One example of this is the GROW initiative, which encourages parishes to develop and implement robust pastoral and strategic plans. The archdiocese supports outreach ministry to various groups and members of the archdiocesan community, including Latino ministry, Indian ministry, the Commission on Black Catholics, the Venezuelan mission, and Archdiocesan Council of Catholic Women, deaf ministry, and other groups and coalitions. As one example: the Latino Ministry Advisory Council, led by the Vicar for Latino Ministry, oversees support and programming at 23 Latino Ministry parishes throughout the archdiocese. These 23 parishes offer the sacraments, catechesis and spiritual support to tens of thousands of Spanish speaking people throughout the local Church. Latino Ministry also oversees special days of celebration of the faith and family throughout the year. In addition, Latino Ministry runs biblical, catechetical and pastoral leadership development institutes for members of the Latino community to grow in the faith and engagement in the Church. Central Services - $6,352,000 The Department of Central Services provides support and services to the Chancery Corporation staff and the parishes. The department includes the ofces of: the Chancellor (the civil and canonical counsel for the archdiocese); computer services; metropolitan tribunal who work with those seeking annulments; human

resources and benets; the Parish Accounting Service Center (which provides contract accounting services to parishes and schools); and maintenance. Also covered in this category are administrative services to the General Insurance Program Trust, the lay and priest pension plans, and the Archdiocese Medical Benet Plan Trust, as well as dues to the Minnesota Catholic Conference and the United States Conference of Catholic Bishops. Marriage, Family and Life - $1,250,000 This department assists the laity and parishes through programs supporting: marriage preparation, family, youth and young adults, respect life, pro-life groups, biomedical ethics and outreach for disabilities. The Ofce of Marriage, Family and Life also sponsors the annual Archdiocesan Youth Day that brings together hundreds of local high school-aged teens to praise God, grow in the faith and nd fellowship. In addition, this ofce helps coordinate local representatives attending World Youth Day, the National Catholic Youth Conference and other youth events. In 2013, the archdiocese provided $200,000 in nancial assistance to a broad coalition to support marriage in the state of Minnesota. The sources of these funds did not come from parish assessments, the Catholic Services Appeal, or restricted donations to the archdiocese. Communications and Community Relations $3,608,000 The Ofce of Communications fullls the role of Community Relations by helping convey the teachings of the Church and fostering two-way communication between the archdiocesan Chancery Corporation and the faithful, parish and school leaders and staff, and others in our community. It does this through The Catholic Spirit (the ofcial archdiocesan bi-weekly newspaper) multiple websites, social media, video, radio, e-newsletters and other communications vehicles. On July 1, 2012, The Catholic Spirit newspaper became part of the Ofce of Communications. The move increases efciency and will reduce expenses over time. Rediscover: is an ongoing pre-evangelization, evangelization, and catechesis initiative that supports outreach to all Catholics and provides formation opportunities to deepen their faith by complementing the good outreach and formation work already being done by parishes, Catholic schools and ministry organizations throughout the archdiocese. Attendance topped 15,000 for the 2013 Rediscover: faith Speakers Report continued on next page

February 13, 2014 The Catholic Spirit

Archdiocesan Chancery Corporation Annual Report 2012 2013

Continued from page 18 Series, the 2013 Rediscover: Catholic Celebration at the St. Paul RiverCentre reached capacity of 5,000, and more than 130,000 people from all 50 states and nearly every country on earth have visited Rediscover-faith.org. In addition, more than 7,000 smartphone users have downloaded the Rediscover: app and an estimated 5,000 listeners tune in weekly for The Rediscover: Hour, which is produced by the archdiocese in cooperation with Relevant Radio. student accident, auto, public library, boilers and workers compensation. The net assets of the program are held for the benet of the participants because the participants have contributed those funds in exchange for obtaining insurance coverage. In addition, there is an Archdiocese Medical Benet Plan Trust for lay employees, which is a separate legal entity and as such is not included in the Chancery Corporation nancial report. Both the General Insurance Program Trust and Archdiocese Medical Benet Plan Trust currently have reserves in excess of our historical loss experience as a result of positive nancial results over the past few years. For this reason, billing for general insurance has been reduced by 30 percent and billing for the lay employee benet plan has been reduced by 20 percent. This billing reduction will be in effect from January 1, 2014 through June 30, 2015 (the end of FY 2015). The billing will continue to be analyzed and will be adjusted accordingly.

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ease, if they so choose. The archdiocese pays interest to parishes on these funds and allows parishes to withdraw such funds on demand within 30 days of requesting a withdrawal. Net increase in cash from operating activities, investing activities, and nancing activities was $766,000, on $35,416,000 of annual expenditures in 2013.

In Summary
The archdiocese again saw an increase in resources from assessments and the Catholic Services Appeal. Those resources, which are directly related to the generosity and devotion of the Catholic faithful, have increased steadily since 2007. The combination of expense control and increases in resources has permitted the archdiocese to reduce external debt by $6,400,000, return $2,700,000 in deposits to parishes, and increase the cash balance by $4,800,000 since 2008. During the same period, the contingent liability under guaranteed parish and school debt decreased by $30,000,000. Due to a renewed adherence to best practices and dedicated focus on strategic planning efforts aimed at increasing sustainability on the part of parishes, Catholic schools, and the archdiocesan Chancery Corporation itself, the archdiocese remains in a strong nancial state as of June 30, 2013. The archdiocese is grateful for clergy and lay leaders throughout the local Church who work to strengthen sustainability in support of the mission of this local Church. That mission is to make the name of Jesus Christ known and loved by promoting and proclaiming the Gospel in word and deed through vibrant parish communities, quality Catholic education, and ready outreach to the poor and marginalized. Thomas Mertens was appointed chief nancial ofcer of the Archdiocese of Saint Paul and Minneapolis in December 2012, and he served in this capacity during the 2nd half of the scal year covered in this report.

Support Services
General and Administrative - $3,040,000 The ofces of the archbishop, bishops, vicar general, accounting services, nance and general administration are included in the General and Administrative reporting. Changes to the allowances for potentially uncollectible amounts due from parishes and other entities also are reected in this category. Development and Stewardship - $1,581,000 This ofce is engaged in leadership development, informational resources, including the Stewardship Toolkit, and consultation services for parish and school development and stewardship efforts, as well as fundraising for the archdiocese. In 2013, this ofce supported the Catholic Services Appeal. Beginning with the 2014 Catholic Services Appeal, the Appeal will be managed by the independent Catholic Services Appeal Foundation.

Financial Position
Net Assets of the archdiocesan Chancery Corporation were $41,490,000 at the end of 2013, or $1,444,000 less than a year earlier. The decrease was due mainly to the Litigation Reserve Expense of $3,950,000, offset by the strong performance of the General Insurance Program Trust. After adjusting the change in Net Assets for revenue and expense items that did not provide or require cash and activities of the General Insurance Program Trust, operations in 2013 provided cash of $1,455,000. In addition, $977,000 was realized from the repayment of a loan by a Catholic high school and $1,254,000 was used to improve archdiocesan property, equipment, and systems. The bulk of this spending was for computer equipment and software development. The archdiocese used $493,000 of cash to pay parishes that requested funds from their parish demand deposit accounts. These accounts allow parishes with excess funds to deposit such funds with the archdiocese for their administrative

Non Operating Expenses

General Insurance Program Trust The General Insurance Program Trust of the Archdiocese of St. Paul and Minneapolis provides comprehensive, uniform coverage of all of the parishes and certain related entities within the boundaries of the archdiocese, as well as the Chancery Corporation. The program is a trust, of which the Chancery Corporation is the trustee. The coverage includes building and contents, burglary, personal property,

Statement from the archdiocese

Detailed accounting of accounts 1-515 and 1-516
Certain nancial accounts, numbered 1-515 and 1-516, have elicited interest in recent months. The total 1-515 and 1-516 expenses for the past 10 years is $8,813,492 or 2 percent of Chancery Corporation revenue during the same period. This does not include payments by our insurance carrier directly for related legal services and victim settlements. (See related account 1-515 and 1-516 expense chart.) Account 1-515 provides for counseling and other victim support services, as well as victim settlements, for victims of sexual abuse by clergy when the victim was a minor. It also provides for living expenses for a few men no longer in ministry who have been credibly accused of sexual abuse of a minor. In FY 2013, 1-515 expense was $224,739. In 2012, it was $176,086. During the past 10 years, expenses in 1-515 totaled $6,200,066. Of that total, $2,332,859 was for victim settlements, $1,777,679 went to victim support, $566,318 went to legal services, and $1,523,210 went to priest living expenses. Account 1-516 covers expenses related to a broad range of issues, for example: alcohol addiction; gambling addiction; and sexual conduct with an adult. It provides for living expenses for men who are dealing with addictive and behavioral issues. Some of these men have been removed permanently from public ministry. Account 1-516 also provides for

Chancery Corporation Accounts 1-515 and 1-516

1-515 Bishops Charter - Victim Settlements - Victim Support - Legal Services - Priest Living Expenses Total 1-516 Priest Misconduct - Victim Settlements - Victim Support - Legal Services - Priest Living Expenses Total Past 10 Years $2,332,859 1,777,679 566,318 1,523,210 6,200,066 $176,500 518,742 209,213 1,708,970 2012 $ - 13,829 23,418 138,840 176,086 $ - 10,960 21,118 197,896 $ 2013 35,884 17,629 171,226 224,739 1,735 75,023 230,263 307,021

1-516 expenses went to room and board and other living expenses and treatment services for men accused of sexual abuse or other misconduct. The cost of living expenses of men in ministry is ordinarily covered by the parish or other organization where he is serving. When a man is removed from ministry, the archdiocese assumes that expense. The archdiocese is required under Church (canon) law to care for such men. Christian compassion also calls us to care for these men. Most important, we are called to care for victims of sexual abuse and other Church ministry-related misconduct. Accounts 1-515 and 1-516 are not secret and have been included in the consolidated income statements of the archdiocese publicly reported on an annual basis. However, chancery employee access to the details of these accounts is handled with discretion for a number of reasons including the protection of victims who are receiving support for counseling and other services. Certain details about other spending in those accounts are condential, as is the case with personnel matters not requiring disclosure just like the personnel les of any organization. Outside independent auditors have always had access to line items rolling up into accounts 1-515 and 1-516, just as they had access to line item detail for all other archdiocesan accounts.

2,613,426 229,975

Total

$8,813,492

$406,061

$531,759

counseling and other victim support services, as well as victim settlements, for victims of clergy misconduct other than sexual abuse of a minor. In FY 2013, 1-516 expense was $307,021. In 2012, it was $229,975. During the past 10 years, expenses in 1-516 totaled $2,613,426. Of that, $176,500 went to victim settlements, $518,742 went to victim support, $209,213 went to legal services, and $1,708,970 went to priest living expenses. Of the $8,813,492 total in expenses for accounts 1-515 and 1-516 during the past

decade, $2,509,359 went to fund settlements for victims and $2,296,421 went to pay for counseling and other support services for victims. This is 54 percent of the total amount of expenses for accounts 1-515 and 1-516. Since the Ofce of Advocacy and Victim Assistance was established in 1992, it has provided referrals and paid for many victims of clergy abuse and other ministry-related misconduct to receive psychological counseling, spiritual direction, and other services to help victims heal. A total of $3,232,180 in 1-515 and

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Archdiocesan Chancery Corporation Annual Report 2012 2013

Notes to condensed nancial statements

Condensed Statements of Activities

ears Ended June 30, 2013 and 2012 Y The audited nancial statements with footnotes and auditors opinion are posted at arch 2013 2012 spm.org on the Administration and Finance page. OPERATING REVENUE The Archdiocese of St. Paul and Minneapolis (the Archdiocese) was rst established as a Contributions $3,782,083 $4,075,741 diocese by the Holy See in 1850 (originally Minnesota and the Dakotas) and elevated to an Parish Assessments 14,093,473 13,528,072 archdiocese 38 years later. Catholic Services Appeal, Net of Parish Rebates 8,109,237 7,586,403 Now comprising a 12-county area, there are 188 parishes and 91 Catholic schools (includFees and Program Revenue 7,733,609 5,182,218 ing elementary and high schools) within the Archdiocese. The Archdiocese is home to Investment Income, Net 350,235 958,373 roughly 825,000 Catholics, hundreds of clergy and religious men and women, and thouChange in Value of Perpetual Trust 109,564 (108,116) sands of lay leaders, employees and volunteers who serve in the parishes, Catholic schools, Other Income 1,315,875 956,748 and many other ministries. Operating Revenue 35,494,076 32,179,439 The mission of the Archdiocese is to make the name of Jesus Christ known and loved by promoting and proclaiming the Gospel in word and deed through vibrant parish communiOPERATING EXPENSE ties, quality Catholic education, and ready outreach to the poor and marginalized. Program Services: Clergy Services 8,363,611 8,067,019 Nature of organization Community Services 2,437,926 3,615,844 Catholic Education 6,546,707 6,187,198 The nancial statements include all administrative and program ofces and departments Parish Services 2,237,501 2,042,821 of the Corporation named the Archdiocese of St. Paul and Minneapolis (the Chancery CorCentral Services 6,352,029 5,892,966 poration). Parishes, their related schools, and other separately incorporated and operated Marriage, Family and Life 1,249,532 1,607,538 Roman Catholic entities within the 12-county area of the Archdiocese are not under the Communications and Community Relations 3,607,855 731,541 scal or operating control of the Chancery Corporation and, therefore, in accordance with Total Program Services 30,795,161 28,144,927 accounting principles generally accepted in the United States of America, are not included

Condensed Statements of Financial Position

on the nancial statements. An unqualied opinion means that an independent auditor nds that an institutions nancial statements are fairly and appropriately presented, and in accordance with generally accepted accounting principles (GAAP). The accompanying condensed Statement of Financial Position and condensed Statement of Activities are prepared from the audited nancial statements but, in the interest of brevity, do not contain a similar level of detail and are not accompanied by complete explanatory footnotes. In order to see the full footnotes, please refer to the archdiocesan website at As of June 30, 2013 and 2012 archspm.org. 2013 2012 Accordingly, the opinion of the independent certied public accountants is not present ed. It, too, can be found on our website. Assets

in the Chancery Corporations nancial statements. Certain members of the Chancery CorSupport Services: poration are on the board of trustees of some of such other Catholic entities. Litigation Reserve Expense 3,950,000 (1,050,000) General and Administrative 3,039,873 2,335,637 Basis of presentation Development and Stewardship 1,580,930 1,241,460 Total Support Services 8,570,803 2,527,097 The nancial statements of the Chancery Corporation have been prepared on the accrual Total Operating Expenses 39,365,964 30,672,024 basis of accounting. The Chancery Corporation reports information regarding its nancial position and activities according to three classes of net assets: unrestricted net assets; temChange in Net Assets from Operating Activities (3,871,888) 1,507,415 porarily restricted net assets; and permanently restricted net assets, based on the existence or absence of donor-imposed restrictions. NON-OPERATING ACTIVITY General Insurance Revenues 8,272,436 8,180,599 Financial statements General Insurance Expenses (5,844,483) (6,591,728) Change in Net Assets from Non-Operating Activities 2,427,953 1,588,871 The nancial statements of the Chancery Corporation for FY 2012 and FY 2013 were audited by independent certied public accountants who rendered an unqualied opinion CHANGES IN NET ASSETS $(1,443,935) $3,096,286

Cash $9,510,724 $6,666,786 Contributions Receivable, Net of Allowances 1,824,513 1,390,480 General Insurance Program Trust Accounts Receivables, Net of Allowances 6,918,664 7,234,584 The Chancery Corporation, along with parishes and other Catholic entities operating Loans and Notes Receivable, Net of Allowances 1,387,600 2,283,826 within the boundaries of the Archdiocese, participate in the General Insurance Program Litigation Insurance Claims Receivable 700,000 Trust (the Program). The Program is a trust, of which the Chancery Corporation is the Investments 17,380,741 17,264,667 Trustee, that provides comprehensive, uniform coverage for all of the participants. Benecial Interest in Perpetual Trusts 1,363,754 1,254,190 The net assets of the Program are held for the benet of the participants, as the particiGeneral Insurance Program Assets 9,531,198 9,150,469 pants have contributed such funds in exchange for obtaining insurance coverage. The covPrepaid Expenses and Other Assets 163,003 419,061 erage includes general liability, employment practices, building and contents, burglary, perLand, Property and Equipment, Net 10,521,188 10,304,976 sonal property, student accident, auto, public library, boilers, and workers compensation. Total Assets $59,301,385 $55,969,039 Other programs Liabilities and Net Assets The Chancery Corporation acts as a conduit for special collections in the parishes desigLiabilities nated by the United States Conference of Catholic Bishops (USCCB National Collections) Accounts Payable and Accrued Liabilities $3,059,393 $2,563,430 or for local purposes. During 2013, $1,500,000 was contributed by parish communities for Litigation Claims Payable 5,300,000 650,000 such collections and sent to the Chancery Corporation for remittance to the intended reGeneral Insurance Program Claims Payable cipient. This amount includes $270,000 for service of debt at the Cathedral parish resulting and Other Liabilities 4,567,492 4,537,132 from the building restoration. Amounts Held for Others Under Agency Transactions 1,575,656 1,611,349 Parish Demand Deposits 3,177,535 3,670,963 Commitments Deferred Revenue 131,714 2,635 The Chancery Corporation has entered into a number of contracts with lending instituTotal Liabilities 17,811,790 13,035,509 tions to assist afliated parishes and schools with credit for facility additions. This includes loan guarantees that aggregate approximately $54,500,000 at June 30, 2013. Net Assets Unrestricted: General Insurance Program 17,782,881 15,354,928 Board Designated 5,181,047 5,571,552 Undesignated 13,813,768 17,894,398 Total Unrestricted 36,777,696 38,820,878 Temporarily Restricted 2,828,253 2,338,570 Permanently Restricted 1,883,646 1,774,082 Total Net Assets 41,489,595 42,933,530 Total Liabilities and Net Assets $59,301,385 $55,969,039

February 13, 2014 The Catholic Spirit