L.A. Catholic Archdiocese Projects $8-Million Deficit

The administrative arm of the Los Angeles Catholic Archdiocese has had a moratorium on hiring and new programs for the last eight months and faces a budget deficit of up to $8 million by June, according to its chief financial officer.

The projected shortfall has been caused primarily by increased subsidies to inner-city parishes and schools, as well as sharply rising health insurance costs, Jose Debasa said in an interview this week.

“We’re doing more than we can afford to do,” said Debasa, who oversees yearly expenses of $111 million for the chancery, as the archdiocesan central offices are called. But he said the deficit could be smaller, depending on other sources of income.

The disclosure comes on the heels of the release this month of a more upbeat financial report for the fiscal year that ended June 30, 1989. A church spokesman said at the time that “the financial condition of the archdiocese is healthy, but . . . could be much better.” (In addition to the chancery, that report covered another $200 million handled independently by parishes and parish-run schools.)

The most troubling trend in the archdiocese-wide report for fiscal 1989, Debasa said, was that expenses of $301 million represented an increase of 4.2% from the previous year while income rose less than 0.5%, to $325 million. At the same time, there was a 10% rise in contributions from parishioners.

If more parishes and schools cannot make ends meet, more of them will be seeking financial aid from the chancery budget, Debasa said.

This year is the first time that the chancery has imposed a budget cutback or spending freeze on its departments. Debasa said this indicates that financial problems, while not grave, are growing.

“We are holding down expenses but not getting the income we should, considering the size and importance of this archdiocese,” he said. About 300 people are employed in the chancery. Debasa said the only major exception to the freeze on new programs was the recent approval of an expansion of the Tidings, the archdiocesan newspaper, including creation of a Spanish-language paper.

A 29% rise in medical and health insurance costs last September prompted Debasa and other chancery officers to ask each department to cut back 16% in their expected spending for the year ending June 30, 1990. The departments achieved only a 13% reduction because health costs increased an additional 12% on Jan. 1, he said.

The archdiocese, the most populous in the country with 3.4 million Catholics in 285 parishes, provides financial subsidies to 51 inner-city parishes.

“When I came here four years ago we gave a little more than $3 million to help inner-city parishes. Today that subsidy has doubled,” Debasa said. Among the biggest expenses are improved teacher salaries, insurance, earthquake code compliance and rehabilitating older buildings, he said.

Debasa estimated that the chancery deficit by the end of June will be between $5 million and $8 million.

“If we don’t have the cash, we have to go to our reserves,” he said. However, he added, a deficit is not certain if market investments or other sources of revenue bring more than expected.

Archbishop Roger M. Mahony has expanded the chancery bureaucracy manyfold since succeeding Cardinal Timothy Manning in 1985 as archbishop of Los Angeles.

“We’ve grown awfully large very fast,” Debasa said. The freeze on hiring and new programs will continue until final reports from consultants analyzing what services might be trimmed are in place, he said.