Orange Diocese Ends Year in the Red

The Roman Catholic Diocese of Orange ended the recent fiscal year more than $14 million in the red, the result of a souring stock market and additional money spent to assist the poor.

And the bad news has continued into the current fiscal year, with the diocesan investment portfolio having lost $10 million since July.

Catholic officials on Monday released a grim financial report that revealed the diocese’s first budget deficit in its 25-year history, for the fiscal year that ended in June. The previous year, the first year for which the diocese publicly disseminated financial information, had shown a net income of more than $21 million.

Church finances suffered from a one-two punch: a significant drop-off in investment returns--$2.2 million compared with $22.6 million the year before--and a one-time spending increase of $12 million for needy parishes and for parochial students who needed scholarships.

“I’m not alarmed by it,” Bishop Tod D. Brown said. “We’re in a good financial state. We spent millions on the poor in Orange County, and that says a lot about us. We knew what was coming.”

The Archdiocese of Los Angeles, which has a budget about 10 times the size of Orange’s, will release a report for the past fiscal year in December, a spokesman said.

The last fiscal year has seen the diocesan nest egg reduced by 9.3% to $136 million in assets, from $150 million. The fiscal year that began in July has already seen a loss of $10 million in the value of the diocesan investment portfolio.

Brown said the financial picture will not affect approved plans or a capital campaign that could raise as much as $100 million for 12 additional projects in Orange County, including a new cathedral and parish in Santa Ana and a retirement home for priests.

“This is all the more reason to push ahead with the campaign,” said Brown, adding that large gifts to poorer parishes and schools can’t keep coming from the general diocesan budget. In the Los Angeles Archdiocese, for example, an education foundation gives $5 million annually in parochial school scholarships.

The capital campaign, scheduled to begin this year, had already been delayed until at least next summer because of the Sept. 11 terrorist attacks.

Diocesan officials will implement austerity measures, including a potential hiring freeze, “cutbacks on some programs and grants to parishes and schools,” and a general reduction in expenses, said Phil Ries, the director of finance.

Brown said the diocese will have a balanced budget this fiscal year.

For the 1999-2000 fiscal year, the diocese received a 12% return on its $222-million diversified investment portfolio, which is managed by financial professionals and overseen by a diocesan financial council. Last fiscal year, budget officials predicted a 5% return, but received only 1%--a difference of $8 million.

“We just didn’t anticipate that big of a dip in the market,” Brown said.

Though Brown conceded that some future projects will be reexamined, the poor financial showing won’t change already-approved plans, such as the new Our Lady of La Vang parish in Santa Ana.

The diocese gave the poor parish, a Latino and Vietnamese congregation, more than $9 million to buy land and erect a building, which is scheduled for completion in 2003. New parishes usually are required to raise money themselves for new buildings or expansions.

A top priority for Brown, who was appointed bishop of Orange in 1998, has been to bring the Catholic Church’s sagging infrastructure up to speed with the county’s rapid growth. Six new parishes and 15 church expansions are planned.

“I haven’t heard the bishop retreating from his commitments,” said Father Bill Barman, pastor of Our Lady of La Vang. “I think he’s trying to be sensitive to the financial worry, but we do have to have a sense of providence. Is God directing our efforts, our dreams, our plans, or is it driven by markets and polls?”

This is the second year Brown has widely disseminated financial information to priests and the estimated 1 million Orange County Catholics, after 15 years of diocesan silence. A report will appear this weekend in the diocesan newspaper delivered to its 59 churches and centers.