Archdiocese Cuts Budget Amid Woes

Responding to stock market losses and the prospect of costly future sexual abuse settlements, the Roman Catholic Archdiocese of Los Angeles is cutting budgets for ministry and education programs--some by as much as 30%--and leaving jobs unfilled.

Six weeks into its 2003 fiscal year, which began July 1, the archdiocese still does not have a budget. Moreover, it has yet to issue its annual financial statement summarizing its 2002 budget year--a document that was supposed to be published in December.

Meanwhile, the archdiocese said its new $200-million Cathedral of Our Lady of the Angels and conference center, which will be dedicated Sept. 2, will require an unspecified subsidy from the archdiocese for several years to meet operational costs until it becomes self-supporting.

The subsidy is similar to archdiocesan financial aid given to new parish churches until they get on their feet.

But the amount is expected to be much greater, and it comes at a time when the archdiocese is retrenching elsewhere.

Despite repeated requests from The Times, archdiocesan spokesman Tod Tamberg said he could offer no specifics on how many jobs have gone unfilled, the size of the archdiocese’s budget or the total number of archdiocesan employees.

According to past statements by church officials, the annual operating budget is about $500 million. A Dun and Bradstreet report dated March 7 said there are 300 employees at the archdiocesan headquarters.

The archdiocese, the nation’s largest, has 287 parishes that serve about 5 million Catholics in Los Angeles, Ventura and Santa Barbara counties.

Cardinal Roger M. Mahony has expressed concern about losses in the archdiocesan investment portfolios.

“We’re in 2 1/2 years of not just zero return but minus return,” Mahony told a group of Times reporters and editors last month. “We not only didn’t get a dollar, we lost huge amounts of money. So while we did have a reserve fund to get through one or two rainy years, I’m very alarmed.”

Mahony said endowment funds for St. John’s Seminary in Camarillo and scholarships for Catholic elementary and high school students, as well as archdiocesan operational costs, have been particularly hard hit by reversals in the stock market.

Asked if there would be layoffs, Tamberg said Friday that he did not know, but added that so far the archdiocese has managed to cut personnel costs through attrition. “We just have not hired people when other folks have left,” he said.

Tamberg said he could not immediately determine how much money the archdiocese has lost because of the decline on Wall Street. But the much smaller Diocese of Orange--with a budget roughly a tenth the size of Los Angeles’--reported that its investment income for the period of July 1, 2000, to June 30, 2001, fell $20 million from the previous year’s figure.

Even without a formal budget, cuts have taken place. For example, the archdiocese’s department of Catholic schools has seen its operating budget, which does not include teacher salaries, cut 30% over the last two years, said Father Albert DiUlio, the department president.

He said that amounts to about a $33,000 cut from a $100,000 budget over two years. Most of those cuts came out of travel and office expenses.

DiUlio said the retrenchment has not yet affected the size or number of scholarships for elementary and high school students.

In fact, he said, the number of students receiving scholarships will increase to 5,000 this year from 4,700 last year, thanks to extra donations.

At downtown Los Angeles’ Cathedral of Our Lady of the Angels, which will have a separate budget from the archdiocese, leaders of various ministries report that they still don’t know what they will be able to spend.

In the meantime, some, like the head of Cathedral Charities--an outreach to the poor, homeless and those in jail--is moving ahead with a modest program largely staffed by volunteers.

In a time of fiscal retrenchment, Mahony also cut back the extent and cost of celebrations planned for the cathedral’s dedication.

Two weeks of events have been pared to one week. Only soft drinks, rather than lunch, will be served after the dedication ceremony next month.

Mahony has also been looking for ways to cut the cathedral’s operating costs.

For example, the archdiocese will wash the windows once a year instead of four times as first planned, he said. In addition, there will be only two priests and a deacon assigned to the staff full time.

“We have so many of our people out of work,” Mahony conceded recently. “The cathedral’s got to be a spiritual center primarily. So we have to cut back on expenses on the operations, expenses on the staff, to meet the times,” he said.

A new cathedral finance council is working on projections for the complex’s annual operating costs, but Tamberg said it will be at least a year before anything is known for certain.

Even if the stock market hits a much anticipated bottom and begins to recover, the extent of the archdiocese’s financial exposure because of future sexual abuse costs remains anyone’s guess.

As a nonprofit religious organization, the archdiocese’s financial records, unlike those of a government agency, are not open to the public.

So far, Tamberg said, the archdiocesan payouts to sexual abuse victims have been relatively minimal, totaling $3.5 million, most of it covered by insurance. But that sum could pale in comparison to future costs.

The national scandal over priestly abuse, sparked by a case in Boston early this year, focuses on Roman Catholic dioceses that failed to fire priests accused of abuse.

In response, more than 200 priests have been dismissed from American dioceses, and law enforcement agencies and attorneys for victims have followed by pressing lawsuits.

In the Los Angeles Archdiocese, law enforcement is investigating 60 present or former archdiocesan priests suspected of sexually abusing minors over the years.

Attorneys representing 50 alleged victims filed a class-action suit last month against the archdiocese.

Adding to the archdiocese’s potential liability is a new California law that takes effect in January.

Drafted to aid victims of priestly abuse, it suspends the statute of limitations for one year for lawsuits claiming that an institution allowed a known molester to continue to work and that the person went on to sexually abuse another child.

The law has the potential of dramatically increasing a church’s liability for decades-old cases, according to both plaintiffs’ lawyers and church officials.

Aside from the actual cost of attorneys’ fees, settlements and psychological counseling for victims, there is widespread concern that the scandal will reduce contributions to the church by major donors and rank-and-file Catholics alike. That has been the case in the Boston Archdiocese.

Although Tamberg said Friday that contributions to the cathedral and to parish churches have not been affected by the scandal, others worry that hard times may be ahead--particularly if the church fails to be candid with donors about the cost of sexual abuse cases.

The president of an association of privately endowed foundations that give money to Catholic causes warned in June that the crisis would have “profoundly negative repercussions” on Catholic giving.

Francis J. Butler, president of Foundations and Donors Interested in Catholic Activities, called for “clear and transparent financial reporting” by the church.

In a letter to Bishop Wilton D. Gregory, president of the U.S. Conference of Catholic Bishops, Butler cautioned, “In the absence of such disclosure, donor uncertainty will increase. Many will begin to wonder whether future donations intended for the church’s work might instead be diverted to settle claims.”

The Los Angeles Archdiocese’s annual public accounting is usually published every December in its weekly newspaper, The Tidings, Tamberg said.

But he said he does not know when the statement due last December will be printed.

Overall, Mahony sounds pessimistic. “The [sexual abuse] scandal aside, we really are ... not going to be able to offer all of the things, archdiocesanwide, [that] we did before,” he said during a wide-ranging July 2 discussion with Times editors and reporters.

“I see nothing on the horizon that is going to change the economy of this country,” he said. “I’ve had an economist tell me we’ll be lucky to see a 1% increase per year in return on stocks, and that’s maybe 2005 or 2006. That’s very grave. I can’t afford to allow the archdiocese to get caught off guard. In other words, I would welcome a turnaround in the market. I can’t count on one.”