The clergy sex abuse scandal is costing the Catholic Diocese of Buffalo more than the $17.5 million paid to childhood victims of abuse through a special compensation program.
Giving at area Catholic parishes is down since last August and is likely to result in a budget shortfall at the diocese and cuts to ministries and services, according to the Rev. Peter J. Karalus, the diocese’s chief operating officer.
“The abuse scandal has had consequences on the financial condition of the diocese beyond the cost of settling claims,” said Karalus, vicar general and moderator of the curia, in a preface to the diocese’s 2018 financial report.
Karalus also warned of “significant financial challenges” facing the diocese, including clergy abuse lawsuits allowed under the Child Victims Act.
A spokeswoman for the diocese said Friday it was too soon for the diocese to discuss bankruptcy protection.
“It is impossible to determine the impact of the cases filed under the CVA until we actually review the filings,” Kathy Spangler, the spokeswoman, said in an email response to several questions from The Buffalo News. “A number of other dioceses have sought the protection of the bankruptcy statutes but it is too early for us to make that determination.”
Under the Child Victims Act, a one-year window opens Aug. 14 for childhood victims of alleged abuse to file lawsuits that previously were barred by time limitations.
Spangler declined to answer if the diocese has been in contact with bankruptcy attorneys or if the diocese has plans to cut programs, services or staff beyond the elimination last August of its Daybreak TV operations.
The diocese, she said, “continues to evaluate its operating budget to ensure effective and vital ministry across Western New York.”
Diocese officials learned last fall that collections were down calendar year-to-year by an average of 7.5% at a variety of parishes surveyed, although the survey did not weigh the size of the parishes, according to two local pastors.
The decrease in giving isn’t apparent in the financial statement released this week by the diocese, along with a report on the compensation program. That’s mainly because the diocese’s 2017-18 fiscal year ran from Sept. 1 through Aug. 31 and the priest abuse scandal didn’t begin unfolding publicly until more than halfway through the fiscal calendar, when the Rev. Norbert Orsolits in late February 2018 admitted to The Buffalo News that he had molested “probably dozens” of boys in the 1960s, 1970s and 1980s.
The scandal continued to escalate later in 2018, with accusations of abuse against dozens more priests, calls for Bishop Richard J. Malone to resign, an investigation by the state Attorney General’s Office and a federal probe featuring multiple subpoenas and FBI field interviews of dozens of potential witnesses.
In the 2018 financial statement, the diocese listed among its liabilities $18 million as a provision for Independent Reconciliation Compensation Program. The new liability was the main reason total net assets fell to $29.2 million, the lowest level since 2003, after the stock market crash of 2002 hurt the diocese’s investment portfolio.
The financial report shows diocese revenue from assessments on parishes stayed at $6.2 million in 2018, roughly the same as in 2017. Assessments are the best indicator of overall parish offertory giving, because the diocese “taxes” all 161 parishes, taking a percentage of their annual collections based on a formula. Parishes that don't operate schools also pay an additional assessment to help fund Catholic elementary education throughout Western New York. Total education assessments fell by 12%, from $4.2 million in 2017 to $3.7 million in 2018.
Despite investment earnings of $1.7 million, the diocese's central administrative offices were $1.8 million in the red in 2018 even before factoring in the compensation program payouts.
Some area pastors said there’s no question the scandal has driven away some worshippers and discouraged giving.
“People are just angry, and they’ll express their anger by a decrease in their contributions,” said Monsignor Robert E. Zapfel, pastor of St. Leo the Great Church in Amherst.
Collections at St. Leo dropped by about 3.4% in the survey period – enough for the parish trustees to discuss their concern about finances with fellow parishioners, who have responded well, said Zapfel.
The parish was not at the point of having to make drastic cuts, “although our budget is very tight, and we’re watching it all the time, and we’re being extra, extra careful with our expenses and trying to save where we can,” he said.
Several pastors said at least some of the drop-off in giving was attributable to an ongoing slide in the number of practicing Catholics in Western New York. In addition, the diocese’s capital campaign, “Upon this Rock,” which required a commitment to donate over a period of five years, sapped some contributions that otherwise would have come to parishes through offertory collections.
A small number of suburban parishes were having trouble paying their assessments, and diocese officials have agreed to a 10% reduction in the tax levies, said Zapfel. Other parishes have made large cuts in staff or increased tuition for their schools.
A dramatic decrease in weekly collections at St. Mary Church in Swormville earlier this year prompted a plea from the Rev. Robert W. Zilliox Jr. for members not to take out their frustrations on the parish community.
“I absolutely understand your righteous anger and I share it,” Zilliox, the pastor, said in a letter in the church bulletin. “After speaking with a number of parishioners and other pastors, I have heard that the people are withholding donations to their parish, ours included, as a protest against the diocese. Unfortunately, this hurts only our parish and our ability to engage in the ministries so dear to us, not the diocese.”
The parish of 2,800 families will have “to consider cutbacks in ministries that we hold dear” if the downward giving trend continues, he said.
In a year-end financial report to members of St. Joseph University Church, the Rev. Jacob C. Ledwon acknowledged that some parishioners were so offended by the cover-up of clergy abuse that they withdrew financial support from any diocesan programs, including pledges to the “Upon This Rock” capital campaign, Catholic Charities donation and giving to the parish.
“For many the only voice they feel they have is to vote with either their feet and/or their wallet,” Ledwon said. “If you feel compelled to take such a stand, please use your wallet rather than your feet. The church can survive without your dollars, but it cannot survive without your presence.”
In written comments about the 2018 financial statement, Malone called it “an unprecedented year” and reiterated that the IRCP was financed through diocesan reserves, insurance reserves and the sale of the longtime bishop’s residence at 77 Oakland Place, which sold for $1.5 million.
“Funds from current parish collections, 'Upon This Rock,' Catholic Charities or other collections were not utilized to fund this program,” he said.
Contributions to the annual Catholic Charities appeal historically were split between the human services agency and the diocese, with about $35 of every $100 gift going to a fund controlled by the bishop.
But in a nod to parishioners’ discontent over the abuse scandal, the appeal this year included an option for donors to choose for their gift to go only to Catholic Charities, and not to the Bishop’s Fund for the Faith. About 45% of donors so far chose that option – potentially cutting deeply into another main revenue stream of the diocese.
The appeal in 2018 accounted for 20% of all revenues into the diocese’s central administrative offices.
Story topics: Clergy sex cases