SACRED HEART WILKES-BARRE FOUNDATION, INC
770 Lantern Hill Road
Shavertown, Pennsylvania18708
(570) 696-3169
December 19, 2008
Msgr. John Sempa
Members or the Sacred Heart – St. John Parish Finance Committee
666 North Main Street
Wilkes-Barre, PA18702
Subject: Parish Financial Statement for Fiscal Year Ending June 30, 2008
Dear Msgr. Sempa and Members of the Finance Committee
We are writing to inquire about some discrepancies in the annual Parish Financial Statement for Sacred Heart – St. John Parish for the Fiscal Year Ending June 30, 2008, as published with the church bulletin on September 28, 2008. We have been travelling extensively out of state on business, and have only recently had an opportunity to review and study this statement.
The first item that struck us was the $277,798 expense for school subsidies. Taking into account the $26,242 returned from the SacredHeartSchool to the parish as other income, the net expense for school subsidies was $251,556. The school subsidy assessment for FYE June 2008 has been repeatedly reported to be $19,345 a month, or $232,144 annually (see attached letter with the attached Financial Statement for FYE June 2007 included with the Oct. 21, 2007 bulletin and the June 8, 2008 bulletin announcement). The School Subsidy Expense reported for FYE June 30, 2008 exceeds this assessment by $19,412, as shown below.
|
School Subsidy Expense per Financial Statement |
277,798 |
|
Less Other Income from Closing Out of SH School |
(26,242) |
|
Net School Subsidy Expenses |
252,566 |
|
School Subsidy Assessment Due Per Diocese |
232,144 |
|
Excess Expense |
19,412 |
CC: Most Rev. Joseph F. Martino, D.D., Hist. E.D., Bishop of Scranton
Msgr. Vincent Grimalia, V.G.
Father Michael F. Quinnan, E.V. for the Southern Pastoral Region
Mr. James Quinn, Diocesan Sec. for Financial Services & Chief Financial Officer
In presenting the financial statement for FYE June 30, 2007, we were advised at the masses on the Oct. 21, 2007 weekend that the school subsidy expense for FYE June 2007 was approximately $315,000. Furthermore, we were told that $120,000 had been withdrawn from the diocesan savings account to cover the school bills and teacher salaries and benefits until the end of August (see attached letter submitted with attached financial statements for FYE June 2007). Considering the $315,000 school subsidy expense for FYE June 2007 exceeded the prior year school subsidy expense by nearly $45,000 and the reason given for the excessive expense was related to the closing of the school in June 2007, it is difficult to understand how an additional $19,412 could have been expended over and above our parish Diocesan School Subsidy Assessment for FYE June 2008.
There are other expense items that are difficult to understand, especially since the parish rectory has been closed since July 2007 when the pastor and parish administration officially relocated to St. Stanislaus parish rectory and the two parishes became linked. Considering that the purpose of linking and consolidating parishes is to achieve economies of scale in order to reduce operating expense, one would expect many expenses to be lower than the prior year. However, as indicated in the following table, just the opposite occurred.
|
|
YE 2006 |
YE 2007 |
YE 2008 |
$ Increase (07-08) |
% Increase (07-08) |
|
Administration |
145,586 |
148,597 |
163,898 |
|
|
|
Less St. Stan Payroll Reim |
|
|
(28,488) |
|
|
|
Net Administration Expense |
145,586 |
148,597 |
135,410 |
(13,187) |
-8.87% |
|
Plant Operation/Maintenance |
50,983 |
53,275 |
77,934 |
24,659 |
46.29% |
|
Rectory |
17,171 |
18,914 |
24,681 |
5,767 |
30.49% |
|
Total |
213,740 |
220,786 |
238,025 |
17,239 |
7.81% |
When the parishes were linked, and the rectory moved to St. Stanislaus, it was announced the expenses would be prorated: 75% paid by Sacred Heart – St. John, and 25% paid by St. Stanislaus. One would expect an approximate 25% reduction in administration and rectory expense. Also, considering that all weekday masses plus 50% of the weekend masses at Sacred Heart of Jesus Church have been eliminated, one would also expect a significant decrease in the Plant Operation/Maintenance expense. However, as illustrated above, the costs associated with the operation and administration of the parish and church have increased by $17,239, or nearly 8% more than the prior year. In particular the cost for Plant Operation/Maintenance jumped by 46%, and the Rectory expense jumped by over 30%.
The parish continues to incur a net loss, yet there seems to be little control over the parish expenses. In prior correspondence, we disclosed the $232,144 parish school subsidy assessment for FYE June 30, 2008 represented an assessment rate of 45%, and exceeded the standard 25% assessment rate by $102,813. Not only was this $102,813 overcharge paid, but an additional $19,412 was expended on a closed school. In addition to the school subsidy expense increase, the costs of operating the church and administration are also spiraling, as noted by the above table. The amounts in question, as shown below, represent a significant portion of the annual parish expense, and eliminating these excessive charges would result in a net income as opposed to a net loss.
|
Excessive School Subsidy Assessment |
102,813 |
FYE June 2008 |
|
Excessive School Subsjdy Assessment (over diocesan Assessment) |
19,412 |
FYE June 2008 |
|
Descrease in Administration Expens |
(13,187) |
'07 vs. '08 |
|
Increase in Platn Operatons/Maintenance |
24,659 |
'07 vs. '08 |
|
Increase in Rectory Expense |
5,767 |
'07 vs. '08 |
|
Total Expenses in Question |
139,464 |
|
|
|
|
|
|
Total Expense-FYE 2008 |
610,020 |
|
|
Less Close Out of SH School |
(26,242) |
|
|
Less St. Stan's Payroll Reimbursement |
(28,488) |
|
|
Net Expenses - FYE 2008 |
555,290 |
|
|
|
|
|
|
Questionable Expenses as Percent of Net |
25.12% |
|
|
|
|
|
|
Net Loss - FYE 2008 |
(74,199) |
|
|
Total Expenses in Question |
139,494 |
|
|
Hypothetical Net Income |
65,265 |
|
|
(if Expneses in Question were eliminated |
|
|
What is really frustrating about the parish finances and associated stewardship is the magnitude of the parish expenses, in particular the amount that has been spent on school subsidies and assessments in recent years, as illustrated in the following table:
|
FYE |
|
Parish Income |
School Subsidy Expense |
School Subsidy Percent of Income |
|
2005 |
|
506,727 |
232,078 |
45.8% |
|
2006 |
|
516,716 |
282,144 |
54.6% |
|
2007 |
|
509,371 |
315,218 |
61.9% |
|
2008 |
* |
535,822 |
277.799 |
51.8% |
|
TOTAL |
|
2,068,636 |
1,107,239 |
53.5% |
|
|
* |
Net of SS Pay SH Sch |
roll Reimbursement o ool Close Out of (26, |
f (28,488) and 242) |
As illustrated, during just the past four years, the parish has expended $1,107,239 for school subsidies, over 53% of its income. Had these expenditures been more in line with the average diocesan assessment rate of 25%, over approximately $590,000 would have been saved resulting in a cumulative parish income of $388,000 over the past four years as opposed to the net loss of ($202,050). Also, please note that this $590,000 additional expenditure is over half of the consultant’s cost estimate of the restoration work for Sacred Heart Church, as stated in the facility evaluation of the Called to Holiness and Mission project. We are proud of our parish’s exceptional support of Catholic Education. However, the impact on the parish finances must be acknowledged. Instead, it has been used to portray the parish as being in dire financial straights, deep in debt, etc. We fear this will be used as a major factor and justification to suppress the parish and close SacredHeartChurch.
As long time parishioners, we are very concerned about the parish finances and the expenditure of our hard earned money which we contribute to this parish. We would prefer to establish a cooperative relationship as opposed to an adversarial relationship with regards to the administration and management of the parish and its finances. We would greatly appreciate a response to the issues that have been raised in this letter.
Thank you for your attention to this matter.
Wishing you a Merry Christmas and Happy New Year,
Anthony S. Foti Noreen W. Foti
Attachments |
