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ANTHONY S. FOTI
NOREEN W. FOTI
770 Lantern Hill Road
Shavertown, Pennsylvania18708
(570) 696-3169
July 30, 2007
Mr. James Quinn
Diocesan Secretary for Financial Services and Chief Financial Officer
Diocese of Scranton
300 Wyoming Avenue
Scranton, Pennsylvania18503
Subject: 2007 – 2008 Parish Assessments for Schools
Dear Mr. Quinn,
We are writing to request a review of the recently announced 2007 – 2008 Parish Assessments for Schools, and to make appropriate adjustments.
As long standing faithful parishioners of Sacred Heart of Jesus Church in Wilkes-Barre (formerly the Sacred Heart – St. John Parish Community, now the Catholic Community of North Wilkes-Barre), we were very disappointed when we learned our parish had been assessed over $232,000 for the upcoming 2007 – 2008 school year. Our parish had struggled financially to maintain and support its elementary SacredHeartSchool for its entire 99 year history, covering necessary maintenance costs and capital improvements as well as meeting the never ending operational shortfalls. For instance, just a few years ago the parapets on the school (now closed) were repaired at a cost of approximately $185,000, over and above the school subsidy. In addition to funding capital outlays such as this, over half of the parish revenues had been spent to support this school, at the expense of necessary repairs and maintenance to the church. Contrary to assertions that our parish is poor and declining, our income is in the top 15% of all parishes in the diocese. Our recent difficulties in meeting all the operating expenses of the parish are the result of having to allocate such a high percentage of our income to support the school. Although we were saddened when our school was included among those being closed, we expected that under the new system, our parish would benefit financially with the relief of the heavy burden of supporting the school. Understandably, we were shocked when the new assessments were announced. Considering the cavalier attitude of our pastor in announcing the assessment to the parishioners at a homily during mass (“we hoped it would have been lower, but it is what it is”), we, in the best interest of our parish, decided to perform our own analysis of the 2007 – 2008 Parish Assessments for Schools, as published in the June 28, 2007 edition of The Catholic Light. We would have hoped that our pastor, his finance committee, or his business manger would have presented a similar analysis to you. In the event they have not, kindly allow us to review our analysis with you. The results of this analysis, as shown in the tables and spreadsheets appended to this letter, are quite revealing.
As quoted in The Catholic Light, parishes were assessed at 25% of their operating income if their income exceeded $150,000, and if they had paid a school subsidy in the past. Of the 163 parishes in the diocese with incomes over $150,000, only 123 parishes, or 57.2% of the 215 parishes in the diocese were actually assessed at 25% of their income.
The first exception to the general formula applied to parishes with incomes less than $150,000 or those parishes which had not paid a school subsidy in the past. Parishes that met these criteria would be only assessed 10% of their operating income. This assessment formula was applied to 60 parishes, or 27.9% of the 215 parishes in the diocese. This is a commendable consideration for the smaller parishes within the diocese, and has a minimal impact on the overall diocesan finances. The total assessments from these 60 parishes amount to only 3.45% of the total assessments from the entire diocese.
The second exception to the general 25% rule was the establishment of a $50,000 cap in the allowable change in assessment of any parish, when comparing the 2007 – 2008 assessment to the actual subsidy paid in the base year of 2005 – 2006. This exception applied to the remaining 32 parishes (all with incomes exceeding $150,000), or 14.9% of the 215 parishes in the diocese. Although the intention was “to provide a more equitable distribution of the support for Catholic education”, the actual results of this rule, as demonstrated in the appended analysis, are quite the opposite. Although well intentioned, the application of this cap by design has the opposite effect. Parishes which have paid excessive subsidies in the past to support catholic education continue to be assessed at higher rates at the expense of those parishes which have paid less than their fair share in the past.
As a result of the $50,000 cap, 18 parishes in the diocese pay more than 25% of their income. These 18 parishes are assessed a total of almost $760,000 more than the standard 25% of their operating income, or an average of 32% of their operating income. The remaining 14 parishes pay less than 25% of their income. These 14 parishes are assessed approximately $300,000 less than the standard 25%, or an average of 20.3% of their income.
Of the 32 parishes affected by this $50,000 cap, seven (7) are in the Eastern Region. All seven (7) in this region are affected favorably by this cap, in that their assessments are less than the standard 25% rate. These seven (7) are assessed an average of 20.1% of their income, resulting in a savings of almost $175,000 from the standard 25% assessment rate.
There are five (5) parishes in the Western Region affected by the $50,000 cap. Three (3) are assessed at an average rate of 36.9% of their income, and pay almost $184,000 more in assessments than the standard 25% assessment rate. The other two (2) are assessed at an average of 22.7% of their income, resulting in savings of over $11,000 from the standard 25% assessment rate. Combined, these five (5) parishes in the Western Region pay approximately $172,000 more than the standard 25% assessment rate.
In the Central Region, there are twenty (20) parishes affected by this $50,000 cap. Fifteen (15) parishes are assessed at an average of 31.3% of their income, and pay over $576,000 more in assessments than the standard 25% assessment rate. The remaining five (5) parishes are assessed at an average of 20.0%, resulting in savings of nearly $114,000 from the standard 25% rate. Combined, these twenty (20) parishes in the Central Region pay approximately $462,000 more than the standard 25% rate.
Clearly, the application of the cap results in the redistribution of wealth, from certain parishes and regions which have contributed more in the past to support catholic education, to certain parishes and regions which have not contributed their fair share.
As alarming as this may seem, it pales in comparison to the effect on the individual parishes. As previously noted, we are from the Sacred Heart of Jesus Church in Wilkes-Barre, and consequently will focus our attention to the Sacred Heart/St. John Parish. According to the information published in The Catholic Light, this parish has the 31st highest Operating Income of the 215 parishes in the diocese, but will now pay the sixth (6th) highest assessment of all parishes in the diocese. Its assessment of $232,144 is 44.9% of its income, the highest percentage in the entire diocese! The variance between the $232,144 assessment and a flat 25% assessment rate is $102,813, the highest variance of any parish in the diocese. This $102,813 represents nearly $0.20 out of every $1.00 raised by the parish through collections and every other source of income. To put this in perspective, our parish recently held its annual bazaar fundraiser. Countless manhours were contributed before, during and after this three day bazaar, and numerous donations, both monetary and material goods, resulting in a $53,039 profit. Our parish would have to hold two (2) more such bazaar fundraisers to recover this additional $102, 813 assessment. The 2007 Diocesan Annual Appeal Goal for our parish is $45,525. The additional assessment is more than twice this amount. Finally, our pastor has informed us for years that the furnace for the church does not work properly, and the replacement will cost approximately $30,000. This additional assessment would buy three furnaces, and still have money left over. As a side note, at the end of the winter of 2006, both the school furnace had been recently replaced at a cost of $45,000, and the rectory furnace had been recently replaced at a cost of $11,000. The school building closed in June 2007, and the rectory/parish office is in the process of being located to St. Stanislaus’ rectory. Yet our church building is still in need of a furnace.
The income of Sacred Heart/St. John Parish was $517,323, virtually identical to Gate of Heaven Church in Dallas ($517,400) and St. Peter’s Cathedral in Scranton ($517,721). Although Sacred Heart/St. John is assessed at $232,144 (44.9% of its operating income), Gate of Heaven is assessed at only $177,070 (34.2% of its operating income), and St. Peter’s Cathedral is assessed at only $87,382 (16.9% of its operating income). Furthermore, the parish with the fourth (4th) highest income in the diocese, St. Luke in Stroudsburg, (operating income of $934,430, or 80.6% more than Sacred Heart/St. John) pays only $152,226, or 15.9% of its operating income.
Clearly there is no equity resulting from the imposition of this arbitrary $50,000 cap. To paraphrase our pastor: the numbers are what they are. This is not meant to imply that there was any motive or agenda to take money from some parishes, and reimburse others. According to Meitler Consultants, Inc., the “system would be financially supported by all parishes according to an equitable funding formula”. We commend your intentions to fairly and equitably allocate the financial burden of supporting diocesan catholic education to all parishes. Despite your good intentions, the announced assessments are not fair or equitable.
This letter is a formal request to re-examine the assessments, and to adjust the assessment for Sacred Heart/St/John Parish in particular, and for the other parishes adversely affected by the imposition of the $50,000 cap. We realize that having announced the assessments, the fourteen (14) parishes that were favorably affected by the cap (i.e.: had their assessment reduced to below the standard 25% assessment rate) will not want to see their assessment increased. However, this should not prevent the removal of the cap from the eighteen (18) parishes adversely affected by the cap (i.e.: had their assessments increased to above the standard 25% assessment rate). We recognize that by eliminating the cap for the eighteen (18) parishes adversely affected, the diocese stands to loose almost $760,000 in assessments. However, this represents only a 5% reduction from the $15,162,239 total 2007 - 2008 assessments for the entire diocese. As you are aware, the $15,162,239 total 2007 – 2008 assessment is approximately equal to the $15,175,717 total 2005 – 2006 assessment. Considering that the school closings and consolidations saved approximately $5,000,000, the proposed $760,000 reduction in 2007 – 20008 assessments should not be too difficult to absorb, even if it means differing some of the improvements and upgrades to facilities and programs at Holy Redeemer and Good Shepherd Academy (i.e.: smart boards, heating/air conditioning, boilers, etc.).
We have spent at great deal of our time and effort to perform this analysis, and would appreciate a prompt written response explaining what corrective action will be taken to address our concerns. We expect details of the criteria used to evaluate which parishes will have their assessments adjusted, and when the affected parishes will be notified.
In our study of your assessments, we also found that according to the published tables, the cap or assessment percentage was incorrectly applied to the following four parishes: St. Hedwig Church in Kingston, St. Theresa Church in Wilkes-Barre, HolyChildChurch in Mansfield, and St. VincentDePaulChurch in Milford.
There is also a discrepancy between our school subsidies as published in our parish bulletin for 2005 – 2006, as compared to the 2005 – 2006 school subsidy amount reported in The Catholic Light and used as a basis for the 2007 – 2008 parish assessment (Bulletin: $270,580 versus The Catholic Light: $282,144, a difference of $11,564).
In addition, we would like to advise you of some inaccuracies published in The Catholic Light. On November 30, 2006, it was reported that Sacred Heart – St. John Parish had a debt of $700,000, that the financial situation was tenuous, and that the parish needs $3,000,000 to repair the church. As noted above, our parish would not be in as tenuous a financial situation if it were not for the school subsidies, which we expect will now be adjusted accordingly. Furthermore, $3,000,000 is not needed to repair the church. The architects and contractor construction estimate for repairing the Sacred Heart Church and Grounds was $2,831,400, and included a new playground, site lighting, front steps and railing, and other miscellaneous, non-critical items totaling $475,800. In addition, the work required can be performed in phases, over several years. The work that needs to be completed first, in order to repair the exterior and prevent further damage, even after adding architectural and engineering fees and contingency, and after adjusting for inflation, amounts to $2,055,000.
The Catholic Light has also reported the balance of outstanding loans due from the parishes and schools to the diocese as of December 31, 2006 was $28,584,866. Of this total, $12,936,290 is owed by financially troubled parishes and schools. Considering the entire diocese is aware of the financial position of Sacred Heart/St.John Parish, we request an allocation by parish for the total outstanding loans as well as the allocation by parish of the $12,936,290 owed by the financially troubled parishes and schools. The Sacred Heart/St. John percentage due the diocese is a mere 5% of this substantial sum. Finally, please advise of the appointees to the Board of Directors and the Chief Administrators of the regional school systems.
Thank you for your prompt attention and response to these requests.
Sincerely,
Anthony S. Foti and Noreen W. Foti
CC: Most Rev. Joseph F. Martino, D.D., Hist. E.D., Bishop of Scranton
Msgr. Joseph C. Bambera, V.E., Canonical Consultant for Pastoral Planning
Father Michael F. Quinnan, E.V. for the Southern Pastoral Region
Father Philip A. Altavilla, E.V. for the Northern Pastoral Region
Msgr. John J. Sempa, Pastor of Catholic Community of North Wilkes-Barre
Father James J. Alco, Asst. Pastor
Joseph Casciano, Diocesan Secretary for Catholic Education and Superintendent of Schools
Appendix: Analysis of Parish School Assessments 2007 – 2008(1 page)
Parishes Affected by $50,000 Cap (1 page)
Statistical Analysis of School Assessments 2007 – 2008 (1 page)
Diocesan Comparative Ranking of Parishes (7 pages)
Detailed Parish Assessments for Schools 2007 – 2008 (5 pages)
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