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Exorcising financial demons

As if the widening sex scandal weren’t devastating enough, the Catholic Church also faces a legal barrage that could hurt financially. The Santa Rosa diocese has been through that, too. MSNBC’s Jon Bonné reports.
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As if the widening sex scandal weren’t devastating enough, the Catholic Church also faces a legal barrage that could deliver a serious blow to its coffers. On this point, too, parishioners in the Santa Rosa diocese have some perspective on how to endure.

Santa Rosa has had its share of sex abuse cases, but for many here the real scandal came when it was found that Bishop Patrick Ziemann’s financial management had left the diocese with some $30 million in bills — and $16 million of debt — by the time he resigned in 1999. Among the losses was $11 million invested in high-risk government bonds and a Luxembourg-based partnership.

Indeed, many parishioners find the money troubles worse than the sex scandal, since the abuse allegations extended to a handful of priests but the financial problems affected nearly every parish, some of which lost millions.

Ziemann is gone, but the financial havoc he wrought remains a scar on the diocese and a cause of worry among the faithful.

After Ziemann left, San Francisco Archbishop William Levada stepped in as a temporary administrator. What he found was stunning: Ziemann had consolidated finances for almost all parishes and schools in his dominion into a single account to which he had access.

‘A rat' is detected
In the year before he stepped down, Ziemann personally spent $2 million from the consolidated account — not for personal use, but for projects he promised to individual parishes with little concern about the source of funding. “The bishop had not spent the money on himself, except maybe one or two suspicious items,” says Jim Dillon, a retired investment banker who helped repair the financial damage after Ziemann left. “I think he spent $100,000 on some very mediocre art.”

Dillon had decades of experience with church finances before he retired to California — including a stint as development director at the Bridgeport, Conn., diocese under Bishop Edward Egan, now New York’s archbishop and one of the church’s most powerful leaders. Ziemann’s expenditures were well-intentioned, Dillion says. But if a new roof or a subsidy to a failing school were easy enough to promise, paying for them was another matter.

As Dillon recalls, there were signs as early as 1996 that the diocese’s finances were awry — when, for example, schools tried to draw money from the consolidated account and were rebuffed by the bishop and Monsignor Thomas Keys, a top aide. “I smelled a rat,” Dillon says.

Skittish donors
But the carefree spending has been only part of parishioners’ concerns. The diocese also has had to explain how it is paying $7.4 million in settlements to victims of sexual abuse by priests. Diocese officials are quick to point out the funds come from separate insurance policies, but lay Catholics are as skeptical here as they are in many parts of the country about the eventual costs of abuse cases just now emerging.

The reluctance is reflected at least somewhat in collection plates, especially when a separate plate is passed for diocese needs. (Even when it’s not, as one parishioner pointed out, part of the parish funds are funneled, or “assessed,” back to the diocese as a standard part of Catholic protocol.)

The hesitancy is reflected in people like Dr. Paul Miller, an ophthalmologist and devout Catholic — “I don’t think you could get me away from the church with a big stick,” he says proudly — who attends regular Mass and an informal rosary group.

But his money remains far from official church hands.

Instead, he seeks out charities that drive funds directly to missionary work overseas. He also uses his skills as a doctor for several medical missions a year that he funds out of his own pocket. It is his end-run around a U.S. church mission that he finds lacking in “social justice,” whether it’s a question of funding missionary work or opening Catholic schools to those who can’t afford tuition.

A useful separation
As for good works at home, Santa Rosa has managed to keep up a solid flow of donations. Amid the current scandals, the local Catholic Charities is only off slightly from its usual giving, though fewer donors have stepped up to the plate.

“We have had on numerous occasions to assure donors of our fiscal integrity and of our management systems,” says Maureen Shaw, executive director of the local charities.

Other branches of Catholic Charities have been less fortunate, including the Boston operation, where donations are off by $800,000 this year and 15 percent of the staff has been laid off amid spreading allegations of sex abuse in the Boston archdiocese.

One key element of Santa Rosa’s strategy has been to remind donors that the charity is run as a separate non-profit corporation, financially — if not politically — independent from the church.

Ironically, most Catholic Charities branches found themselves in a forced separation from their dioceses in the late 1970s when programs to help Southeast Asian refugees couldn’t receive federal funds unless the charities were severed from the church proper.

Though diocese officials serve on many Catholic Charities boards — including in Santa Rosa — the money trail remains separate, as officials are keen to remind donors. “I think people understand the distinction between the mission of a public benefit corporation and the mission of the church,” Shaw says.

Momentum for healing
Schools in the Santa Rosa diocese are also on the mend. After losing $750,000 when Ziemann left, St. Bernard’s High School in Eureka made back $1.6 million on the promise that not a cent go to the diocese. Cardinal Newman High School in Santa Rosa similarly found itself $1.6 million in the red, but it has raised back $1.1 million so far — and created new oversight. Where the bishop used to direct concerns directly to the principal, he now must deal with a management board, one way to draw more people into the management process.

“I feel really good about the fact that we can talk to people in the diocese and there’s not just one person,” says Principal Dennis Crandall.

But here, as in many dioceses across the United States, fears persist that one priest’s misconduct could have a devastating financial impact on the church as lawsuits target diocese assets.

“If something comes out of the woodwork, they could get a judgment against the diocese and attach the funds of the diocese,” says Dillon, who still serves on its financial committee.

For regular churchgoers like Miller, walking away from a church in crisis is not an option — “Catholics don’t vote with their feet,” he says — but the need for emotional and financial protection remains key to those who witnessed the years of fiscal mayhem.

Still, there is a certain pride among parishioners that they have been invited into the reform process, and after years of fiscal trials there is finally hope that wrongs are being righted with the help of careful audits, scrupulous overseers like Dillon and regular Catholics who are just beginning to reach in their pocketbooks again.

“When that level of energy and motivation to change is evident,” Shaw says, “I have lots of hope and trust that the right decisions will be made.”