Bishop’s Report to the Diocese
Dear Brothers and Sisters in Christ,
I appreciate this opportunity, along with our Diocesan Finance Officer, Dave Malanowski, to share directly with you details of the Diocesan Financial Report, our financial stewardship of the resources provided by your donations and other gifts supporting the work, ministry and mission of the Church given us by Jesus Christ. Your gifts, sacrificial offerings and tithes enable our diocese to sustain and appropriately grow the offices and ministries that also support and enable our parishes, schools and other institutions to be all they are meant to be.
The life and growth of the Church in northern and western Missouri form our identity together as a family, carrying out the mission and work of our local Church. Additionally, because of these financial gifts, together we are also able to specifically fund certain corporal and spiritual works of mercy through grants and other means of reaching specific needs. All these actions combined enable me to more fully and directly fulfill my office as your shepherd as we follow Jesus as missionary disciples.
In my travels throughout the cities, towns, and all the corners of our diocese, I continue to see the rich blessings God showers upon us as well as our Catholic faith expressed in you, His children. In spite of the challenges that the pandemic has placed upon us, sacraments continue to be celebrated with faith and joy; teaching, sharing and handing on the faith to both our young and not-so-young continues in so many beautiful ways; works of Christian charity and mercy are extended in hope. We are blessed indeed.
Our 2021 Annual Catholic Appeal is underway and your contribution remains essential to the mission and ministry of the Church. Your participation at some level is itself an expression of faith.
In this Advent season in which we pray Maranatha—“Come Lord Jesus”—and prepare our hearts for the awesome gift of Incarnation and the birth of our Savior at Christmas, I offer my own thanks for your belief and faith, for your witness to your baptism, for your generous heart. Thank you for sharing your generosity in giving back to God from the various blessings God has given you; for indeed, “the Love of Christ urges us on!” (2 Cor 5:14).
Gratefully yours in Christ,
+Bishop James V. Johnston, Jr.
Letter from the Diocesan Finance Officer
Our Diocese is committed to the proper stewardship of and accountability for the financial resources of the Diocese. Therefore, we continue our practice of disclosure and transparency, and present the financial status and activity of the three major components of the administration of the Diocese for the 2019/20 fiscal year ending June 30, 2020. The information in this report is for:
- Diocesan Chancery Operation (DCO) – represents administrative functions, ministries and programs which are operated at the Catholic Chancery (at the Catholic Center), as well as our campus ministry locations.
- Diocesan Deposit and Loan Fund (DLF) – is a segregated trust (overseen by a seven-member Board of Trustees) and holds the deposits of parishes and schools ‘in trust’ primarily to make loans to parishes and schools for new construction and major renovation.
- Diocesan Insurance Operation (DIO) – includes the Diocesan self- insurance fund for property and casualty insurance and the lay and clergy benefit programs.
The presentation of this financial information represents the commitment of Bishop Johnston, Diocesan Leadership, our Diocesan Finance Council and the staff of the Diocesan Finance Office to report openly the sources of our funds and how these funds are used, along with a description of overall financial condition.
Diocesan Chancery Operation (DCO)
Catholic Diocese of Kansas City-St. Joseph
Chancery Operation Statements of Financial Position
-Years Ended June 30, 2020 and 2019
|Current||Plant||Custodian||Endowment||2020 Total||2019 Total|
|Cash & Cash Equivalents||$11,899,996||$1,462,821||$1,131,550||$3,744,847||$18,239,214||$15,768,792|
|Loans & Accounts Receivable||$2,736,369||–||$23,743||$3,023,338||$5,783,450||$5,258,418|
|Pledges Receivable-Annual Catholic Appeal||$114,751||–||–||–||$114,751||$105,961|
|Land, Buildings & Equipment||$1,023,794||$8,974,841||–||–||$9,998,635||$10,216,010|
|Beneficial Interest in Others||–||–||–||$610,698||$610,698||$626,558|
|Investments, At Market||–||–||–||$3,010,496||$3,010,496||$2,951,716|
|Other Short Term Deposits||$415,287||–||$1,155,293||–||$1,570,580||$1,715,335|
|Long Term Deposits Payable|
|Diocesan Insurance Reserves||$2,343,063||–||–||–||$2,343,063||$262,491|
|Retired Priests Benefit Obligations||$9,926,384||–||–||–||$9,926,384||$9,030,263|
|Without Donor Restriction|
|Designated for Annuities||–||–||–||($62,372)||($62,372)||($75,615)|
|Expended for Plant||–||$4,756,537||–||–||$4,756,537||$4,819,504|
|Total Net Assets Without Donor Restrictions||$1,581,423||$6,219,358||–||$1,974,461||$9,775,242||$10,267,719|
|With Donor Restriction||–||–||–|
|Total Net Assets with Donor Restrictions||$665,258||–||–||$7,687,402||$8,352,660||$7,524,667|
|Total Net Assets||$2,246,681||$6,219,358||–||$9,661,863||$18,127,902||$17,792,386|
|Total Liabilities & Net Assets||$15,774,910||$10,437,662||$1,155,293||$10,389,379||$37,757,244||$34,927,455|
The financial information for the DCO is from the 2019/20 annual audit report prepared by the accounting firm RSM US. The audit resulted in a “clean opinion” meaning there were no qualifications and the financial statements “represent fairly, in all material respects, the financial position of the Catholic Diocese of Kansas City – St. Joseph Chancery Operation as of June 30, 2020 and June 30, 2019, and …are in accordance with the accounting principles generally accepted in the U.S.”. In addition, the auditors indicated there were no internal control weaknesses identified within the scope of the audit. The Diocesan Finance Council reviewed and recommended approval of the audit at its October 26th meeting; recommendation was subsequently approved and accepted by Bishop Johnston.
As shown in the DCO’s Statement of Financial Position presented in this article, Total Net Assets Without Donor Restrictions decreased by approximately $493,000 to $9.8 million. The Undesignated Portion of Net Assets Without Donor Restrictions decreased from $687,326 to $460,681. These decreases are due primarily to the recording of a net expense (and increased liability) of $896,121 related to the accrued benefit obligation for health care and long- term care for our retired priests. The actuarial loss component ($755,000), in turn, was due to service cost, interest cost, premiums paid, changes in participant data and use data, interest rate assumptions, industry trends, and new premiums for health and long- term care.
The DCO paid down the mortgage on the Catholic Center by $154,408, ending the year with a mortgage balance of $4.22 million (in the Plant Fund). The original mortgage on the Catholic Center in October 2010 was $7 million.
From a pure “operations perspective” (looking at results in light of the DCO operating budget), the DCO ended with a surplus of $356,000. Income associated with the Annual Catholic Appeal was $1.85 million, which was a combination of 2019/20 pledges ($1.73 million) and a small amount of additional 2018/19 pledges ($116,000). The 2019/20 Annual Catholic Appeal amount was virtually the same as the previous year. Income included a budgeted $350,000 transfer of net interest income from the Deposit and Loan Fund approved by the Trustees of the Deposit and Loan Fund. This amount was also $350,000 in 2018/19.
Fiscal Year 2019/20 was the eighth year of the special collection for seminarian education and vocations called “Tomorrow’s Priests”. This collection realized $152,879, an increase of approximately $12,000 over 2018/19. The continued generous support of this collection speaks to the recognition by the Diocesan Faithful of the importance of priestly vocation awareness and development and the cost of seminarian education (undergraduate, pre-theology and theology programs).
All offices, departments and programs did a reasonable and effective job in adhering to approved budgets.
The DCO did develop and implement a Parish/School Assistance “Bridge Plan” to help parishes weather the impact of the COVID-19 virus during those critical, initial months of April and May and into June. The DCO forgave two months of the Cathedraticum assessment for parishes and 25% of property and casualty premiums for the same two months for parishes and schools.
The DCO did receive a $989,500 loan from the Payroll Protection Program (through the Small Business Administration) in April. The DCO has determined that it has met all requirements for forgiveness; thus, auditors have allowed us to account for the loan proceeds as a contribution in the 2019/2020 financial statements.
Parish/School Accounts Receivable (what is owed to the DCO) increased by approximately $30,000 to $2.74 million. These are amounts that parish, schools, Catholic Cemeteries and Catholic Charities owe to the DCO for certain, normal monthly bills (the Diocesan Cathedraticum Assessment, employee benefits, property and casualty insurance premiums, school per pupil assessment, etc.). The increase was a comparison of 10/14/20 to the previous year 10/14/19, a comparison which provides the Diocesan Finance Council with the most current information available when meeting in October, and coincides with the end of a mid-month billing cycle. The receivable amount can be an important and effective gauge of parish or school financial health.
Diocesan Deposit and Loan Fund (DLF)
Catholic Diocese of Kansas City-St. Joseph
Deposit and Loan Fund Statements of Financial Position
-Years ended June 30, 2020 and 2019
|Endowment||Deposit & Loan||2020 Total||2019 Total|
|Cash & Cash Equivalents||–||$2,650,695||$2,650,695||$1,078,159|
|Loans & Accounts Receivable||–||$20,968,265||$20,968,265||$16,734,977|
|Other Short Term Deposits||–||$12,507,003||$12,507,003||$12,342,051|
|Long Term Deposits Payable:|
|Cemetery Perpetual Care Funds||–||$6,591,928||$6,591,928||$6,479,897|
|Without Donor Restrictions|
|Total Unrestricted Net Assets||$1,547,972||$1,562,442||$3,110,414||$2,549,570|
|With Donor Restrictions|
|Total Temporarily Restricted Net Assets||$1,546,888||–||$1,546,888||$1,539,043|
|Total Net Assets||$3,094,860||$1,562,442||$4,657,302||$4,088,613|
|Total Liabilities & Net Assets||$3,094,860||$40,889,450||$43,984,310||$47,021,750|
The Board of Trustees of the Deposit and Loan Fund approved the Fund’s audit on October 29th. The audit of this Fund, like the DCO, was performed by RSM US and received a “clean opinion” from our auditors and represents a successful fourth full year of operation as a separate trust. The Statement of Financial Position (as presented in this article) shows a healthy DLF, with $44.0 million in assets, of which $23.0 million are held in cash and investments. Cash and investments would handle prospective withdrawals and loans. Total Net Assets totaled $4.7 million. The line graph contained in this article shows the level of parish loans and deposits over the last five years. Loaning activity increased primarily with the renovations at St. Elizabeth Church, renovation of a newly purchased building into a new Early Childhood Center at St. Joseph Cathedral, school and church gathering space renovations at Our Lady of the Presentation Church in Lee’s Summit and the roof repair at St. James Church in St. Joseph. The net increase in total loans receivable (parishes and schools) was from $16.7 million to $21.0 million. The amount of net deposits at 6/30/20 and internal projections of deposits, withdrawals, loans and principal paybacks (out to end of calendar year 2021) indicate adequate capacity to handle anticipated loans and withdrawals in the near term, particularly, taking into account current and upcoming construction or renovation projects being considered or in design.
Diocesan Insurance Operation (DIO)
Catholic Diocese of Kansas City-St. Joseph
Diocesan Insurance Office Statements of Financial Position
-Years ended June 30,2020 and 2019
|Total Current Assets||$393,591||$457,727|
|Deposits with Catholic Diocese of Kansas City-St. Joseph||$2,343,063||$262,491|
|Investments, National Catholic Risk Retention Group Stock||$1,693||$1,693|
|Auto Premium Reserve||$98,202||$101,299|
|Claims & Expenses Payable-Property & Casualty||$1,081,922||$1,670,548|
|Claims & Expenses Payable-Self Funded Health Insurance||$761,042||$685,832|
|Total Current Liabilities||$1,941,166||$2,457,679|
|Note Payable to Diocese||–||–|
|Claims Incurred But Not Reported||$1,608,034||$1,632,299|
|Total Long-Term Liabilities||$1,608,034||$1,632,229|
|Net Assets Without Donor Restrictions||($810,853)||($3,367,997)|
|Total Liabilities & Net (Deficit)||$2,738,347||$721,911|
The Diocesan Insurance Operation is reviewed by RSM US each year. A review includes applying analytical procedures to management’s financial data and making inquiries of management. Thus, the scope is different and less than a full audit. The Diocesan Finance Council reviewed this report at its meeting on November 23rd.
In January 1, 1975, the Diocese established a self-insurance program for property and casualty insurance coverages. Under this plan, the Diocesan Insurance Operation (DIO) self-insures the property and casualty coverages (except for boiler insurance, which is a deductible program) for all Diocesan parishes, schools, early childhood centers, Catholic Cemeteries Association, Catholic Charities of Kansas City-St. Joseph, and other diocesan institutions. The self-insurance programs provide coverage for buildings, machinery and equipment, boiler, workers’ compensation, automobile, student accident, comprehensive general liability, fiduciary liability, professional liability, sexual misconduct liability and cyber liability. The program includes a limit on each claim payable by the DIO. Claims in excess of the self-insured retention are insured by licensed insurance carriers. Under the program, the DIO contracts for the administration of claims, appraisals, and loss control and prevention services. The Diocesan Insurance Office coordinates the placement of coverage, payment of claims and premiums with insurance companies and service providers.
Part of the administrative activity of the DIO is the Office of Child and Youth Protection, which oversees: a) compliance with the Charter for the Protection of Children and Young People, b) victims’ services and counseling, c) safe environment training and education and d) investigations.
In addition to the property and casualty coverages, the Diocesan Benefits Office (as part of the Office of Human Resources) administers the clergy and lay employee benefit programs, which include pension, life insurance, short-term disability, long-term disability, health care insurance, voluntary dental care, voluntary supplemental life insurance, flexible spending accounts, health savings accounts, long-term care (clergy), and supplemental medical reimbursement (clergy). (Please note-the actual pension plans for the Diocesan priests and the lay employees of are various parishes, schools and other entities are two individual, separate trusts overseen by two separate boards.
Premiums for the self-insurance property and casualty coverages are based on an exposure assessment for the specific line of coverage such as the appraised value of structures and contents for property coverage. Premiums are collected by the DIO and used to pay claims as they are incurred. Premiums for insured coverages are collected by the DIO from all entities of the Catholic Diocese of Kansas City-St. Joseph, Catholic Cemeteries Associated of Kansas City-St. Joseph, and Catholic Charities of Kansas City-St. Joseph.
The DIO Statement of Financial Position presented in this article shows net assets of <$810,853>. This ‘negative’ net asset amount relates very directly, but not solely, to the $9.9 million clergy sexual abuse settlement of 2014. The DIO had an operating surplus in 2019/20 of $2.56 million, a sixth successive year of surplus. The surplus is generally a product of positive claims experience. A plan, approved by the Diocesan Finance Council in January 2014, has enabled the net asset amount to increase by approximately $14 million over the last 6 years. (The net asset figure in 2013/2014 was <$15.0 million> and now is <$810,853>.) The one-time loan from the DCO to the DIO made six years ago is completely paid off. The Diocesan Finance Office and the DIO continue to monitor and follow the plan set forth by the Diocesan Finance Council.
In summary, as Diocesan Finance Officer, I would make the following comments: 1) the DCO continues responsible budgeting and seeks to maintain a level of overall financial stability, 2) the DLF is effectively addressing the saving and loaning needs of parishes and is in solid financial shape, 3) the DIO continues to experience positive results to reduce the negative net asset position, and it continues to follow the plan set forth by the Diocesan Finance Council, 4), the DIO and the Office of Human Resources will continue to monitor results and develop short and long term strategies for cost-effective lay employee and clergy healthcare, and 5) our Diocese continues to address the priorities and goals articulated in the Mutually Shared Vision. A clear Diocesan Vision Statement with the accompanying priorities for the next 3-5 years will allow us to move forward together as One Family. Restored in Christ. Equipped for Mission, passionate about our faith and hopeful for the future.
In addition, Bishop Johnston is extremely grateful to all who have continued their stewardship of treasure and faithful giving since the middle of March up to this Fall. Bishop Johnston’s gratitude extends to giving not only to the DCO but also to parishes, schools and Catholic Charities.
Anyone having questions or wishing to discuss the information contained in this report may contact me at (816) 714-2319 or e-mail me at firstname.lastname@example.org. I will be happy to assist you. The Diocesan Finance Office will publish the complete DCO Audit, the complete Deposit and Loan Fund Audit and the complete Diocesan Insurance Review on our Diocesan website here.
Thank you for your continued support, particularly during these recent challenging times. This report hopefully shows that your support helps in so many important ways.
Diocesan Finance Officer