Dear Friends in Christ,

As I begin my fifth year as bishop of The Diocese of Paterson, I thank our Lord for your unwavering support of the mission and good works of our diocese. Your generous offerings help us to do the work of Jesus in encountering and serving the People of God. In the website link below, you will find access to the audited financial statements of the diocese for our fiscal year 2023 which ended on June 30, 2023. I am pleased to report that the diocese once again received an unqualified audit opinion from our auditor Grant Thornton.

Your sacrificial gifts of service, time, and contributions continue to strengthen our capabilities to serve the spiritual, emotional, and physical needs of our brothers and sisters, our families, the aged, our young, and especially those at the margins of society. Your gifts to the Diocesan Ministries Appeal and the weekly parish offertory collections are manifestations of your hearing the call of Jesus to be his disciples and spread his Good News, in both words and actions.

Please read the letter from Patrick Brennan, our chief financial officer. His letter explains how your sacrificial gifts are used across the diocese, particularly within the Central Business Office which supports your local priests, parishes, and Catholic schools. In a special way, your gifts also provide significant financial support for the formation of our seminarians, our Catholic Charities agencies, Catholic education, and the healthcare needs of our priests.

Inspired and strengthened by our faith and your continued support and encouragement, we remain sharply focused on spreading the Good News of Jesus Christ in all we do. My frequent visits to the parishes and schools are filled with joy and consolation as I witness firsthand Christ’s love and compassion in so many wonderful and important ministries.

Thank You for all you do for our Church, the diocese, and your parishes.

Commending you to the care of the Blessed Virgin Mary, Our Lady of Hope and Good Counsel, and with a prayer for the Lord’s blessing, I remain

Faithfully yours in Christ,

Diocesan financial picture remains steady

By PATRICK BRENNAN
CFO, Paterson Diocese

As I begin my tenth year serving as the Diocese of Paterson’s chief financial officer, I’m pleased to report that the fiscal health of the diocese remains stable despite some significant current and anticipated challenges. Through the generosity and concern of so many committed parishioners and donors, and with a profound appreciation for the tireless and faith-filled work of our pastors, administrators, school leaders, and agency heads, we gratefully continue funding the essential ministries, evangelization, and human services of the diocese. Your financial gifts through the Diocesan Ministries Appeal enable us to truly encounter and humbly serve the hearts, minds, and souls of our friends and neighbors, especially those marginalized by spiritual, physical, emotional, and economic hardships.

Grant Thornton LLP recently completed its annual audit of the financial statements of the diocese for the fiscal year ending June 30, 2023. These financial statements reflect the financial activities of the Chancery Office, including central business operations, self-insurance programs, priest’s catastrophic healthcare, the Mission Fund, the Catholic Education Trust, and Calvary Cemetery. Individual parishes, schools, and social service organizations are distinct from the Chancery and maintain separate financial records and reporting. Grant Thornton’s audit report and the accompanying financial statements are now available for review on the diocese’s website at this address: https://rcdop.org/financialreports

The following is a brief summary of the significant factors affecting the financial status of the diocese in Fiscal 2023:

Central Business Operations:

Parish assessment revenues of $6.25 million were up about 10 percent year-over-year primarily due to the favorable effects of the post-COVID recovery on parish offertory and notable increases in fundraising and bequests. This contributed to improved stability in the overall economic situation of many parishes. Diocesan Ministries Appeal revenues of $3.73 million were essentially flat due to continuing challenges in the economic and market environment for most donors. Rental income of $150,000 was down significantly due primarily to the loss of rental income from the former Neumann Prep property which was sold. There was a $12.5 million gain on the sale of property in Fiscal Year 2023 primarily from the sale of Neumann Prep.

Program expenses for evangelization, social ministry, and pastoral activities of $8.23 million increased by 2.6 percent over the prior year. School subsidies and other education-related expenses of $1.82 million increased by about 15 percent over the prior year reflecting continuing student attrition at several elementary schools and the diocese’s commitment to keeping Catholic education affordable while helping schools explore ways to remain sustainable.

The pie charts at the top of this post depict the major sources of revenues and areas of expense for central business operations in fiscal 2023. In fiscal 2023, about 78 cents of every dollar of income to the diocese was used to directly support the evangelical, ministerial, and educational missions of the diocese. Additional detail about revenues and a break-out of expenses by functional area are presented within the audited financial statements on the Statement of Activities at https://rcdop.org/financialreports

Self-Insurance Programs

The diocese is self-insured for all employee benefits and liability coverages and also provides these insurances to our parishes, institutions, and related agencies. Premiums charged and payments made on claims appear in the consolidated financial statements. In fiscal year 2023, total premiums collected for insurance was $34 million, and total claims were $31 million, and both are reflected as part of the change in net assets in Fiscal 2023.

Financial Priorities Going Forward

The Paterson Diocese continues to experience many of the same fiscal challenges faced by the wider Church throughout the country. A volatile economy and choppy financial markets combined with the lingering effects of sticky inflation, are all challenging the diocese’s ability to continue to provide the same breadth and depth of ministries. As we move forward, we are carefully assessing how we use every dollar to ensure that it results in the greatest positive impact in support of the overall mission of the diocese. We also seek to prioritize opportunities that provide a multiplier effect in terms of our works of evangelization, education, and ministry for the people of God.

The diocesan finance team continues to focus on providing accurate and timely financial reporting, billing, and payment processing as well as financial analysis and insights to help diocesan, parish, and school leaders with planning and decision-making. Some of the specific financial areas we addressed in Fiscal Year 2023 and which we continue to focus on are as follows:

1. Monitoring Parish and School Financial Status: Most parishes and schools remained stable financially in Fiscal 2023 but some continue to face significant financial stresses and uncertainty. We have been working with a team of diocesan leaders that has been meeting periodically for the past two years to assess the financial, ministerial, and sacramental challenges in several of our stressed urban parishes. Several new initiatives are underway as a result of the team’s work including the recent temporary closing of St. Michael parish in Paterson to assess structural safety issues as well as how to best evangelize and minister to the Little Peru neighborhood surrounding the church. We also monitor temporary and persistent challenges such as flat or declining offertory and total income as well as the impact of inflation on facility maintenance and repair expenses and the burden of property and liability insurance which continue to rise sharply. 
2. Lay Retirement Plans: In fiscal 2023 we invested significant effort in researching and planning focused on how to reduce the unfunded liability of the Lay Pension so that it would be more sustainable in the future. Working closely with our actuaries at Gallagher, we decided to offer an optional one-time lump-sum payout opportunity to pensioners at the current 55 percent funded level as well as to eliminate several ancillary non-core plan benefits. The goal was to strengthen the Lay Pension’s core benefit of monthly payments for the lifetimes of pensioners who choose to stay in the plan. This program was implemented in January 2024 and about 50 percent of lay pension participants decided that it was advantageous for them to elect the lump-sum option. This result was in line with our expectations and enhanced our ability to fund the Lay Pension for decades to come. Concurrently, employee participation levels in the Lincoln 403b plan remained high in Fiscal 2023 with about 65 percent of employees still participating voluntarily and receiving 3 percent matches with certain pension-eligible employees receiving additional special grants. 
3. Insurance Benefits: Last year we restructured our health benefits options for employees to better align with rising costs. We implemented a new Health Savings Account (HSA) option that provides tax-advantaged lifetime savings for employees and helps to reduce employer costs as well. We continue to believe that partnering with other New Jersey dioceses on healthcare, as has been the case in Michigan for decades, is the most promising long-term option to achieve sustainable healthcare cost savings through increased scale of covered populations, more leverage in pricing negotiations, streamlined administrative infrastructure, and strengthened Catholic health issues advocacy.
    
   With property and liability insurance we have been experiencing significantly increasing premium rates and fewer carriers providing coverage due to increasing claims losses across the industry. Many carriers now wait until the last possible moment to provide rates since they want to minimize their uncertainty and risk. This environment is challenging for the diocese and our parishes, schools, and agencies since property and liability insurance is a major operating expense for most. We are working closely with our insurance consultant on options to minimize the impact on our entities while making sure we always have sufficient coverage in place to minimize financial risks. 
4. Funding Sexual Abuse Claims: In fiscal 2023, there were no additional claims related to the Independent Victims Compensation Fund which was initiated by the five New Jersey dioceses in 2019. In addition, New Jersey Child Victims Act windows were opened beginning in December 2019 and reopened again in December 2021. As of early May 2024, there are 106 open claims filed under these acts naming the Chancery, four less than in May 2023 due to dismissals or nominal settlements. Significant uncertainty remains about the future financial impact of the Child Victim Act claims, however, sexual abuse claim expenses to date have been manageable using the proceeds from the sale of excess diocesan properties that were no longer in use or needed.

I’m filled with gratitude to witness the continuing resilience of our parishes, schools, and agencies which results from the thoughtful generosity of so many parishioners and benefactors. Our deep commitments to the spiritual and corporal works of ministry, evangelization, and Catholic education are the outward signs of our shared faith. In this my tenth year as chief financial officer, I’m thankful to be able to continue serving the diocese’s mission by working to safeguard its financial resources every day for God’s greater glory.