Washington archdiocese aims to tackle multi-million dollar deficit

Several Washington priests say the archdiocesan CFO claimed the extent of the deficit had been previously obscured by “selective presentation” of finances

In a bid to fill a multi-million dollar annual operating deficit, the Archdiocese of Washington has announced a sweeping reform of its parish assessment system which would make all donations and parish income, even previously restricted gifts and grants, liable to diocesan taxation.

While several Washington priests say the archdiocesan CFO has said in deanery presentations that the extent of the archdiocesan deficit had been previously obscured by “selective presentation” of archdiocesan finances, a spokesperson told The Pillar Monday that those accounts are “inaccurate.”

Archdiocese of Washington Pastoral Center.

According to an Oct. 31 letter from Cardinal Wilton Gregory to pastors, the changes to parish assessments — the canonical tax levied by the diocese on parish income — are necessary because the current system has gone unchanged for more than three decades and “failed to keep pace with the increased costs of operating the Pastoral Center.”

The new system will be “more equitable, particularly for the parishes in the lower half of revenue,” while raising some $3 million in additional revenue for the archdiocesan chancery, the cardinal told his priests in his late October letter, obtained by The Pillar.

Gregory added that the details of the changes, along with rationale for the revised system, would be explained to all pastors in a series of deanery meetings.

According to several priests in the archdiocese, those meetings took place over several weeks in November and early December, at which archdiocesan chief financial officer Liam O’Connor explained that the archdiocese had been operating with a multi-million dollar annual deficit for years, which had further ballooned after the Theodore McCarrick scandal in 2018.

Several priests also said that O’Connor, who took up his position as CFO in August of 2022, had told the presbyterate that the deficit issue had gone largely unnoticed because of a “selective” presentation of archdiocesan finances by his predecessor.

The archdiocese publishes annually audited financial accounts.

In a letter addressed to parishioners and published Sunday, one archdiocesan pastor reported that his deanery meeting was told by O’Connor that, prior to 2018, the archdiocese had been operating with an annual deficit of approximately $3 million — but that “with the revelation of Theodore McCarrick’s crimes giving to the annual appeal plummeted generating an annual deficit of $10 million.”

Fr. Vincent Da Rosa, pastor of St. Mary Mother of God Parish in Washington, D.C., wrote in a letter to parishioners posted at the parish after Mass on December 8 that priests were told “the deficit was not obvious because of what [O’Connor] called ‘selective presentation’ — his exact words — by the previous CFO,” who has since moved on to become the chief financial officer for another diocese.

“I asked why auditors did not catch this over the last several years. The audited financial statements of the [archdiocese] are all available online after all. [O’Connor] responded that technically the math was all there and correct for someone to see it, as he did on arrival in the [archdiocese], and that the ‘audit committee’ to which the audits are presented each year does not include any accountants, who might’ve been better trained to look for these things.”

“No laws were broken and no money was stolen,” Da Rosa said the priests were told. “But the presentation of the deficit was underplayed. [The previous CFO] and the board were both appointed by Cardinal [Donald] Wuerl. [O’Connor] says that the cardinal himself didn’t seem to grasp the full gravity of the situation.”

In a statement to The Pillar, the Archdiocese of Washington said it “has faced financial challenges as a result of the revelations of 2018 and the subsequent impact of the pandemic,” and that its published financial statements “reflect a fair and accurate picture of the Archdiocese’s financial condition each year.”

“Comments attributed to an internal meeting with priests about a recent modification to the assessment policy are inaccurate. Those who stewarded the Archdiocese’s temporal goods back in 2018--and since--have conducted themselves with competence, integrity, and professionalism at all times,” said the archdiocesan statement.

Another pastor of the archdiocese told The Pillar that O’Connor had given a similar account to his own deanery meeting last month, reporting that the archdiocesan CFO described the deficit as having been disguised with “smoke and mirrors” by the previous CFO.

“[O’Connor] was pretty blunt about the state of things,” said the priest, who requested not to be named because “the chancery doesn’t like [archdiocesan priests] talking to The Pillar.”

“Everyone was pretty shocked about the state of the deficit, and a lot of guys are now worried about the pension fund, too, even though we were told it is fine.”

The Pillar also contacted for comment the former archdiocesan CFO, Deacon Eric Simontis, who now serves as CFO of the Diocese of San Jose, California.

Deacon Simontis responded to The Pillar saying he “served as chief financial officer of the Archdiocese of Washington from January 2016 through March 2022. During my tenure, all budgets were presented in full to the finance council, in accordance with canon law, and received their approval. There was no 'smoke and mirrors' employed in these presentations.”

“For context,” Simontis said, “the audited financial statements currently available on the ADW.org website demonstrate the fiscal outcomes during my time as CFO. For the fiscal year ending June 30, 2022, my final partial year of service, the chancery reported a net operating surplus of $1.0 million. The prior fiscal year ended with a net operating surplus of $2.8 million, and the year before that closed with a deficit of $826,000.”

“These figures reflect a transparent and honest approach to financial management and a commitment to responsible stewardship of diocesan resources,” he said.

In fact, the 2021-2022 archdiocesan financial statements do show a 2022 “increase in net assets from operating activities” of $1,001,469.

However, the archdiocese’s financial report for the same year listed a “Central Pastoral Administration operating deficit” of $3.39 million, and $2.5 million for the financial year ending in 2021.

“While I cannot comment on the current statements or internal matters of the Archdiocese of Washington, I stand by my professional approach and dedication to serving the Church with honesty and diligence,” Simontis said.

According to Cardinal Gregory’s letter, among the cost-cutting measures adopted by the archdiocese, with the support of the priest council and the college of consulters, are reductions to contributions to both the priest retirement fund and the lay retirement fund — both of which the cardinal said are “fully funded.”

“The contribution to the fully funded Priest Retirement and Special Health Care Fund will be reduced by 50% while still potentially allowing for increased benefits,” Cardinal Gregory said in his letter.

According to several priests in the archdiocese, O’Connor explained at several deanery meetings that the priests’ pension fund was found to be in better financial health than previously thought because of outdated “assumptions” used to calculate its funding and liabilities.

“Basically, the fund was being looked at as though every priest was going to be retired as of their 70th birthday and immediately taken off any parish budget,” one priest told The Pillar. “Obviously that’s not true, 75 is the new 70 at least, and a lot of guys expect to carry on living in parishes and doing some kind of ministry even if it’s at a slower pace — we all know that. But even so, you see a 50% reduction in the [archdiocesan] contribution and you worry.”

According to the cardinal’s letter to priests, under the current system of archdiocesan parish assessments, parishes are assessed based on thresholds for weekly collection receipts according to a scale which has not been changed in some 30 years.

As a result, the cardinal said, “129 of our 141 parishes (92%) are currently assessed at the highest rate.”

“In addition, the assessable base in the existing policy is limited to weekly offertory, which leads to disparities between parishes based upon how income is categorized.”

Cardinal Gregory said that the new changes, which will come into effect next year, will “result in a system that is more equitable, particularly for the parishes in the lower half of revenue—nearly every one of these parishes will see a net reduction in their overall assessment.”

Several priests told The Pillar that they were told in deanery meetings that an estimated two-thirds of parishes were expected to pay either the same or less under the new assessment scheme.

“While the new structure will result in a projected increase of approximately $3,000,000 in overall assessments in the year following its implementation, I am also delighted to report that this will be offset entirely by a decrease in other parish contributions,” the cardinal wrote.

However, in his letter to parishioners, Fr. Da Rosa noted that “many people give money to parishes with the express understanding that 100% of their gift stays at the parish,” and that the new assessment rules could affect parish-level giving in unforeseen ways.

“Likewise foundations and grants giving funds to parishes,” will now be taxed, Da Rosa noted. “The new schema requires permission from the Chancery [for any exceptions] and specifies that permission may only be requested for capital campaigns. It leaves no space for individual smaller gift-giving.”

Da Rosa also publicly challenged what he called a lack of accountability for the deficit.

In his letter to parishioners, the priest wrote that “no one has been disciplined for any of the above failures.”

“Most important of all,” Da Rosa said in his letter, “trust has been broken. People stopped giving money to the annual appeal because they felt the bishops could not be trusted.”

“In all these years of living with episcopal missteps, no one in the [archdiocese] has ever apologized to us. No one has ever spoken with any sense of contrition to us.”

“The new schema does nothing to restore that trust,” he said, “and in the long run I think that will shrink overall giving by the People of God.”