The Archdiocese of Miami FY 2008

The Archdiocese of Miami confirmed on August 17, 2009 that it made the “final” decision to close 13 Parishes, effective October 1, 2009.  Apparently the Parishioners of these Parishes are unable to provide sufficient funds to keep the Parishes financially self-sufficient and the Archdiocese no longer wants to subsidize these Parishes or schools to keep them open.

As earlier reported, the Archdiocese of Miami published its Financial report for the Fiscal Year ended June 30, 2008 in the Florida Catholic July 3-16, 2009. We encourage our readers to review this report and direct any questions to the Archbishop or to his Finance Council. The current financial report and Archbishop Favalora’s letter can be viewed at www.miamiarch.org.

Keep in mind when viewing the financial report that this information is already more than a year old - a year in which the economy, as well as the Archdiocese’s financial condition, worsened. Without timely issuance of financial reports and meaningful footnotes which explain significant matters, we can only raise questions about the Archdiocese’s current financial situation.

At a glance, the financial statements would indicate things were not too bad as of June 30, 2008; net assets of $746 million are only slightly lower than the previous fiscal year. The most troubling statistic is the $36 million decline in the value of marketable securities and a $12 million decrease (over 50%) in investment income. Marketable securities for Parishes and elementary schools experienced a $27 million decline in value. Considering that most of the decrease in the investment markets happened in the latter half of 2008 and early 2009, the reader is left to wonder how extensive the loss became, who had stewardship over the portfolios, and why it was allowed to happen.  A footnote on the present market value of the investments would have been appropriate under good accounting practices, and the figure should be readily available to the Archdiocese.

Another area of concern is the increase in Notes Payable of $30 million, raising the total to $303 million. There is no indication in the financial statement concerning the number of outstanding loans, their duration, the interest rates charged, the number of Parishes involved, or how the Parishes are going to get the money to pay the interest on these loans, let alone the principal balance when the loans become due.

In October of 2008 we raised concerns about the extensive borrowing of funds by the Archdiocese of Miami that were occurring.  Payables, due from Parishes to the Archdiocese, were being converted to third party bank debt, thereby providing cash flow to the Archdiocese and liabilities to the Parishes. Subsequent to June 30, 2008, the date of this report, did this borrowing program expand? How were these proceeds used? Were the funds simply added to the investment portfolio and exposed to the market decline?  These concerns still continue.

No doubt it was a difficult year for Archbishop Favalora to comment about the adverse financial condition of the Archdiocese, considering the need to close schools and merge parishes and missions. The Archdiocese has already closed a number of Parish schools. Earlier this year, due to the Archdiocese of Miami’s continuing financial difficulties, it circulated a list of 13 Parishes it expected to close.  Unfortunately, on August 17, 2009 that list became final. 

We can only speculate what Parishes and Schools will be on the next list of closings.  We again request the Archdiocese to provide current and more complete financial accounting.