top

The National Herald - October 19-20, 2002

Archdiocese's Finances Deteriorate Further

__________________

By Theodore Kalmoukos
Special to The National Herald

BOSTON. - The recent report on the finances of the archdiocese that was given to the archdiocesan council at its September 27 meeting in New York paints a deteriorating picture. The report was prepared by the Archdiocesan Department of Finance, which is under the directorship of John Barbagallo, and it represents the first eight months of the current year 2002 ended August 31, 2002.

The report reveals a net deficit of $873,000, and a reduction of the unrestricted contributions of $438,000 in comparison to the same period of the previous year.

A report copy obtained by The National Herald states: "On the actual basis, the archdiocese realized a net deficit from operations of $873,000 for the eight months ended August 31, 2002. This represents a negative variance of $709,000 compared to the eight months ended August 31, 2001."

The reasons for the "significant difference," from 2001, as the report calls it, are the following: "The archdiocese recorded approximately $438,000 less in unrestricted contributions during the first eight months of 2002 vs. the first eight months of 2001. The additional unrestricted revenue received in 2001 was from the challenge campaign."

The archdiocese incurred approximately $671,000 more of operating and reimbursable expenses during the first eight months of 2002:

  • $200,000 in expenses relating to the patriarchal visit. The archdiocese has received $100,000 to date.
  • $80,000 in expenses relating to videotaping the Epiphany Day celebration in Tarpon Springs, Florida. We expected underwriting for this event by the end of 2002.
  • $106,000 in expenses relating to the Clergy-Laity Conference. The archdiocese expects to receive this money from the Clergy-Laity bank account established through the Diocese of San Francisco.

No explanation is given in the report concerning the $80,000 videotaping expenses for the Epiphany celebration in Florida, or as to what it represents, who authorized it, or which company produced the video. The report also provides no explanation for the $106,000 paid by the archdiocese to the Clergy-Laity Congress. Two messages by The National Herald to Barbagallo remained unanswered.

Archbishop Demetrios did not respond to a written request by the Herald to present his position.

Sources told the Herald that the $106,000 represents expenses made by archdiocese personnel who attended the Los Angeles Clergy-Laity Congress. The same sources spoke of an unusual large number of archdiocesan personnel at the Clergy-Laity Congress.

The Herald has learned that the organizing committee of the congress has already paid $140,000 for hotel expenses. The $106,000 recorded in the report represents the air tickets for the archdiocesan personnel. The same sources said that this amount does not include the archbishop's expenses or those of the members of the Holy Eparchial Synod.

Among the operating expenses the Barbagallo report lists are the following:

  • $131,000 increase of the obligation to the Ecumenical Patriarchate
  • $123,000 in expenses incurred for Ionian Village. Due to the cancellation of the camp in 2002, the archdiocese received no revenue to offset these expenses
  • $131,000 increase in expenses relating to retired bishops and clergy between assignments.

Concerning the cash flow of the archdiocese the report states: "Cash inflow for the eight-month period ended August 31, 2002, include approximately $6.7 million in total commitment. Unrestricted contributions total $947,000 of which only $446,000 was actually received in cash. [Half a million dollars] $500,000 of our long debt was paid by an anonymous donor directly to our bank. Significant cash outflow during the eight month period ended August 31, 2002, include $200,000 to the Ecumenical Patriarchate, over $1.2 million in health and business insurance premiums, $500,000 to Hellenic College, $200,000 for a legal settlement, and approximately $1.6 million of expenses for diocesan ministries."

The report does not clarify the nature of the legal settlement that cost $200,000 and the archdiocese paid on its own without any insurance coverage.

According to Barbagallo's report, the accounts payable are as follow: "Accounts payable at August 31, 2002 totaled $1.7 million. Of that amount, $237,000 of accounts payable date back to the year 2000 and prior. (These invoices are currently under review and subject to negotiation with vendors). Of the remaining $1.5 million' accounts payable, $400,000 is owed to Hellenic College and $300,000 is owed to the Ecumenical Patriarchate. Therefore, approximately $800,000 of accounts payable relate to current vendor invoices." Summary of Long-Term Debt "Loans and obligations payable at August 31, 2002 amount to $2.49 million respectively and are comprised of the following:

  • $1.2 million loan payable to Atlantic Bank. The archdiocese will pay interest only on this loan until 2004.
  • $500,000 payable to Town Bank of Westfield under a line of credit agreement.
  • $400,000 payable to Atlantic Bank under a line of credit agreement.
  • Two capital lease arrangements for the purchase and installation of new electrical wiring and phone system. The amounts due for these projects total $397,000."

| The report reveals that due to the bad financial situation the archdiocese interrupted its obligation to the theological school for a period of three months: "...The archdiocese ceased payments to Hellenic College from June through August... The archdiocese resumed payments to the college in September. Assuming that parishes will pay their total commitment timely and in full by the end of the year, it is anticipated that the college will be paid in full by December 31, 2002."

[ The National Herald  -  October 19-20, 2002 - pp. 1 and 4 ]