Finance & Administration Recommendations and Goals

URGENT AND CRITICAL NEEDS

Prior to 2016 the Diocese of Fall River did not have the resources appropriate to the requirements of absolute transparency and management accountability. Among the many challenges, many of which have since been addressed, were the following:

1. The Chancery Finance Office was under-resourced. Roman Catholic Bishop of Fall River, Corporation Sole, which is he legal name for the Diocese of Fall River includes parishes, schools, nursing homes, ministries, and social service agencies. Collectively these entities generate several hundred million dollars in revenues and expenses each year, and employ more than 3,000 people. In addition to assisting with management of the Diocese, the Chancery acts as insurance broker for diocesan entities and runs a savings and loan program. As-of 2016 the Chancery Finance Office paid all insurance claims and premiums; billed diocesan entities for insurance, assessment, loan and pension charges; reconciled diocesan investment and bank accounts; sent out semi-annual interest payments for savings accounts; tracked savings and loan program account balances for diocesan entities; collected parish and school financial data; interfaced with auditors on the annual FACE audit; answered Quickbooks related questions from parish staff; and provided information for ad hoc projects (assessment, Diocesan Schools Taskforce, etc…). At that time the Chancery Finance Office employed 1 staff accountant and 1 billing/accounts payable associate.

2. Inadequate lay leadership and oversight. At the diocesan level there was no audit, investment, or central school committees. While Canon Law requires parishes to have Finance Councils providing financial counsel to the Pastor, relatively few parishes exhibited healthy oversight practices – including regular meetings, regular posting of budgets, finances to date, and forecasts, and relatively little lay input was involved in determining budgets.

3. No professional financial audit. Financials for the Chancery Finance Office had never been audited in the history of the Diocese. Also, while select parishes and schools had undergone audits, it was not a common practice, and for those that did complete audits, not done on a consistent basis.

4. Financial transparency was inadequate. The Diocese did not share unaudited Chancery Finance financials on-line or in print. At the parish level, annual reports were not published for all parishes, and the quality of reports varied widely. Furthermore no mechanisms were in place to share parish level data on a central diocesan resource (i.e. Diocesan website).

5. The Diocese of Fall River ranked near the bottom in the Voice of the Faithful transparency rankings of the 177 territorial dioceses in North America.

6. Central oversight and support for planning processes was lacking. There was not financial planning function at the diocesan level. There was no regular program for providing parishes, schools, and other entities guidelines or support for planning processes.

7. Diocesan training programs for Quickbooks or Microsoft Office products did not exist. In addition, little support in the way of calendars, templates, or other resources were provided to diocesan entities.

8. Under-utilization of technology and lack of appropriate financial accounting systems. At the Diocesan level, billing and accounts receivable processes were managed entirely in Excel. At the parish level, many parishes utilized outdated versions of Quickbooks, or in some cases, managed books with Excel.

9. Vendor contracts, including leases, were reviewed for legal issues, but no financial analyses (including lease vs. purchase analyses), were completed.

10. The process for collecting parish and school financials was inefficient and ineffective. Parish and school financial reports were sent to the Chancery by fax or snail mail, where they were manually entered into the Chancery system with minimal review. Information was provided sporadically for some locations, and on occasion data would be changed after reports were submitted.

11. There was no comprehensive parish guide or policy handbook. Rules that did exist were often unwritten.

Recognizing that the Bishop has already made significant improvements at the Chancery and school levels, the members of the Finance and Administration Commission were most concerned with the threats and challenges to transparency and accountability at the parish level.

Following are their specific observations about parish finances and other pertinent concerns by members of the commission:

LACK OF FINANCIAL CONTROL AT PARISHES

• The Chancery should create a budgeting and accounting manual for parishes and schools
• Parish financial reporting is inadequate. The chancery should provide templates for parishes to create consistent annual reports and budgets
• The Bishop needs to enforce the use of active finance councils at the parish level.
• There is a lack of accounting software and appropriate technologies at the parish level, including the necessary training.
• There is a lack of standardized job descriptions in financial management and accounting – a lack of consistency among parishes; they “do their own thing.”
• Lay participation should be increased at the parish level and volunteer laity can assist in building templates, guides, etc.. for parish use
• Parish staff and pastors are often forced into roles for which they are ill-equipped. Creating regional business managers to service multiple parishes should be considered.

TRANSPARENCY

In terms of transparency, the Commission members were most concerned about:

• Lack of trust among and between pastors and laity.
• Audit and financial transparency reports are posted on-line

MANAGEMENT

While it is recognized that the Church is the Church and not a business, it does not excuse us from being disciplined and organized about our finances and human resources management. There exists a struggle between central and decentralized control – a great deal falls between the cracks and is left to interpretation, creating cynicism and resentment. The Chancery is perceived as a big black hole into which money flows and from which nothing is provided in services or support to the parishes. Members of the commission also commented that parishes can be perceived as black holes because of a lack of transparency.

Many best practices can be adapted from the business and nonprofit sector. Commission members would like to focus on:

• A meaningful business model – accounting and financial procedures – for the Diocese. It has struggled causing cynicism, mistrust, and a lack of confidence among the laity.
• Need for “change management” by focusing on achievable goals and the means to address them – and enforcing this across the Diocese.
• Lack of adequate financial staff for oversight. While many believe that the Chancery has too many employees, the fact is it does not have enough for responsible oversight and the adequate analysis of data.
• Limited use of technology at the parish level.
• Explore a shift from the traditional parish model to one where priests are available to minister to the flock and administration moves toward greater lay involvement.

CLERGY

There is concern among the members of the Commission about our clergy. While respecting their role, it was noted that there is considerable mistrust about the ways many pastors manage and oversee parish finances. Among the concerns voiced by members of the Commission:

• The Commission was concerned that that the clergy were not a visible part of the meetings held.
• Many pastors are too independent of both the Diocese and their parishioners in managing finances.
• Many pastors do not see lay leaders as partners in mission; they want control.
• Many pastors are not committed to growth, change, or outreach, only the status quo.
• Financial planning should be utilized for outreach and ministry, not merely control.
• Many clergy are resistant to change.
• Clergy must be open to training and support in adjusting to change.
• Frequent turnover among clergy understandably creates disruptions and a void with maintaining and strengthening consistent connection of laity and parishioners to the Church leadership, most notably with Parish Councils and Finance Councils.

SHARED/CENTRALIZED SERVICES

• Many parishes are now partnering as “linked” parishes, sharing pastors among two or more parishes with a centralized administration. Members of the Commission see this sharing of resources as a positive trend:
• The Diocese should encourage shared services for administrative and other parish operations.
• The Church should look to further regionalizing certain administrative functions. We should centralize purchasing programs across many parishes – e.g., maintenance services, – landscaping, snow removal, contractors, office and liturgical supplies, among many others.

AGING FACILITIES AND LOANS

Given the aging of parish and diocesan facilities, the Commission feels the need for greater attention and focus on:

• Downward trends in revenue and increases in expenses, and how we will address outstanding debt and property upkeep.
• Unfunded liabilities, capital improvements, repairs, and property claims – who owns what, who is liable (parish or Diocese), and what is the plan for upkeep or disposition. Issue of loans – how will projects be funded?
• Adherence to formal approval protocols for any capital project expenditure (or loan) greater than $10,000 (or other suggested dollar limits). Such protocols must be approved and endorsed by parish Pastors and Finance Councils.

OTHER

Numerous other issues raised by the Commission include:

• Our schools – we need to ensure parishes view schools as a viable mission and renew their commitment to our schools
• Facing “head-on” the possibility of future church closings, and appropriately managing expectations.
• Communication – by sharing the successes of parishes, other parishes are provided with new and better ideas.
• Consolidating priest residences with the view that living together allows for greater sharing of ideas, social benefits, and better mental health.
• Effectively integrating the use of lay administrators and business managers, relieving pastors of the burden of administration.
• Trust becomes a strength when there is trust present. Parishes need to be able to trust the decisions related to church closings and future planning without the fear that their church will be next.
• Parishes need to understand, accept, and trust the process, and understand that they are an integral part of a larger diocesan organization.
• Through the efforts of this plan, parishes need to trust the vision and believe in the strength of the entire diocese to support the faithful.
• These challenges and threats must be addressed and corrected. They can be turned into great opportunities, generating the trust and goodwill of people prepared to commit more of their time, talent, and treasure – if the Church becomes transparent and accountable.

RECOMMENDATIONS

• Building on the accomplishments of the Finance staff to date, and after considerable research and discovery, the Finance and Administration Commission is recommending the following four goals:

GOAL 1: ENSURE THAT WE HAVE “ABSOLUTE TRANSPARENCY” IN FINANCIAL REPORTING.

Action Step 1.1 Conduct annual Chancery audit and publish a transparency report online.

Bishop da Cunha conducted and posted the first Chancery audit for fiscal year 2016, and has continued the practice in 2017 and 2018. This must continue. This year the Diocese published only the FY18 audit results; no transparency report. The Finance Office’s goal is to publish an audit every year, and a transparency report every other year. As described in Appendix A, the Voice of the Faithful describes a number of requirements for transparency.

Action Step 1.2 Expand the Chancery audit to include all parishes and schools.

This will take considerable time as a number of important steps must be completed first, including 1) all parishes must migrate to the use of Diocesan recommended online accounting software; 2) parish staff must be adequately trained and oriented to the use of the software, and 3) an intranet must be created for the adequate, secure, and appropriate exchange of information. It is the goal to be able to audit every school and parish once every four years.

Action Step 1.3 Post online the source and use of all parish assessments.

This is to ensure that all clergy and laity have a clear understanding of the use of their parish assessment, including not only the allocation of such funds, but also the results – answering the question “Are our ministries effective and successful at what they do?”

Action Step 1.4 Post online the source and use of the Catholic Charities Appeal.

This is already done each year, but most people do not know because it is not widely communicated. The 2018 Appeal total income, and detail on where it was spent, is now included on the Catholic Foundation website, and will be each year going forward. See https://www.catholicfoundationsema.org/revenue-and-expenditures/

Action Step 1.5 Post online parish financial guidelines.

Lay people are most often unaware of the guidelines. While guidelines have been published in print, they are distributed only to Pastors and are not widely shared. Before this step can be accomplished, an intranet must be created for the secure sharing of this information.

Action Step 1.6 Post detailed parish collection and counting procedures.

Procedural “recommendations” for the counting of collections were approved by the Presbyteral Council in May of 2019. The Council did not want to make them “policy” as of yet. We look forward to this recommendation being made policy. This would bring the Diocese into accord with the Voice of the Faithful ranking guidelines. Parishes have to cooperate and again, an intranet is needed.

Action Step 1.7 Achieve a top decile (top ten percent) Voice of the Faithful transparency ranking.

While the Diocese has improved remarkably in the rankings since conducting an audit and posting the results online, it continues to fall short in the area of posting parish financials. As indicated above in Step 1.5, much work is yet to be done before that is possible.

GOAL 2: ESTABLISH STATE OF THE INDUSTRY FINANCIAL CONTROLS.

Such financial controls include the storage, analysis, management, and processing of financial transactions, records, and processes. In order to implement these controls, the Chancery must have appropriate staffing levels to assure proper oversight and management.

Action Step 2.1 Integrate billing and accounts receivables platforms of the Chancery Finance Office.

This integration will include medical insurance, dental insurance, property insurance, clergy and frozen lay pension, parish assessments, etc. The billing, accounts receivable, and general ledger functions at the Chancery are currently spread across three platforms. The Chancery uses Excel and QuickBooks to create invoices and track receivables. Prior to this year Excel was used exclusively for billing and receivables; there was no functioning aging report. While the Diocese recently introduced some automation, the cash application process is still manual and disconnected. Parishes and schools still have issues with collections and payments; and the Chancery needs to continue to provide instruction for properly submitting payments.

Action Step 2.2 Expand oversight of diocesan ministries receiving Catholic Charity Appeal funds, including creating and reviewing budgets and financial plans. Once budgets are implemented, actual results must be compared to budget. Significant variances (both good and bad) will need to be explained by the ministries.

Most importantly this will require zero based budgeting – ministries of the Church will be required to begin every year with a “zero balance,” and defend their subsequent year budgets (and proposed increases, if any) based on mutually predetermined success metrics – metrices that demonstrate the effectiveness of the ministry.

Action Step 2.3 Extend financial reviews to all other diocesan offices not currently being audited such as health related agencies.

All agencies of the Diocese of Fall River should be regularly reviewed and audited. Much will depend on the migration of the agencies to online platforms. An intranet will allow for Chancery Office access to up-to-date and accurate posting of financial information.

Action Step 2.4 Create an intranet – a private Diocesan network – to deliver invoices and other necessary content.

A private network will provide a secure means for parishes, schools and other agencies of the Diocese to share information. This is an important tool, necessary to promote collaboration and cooperation – important goals of Rebuilding in Faith and Hope. This internal communication tool can include, but not be limited to, search engines, user profiles, blogs, mobile apps with notifications, and events planning. [This is also addressed in the HR strategic plan.]

Action Step 2.5 Bring all diocesan entities onto common payroll. [This is addressed in the HR strategic plan.]

The Chancery must standardize payroll procedures throughout the Diocese to ensure our practices are fair, consistent, and compliant. The HR Office will seek bids from payroll companies such as Paycor, Paylocity, IOI, Kronos, ADP, et al.

Action Step 2.6 Encourage adherence to the Parish Financial Management Guidelines established by the USCCB (United States Conference of Catholic Bishops). This document recommends basic by-laws, procedures, and protocols appropriate to all of our parishes. By developing and implementing these, at least three crucial purposes will be satisfied:

• Establishing guidelines for everyone that these have to be clearly followed and adhered to – most importantly, Pastors. All expenses should be justified and approved.
• Finance Council members must be active in the process. No longer can they just be passive. Any opportunity for miss-appropriation of funds will be minimalized since they will have to sign their name to the entire weekly warrant of all expenses of the parish.
• Public Relations – Diocese can demonstrate that they are making financial responsibility a priority

GOAL 3: PROVIDE CRITICAL SUPPORT AND OVERSIGHT FOR PARISHES, SCHOOLS, AND OTHER AGENCIES.

Action Step 3.1 Convert parish financials to on-line hosted platforms – either Right Networks or QuickBooks. School were converted in 2018. Parish beta test recently began with a small team of pastors. Goal is to complete migration by the end of summer.

Action Step 3.2 Introduce accrual accounting to parishes and schools.

Schools and parishes now record financial activity on a cash basis. Accrual accounting provides a more accurate picture of cash flow by recording when the expense or revenue transaction actually occurs, not when the cash changes hands. It is the preferred method for GAAP, the Generally Accepted Accounting Principles set forth by the Financial Accounting Standards Board. This will require substantial training and orientation for those in parishes and schools who post financial transactions.

Action Step 3.3 Expand training classes and available resource materials.

Training classes to be made available for Excel, QuickBooks, and (new) QuickBooks On-line; Tax Seminars for Pastors; and a new Diocesan Guide: 15 Things Every Business Manager Should Know in QuickBooks (completed).

Action Step 3.4 Conduct financial reviews of all parishes, schools, and agencies on a regular and recurring basis.

The financial reviews will focus on internal controls, reporting, and cash management. The Diocese currently has 80 parishes, 20 schools, and roughly 20 related agencies. The immediate goal is to conduct ten reviews this year, expanding to 25 audits per year by FY23. Every parish, school, and agency should be audited once every four years. This will require the hiring of two additional auditors as illustrated in the Organization Chart.

Action Step 3.5 Develop budget and reporting tools for parishes including a template for annual reports.

In FY19 the Diocese provided a “self-service” budgeting tool to schools – a template enabling them to construct budgets on their own. The goal is to develop similar tools, with training, for the parishes beginning in FY20. Included in this “tool box” will be a summary report template that parishes can use for producing annual reports and a common budget calendar.

Action Step 3.6 Extend diocesan purchasing programs to parishes.

Current centralized Diocesan purchasing programs include SOLAR leasing agreements, gas and electric supply RFPs (Requests For Proposals), and similar voice services RFPs. The Chancery initiated several purchasing initiatives in 2018, including a SOLAR lease agreement for four large systems; RFPs for over 30 parishes and schools for gas and electric supply, and 12 locations for voice services. Plans for next year include SOLAR projects at 17 new locations, additional locations for gas and electric supply, and expanding the scope of new services and programs.

Action Step 3.7 Integrate Diocesan schools business functions into the Chancery operations.

These business functions include payroll, cash management, and select accounting activities. The Diocese has already absorbed (completed in May 2019) some former business manager functions from the Catholic Schools Office. Payroll for all of the high schools has already transitioned to the Chancery.

Action Step 3.8 Assess and make recommendation on the concept of regional business managers.

Based on the emerging capabilities in accounting, payroll, and HR at the Chancery, and the success in consolidating services for the schools, the Commission is eager to pursue the possibilities for further centralizing the business and administrative functions for parishes.

The first step is to adequately support the work of the 10 new collaboratives – linked parishes – that have emerged as a result of this planning process. As they consolidate and streamline their administrations, further consideration should be given partial consolidation of all parishes, whether linked or not. The potential exists for creating clusters of up to ten parishes, and providing a central business manager for each, overseeing accounting, payroll, and purchasing.

Action Step 3.9 Hire additional staff to meet financial management goals

Action Step 3.10 Analyze and evaluate the parish assessment (cathedraticum).

The current parish assessment – the contributions made by the parishes for Chancery operations – was launched in 2016 and “frozen” until 2020. The assessment, including its means of apportionment and administration, should be analyzed and recommendations made for the future.

GOAL 4: RECRUIT, INSPIRE, AND STEWARD CRITICAL LAY AND CLERGY LEADERSHIP FOR SHARED ACCOUNTABILITY.

Great leadership begins at the top. Bishop da Cunha recognizes that in addition to our clergy, and in addition to the “right fit” administrative team, we also need right fit lay leaders – passionate and dedicated volunteers with the requisite professional skills, experience, and wisdom. There is a need for greater lay engagement and oversight at all levels of the Church. The Finance and Administration Commission notes that over four hundred parishioners volunteered to serve on the Rebuild in Faith and Hope commissions, indicating widespread interest and concern.

Until now, there has been little opportunity for lay leadership, the Diocesan Finance Council the notable exception. Most related agencies of the Church have had boards of clergy and staff with little additional participation of the laity.

The purpose of this strategic planning process is to 1) engage the broadest possible lay and clergy audience, 2) provide them with the tools to research and analyze current trends in Diocesan management, 3) seek their advice and counsel in proposing goals and action steps, and as a result 4) enable them to be co-responsible – sharing accountability – for the future growth of our parishes, schools, and agencies.

In order to foster shared responsibility and accountability, the Commission recommends that there be greater opportunities for lay leadership and oversight, particularly at the Diocesan level, but also at the parish level. This will further strengthen the relationship and increase trust.

The Commission recommends the following steps:

Action Step 4.1 Recruit and hire a Director of Strategic (Pastoral) Planning.

This person will serve as a resource to the Chancery, parishes, and schools, offering planning facilitation and implementation – most importantly fostering and enabling the continuing work of Rebuilding in Faith and Hope. The new Director of Strategic Planning will serve as support staff (similar as the Chancellor supporting the work of Diocesan Finance Council).

Action Step 4.2 Establish and appoint a Diocesan Pastoral Council.

The purpose of the Council will be to serve as the strategic planning implementation team, ensuring compliance to the plan and measuring success. Members of the Council (the final number to be determined by the Bishop) will be appointed by the Bishop to serve terms whose length is to be recommended by the Council. The Council will also research necessary protocols, rules, procedures, and job descriptions for the Council itself, and make recommendations to the Bishop.

Throughout the first year of implementation of Rebuilding in Faith and Hope, the Diocesan Pastoral Council should meet monthly to properly steer and ensure implementation of the plan. The Council’s tasks will include, but not necessarily be limited to:

• Offering professional advice and counsel to the Bishop and administrative staff.
• Monitoring of the goals proposed by the plan, ensuring adherence and performance.
• Reassessing the goals of the plan on a regular basis, determining which goals need revision or reconsideration.
• Imagining new goals based on changing and evolving needs.
• Extending the reach and influence of the Council through their personal and professional networks.

Action Step 4.3 Establish, recruit, and appoint Diocesan Pastoral Council Committees.

It is recommended that these committees include:

• Human Resources Committee to oversee and implement the work of the Human Resources Strategic Plan.
• Communications Committee to oversee and implement the work of the Communications Strategic Plan.
• Facilities and Real Estate Committee to oversee and implement the work of the Facilities and Real Estate Strategic Plan.

The Committees should be comprised of at least 15 to 20 members, the chairs or co-chairs of which should serve on, and be representatives to, the Diocesan Pastoral Council. “At-large” members of the committees will not necessarily serve on the Diocesan Pastoral Council. Committee service can also serve as an appropriate means to vet leadership for the Council.

Action Step 4.4 Establish and appoint a Technology Task Force.

The current planning group dedicated to analyzing the technology and IT needs of the Diocese is ad hoc. The work of this group should continue beyond the presentation of this document, and present their recommendations to the Bishop and the Diocesan Pastoral Council. At that time it may be recommended to form a Technology Committee, serving in the same capacity as the above committees.

Action Step 4.5 Establish and appoint a Budgeting and Assessment Committee of Finance Council.

Based on the recommendation of the Chancellor, a Committee of the Finance Council should be formed to make recommendations about Diocesan budgeting and the current parish assessments.

Action Step 4.6 Recommend that Catholic Social Services recruit and appoint an expanded Catholic Social Services Board of Directors including subcommittees recommended in the CSS Strategic Plan.

Up to this point, the CSS Board of Directors has been comprised of the Bishop, a few priests, and the Chancellor, and has met only once or twice per year. This is considered inadequate for the tasks of CSS moving forward. The board should include not only the Bishop and his representatives, but also lay volunteers who can offer specific expertise in social services administration, and leadership in fundraising efforts.

Action Step 4.7 Recommend that the Catholic Foundation of Southeastern Massachusetts establish and recruit a Catholic Charities Appeal Committee.

The Committee would report to the CEO of the Catholic Foundation. The Committee’s purpose would be to:

• Provide leadership in giving.
• Parishes should encourage support for the Foundation.
• Recruit and solicit major donors for the Appeal.
• Spearhead a speaker’s bureau of committed volunteers.
• Recruit and lead an appropriate face-to-face solicitation effort at the parish level
• Conduct an analysis of the current “branding” of the Appeal and whether it is serving the intent of the donors. Many parishioners believe that the entirety of the Annual Appeal is allocated to Catholic Social Services, which it is not.

COMMISSION MEMBERS