BRAINTREE -- For the first time since Cardinal Seán P. O'Malley's arrival in Boston seven years ago, the Archdiocese of Boston has a balanced budget.

"Our financial house is in order," said Vicar General and Moderator of the Curia Father Richard Erikson.

On April 14, the archdiocese publicly released its 2010 Financial Report, which shows that the diocese achieved a balance budget for that fiscal year, which ran from July 2009 to June 2010. The report contains analyses of the archdiocese's finances, financial statements, expenditure disclosures, information on monies paid for sexual abuse settlements as well as salary and vendor disclosures.

"To get to a point where we are at a balanced budget operationally is an extraordinary achievement," said Father Erikson. "It's a great reflection of the generosity and trust of the people of the Archdiocese of Boston who have stuck with the Church through thick and through thin."

When Cardinal O'Malley arrived in Boston in 2003, the archdiocese was operating with an annual $15 million deficit.

The $29.8 million budget for fiscal year 2010 was approved in June 2009. It represented a five percent reduction in revenue and 11 percent expense reduction compared to the 2009 budget.

Finance officials faced a $2.3 million budget deficit, a nearly $4 million cash flow deficit and anticipated Catholic Appeal decline of $1.5 million when planning the 2010 budget.

The shortfall was overcome through layoffs, transferring staff to other diocesan entities, leaving open positions vacant, sacrificing cost of living increases, five to ten percent pay reductions for those earning over $100,000 annually, eliminating most business travel, using insurance funds and trimming other expenses.

As a result, central administration reduced costs by $1.6 million, or 13 percent, from 2009.

"The balanced budget is not without great sacrifice," Father Erikson said. "We've had to make difficult decisions with our personnel."

The reductions in workforce echoes a trend in the archdiocese in recent years. Since the 2007 fiscal year, the diocese has reduced its workforce by 23 percent and expenses by almost 17 percent.

In conjunction with the report, the archdiocese also released the results of the 2010 Catholic Appeal and announced a goal for the 2011 effort, which is already underway.

The 2010 Catholic Appeal raised $13 million, 14 percent less than the 2009 total of $15 million. The archdiocese did not set a goal for 2010.

Kathleen Driscoll, the archdiocese's development chief, blamed the decrease on the lackluster economy. She noted that the archdiocese's shortfall was not as substantial as other large non-profit organizations, which she said saw drops of between 11 and 40 percent.

The goal for the 2011 campaign is $14 million, which represents an 11 percent increase over the 2010 total.

The report also examines the general financial situation of the archdiocese's 291 parishes, schools, lay pension plan, Catholic Appeal and the impact of the Improved Financial Relationship Model (IFRM).

The report pointed out that many of the archdiocese's Catholic schools have tuitions that are up to $3,000 below the actual per-pupil cost, and scholarships and financial aid do not sufficiently cover the cost difference. The report says the archdiocese's goal is to make tuition rates cover 85 percent of the per-student cost to educate.

Chancellor Jim McDonough acknowledged that tuition rates will likely rise at schools which have lower per-pupil costs.

This year's report contains additional salary information from years past. Traditionally, the diocese has released only the salaries of top wage earners and cabinet heads. The 2010 report, however, includes additional salary information for advisory bodies such as the Presbyteral and Pastoral Councils and other employees.

"It's a continued effort to disclose as much information as possible," said John Straub, Executive Director of Finance and Operations Central Ministries.

Straub said this level of disclosure is greater than other dioceses.

The report also includes salary disclosures for seven employees who earned over $150,000 per year in FY 2010. Archdiocesan officials defended those earnings.

"Cardinal Seán has attracted world-class talent to his team, and the fruits of their labor can be seen in what they have accomplished," Father Erikson said.

McDonough noted the complexity of the local Church's administrative structure.

"While we think of the Church of Boston as something simple and mission-driven, behind that is a very complex enterprise that requires attorneys, accountants and people with tremendous talents and skills," he said.

This year's report says that one third of the archdiocese's parishes are operating at a deficit while another roughly one third are breaking even. This trend is similar to 2009, according to the report.

"The financial report highlights the need for pastoral planning, which is well underway," said McDonough.

Cardinal O'Malley recently organized a commission to make recommendations for future pastoral planning. The group is chaired by Msgr. William Fay, pastor of St. Columbkille Parish in Brighton.

The financial report also addresses the recently established Improved Financial Relationship Model under which each parish will be asked to pay a 10 percent tithe of collection and rental income to the central ministries of the archdiocese. In addition, parishes will have an appeal assessment equal to eight percent of parish income.

The model was rolled out with 33 parishes in a pilot phase and roughly another 40 parishes joined for the second phase, which is now underway.

Archdiocesan officials have said the new model will result in a more equitable system of contributions to the archdiocese while, at the same time giving the archdiocese a greater interest in aiding the financial success of parishes. As parish income grows so, too, will income to the central ministries.

According to the report, numerous parishes saw increased offertory through programs implemented as part of the effort.

McDonough pointed out that IFRM will not result in more money going towards central ministries than in years past, but rather represents each parish paying their "fair share."

"It certainly was a positive step in many ways," McDonough said.

McDonough expressed his hope of replicating the archdiocese's 2010 success in 2011 -- meaning another balanced budget.

"We think with continued expense management we are going to produce a second balanced budget in 2011," McDonough said.