Priests told of Clergy Fund woes, plans for overhaul

BRAINTREE -- At a series of regional meetings with archdiocesan clergy, the Archdiocese of Boston announced steps to overhaul its ailing Clergy Fund.

Around 400 priests attended meetings in which the poor financial situation of the Clergy Fund was discussed. The meetings were held between Sept. 9 and Sept. 11 in all five regions of the archdiocese.

The Clergy Fund is the investment vehicle that provides for the retirement, disability, medical and financial needs of the priests of the archdiocese. Currently there are 775 Boston priests; 269 of those priests are retired and 13 are on disability.

At the meetings, Chancellor James McDonough explained that he is drafting a plan to raise $50 million needed to stabilize the retirement portion of the Fund, expand the lay presence on its board of trustees and review ways to streamline the current benefits, including taking additional advantage of available government benefits.

“We have a very serious crisis in our hands,” McDonough told The Pilot in a Sept. 16 interview.

The Fund will be out of cash by 2011 if urgent measures are not taken, he said.

The unfunded pension liability is around $110 million but, according to McDonough, the current need is to raise $50 million. The rest is expected to be achieved by continuing the current Christmas and Easter collections, which are directed exclusively to the Clergy Fund and are its most substantial source of income. Those collections have raised around $5 million annually in recent years.

McDonough explained that the archdiocese needs to improve the long-term financial management of the funds. As a result, Cardinal Seán P. O’Malley has agreed to modify the governance structure of the Clergy Fund. Currently, the Archbishop of Boston is the sole trustee of the fund with the day-to-day management being handled by his delegates.

Under the new model, an expanded board of trustees will include three or four laypersons with extensive financial, legal, health care and executive experience, as well as the Secretary for Parish Life and Leadership and two pastors.

This new board will oversee the management of the fund, reorganize the trusts, release a public annual report, improve communications regarding policies and programs, control the costs of the fund and protect the integrity and purpose of the funds.

The first priority of the new board will be increasing revenue, McDonough said.

In addition to promoting increased giving to the current Christmas and Easter clergy collections, a third annual collection will be added.

Details about that new collection are still being finalized but it will be a second collection on a designated Sunday, not an exclusive collection for that day, McDonough said.

The archdiocese also expects to raise between $1.5 and $2 million by organizing a yearly fundraising event.

In 10 years those initiatives could add at least $30 million to the fund, he said.

McDonough also expects that the Catholic faithful and current donors of the archdiocese will strongly support the effort to fully fund the Clergy Fund.

“This is a clear and achievable goal that we can meet and we will meet,” he said.

As part of the change in policy, the archdiocese will start utilizing government-provided benefits such as Medicare and Medicaid.

Currently all priests who are at nursing homes are private pay patients. The plan calls for transitioning them into Medicaid over a period of time, as well as utilizing Social Security disability pension for priests on disability.

“We need to learn about those government programs and make a better use of those,” McDonough said.

To work with the new board of trustees, the archdiocese has secured the services of Joseph D’Arrigo, an expert in the benefits field.

In an email to priests sent Sept. 13, Vicar General Father Richard Erickson explained that reasons for the deficit in the Clergy Fund include flat revenues for the past several years from the Christmas and Easter collections, dropping investment returns below actuarial projections and dramatic increases in health care and nursing home costs.

In 2005, an archdiocesan memo leaked to the press stated that no funds had been deposited into the retirement fund between 1986 and 2002, prompting questions about the integrity of the fund.

Then-Chancellor David Smith clarified that all the funds raised at the Easter and Christmas collections had been properly used for the care of clergy, even though funds had not been placed into the retirement component of the Clergy Fund because investments had yielded enough to secure the viability of the plan for those years.

Smith said that the funds raised were, instead, used to fund other segments of the fund, including the skyrocketing medical expenses of both retired and active priests.

McDonough stressed that it is very important to the cardinal to restore trust among the clergy and the lay people. As a result, after listening to the feedback from the priests at the meetings, the cardinal has requested a thorough review of the funds starting in 1973.

Asked about claims that the funds were used to pay stipends for priests accused of sexual abuse, the chancellor said that the cardinal’s requested review of the fund will settle that question.

Father Thomas Foley, the archdiocese’s Secretary for Parish Life and Leadership, who was part of the presenting team at the regional meetings together with McDonough, Father Erikson and Father James Flavin, said that there is a sense of urgency among priests about this problem.

“The priests want to know what exactly happened to the Clergy Fund,” he said.

“My understanding is that what the cardinal wants is a thorough report, so that none of us will say ‘Is there something else that is not included?’”

“We’ve heard bits and pieces over the years, but it is to be a comprehensive study from the beginning of the Clergy Fund to the present that will give a complete reporting,” Father Foley said.

“I think that will go a tremendous way to rebuild trust,” he added.

Father Foley said that along with the questions and anxiety that this situation is causing to the Boston clergy, he perceives that there is a widespread sense that now is the right moment to forcefully address the problem.

“I think that, by and large, the priests were grateful that somebody is showing us a way forward.”

Father Foley said that the meetings were well-received by the clergy, and that McDonough’s ideas are resonating well with the priests, particularly the plan to revamp the Fund’s board of trustees.

In his email to priests, Father Erikson addressed some of the issues raised by priests at the meetings, challenging rumors but at the same time stating that “all potential solutions must be considered.”

Addressing the issue of potentially reducing benefits to retired priests, Father Erikson wrote that, “we are doing all that we can to not cut benefits.”

“Our goal is to avoid taking this step,” he said.

In his memo, the vicar general also refuted rumors that the archdiocesan retirement home for priests, Regina Cleri Residence in Boston, was in the process of being sold as well as the perception that the monies allocated for the care of priests were misused.

“The perception that the archdiocese did not contribute monies raised in the Christmas/Easter collections from 1986-2002 is not true. The funds were deposited into the Clergy Fund and used specifically for medical care costs,” he wrote.

Father Foley said that, unlike an earlier attempt to fix the Clergy Fund, the main aim of this effort is not to cut benefits but to raise the monies needed to shore up the fund.

“(The plan) is about changing the governance of the plan with professional lay expertise helping us and raising the additional revenue that is needed,” he said.

Father Erikson expressed the commitment of the archdiocese toward the retired priests.

“The Archdiocese of Boston will continue to care for our priests. This commitment is embraced without hesitation taking into account the years of dedicated and faithful service to the Catholic community.” Father Erickson said.