BRIDGEPORT—Bishop Frank J. Caggiano and the Finance Council of the Diocese of Bridgeport have approved the fiscal year ending June 30, 2025 operating budget with a total of $24,416,459 in revenues and $24,389,944 in expenditures, representing a $26,515 projected surplus.
This year’s approved budget projects revenues and expenses to decrease approximately $930,000 from June 30, 2024. The decrease in revenue and expenses are related to prior year restricted contributions for specific programs which were utilized in the June 30, 2024 fiscal year.
Good Stewardship
“We are stewards of all funds entrusted to us as we continue fiscally responsible and prudent decision making at all levels of the diocesan management team,” said Michael Hanlon CPA, Chief Financial Officer (CFO). “Additionally, we continue our practice of financial transparency called for by Bishop Caggiano as we outline our diocesan budget and release audited financial statements annually.
Hanlon said the prior-year budget adopted for fiscal year ending June 30, 2024 similarly reported a projected surplus, totaling $18,996.
“We have continued our multi-year policy of fiscal prudence to support diocesan operations,” said Hanlon, who added that preliminary financial reports for fiscal year ending June 30, 2024 projects a surplus. Preliminary pre-audit actual results as of June 30, 2024, project an operational surplus of approximately $60,000, which confirms the accuracy of our budgetary process and estimates.
“This surplus was realized as additional contributions and bequests were received throughout the diocese from our generous donors for designated programs and other support. Additionally, unbudgeted interest earnings increased revenue and some budgeted expenses were not utilized during this fiscal year,” said Hanlon.
Hanlon said the development of this fiscal year budget ending June 30, 2025 was as challenging as prior years with continued uncertainty related to contributions and other revenue sources, and inflationary pressures on expenses.
Last year Bishop Caggiano and Deacon Patrick Toole, Chancellor and Episcopal Delegate for Administration, developed a new model to examine Curia operations by categories:
1. Central ministries and services that are unique to the ministry of the bishop and only the diocese can provide
2. Administrative services that must support the central ministries (whether provided by the diocese directly or outsourced)
3. Services provided to parishes, schools and other institutions, while respecting the principal of subsidiary
4. Diocesan-sponsored charities that help realize the threefold function of the Bishop’s Office: teaching, sanctification and governance (including charity).
The approved budget for June 30, 2025, allocates the following:
Central Ministries budgeted revenue and expenses total $8,298,138, or 34.0 percent of the total budget ($7,694,565 or 31.5 percent for June 30, 2024). Administrative Services budgeted revenue and expenses total $8,301,356, or 34.0 percent of the total budget ($7,859,208, or 32.2 percent for June 30, 2024). Services provided to related entities budgeted revenue and expenses total $4,551,448, or 18.7 percent of the total budget ($4,412,431, or 18.1 percent for June 30, 2024) and diocesan-sponsored charities budgeted revenue and expenses total $3,239,002 or 13.3 percent ($4,447,460, or 18.2 percent for June 30, 2024).
Bishop’s Appeal
The Annual Bishop’s Appeal (ABA) and Cathedraticum tax continue to be the major sources of revenue for the annual operating budget, totaling approximately 60 percent. The ABA supports diocesan mission-related programs, and Cathedraticum is the traditional assessment on parishes to support the administration and operating costs of the diocese, he said.
Joseph Gallagher, chief development officer, and his team continue to focus their work on achieving annually the ABA budgeted goal, totaling $8.0 million for the June 30, 2025 budget.
Cathedraticum revenue is projected at $6.5 million for fiscal year ending June 30, 2025, a $200,00 increase over the prior year amount. This is a positive trend as church attendance and parish offertory continue to recover from the pandemic years.
Cemeteries’ operational success under the leadership of Dean Gestal is projected to provide diocesan-budgeted support totaling $1.5 million, the same as the prior year allocation.
Additionally, with the continued attractive interest rate environment, the cash management program implemented last year within the finance department, to maximize the use of cash balances, will again provide a much-needed source of funds with approximately $1.2 million budgeted from these earnings. This is compared to the $1.0 million budgeted amount for June 30,2024.
Salaries and benefits (lay, priests and religious) represent approximately 48.2 percent of the overall budget, Hanlon said, noting, “market-rate salary increases have been budgeted for January 1, as our employees are dedicated to our mission and are always doing more than expected. Inflationary pressures and a reduction in the eligible employment pool are increasing salaries for new employees and we need to be fair to our long-term dedicated employees. Several new much-needed positions within Curia operations have been budgeted.
A positive increase in expenses is related to seminarians and related tuition costs. For June 30, 2025, $1,564,624 has been budgeted, a 14.7 percent increase over the prior year. This remarkable trend is related to the work of Father Christopher Ford, director of vocations and seminarians. His focus is on developing a culture for promoting vocations within the diocese and the accompaniment of men as they discern their path to priesthood. Currently the diocese has 33 men in formation.
Grants
Contributions and grants allocated from the Annual Bishop’s Appeal to diocesan mission-related entities represent approximately 26.0 percent of appeal contributions and 13.1 percent of total budgetary expenses. These contributions and grants support the missions of Catholic Charities of Fairfield County, St. Catherine Center for Special Needs, the Catholic Academy of Bridgeport, the Cardinal Shehan Center and the Bishop’s Scholarship Fund within Foundations in Education. Additionally, the appeal funds support vocations, seminarians and retired priests.
Grants from restricted contributions to support school initiatives and physical improvements total approximately 6.0 percent of total expenses.
Pastoral and mission related programs are always an imperative part of the diocesan budget, as Bishop Caggiano’s seeks to revitalize our faithful. As the bishop continues to implement “The One” the funding reaches heighten importance on the success of his mission. Contributions to support “The One,” are being raised in addition to operational budgetary support.
“Although the diocesan goal has been not to use one-time revenue sources within our budget to support operations, this year’s budget includes approximately $1.5 million of one-time revenue sources to achieve a balanced budget,” he said. These one-time revenue sources include proceeds from the sale of real estate assets and a large, restricted bequest to support the operations of the Queen of Clergy priests’ retirement home.
Alternative revenue sources and models are being explored to reduce the reliance of the one-time revenue sources for future budget cycles.
Budget Planning
During the budget planning process department leaders submitted their preliminary budgets to the finance department and after initial review, proposed expenses were adjusted to reduce requested expenses to minimums necessary to functionally operate based on estimated revenue and a balanced budget.
The diocese continues to focus on its challenges which include post pandemic reduced church attendance and offertory as well as the funding status of the lay pension plan.
The diocese will partner with parishes on an enhanced giving program in the fall of 2025 to assist parishes increase offertory and support as they continue to recover and plan for continued financial needs and investments.
The long-term underfunded liability obligations related to the frozen diocesan lay employee pension plan (frozen since 2008) continue to be a major area of concern and challenge for the diocese.
A major step in resolving the lay pension underfunding status was achieved during the last two years as increased pension shortfall funding was implemented. All diocesan entities pension funding assessment increased by 25 percent last fiscal year with an additional 10 percent for this fiscal year. These increases result in an annual contribution of $4.4 million to the lay pension plan, the minimum contribution determined by actuarial projections necessary to fulfill all future lay pension obligations.
The funding required annually to fulfill all future pension benefit payments to pension participants is being monitored by several committees of the diocesan finance council.
Employee Retention Credit
A prior change in federal law which allowed entities who received Payroll Protection Program funds to also apply for Employee Retention Credits will allow for additional cash infusion into our diocesan entities. One eligibility criterion is if an entity was affected by governmental shutdown orders during certain measurement periods. A governmental shutdown order applied to all parishes and schools within Connecticut.
The diocese engaged a preferred consultant to assist parishes, school and other related entities to determine eligibility on the CARES ACT—Employee Retention Credit (ERC). This credit offers the opportunity for significant tax refunds to the diocese, our parishes, schools and other affiliate entities.
Most entities have applied, with projected payroll tax refunds received or to be received expected to exceed $9 million in total. This additional infusion of cash assists in the recovery from the pandemic and provides additional financial stability for our entities.
Although the Internal Revenue Service (IRS) announced a moratorium on processing ERC claims during September 2023, they recently recommenced processing refunds. Several of our entities have received refunds within the last few weeks and these refunds will continue to be processed by the IRS.
Managing Healthcare Costs
Healthcare benefits costs continue to increase greater than inflation rates annually.
The diocese continues to work to manage and control healthcare related expenses and benefits while providing affordable comprehensive coverage for employees and their families.
On January 1, 2023, the diocese engaged Reta Trust to provide these benefits, after years of providing benefits on a “self-insured” basis.
Reta Trust (a not-for-profit trust) has operated for more than 45 years providing health coverage that aligns with the teachings of the Catholic Church, to employees and religious staff of Catholic institutions. Many U.S. dioceses have joined, and members total more than 425,000. This provides purchasing power for benefits that were lacking with our self-insured plan. As a not-for-profit trust annually, dividends are returned to each diocese that should control future increases in medical premiums. Additionally, due to the billing of medical benefits by a third-party provider, premiums are paid in full by all diocesan entities. This eliminated an approximately $1 million annual bad debt reserve for unpaid premiums, when billed by the diocesan self-insured plan.
Andrew Schulz, director of real estate, has continued to identify new areas of revenue sources while overseeing the diocesan property portfolio.
“He continues to do a remarkable job in identifying opportunities to generate alternative sources of revenue from real estate by marketing vacant diocesan owned buildings for use,” he said.
In December 2013, Bishop Caggiano took a major step toward financial transparency when he released the audited financial statements for years 2010, 2011 and 2012. Audited financial statements for the subsequent periods ending December 31, 2013, and 2014, as well as financial statements for the periods ending June 30, 2016, through June 30, 2023 have been released annually. All reports can be found online.
(To learn more, visit: www.bridgeportdiocese.com/financialreports.) n
