Parish Investment in System
- General Questions
- School Operations
- Parish Investment in System/Parish Finances
- School Choice
- Fund Raising in Schools
- Participation by Other Nearby Parishes
- Future Operations/Need for Good Stewardship
- St. Catherine’s and the Racine Dominicans
- Impacts on School Employees
- Need for Parish Support to the System
What was the formula for determining the amount each parish would be asked to invest in the system?
The formula is based on the principle that parishes with larger blessings (i.e. annual income and financial assets) can invest more in supporting the important ministry of Catholic education. The formula is composed of three parts that determine the amount that each parish will be asked to invest.
For the first part, parishes currently supporting schools as a primary ministry are being asked to continue that support at a level equivalent to the past three years. For the second part, parishes with “large net asset balances” are being asked to contribute a portion of those assets for system support. For the third part, all parishes are being requested to contribute a portion of their annual income.
The total of all three parts across the ten participating parishes has a minimum and maximum investment range between ten percent and forty-five percent of annual envelope and offertory income. This level is consistent with benchmark data gathered from systems in Appleton, Fond du Lac, Oshkosh and Kenosha.
I understand our parish commitment is for three years. What will happen to our requested investment after the initial three years?
We anticipate the school system will require ongoing investment beyond this “start-up” period similar to any important parish mission. Consistent with the approach at each parish, school system leadership must practice good stewardship working to balance resources and costs. As a result, they will work to increase revenues from Tuition, Fees, School Choice, Donations and Grants marketing the system’s advantages to maximize enrollment. Compared to other benchmarked Catholic School Systems in the state a larger percentage of the system revenue will come from sources other than parish revenue.
How will investment/subsidy be adjusted after the initial three-year period?
In August 2019, the Finance Committee of the school system will review actual results for 2017/18 and 2018/19. Included will be full review of system revenues and expenses as well as parish financial status including annual envelope and offertory contributions and parish net assets. The Finance Committee will develop a proposal for parish investments for 2020/21, 2021/22 and 2022/23. This proposal will be submitted to the school system Board of Directors and, ultimately, to the Board of Trustees for acceptance. The underlying principle that parishes with larger blessings (i.e. annual income and financial assets) will be asked to invest more in supporting the important ministry of Catholic education will continue.
Will the investment we pay be reduced? It does not seem fair for parishes with schools to continue to bear the larger burdens forever (question from parish with current school subsidy).
The hope of the RACE Task Force is – as enrollment grows, more students become eligible for school choice, the system realizes collaboration efficiencies and advancement/development pursues additional donations and grants – there will be an ability to both reduce some of the investments from the parishes and direct funds to priorities like expansion of music and foreign language programs.
What happens if a parish is unable to pay the investment/subsidy request?
Initially the officers of the parish corporation (i.e. Pastor, Trustees, Vicar General and Archbishop) are notified the payment has not been made. Officials of the school system will work with the parish in an effort to resolve the issue. If the parish leadership determines the payment cannot be made the Pastor will bring the issue to the Board of Trustees for discussion and discernment. In our benchmarking work with other Catholic School Systems we were told Pastors from other parishes came forward with offers to help offset the shortfall in the short term and to work together for longer term solutions.
How will you enforce non-payment if a parish does not make a quarterly payment?
The first step will be for the system to notify the parish of the non-payment with the hope the situation can be resolved. The next step will be to formally inform the officers of the parish corporation of the non-payment. The officers include the Archbishop, Pastor, Lay Trustees and the Vicar General of the Archdiocese. If the situation cannot be resolved at this stage the Pastor will inform the Board of Trustees and, if necessary, call a meeting to discuss next steps.
We are concerned with our ability to contribute at an investment level based on a three-year average given our trend in envelope income.
All parishes are being called on to sacrifice and pastors and trustees expressed concerns based on a variety of factors including aging parish populations, downward trending envelope income, current debt levels and planned near term capital expenditures. As the Archbishop said during his remarks announcing the system, “everyone gives something for the greater good”.
Will we receive a call from the Archdiocese if we are in a deficit position and draw upon reserves? In the past, cautionary phone calls were received from the Finance Office at other parishes if this was the case.
The Archdiocese Finance Office for Parishes has indicated for the first few years of the system there may be a need to submit a deficit budget and, while reducing reserves must be viewed with caution, there are times when this is merited especially if reserves are of significant size.
How were parish restricted funds used in calculation of the investment/subsidy? How will they be managed going forward?
Parish restricted funds were not used in the calculation of the investment/subsidy. In a number of cases these restricted funds are designated for specific purposes and can only be used for those specific purposes. Moving forward if the funds are available for education purposes system leadership will initiate a dialogue with parish leadership to determine an appropriate strategy for use.
Can we use our Restricted Funds for education to fund our requested subsidy/investment?
This will depend on the restrictions originally placed on the funds by donors and to be determined by your Parish Pastoral Council and Finance Committee. We are hopeful that in the future we can begin building an endowment for the long-term support of the system.
Are all parishes really contributing their fair share?
The RACE Steering Committee and Finance Task Team developed the recommended investment/subsidy after reviewing approaches from other Catholic School Systems and gaining agreement from pastors and trustees on these general principles:
· Parishes with larger blessings (annual contributions and unrestricted assets) will be asked to provide greater support.
· Requested parish support will be reduced for financial liabilities (e.g. mortgages, loans and debts).
o Unrestricted assets less liabilities will be referred to as “Net Assets”.
· For parishes currently operating schools they will be asked to continue supporting the system at a level no lower than the average of the preceding three years parish school subsidy reported to the Archdiocese. This is based on the very recent evidence of the parish’s commitment to Catholic Schools and ability to pay.
· Parish support to other Catholic education youth programs may reduce but not entirely replace annual support to the Catholic School system.
· Schools/Parishes choosing not to adopt School Choice as a funding source will have the option of contributing a larger investment to the system reflecting the difference from realized tuition and fees to choice revenue.
Subsequently, a formula with three components was developed to determine the investment/subsidy reflecting:
1. Average school subsidy for the past three years for those parishes with schools.
2. An assessment based on the balance of net assets held in excess of $250,000 by parishes with net assets. The assessment was a sliding scale. Parishes with larger balances were requested to contribute increased support.
3. A third component was based on a three year average of annual envelope/offertory collections with a minimum contribution of 10% of annual collections and a maximum contribution of 40% of annual collections.
While including Net Assets as part of the calculation is appropriate shouldn’t parishes with large assets should be asked to give more?
We believe it is prudent for every parish to have a “rainy day fund” so the first $250,000 of net assets held by parishes will be exempt from assessment. The RACE Steering Committee also recognizes that individual parishes may be saving for large capital items (e.g. roof or parking lot replacement, church refurbishment) and should be encouraged to continue managing finances in a responsible manner.
Some parishioners may opt to make restricted contributions due to concerns about the school system reducing our Envelope revenue.
Certainly every parishioner must follow their conscience and make these decisions. We are hopeful when presented with the reasons for supporting the school system they will continue to make unrestricted contributions and perhaps increase their envelope contributions to help support the school system as an important mission of the church.
Current or projected parish projects will be cancelled or deferred due to subsidy. For example, we have been saving for a new roof. Will we have to delay replacement?
Every parish will have to determine if they can move forward with previous plans on the same timetable or take an alternative approach. So many times in the past those who love the Church have demonstrated a belief in the Church’s mission and a confidence in the Her future sacrificing for the good of many. We believe this new challenge will be met in the same way.
 Net assets are defined as non-restricted cash and investments less liabilities; simply put the resources available to the parish. The typical household would view this as savings less outstanding debt
 The Board of Trustees is comprised of the Pastors of each parish and representatives from the Racine Dominicans and Archdiocese of Milwaukee.
 An exception to the maximum will be made in the case of a parish where the three-year average of previous school subsidy exceeded 40%. Also, parishes through their pastor may appeal to the Board of Trustees for a reduction below the 10% minimum.