First report: from the Wednesday meeting of the Department of Finance

Archdiocesan Convention
Palm Desert, California
7/22/2009

The meeting was sparsely attended. As the panel went through the proposed budget, they mentioned that Bp Demitri was being paid through the Archdiocese of Mexico, and that contrary to Metr. Philip’s comments in a clergy meeting earlier, the panelists were told by Metr. Philip that Bp. Demitri would be reinstated.

They also mentioned that the budget would not come up for approval at this meeting, but would be delayed until October.

There was a short discussion about how some of the largest parishes seem to be giving much less proportionally than the smaller parishes and tithing parishes.  This was followed by another short discussion about how to encourage parishioners to tithe. It was noted that many parishioners are concerned that if they increase their donations from what they gave under the dues-paying system, what would happen to the excess money? It was also brought up that this is actually a spiritual issue, and that we should be educating our brothers and sisters that we are returning to God a small portion of what is already His anyway.

Metr. Philip made a comment in an earlier meeting with the clergy that we have $15 to 20 million dollars in bonds. A question was asked about this, and where the income from these bonds is reflected in the budget. Peter Dacales answered that he does not know of that much being in bonds, and then laid out two major areas where we hold bonds:

  • about $3.7 million in the name of the Order of St. Ignatius
  • about $2 million in the name of the clergy “retirement” fund

The group allowed that His Eminence was likely doing quick math in his head during the earlier clergy meeting, and that this accounted for the much high numbers he mentioned.

It was stated that these bonds are all long-term, held via Merrill Lynch. The department did their due diligence in looking at several wirehouses that could manage our money, and settled on Merrill Lynch. However, further discussion about this revealed that our money is actually held in managed accounts, run by third-parties with whom the Archdiocese has agreements through Merrill Lynch. We are charged under 3% per year for the services of the third-party manager (the actual number was not stated, but it was “well under” 3%).  We have approximately 70% of our funds in bonds and the remainder in equities and cash. There was no detail given about how these accounts were run, the income from them or the investment policies in place that define our objectives, asset allocation, and the processes and methods used by the third-party managers to meet those objectives.

The final item of note was the discussion of a new actuarial study for the clergy “retirement” fund, since the last one was performed six or so years ago. The reason I place the word “retirement” in quotes is because we should not be using that term, since this is not a IRS-sanctioned qualified plan. It is simply money held in trust for the clergy to be dispersed to them at retirement.

      - Delegate with Portfolio

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7 Responses to “First report: from the Wednesday meeting of the Department of Finance”

  1. anon Says:

    Do I understand you to say that +MP told the group that Bishop Demitri is to be reinstated?

    • Conventionbloggers Says:

      It was not the Metropolitan, but the Chairman of the Finance Committee, Peter Dacales.

  2. bakins Says:

    So was there any discussion regarding Demetri or was his reinstatement just “accepted?”

  3. Conventionbloggers Says:

    It was noted in passing. It was not accepted in the sense of being “all right”. It was a statement contra to that of Metr. Philip, so until that can be resolved, it remains a matter of concern to all.

  4. jamesthethickheaded Says:

    Just for the record as an investment manager, if we’re using one of Mother Merrill’s wrap programs (which is what this description fits), we’re generally paying top dollar for a middle man (retail), and are likely much closer to the small numbers under management… rather than the 20 – 30 million which begats institutional service. Otherwise, I can promise that better options exist with more counsel, advice, less cost and no guessing.

    • Conventionbloggers Says:

      JamesTheThickHeaded,

      You are absolutely correct. I run a boutique investment firm. In my time at MS, I learned quite a bit about how this is all done. That is why I asked the questions I did. The opinion of the leadership regarding the holding of long-term bonds is amazing. They do not understand the concept of short-duration.

      Yes, better options exist, but they are not yet on the table.

  5. Love it Says:

    The retirement plan is very much needed. Especially for clergy wives who are widowed.

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