[A Disclaimer: Although he is mentioned in this article, Monsignor Raymond Bastia, a classmate from my seminary days in Rome, was not contacted by me, nor did he contacted me to offer any information that is contained in this post.]
Earlier this year, I predicted that the report of the Pennsylvania State Attorney General investigating statewide allegations of sexual abuse of minors by Catholic Clergy would have the equivalent effect of the atomic bomb dropped on Hiroshima.
Many readers, even a very close friend, took me to task for penning the post.
Last week, I received a brief email from that friend. It read: “You were right about the Penn. report, though I wish like heck you would have been proven wrong.”
Pardon the grammer, but “me, too”!
Now here’s another prediction about a scandal that will be as equally devastating to the Church, one that has nothing to do whatsoever with sexual abuse.
Right now, in the Diocese of Providence, Rhode Island, a scandal alleging massive fraud regarding the August 2017 collapse of the St. Joseph Pension Fund as well as the unfunded liability of the pension fund for teachers and staff of Catholic schools is about to break wide open.
“The unfunded liability of the Lay Employees’ Retirement Plan will continue to grow and will become untenable in the near future,” stated a recent Diocesan document.
Two related massive lawsuits have been filed simultaneously in State and Federal court by the receiver in the collapsed St. Joseph Pension Fund - the largest pension failure in Rhode Island history.
The suit alleges massive fraud in the case which has created a hole in pension assets estimated to be in excess of $115 million.
The suit was filed by the receiver Stephen Del Sesto of Pierce Atwood and was prepared by the special investigator Max Wistow and his law associates Stephen Sheehan and Benjamin Ledsham.
Bishop Tobin, already under fire for his involvement in the failings of the Diocese of Pittsburgh cited in the Pennsylvania Grand Jury Report, has denied any wrongdoing or responsibility for the financial failure of the fund.
The Federal Court complaint is 136 pages and includes a 21 count complaint filed against 14 defendants. Similarly, the State Court complaint is 101 pages and includes 16 count complaint against same defendants.
The defendants include the Diocese of Providence, CharterCare, CharterCare’s parent company Prospect, Angela Pension Group, and a range of other related healthcare and Diocesan entities tied to the sale of the St; Joseph Hospital first in 2009 by the Diocese to Roger Williams Medical Center which created CharterCare and then the sale of CharterCare to Prospect of California in 2014.
The litigation is expected to continue for years.
But now comes word that Bishop Tobin and the Diocese of Providence also face the potential financial collapse of a second pension fund -- the Retirement Fund for Diocesan teachers and staff.
Documents prepared by the Diocese’s top financial officers -- Monsignor Raymond Bastia (a classmate of mine from Rome) and Chief Financial Officer Michael Sabatino -- were considered by top Diocesan officials at a meeting held in June with Bishop Tobin.
Dated June 19, 2018, and marked “immediate action," the document called for drastic cuts to beneficiaries of the fund.
Also considered at the meeting was an October 2017 recommendation document.
The document states: "Even with the revised more realistic assumptions, if we make these changes, it will still take 30-35 years to fully fund the Plan."
Since the Retirement Fund’s fragile financial condition was revealed, the Diocese has begun to slash pension benefits for some eligible members.
The benefits of many teachers and staff in Lay Employees Retirement Fund will be frozen and for others, they will no longer be eligible for the “Lay Teacher’s Retirement Fund” at the end of the year.
The implications are profound, as potentially thousands of Catholic school teachers and staff will lose their contributions to the pension fund. They will receive nothing.
Yet, for the past year, the Diocese’s financial staff and the public relations office has been communicating stable performance of the Diocese’s finances.
“The annual audit of its finances shows the Diocese of Providence closed out fiscal year 2016/2017 in a stable position thanks to a growing economy that has produced strong returns on its investments coupled with a successful Catholic Charity Appeal last spring," wrote Rick Snizek, Executive Editor of the Rhode Island Catholic.
“All of these factors were helpful to our diocese as we remain faithful to the mission of evangelization and to our joy-filled commitment to the many corporal and spiritual works of mercy that we provide to the people of our state and beyond,” said Bishop Thomas J. Tobin in a statement announcing the report, which was examined by the independent auditing firm Mayer, Hoffman and McCann, P.C., and reviewed and accepted by the Diocesan Finance Council.
What is happening in the Diocese of Providence may be just the tip of the iceberg when it comes to other diocesan pension funds throughout the country.
Because they are religious institutions, dioceses are not subject to Federal or State laws regarding the mandatory reporting of pension fund performance.
Nor are dioceses subject to ERISA (Employee Retirement Income Security Act) legislation. As a result, diocesan employees are left with no legal basis upon which they are able to initiate suits against the dioceses for compensation.
I predict that in the coming months and years, revelations will be uncovered regarding the staggering underfunding of diocesan pension funds across the country.
The scandal that will result from these broken promises to Church employees will be staggering, just as much not more so than the scandals involving the sexual abuse of minors.
The impact upon Church hierarchy will be devastating.
In the word’s of my friend, “I hope the heck I’m wrong.”
Sadly, I don’t think I am.
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