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Charles Zech, a professor at Villanova University who studies church financial management and ethics, said he will be surprised if the $5 million set aside for clergy sexual abuse lawsuits lasts very long, especially with the archdiocese already running a modest deficit.
“The $5 million can get eaten up pretty quickly,” he said.
Zech said bankruptcies have happened in other Catholic dioceses around the country in states that have expanded the statute of limitations for child sexual abuse lawsuits. The archdiocese’s financial stability will depend on some extent to its insurance limits, Zech said.
Typically, he said, the extent of coverage in sexual abuse cases depends on what policies were in place at the time of the abuse.
Although some cash-strapped dioceses have shifted valuable assets out of reach of abuse victims, Zech said he didn’t see anything in the reports that indicated any shift of church funds during the 2013 fiscal year.
The Rev. James Connell, a retired Catholic priest in Milwaukee who is a certified public accountant, said he is impressed by the strength of the balance sheet and not concerned about the one-year operating deficit.
“I don’t see a bankruptcy in the offing,” said Connell, an advocate for victims of clergy sexual abuse and a member of a national group called Catholic Whistleblowers.
Connell said it’s notable that actual litigation expense reached $3.95 million in the St. Paul-Minneapolis archdiocese in 2013. While the cost of future lawsuits are an obvious risk for the archdiocese, so is the $47 million in combined debt owed by individual parishes and institutions to various lenders, he said. The report said the archdiocese is on the hook for any defaults.
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