Diocese of Scranton Assessing Financial Status of Catholic Schools
 

The Diocese of Scranton is assessing the financial status of its Catholic schools as the reorganization of the institutions is implemented.

The analysis includes a tally of loans owed to the Diocese, operating deficits at some schools, and a projection of funding needed for capital improvements and technology upgrades.

“As we make the transition to the new system of governance and financing, we have to know what kind of shape the schools are in today, in terms of their budgets and facilities. This will assist us as we implement the reorganization plan for next year and beyond,” said James M. Quinn, Diocesan Secretary for Financial Services.

He noted that this ongoing review is a follow-up to the information gathered during the Meitler Consultants study. That process involved data provided by the schools to the consultants.

Thus far the current analysis has revealed operating deficits of $402,111 at Bishop O’Reilly Jr./Sr. High School and $1,646,544 at Bishop Hoban High School.

“These are certainly serious issues, but it does not mean that these schools are bankrupt,” Mr. Quinn said. “We are working on a plan to resolve the deficits, and families can be assured that these schools will operate as part of the reorganized Catholic school system.”

Beginning with the upcoming school year, the Bishop Hoban campus will be known as Holy Redeemer High School and will serve as the Catholic high school for Luzerne County. The Bishop O’Reilly site, to be known as Good Shepherd Academy, will be a regional elementary center.

Mr. Quinn stressed that the operating deficits at some schools do not indicate mismanagement, but rather are the result of an accounting process that can no longer apply under the new system.

“Typically, these schools were operating on a cash basis accounting system, which means they could take revenue for the upcoming school year (such as registration fees and early tuition payments) and instead use it to pay bills from former years,” he explained. “Now that every school is starting over as a new entity, this procedure cannot be used. But we’re in transition, and the expenses incurred in previous years are still owed and must somehow be paid.”

Since the final plan for Lackawanna, Wayne and Luzerne Counties was announced in January, personnel from the Diocesan Finance Office have been visiting all of the schools in those counties to analyze their financial records.

In addition, engineers have been conducting assessments of the facilities. And the Diocesan Schools Office has been preparing to implement technology upgrades.

The financial implications for the schools in Lackawanna, Wayne and Luzerne Counties are:

·     School loans owed to the Diocese = $5,540,146

·     Estimated operating deficits  = $3,263,285

·     Capital improvements and technology upgrades = $3.1 million to $3.8 million, including:

--Holy Redeemer High School (current Bishop Hoban campus) = $1.6 million for new heating/air conditioning system

--Good Shepherd Academy (current Bishop O’Reilly campus) = $800,000 to $1 million to replace two boilers and other miscellaneous refurbishing

--Acquisition of interactive computerized blackboards, known as “Smartboards,” in classrooms = $400,000 to $500,000. Installation will begin at the junior high and high schools and will be incorporated into all classrooms eventually.

--Acquisition of administrative software that will enable parents to access grades and assignments from their home computers = $200,000. Installed for upcoming school year; then teachers will complete training.

--Estimated costs of $300,000 to $500,000 for expenses such as new uniforms for sports teams, cheerleaders and bands; logos; painting gyms and fields; and other miscellaneous costs.

“Bishop Martino commissioned the Meitler study to develop a school system that is not only high quality, but financially stable,” Mr. Quinn said. “For anyone who questions why he did this, it should be clear that without major changes the school system as we have known it would eventually collapse.”

The analysis will continue through the end of the fiscal year on June 30 and could reveal additional deficits or expenses.

The Diocese was anticipating that the implementation of the reorganization would involve significant costs, Mr. Quinn said.

“Eventually we expect to see reduced costs through the consolidations and greater efficiencies achieved by the regional systems, but right now we have to account for the existing deficits and the money we need to spend to advance Catholic education,” he said.

Mr. Quinn said the Diocese is developing a debt reduction plan to amortize these costs over a period of years.

Meanwhile, he said it is imperative that the schools take the necessary steps to help overcome the financial challenges. These include collecting all tuition owed for the current and previous years, continuing all fundraising activities, and exploring ways to contain and reduce costs.

“When we announced the reorganization plan, many people were upset and they pledged their support for the schools,” Mr. Quinn said. “If they truly support Catholic education, and not just a particular building, now is the time to come forward with a financial commitment that will benefit the entire Catholic school system in the Diocese.”

Joseph G. Casciano, Diocesan Secretary for Catholic Education and Superintendent of Schools, said the money being expended for technology and other upgrades is an investment in the future of education in our Diocese.

“Parents and students expect these kinds of resources. We have to ensure that our schools are competitive and attractive,” he said.

Mr. Casciano added that the financial challenges should not discourage anyone from pursuing a Catholic education at any of the schools.

“We are fully committed to preserving and advancing Catholic education through the sites that will make up the new system,” he said.