St John the Evangelist

1
St John the Evangelist

• Financial Questions and Answers
• Thom Duffy
• Executive Director
• Secretariat for Finance and Management
• April 10, 2008

2
Agenda

• Opening Prayer and Introduction
• Objective for Meeting
• Parish and School Financial Overview
• Options for Debt Elimination
• Use endowment earnings parish assets
• Borrow from an outside entity
• Borrow from the endowment
• Next Steps

3
Objective

• It is required that the Sisters be compensated
  for their service to the church and school
• Share information on short-term solutions
• Ask/Answer questions
• Listen to others points of view
• Discuss long-term solutions

4
Informal Debt

• All outstanding balances are as of February 29,
  2008 except the stipends for the Sisters which
  has been updated as of March 31.

5
Total Parish Debt

• The average debt balance since 2000 has been
  285,000

6
Debt Summary

• Handout to be provided
• Average outstanding debt - just over 285,000
• Ranged from roughly 200 to 350k
• Mild downward trend

7
St John the Evangelist CommunityAdjusted Profit
and Loss by Fiscal Year

• On average the parish and school community has
  lost just under 25,000 annually since 2000

8
Adjusted Profit and Loss

• Handout to be provided

9
Challenges

• Lower enrollment 31 drop in 5 years (106
  students)
• Total school expenses are largely fixed
  increasing by 33 during the same period

10
Options for Debt Elimination

• Use Endowment Earnings Parish Funds
• Endowment balance as 3/31/08 
• Contributions  831,690
• Earnings and Gains   126,234
• Total  957,927
• Eliminates debt to IHM Sisters, but fails to
  eliminate full amount owed of nearly 275,000
• Completely exhausts the Endowments earnings
  which would not be repaid

Potential for surplus after fulfilling memorial
wishes of 100,000 bequest
11
Options for Debt Elimination

• II. Borrow from an Outside Entity
• Interest paid to third party
• Requires archdiocesan approval
• Not recommended when internal sources of funding
  are available
• Parish just paid off Chevy Chase loan

12
Options for Debt Elimination

• III. Borrow from School Endowment
• Interest expense kept within the parish
• Requires archdiocesan approval
• Likely to be approved as long as interest rates
  are fair and reasonable
• Parish can afford interest payments
• Potential for Bond structure
• Principal cannot be spent, but can be invested in
  prudent invest strategies (Endowment Policy,
  Article VII B)
• Prudence investments review borrowers
• ability to earn money to service the debt AND
• assets available to secure the debt

13
Next Steps Longer-term Solutions

• Review Parish Revenue Potential for
• New fundraising activities
• Offertory campaign
• Increased participation
• Review Parish Expenses Potential for
• Greater efficiencies
• Salary and benefits
• Review School Revenue Potential for
• Restricted fundraising (in lieu of endowment
  fundraising)
• Use of endowment earnings / parish subsidy
  (scholarships)
• Tuition and fees
• Review School Expenses Potential for
• Greater efficiencies
• Salary and benefits