Archdiocese of IndianapolisRestructuring. Presented by: John

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Archdiocese of IndianapolisRestructuring

• Presented by
• John S. (Jay) Mercer
• MERCER BELANGER
• 111 Monument Circle, Suite 3400
• P.O. Box 44942
• Indianapolis, IN 46244-0942
• (317 ) 636-3551
• jsmercer_at_indylegal.com

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Introduction

• The Archdiocese as it exists today

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Existing Structure

• Roman Catholic Archdiocese of Indianapolis
• An unincorporated association of members.
• Owns and operates all parishes, schools and
  agencies.
• No formal legal structure

• Roman Catholic Archdiocese of Indianapolis
  Properties, Inc.
• Holds title to all real estate for the Roman
  Catholic Archdiocese of Indianapolis.
• Manages and insures the real estate.
• Parish real estate held in trust for parishes.

• Catholic Community Foundation, Inc.
• Holds and invests all cash and securities of
  Archdiocesan and parish endowments.
• Financial and support services provided by
  vendors and Roman Catholic Archdiocese of
  Indianapolis.

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Why the need to consider restructuring?

• The USCCB in cooperation with the National
  Diocesan Attorneys Association recommends
  formalizing the structures of dioceses.
• Recent court decisions have ignored canon law in
  reviewing the structures of diocese.
• Recognition of canon law in corporate documents
  will provide civil law recognition of canon law.
• Formal restructuring will assist in isolation of
  liability risk.
• Civil law compliance will assist with interaction
  with secular enterprises, i.e. Grants and
  fundraising.

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How did we go about considering the issue of
restructuring?

• Employed a deliberate process.
• Involved a multi-disciplinary group including
  canonical advisors, civil legal counsel,
  financial experts, parish representatives, school
  representatives and priests.
• Reviewed the possible legal structures.
• Selected a structure that most closely conforms
  civil law structure to Canon law requirements.
• Set goals related to restructuring.

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What goals did we look to achieve through
restructuring?

• Maximized Canon law norms to civil legal
  structure (recognizing separateness of juridic
  persons).
• Maintenance of Financial strength (credit
  rating).
• Maintain flexibility in administration and
  continue to use existing internal controls and
  structures as much as possible.
• Properly recognize Archdiocesan control verses
  parish or regional control (central payroll,
  insurance, purchased services).
• Full recognition of Canon law through the use of
  reserved powers.
• Protect assets from liability claims.
• Understand the limitations of restructuring.

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What we have done so far?

• Reviewed the recommendations from the USCCB.
• Held a meeting with all of the Indiana Bishops
  and their legal counsel and discussed the issues
  related to restructuring.
• Formed a multi-disciplinary group to make
  preliminary recommendations.
• Prepared preliminary drafts of incorporation
  documents.
• Sought and received review by canonical experts.
• Made presentations and solicited advice from
  Management Council, Priest Council, Finance
  Council, Policy and Legal Affairs Committee, High
  School Presidents and Bond counsel.

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Proposed Structure

• And how it will work

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Proposed Restructuring
New

• Roman Catholic Archdiocese of Indianapolis, Inc.
• Catholic Center operations
• Agencies
• Provides services to parish corporations and high
  school corporations pursuant to written service
  agreements. Corporation receives payment from
  parish, high school and any other incorporated
  agencies for services rendered. Funds in excess
  of operating needs are held in trust by Catholic
  Community Foundation, Inc. Employs priests,
  current Catholic Center staff and agency
  employees.

• Separate Parish Corporations
• Parish operations
• Parish schools
• Receives services from Roman Catholic Archdiocese
  of Indianapolis, Inc. Real property held in
  trust by Archdiocese of Indianapolis Properties,
  Inc. Parish Corporations pay both Archdiocese
  and Properties for services provided under
  written agreements. Employs parish employees and
  parish school employees. Funds in excess of
  operating needs are held in trust by Catholic
  Community Foundation, inc.
• Priests are employed by the Archdiocese of
  Indianapolis, Inc.

• Other Entities to be incorporated
• High Schools
• CYO
• Catholic Charities
• Mother Theodore Academies
• St. Marys Child Center
• Others

Receives services from Roman Catholic Archdiocese
of Indianapolis, Inc. and real estate held in
trust by Archdiocese of Indianapolis Properties,
Inc. Employs current employees.
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How will the parish corporations operate and be
structured?
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Parish Structure of the Archdiocese of
Indianapolis

• Parish Personal Property (cash and securities)
• Owned by Parish.
• Cash and securities in excess of operating needs
  held in Catholic Community Foundation, Inc. of
  which parish is a participant.

• Finance Council
• Advisory to Pastor
• Parishioners are appointed by the Pastor

Pastor

• Parish Council
• Advisory to Pastor
• Parishioners are appointed or elected

Ownership of Assets

• Parish Corporation Pastor is the President and
  has responsibility for operation decisions.
• Member Archbishop appoints Pastor and Directors
  and holds broad reserved powers.
• Directors Pastor, Priest Administrator or
  Priest Moderator and two others.
• Governance of the corporation is subject to the
  canonical reserved powers of the Pastor.

• Roman Catholic Archdiocese of Indianapolis, Inc.
• Provides services to parish corporation pursuant
  to a written service agreement.
• Paid or reimbursed by the parish corporation.

Service Agreement
Real property held in trust
Invest Borrow Funds

• Roman Catholic Archdiocese of Indianapolis
  Properties, Inc.
• Parish real property held in trust by Archdiocese
  of Indianapolis Properties, Inc. and leased back.
• Non-parish real property held in trust and leased
  back.

• Catholic Community Foundation, Inc.
• Invest excess cash and securities.
• Funds held in trust for Parish.

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What does the Board of Directors do?

• Hold an annual meeting and document the approval
  of the major activities that have occurred during
  the year. (Acceptance of the minutes of active
  committees).
• Establish Committees as needed.
• Annually register the Corporation with the
  Secretary of State.
• Provide a written report of the financial
  operations of the Corporation to the Member.
• Serve as the President, Secretary and Treasurer
  of the Corporation.

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What are the Canonical Reserved Powers of a
Pastor and how are they described in the
corporate documents?

• Provide for the pastoral and sacramental care of
  the assigned Parish.
• Care and administration of the temporal goods of
  the parish (cc. 1281-1288).
• The Pastors interaction with the parish finance
  council (c. 537).
• Safeguarding and management of the Parishs
  property at the assigned parish, to include
  maintenance of insurance policies insuring the
  property (c. 1284 Section 2-1).
• Provide oversight and management of the
  collection of the Parishs revenue and income
  with respect to the assigned Parish (c. 1284
  Section 2-4).
  Continued on next slide.

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Canon Law Reserved Powers of a Pastor (Slide 2)

• Provide oversight and management of the Parishs
  debt obligations with respect to the assigned
  parish (c. 1284 Section 2-5).
• Provide oversight and management of the Parishs
  investment and allocation of funds with respect
  to the assigned parish (c. 1284 Section 6).
• Provide oversight and management of the
  Corporations records with respect to the
  assigned Parish (c. 1284 Section 2-7).
• Provide a written report to the Member, at least
  annually, with respect to the financial
  operations of the assigned Parish (c. 1284
  Section 2-8).
• Provide oversight and management of the annual
  budgets (c. 1284 Section 3).

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How are canonical Reserved Powers of the
Archbishop described in the corporate documents
and how does he interact with the various
corporations?

• Approve the mission and vision statements for the
  Corporation, and assure compliance with
  philosophy, mission, vision and core values of
  the Corporation.
• Interpret and change any statement of mission,
  philosophy, role and purchase of the Corporation.
  
• 
  Continued on next slide.

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Archbishop Reserved Powers(Slide 2)

• Approve any amendment to the Bylaws and Articles
  of Incorporation of the Corporation.
• Appoint individuals to offices entitling them to
  serve as the members of the Board of Directors.
• Remove any member of the Board of Directors or
  Officer of the Corporation.
• Approve and recommend the formation of legal
  entities, the sale, transfer or substantial
  change in use of all or substantially all of the
  assets of the Corporation, or the divesture,
  dissolution, closure, merger, consolidation or
  reorganization of the Corporation.
  
• 
  Continued next slide.

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Archbishop Reserved Powers(Slide 3)

• Approve the acquisition, sale, lease, transfer or
  other alienation of property of the Corporation,
  other than in the usual and regular course of the
  Corporations business or when alienation is
  above specified financial levels set in
  accordance with Canon Law.
• Approve any disposition of the assets of the
  Corporation at the time of its dissolution.

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Role of Archbishop as Member
Roman Catholic Archdiocese of Indianapolis,
Inc. Member Archbishop appoints Board. Board
Members Archbishop, Vicar General, Chancellor,
Chief Financial Officer.
Board of Consulters
Roman Catholic Archdiocese of Indianapolis,
Inc. Member Archbishop appoints Board. Board
Members Archbishop, Vicar General, Chancellor,
Chief Financial Officer.
Council of Priests
Archbishop Sole Member of each corporation with
power to appoint or approve Board members
St. Elsewhere Parishes Member Archbishop
appoints Pastor and two Directors . Board
Members Pastor and two others.
Catholic Community Foundation, Inc. Member
Archbishop appoints Board. Board Members
Community Leaders.
Priest Personnel Board
Finance Council
Other Corporations (high schools, CYO, Criterion,
St. Marys Child Center, Catholic Charities,
Mother Theodore Academies) Member Archbishop
appoints Board. Board Member To be determined.

• Archbishop exercises his reserved powers
  conferred by Canon Law (subject to his obligation
  to seek consultation and consent) in governing
  the corporations.

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How do the new entities relate to the existing
entities?
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Proposed Entity Structure

• New
• Roman Catholic Archdiocese of Indianapolis, Inc.
• Catholic Center operations
• Agencies
• Provides services to parish corporations and high
  school corporations pursuant to written service
  agreements. Corporation is paid by parish or
  high school for services rendered. Funds in
  excess of operating needs are held in trust by
  Catholic Community Foundation, Inc. Employs
  Pastors, Catholic Center staff and agency
  employees.

• Existing
• Roman Catholic Archdiocese of Indianapolis
  Properties, Inc.
• Holds title to all real estate, high school, and
  Archdiocese. Leases property to entities
  pursuant to leases. Parish real property held in
  trust pursuant to trust agreement.

Lease real estate

• New
• 150 parish corporations
• Parish operations
• Parish schools
• Receives services from Roman Catholic Archdiocese
  of Indianapolis, Inc. Real property held in
  trust by Archdiocese of Indianapolis Properties,
  Inc. Pays both Archdiocese and Properties for
  services provided under written agreements.
  Employs parish employees and parish school
  employees. Funds in excess of operating needs
  are held in trust by Catholic Community
  Foundation, Inc.

Real property held in trust

• New
• Other corporations (high schools, CYO, St. Marys
  Child Center, Catholic Charities, Fatima, etc.)
• Receives services from Roman Catholic Archdiocese
  of Indianapolis, Inc. and rents real estate from
  Archdiocese of Indianapolis Properties, Inc.
  Pays both Archdiocese and Properties for services
  provided under written agreements. Employs
  current agency employees. Funds in excess of
  operating needs are held in trust by Catholic
  Community Foundation, Inc.

Lease real estate
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Proposed Entity Structure

• New
• Roman Catholic Archdiocese of Indianapolis, Inc.
• Catholic Center operations
• Agencies
• Provides services to parish corporations and high
  school corporations pursuant to written service
  agreements. Corporation is paid by parish or
  high school for services rendered. Funds in
  excess of operating needs are held in trust by
  Catholic Community Foundation, Inc. Employs
  Pastors, Catholic Center staff and agency
  employees.

• Existing Assets Invested in Trust
• Catholic Community Foundation, Inc.
• Holds and invests all cash and securities of
  Archdiocesan parish corporations including Roman
  Catholic Archdiocese of Indianapolis, high school
  corporations, which are not required for
  operating needs. Returns income to participating
  entities as needed. Makes loans to participated
  entities as required. Financial and support
  services provided by vendors and Roman Catholic
  Archdiocese of Indianapolis, Inc.

Assets Invested

• New
• 150 parish corporations
• Parish operations
• Parish schools
• Receives services from Roman Catholic Archdiocese
  of Indianapolis, Inc. Real property held in
  trust by Archdiocese of Indianapolis Properties,
  Inc. Pays both Archdiocese and Properties for
  services provided under written agreements.
  Employs parish employees and parish school
  employees. Funds in excess of operating needs
  are held in trust by Catholic Community
  Foundation, Inc.

Assets Invested

• New
• Other corporations (high schools, CYO, St. Marys
  Child Center, Catholic Charities, FATIMA, etc.)
• Receives services from Roman Catholic Archdiocese
  of Indianapolis, Inc. and rents real estate from
  Archdiocese of Indianapolis Properties, Inc.
  Pays both Archdiocese and Properties for services
  provided under written agreements. Employs
  current agency employees. Funds in excess of
  operating needs are held in trust by Catholic
  Community Foundation, Inc.

Assets Invested
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What work needs to be done and what is our target
date?

• Continue education programs on restructuring.
• Continue to implement communications plan.
• Legal filings. (This week on non-parish
  corporations.)
• Formal corporate meetings.
• Follow up and assistance of new entities.

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What will the Organization Chart look like when
this is done?
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Chart of Organization
Archbishop
Chancellor
Vicar General
Vicar Judicial
Deans
Priests Council
Clergy Personnel Board
Board of Consultors
Finance Council
Pastoral Council
CCF Board
Parish Corporations
R.C. Archdiocese of Indianapolis Properties, Inc.
R.C. Archdiocese of Indianapolis, Inc.
Catholic Community Foundation, Inc.
Vicariate for Clergy and Parish Life Coordinators
Secretariat for Spiritual Life and Worship
Secretariat for Catholic Education and Faith
Formation
Vicariate Judicial
Catholic Charities and Family Ministries, Inc.
Secretariat for Communications
Secretariat for Finance and Administrator Services
Secretariat for Stewardship and Development
Other High Schools, Fatima, CYO
R.C. Archdiocese of Indianapolis, Inc.
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QUESTIONS, CONCERNS, COMMENTS??