Spokane Diocese passes the plate

Eastern Washington’s Catholic parishes will begin an ambitious campaign in April to raise $10 million for their contribution to the Spokane Diocese bankruptcy settlement.

Exactly how the parishes will fulfill their obligation has yet to be decided, but this much is clear:

•Each parish will be asked to give roughly the equivalent of one year’s plate collections. They can raise that money in any way they choose.

•Expected shortfalls from the fundraising campaign could result in the diocese issuing long-term bonds.

•The heaviest financial burden and risk will be borne by the largest parishes in Spokane County.

Many of the diocese’s 25,000 Catholic families have listened to priests and pastors explain how their contributions will be part of the overall $48 million settlement with victims of priest sex abuse. The settlement has been woven into a bankruptcy reorganization plan, which still awaits a judge’s approval.

Coming up with the money won’t be easy, acknowledge parishioners, but some are willing to foot the bill in order to put the bankruptcy behind them.

“I could put in a moderate donation once a month,” said Lorraine Welsford, a parishioner at Assumption of the Blessed Virgin for the last 45 years. “There are a lot of people at our church. Some are able to do more, and others less.”

She sent seven of her eight children to Assumption school and now just wants this episode to be finished.

The bankruptcy “has been hanging over us for so long now,” she said, “what are we going to do? We don’t want to lose our parishes and schools. But I don’t think it will come to that.”

Mary Riley, a member of St. John Vianney, has no doubt that Catholics in Eastern Washington will pay to save the diocese. She won’t be one of them.

“I’m sure they’ll collect enough, but they won’t get any from us,” said Riley, who’s been going to Mass at St. John Vianney for 53 years. Except for donations to the poverty fund, Riley hasn’t given a cent to the church since the sex abuse scandal erupted four years ago.

“We’re definitely not going to pay for this bankruptcy. The victims deserve something, but not from me – I didn’t do anything.”

Raising money to settle the diocese debt to sex abuse victims will follow the Annual Catholic Appeal, the effort undertaken each year to raise money to fund the bishop’s office. This year, Bishop William Skylstad is seeking about $2 million – an amount equal to about 20 percent of what churchgoers are expected to give to their parishes in collection plates over the course of the year.

Because churches then will be expected to collect an amount equivalent to one year’s collection plate income for the bankruptcy settlement – which ranges from about $4,000 from Pure Heart of Mary in Northport to $637,000 from St. Mary in Spokane Valley – some parishioners fear the bankruptcy will take money away from collections that help Catholic schools, the poor and others in need.

When the diocese filed for Chapter 11 bankruptcy protection in December 2004, Shirley and Dermot Ryan, of Spokane, decided to stop giving to the church and donate money instead to Second Harvest Food Bank, the Spokane Neighborhood Action Program, St. Vincent de Paul and other charities that help the needy.

“It hurts me every Sunday to go to Mass,” said Dermot Ryan, who is a registered member of St. Thomas More but also attends services at St. Anthony’s, St. Francis Xavier and other churches. “I’m really torn about this because I’ve always donated to my parish, but I don’t trust (the church hierarchy). They’ve done a number on the laity.”

Shirley Ryan thinks there are enough wealthy Catholics in town who will come through for the church.

“The lawyers are going to get a chunk of the settlement money, so no, I am not willing to donate to that,” she said.

Bankruptcy lawyers – including attorneys for the diocese and attorneys hired to represent three separate sets of victims – are set to take about $7 million off the top of the overall $48 million settlement for their two years of work. The attorneys who represent victims and worked on the lawsuits leading up to the bankruptcy are expected to collect about 40 percent of whatever amount many victims receive. All told, perhaps more than half of the $48 million settlement will ultimately end up going to lawyers.

A gag order has prevented attorneys, diocese officials and leaders of the Association of Parishes from talking about the settlement.

Here’s how the parish contributions will work:

The diocese and parishes will raise as much as possible by Oct. 1. That’s the deadline for the first $37 million payment. After that, interest begins to accrue at 6 percent.

The next $10 million payment is due Dec. 31. The final $1 million is due Oct. 1, 2009.

Those familiar with the financial terms leave little doubt that the diocese can initially raise enough money to cover the whole amount. So the bishop has hired Catholic Finance Corp., of St. Paul, Minn., to help the diocese arrange bond financing and identify potential investors.

Any diocese bonds would likely be unsecured notes backed only by the bishop’s promise to repay. Finding a buyer for unsecured bonds issued by a bankrupted diocese, however, may not be as hard as it sounds.

Large, well-financed Catholic institutions could be solicited as buyers on bonds offering a decent interest rate over, say, 20 years.

Such an arrangement could give some short-term relief, but add millions more in interest to what the parishes have been asked to give.

The parishes participating in the plan will give first priority deeds of trust and security agreements to a court-approved trustee who will ensure the plan is implemented.

While debts are owed, no parish will be allowed to sell or dispose of any property worth $100,000 without the trustee’s permission.

In a worst-case scenario – parishes not being able to meet their financial obligations, sparking foreclosure – the order of any parish foreclosure sales would be determined by the trustee with one condition: The bishop reserves the right to designate the order of the first six foreclosure sales of parishes, as long as they are within Spokane County and appraised at more than $1.5 million.