10 Years After the Scandals, Dioceses Still Recovering From Bankruptcy

Sex-abuse settlements cost millions of dollars and many Church properties.

STILL STANDING. The Cathedral of St. Augustine in Tucson.
STILL STANDING. The Cathedral of St. Augustine in Tucson. (photo: Shutterstock.com)

TUCSON, Ariz. — For more than eight decades, the centuries-old Pamplona Crucifix was on the wall in the vestibule of St. Augustine Cathedral in Tucson, Ariz., a battered and neglected gift from a forgotten donor.

Now carefully restored, the 12th-century artifact of medieval Spanish Catholicism has a new place, over the high altar of the Diocese of Tucson’s remodeled and renovated cathedral.

At a cost of $75,000, the restoration of the crucifix was only a small item in the diocese’s $28 million “Our Faith, Our Hope, Our Future” campaign. However, as a symbol for a diocese recovering from scandal and bankruptcy, it has become something greater.

On Sept. 20, 2004, the Diocese of Tucson was the second in the nation to seek protection under Chapter 11 of the federal bankruptcy code. And it was the first to emerge, on Sept. 26, 2005, having settled with victims of clergy sexual abuse and their attorneys at a cost of $22.2 million.

Stripped of real estate holdings set aside to accommodate population growth and reserve funds for present and anticipated operating needs, the diocese faced a future with none of the assets considered vital for accomplishing its mission to serve the spiritual needs of the nation’s 52nd-largest metropolitan area.

Yet, Bishop Gerald Kicanas said, “When you lose everything, you realize that you still have what matters most — and that’s your faith, your life and your friends.”

Programs and personnel were curtailed, and plans for up to seven more parishes were put on hold, he said, “but we were now free to move forward.”

Immediately following the diocese’s emergence from bankruptcy, donations to the Annual Catholic Appeal for the Tucson Diocese soared, increasing to $13.3 million, $450,000 more than budgeted, between 2004 and 2008. The separate “Our Faith, Our Hope, Our Future” campaign, intended to restore diocesan funding for Catholic Community Services, Catholic schools, clergy retirement and religious-education programs, attracted 17,209 donors. Their contributions surpassed the $28-million goal, with combined pledges exceeding $40 million.

Although the donors have not been able to fulfill all their pledges because of the recession, the campaign has received more than $24 million so far. Annual appeal income has remained over $3 million, higher than any year prior to the Chapter 11 filing.

Parishes, reorganized as independent corporate entities to protect them from creditors, have benefited from the unexpected surge in donations, although they have also been affected by the economic downturn. Increased responsibility for parish affairs attracted more involvement from parishioners, the bishop said.

“One of our primary goals was restoring trust,” Bishop Kicanas said. The diocese’s safe-environment program, sponsored in part with $600,000 distributed from the $5-million fund set aside by the federal court for possible post-bankruptcy claims, was a start. The rest continues to depend on better oversight and renewal of the priesthood and the parishes “to re-energize the call to service in the Church.”

One of the most visible results of this call to involvement has been the Treasures of the Heart campaign to restore St. Augustine Cathedral. Attracting more than $1.1 million in donations, the campaign was designed to revitalize the spiritual center of the diocese, transforming the spartan and neglected cathedral into a structure designed to inspire faith and hope.

From the beginning, that effort focused on the Pamplona Crucifix. “Moving the Pamplona Crucifix to the front of the church turned out to be a popular decision,” Bishop Kicanas said. “People didn’t like the ‘risen Christ’ in the sanctuary,” a 1970s non-traditional crucifix, installed following the 1964-1968 reconstruction of the cathedral.

Reverting to a traditional and historic crucifix symbolized a return to traditional faith, a rebirth of a “Church purified and humbled.” The bishop said, “It was very well-received.”

Invaluable Lay Support

While the Tucson Diocese describes post-bankruptcy recovery as exceeding expectations, the experiences at other dioceses and archdioceses have been more ambiguous. The difference may hinge on how the bankruptcy cases were concluded and the financial impact of the recession.

The Diocese of Spokane, Wash., which followed the Tucson Diocese into Chapter 11 reorganization on Dec. 6, 2004, emerged in February 2008. However, Deacon Eric Meisfjord, spokesman for the Spokane Diocese, said the $48 million settlement, including $10 million contributed by individual parishes, didn’t end the litigation.

There are still some negotiations to be concluded, Deacon Meisfjord said. Until that happens, the diocese won’t be able to assess where it stands. “We’re still settling up,” he said.

So is the Diocese of Davenport, Iowa, which filed for Chapter 11 protection on Oct. 10, 2006. Deacon David Montgomery, spokesman for the diocese, said, “We’re not done, yet.”

Paying out $37 million for abuse claims, mostly through the sale of the bishop’s house and other Church property, and the impact of the recession on parishes, has left the diocese financially strained. However, Deacon Montgomery said, “We’ve been able to maintain our services, mostly thanks to a good set of volunteers who’ve come forward since the bankruptcy.”

“We had to cut back staff and programs when this began,” he said. “Since then, we’ve been able to maintain funding at the same level, but we haven’t seen an increase.”

Deacon Montgomery noted that the laity have came forward because the diocese needed the help. He described lay support as “invaluable” throughout this process: “Their involvement has allowed us to maintain ministries we wouldn’t have been able to maintain otherwise. We hope this involvement will continue.”

‘Life Goes On’

The Archdiocese of Portland, Ore., was the first in the U.S. to seek Chapter 11 protection on July 6, 2004. Like the Dioceses of Spokane and Davenport, settlements with the 175 people claiming sexual abuse by archdiocese clergy and staff took years to conclude. Spokesman Bud Bunce said now it’s done, “and we’re building up again.”

A final agreement was approved on April 14, 2007. Insurance covered $52 million of the $75 million settlement, paid out in 2008 and 2009. Paying the balance without a fire sale of Church property left the archdiocese with a debt of $20 million.

“There has been improvement as the years pass,” Bunce said. The archdiocese has yet to restore all of the 23 full-time positions cut during the reorganization. Recovering from the bankruptcy has been a slow process, “and the economic downturn has been an additional burden to carry,” he said. “However, the bishop’s annual appeal has met (its) goal.”

Meanwhile, Bunce said, “Even during the bankruptcy, parishes still served the spiritual needs of Catholics and Catholic schools still functioned,” he said.

Therefore, parish-focused projects, including programs for youth ministry, family life and continuing Catholic education, are the priority for still-limited archdiocese funding and effort. “We want to grow back programs that benefit our parishes,” he said.

Although the Chapter 11 reorganization could have been a disaster, Bunce observed, “Life in the Church is more than what’s happening at the pastoral center.” The bankruptcy has shown that life “exists throughout the archdiocese, and it continues on.”

Register correspondent Philip Moore writes from Vail, Arizona.