THREE FINANCE INTERVIEWS
One assignment in my finance class was to conduct three interviews of finance and business directors in Catholic organizations. For sheer proximity, The Saint Joseph Christian Life Center and Villa Angela-Saint Joseph High School made sense. They are within two miles of my home and adjacent to one another. I also hoped to secure the third interview with a finance official at the diocesan headquarters downtown. I wasn’t given these interview assignments for investigative means, but rather to gain more insight into the roles and responsibilities of business and financial professionals operating Catholic organizations and institutions. What follows are the summaries and insights of my three finance-related interviews.
Interview #1: Business Manager, Villa Angela-Saint Joseph High School
Villa Angela-Saint Joseph High School is located next to The Saint Joseph Christian Life Center. The interview was conducted in the VASJ Business Office. The school is one of six high schools owned by the diocese.
In many class discussions at CUA, we talk about school governance and the principle of subsidiarity. Catholic schools differ from public school districts in that many of their decisions are made at the school level while in public schools, most decisions on governance and programs come from the central office. With regard to accounting, however, it makes sense for Catholic schools to use similar procedures so that the financial director of the diocese can assimilate numbers so that comparisons and forecasts can be drawn in a language and format in which all schools may be comfortable extrapolating.
The responsibilities of the business director at Villa Angela-St.Joseph High School include all financial functions, such as payroll, benefits, tuition collection, budgets, and accounts receivable. The position also leads monthly finance meetings with the school’s president, principal, athletic director and other administrators as well as members of the Marianists and Ursulines, the contributing religious orders to VASJ. I hesitate to use the word “contributing” because this may sound to diminish the original support and backing of the school. On the Marianist website, VASJ is said to be a Marianist school (www.marianist.org). The diocese owns the school, and the Marianists support it. It may have been the other way around in the past, with diocesan contribution to the Marianist school. The Ursulines support of the school comes from their previous sponsorship of the merged all-girls high school, Villa Angela Academy.
The business director reports directly to the President and Principal. VASJ employs the President-Principal model of Catholic schools, whereby the President works to ensure the future sustenance and growth of the school, and the Principal leads the daily operation of the school. Accountability and transparency are watchwords in the lexicon of organizations today, be they Catholic, Christian, private, secular or public. I imagine business and finance managers would be the first to hail the open approach in safeguarding their management of large sums of money.
VASJ sends monthly financial reports to the diocese in a format produced by the diocese. There is also an outside source consultant to the diocese that supports the business directors in all six of the diocesan-owned high schools. Further, there is the annual audit of accounts for these schools.
As the religious orders of the Marianists and Ursulines support the school, I asked the business manager to what extent is their support. In addition to passing on the traditions and charisms of these religious orders, their part in the decision making of the school is mainly advisory. Both orders offer yearly financial gifts to the school.
A good portion of our studies at The Catholic University of America is on the transition of leadership in Catholic schools from vowed religious to the laity. This has occurred due to necessity. The main concern in this transition is the upkeep of “catholic identity.” With religious orders handing over the keys of Catholic school operations, so to speak, it is good to know the articulation of their founding traditions and charisms are still evident in practice. While a staff member may not be a vowed Marianist, or an Ursuline, teachers can be “Lay Marianists” or “Lay Ursulines.”
The business directors of the six diocesan-owned high schools meet monthly to discuss issues pertinent to their positions. Incidentally, there are more independent Catholic high schools in the diocese than diocesan owned.
I asked the business manager about the position’s stressors. Indeed, managing the financial operation of a high school has a certain level of anxiety attached to it. One of the biggest hurdles stated is with the alumni of Villa Angela-Saint Joseph High School. In the 1970s, St. Joseph High School, sitting on the border of Cleveland and Euclid on Lake Erie, enrolled close to 2,000 boys. In the last quarter of the twentieth century, there occurred a great exodus of people from the city to the outer-lying suburbs. Enrollment went down substantially at St. Joe High School. Villa Angela Academy, the sister school of St. Joe’s, located approximately a mile west into Cleveland, along the same Lake Shore Boulevard as St. Joe's, also had enrollment drops because of the out-migration of Catholics. In the late 1980s, the two schools merged to become a co-educational institution. While it is difficult to know for sure without in-depth analysis, alumni of both St. Joseph High School (boys) and Villa-Angela Academy (girls) withdrew their financial support of the school, citing the merger and new co-ed approach to schooling as the main factor in their withdrawal of support. I run into St. Joe alumni all the time. While attending Euclid Senior High School, I competed with St. Joes’ teams in different sports. I played CYO sports as a youngster and attended St. William Catholic parish. I walk in many of the same circles as alumni from the school. Since beginning the work for the assignment, I have spoken to several alumni of the school, and they reinforced this theory that alumni giving diminished since the school is no longer an all-boys school. My brother in law went to St. Joseph’s. His next-door neighbor went to Villa-Angela. When asked, they both said the merged school is not their school anymore. It is a new school and financial support to the school should come from those who graduated from it, post-merger. While we didn’t discuss numbers, the business manager shared that financial support to the school isn’t what they would like it to be. Another financial constraint today is that children of graduates are no longer given a substantial discount in tuition.
In determining the annual budget of the school, three factors are followed. Number one is the scope of teacher benefits in totality. Second, a good estimate of the next year’s enrollment is determined and third, VASJ tries to keep the annual increase in tuition to no more than $250. The business manager related that the budgeting process is a year-round, ongoing process.
Having worked in a good number of schools, and observing the roles of business managers at home and abroad, I inquired about the position’s input into decision making regarding school policy, mission, and goals. The business manager replied that input is accepted, even in non-financial matters. The president ensures that all decisions are made in line with the mission and philosophy of the school.
Strategic planning is an essential ingredient for the ensured success of all organizations. In short, it is about road mapping the future and giving seats in the vehicle to as many people as possible who are going along for the ride. VASJ employs a full-time development director. The business manager works closely with this position with regard to strategic financial planning.
The first priority must always be the meeting of payroll and benefits. Villa Angela-St. Joseph utilizes a third-party tuition management system but allowed it is a constant struggle to receive tuition payments. When asked how to ensure that Catholic schools thrive today, the word was “Donations!” Indeed, this reiterates our studies of the current state of Catholic schools in the United States. With the current system of tuition and parish or diocesan subsidy barely enough or simply not enough to administer a school, it is essential to develop capital and endowment campaigns.
VASJ certainly knows about the Catholic school funding crisis, which has come on, in great part as a result of the transition from vowed religious staff to faculties made up largely of lay people. Lay teachers would like to earn salaries competitive with their public school counterparts, and even are willing to make less to stay teaching in Catholic schools because they believe in them. The reality is they still have bills to pay and understand the cost of living in today’s society. The business office has calculated that at VASJ, it costs about $9,000 to educate each student. Yet, the current tuition stands at $6,900. Students needing financial assistance fill out a FAFSA (Federal Assistance for Financial Aid (www.fafsa.com) type form to help inform the school how much aid is needed. Financial aid will come from a combination of donations to the school and also from the diocese.
We arrived at the “voucher” question and at which level VASJ participates. Cleveland, of course, is one of the pioneers in the system of educational vouchers, which allow students from underperforming public schools to receive vouchers that allow them to attend other schools of their choice. The Zelman v. Simmons Harris (2002) Cleveland case went all the way to the US Supreme Court, upholding the voucher system that per-pupil funding follows the student and not the school. This Catholic school does participate in the voucher program. There is a lottery system for students living inside the city limits of Cleveland. Students that have attended at least one year at a Catholic grade school are eligible. It is state-funded and is called The Cleveland Scholarship and Tuition Program. No students, however, are given 100% tuition assistance.
I continue to struggle with the question of school governance. Though Catholic schools are thought to have autonomy within their walls in regards to decision making, in diocesan owned schools, the Education Secretariat of the dioceses takes special interest in the ongoing development of the school. The business manager put it well, saying, “The school reports to the diocese, but is not governed by them.” As stated earlier, the school submits monthly reports to the diocesan Secretariat of Education.
Finally, I was compelled to ask the business manager if Villa Angela-St. Joseph High School, situated adjacent to the now-closed Saint Joseph Christian Life Center, had any plans to acquire the building and property for its’ own good purposes. The Diocese of Cleveland owns the land and buildings which comprise VASJ and The Christian Life Center. As an outsider, it seems quite logical that the school might want to consider obtaining The Center, though there is a host of issues that a casual observer may not be aware of, in addition to the fact that school enrollment has been declining, thus reducing the need for additional building space. The business manager’s response was that VASJ would like to acquire The Center, but money and needs are considerations. The school already lost out on growing the campus behind the school at lake’s edge when the Hospice of the Western Reserve acquired a corner chunk of land behind the school’s track and field. Thus, Villa Angela-St. Joseph would not also like to lose the prospect of acquiring this adjacent Catholic property to enhance mission development.
2022 Note: VASJ has grown in enrollment and viability since 2007.
Interview #2: Finance Director, St. Joseph Christian Life Center
After the insightful interview with the Villa Angela-Saint Joseph High School Business Director, I walked next door to the soon to be closed St. Joseph Christian Life Center to arrange an interview with the Finance Director of the institution. I spoke with Father Walter Hyclak, The Center’s director for over two decades. I passed my condolences to him regarding the closing of The Center as we walked into his office sidestepping the moving boxes in the hallway that the led to the office of Father “Wally.” I had already contacted him regarding writing an updated history of the SJCLC. At the time I saw the article in the newspaper announcing the closing of The Center, I immediately sent an email in support of continuing the Center’s programs, at the behest of a flyer that was given to me by the volunteer receptionist of the SJCLC. Since we had been studying the complexities of consolidations and closings of Catholic institutions in our Contemporary Issues course, and the necessity to give ample time to final efforts to keep established Catholic institutions alive and well, I simply wanted to inquire if those means had been exhausted on behalf of The St. Joseph Christian Life Center. To my surprise, Father Edward Estok, the rector of St. John the Evangelist, the mother church of the diocese and next to the diocesan offices, replied to my letter. I knew Father Estok from St. William Church, my parish in Euclid, when he spent some time there as an associate pastor in the early 1990s. He was a great confessor, and I sensed he really had the gift of tuning into the needs of the people of the parish. It was no surprise to me when, after one of my globetrotting adventures, I found him to be the presiding rector of St. John the Evangelist, downtown. Father Estok, in his reply email, assured me with pieces of evidence that efforts were made to keep the SJCLC open through previous strategic planning.
As I sat down with Father Hyclak, the well known, popular and sincere priest in the diocese and of Catholic radio fame, he too assured me of their final efforts to keep The Center open. In the last year, the diocese subsidized it with $200,000, which was far above the subsidy of previous years. He said that any further efforts would be futile and the decision to close was final. I asked him if it would still be alright to get historical information on the St. Joseph Christian Life Center so that I could write my history paper. Father Wally kindly assured me that it would be fine, but that at the moment he was busy packing up the place, and then later would be going on pilgrimage to the Holy Land, followed by adjusting to his new assignment in the diocese. As this was September, Fr. Wally suggested I call him in December when we could meet to discuss history. He referred me to the Center’s Finance Director. I could secure my second interview with her.
The Finance Director of the SJCLC has had the responsibility to oversee the financial cycle, attend to accounts receivable and payable, produce cash flow reports and finance reports, prepare budgets and balance sheets, grant writing and research, maintain the donor database and lead efforts at fundraising. In the later years, the position also added the responsibility of maintaining and developing the website for The Center. This is quite a large load of responsibility for any well-meaning, high functioning, organized and ambitious individual. In a financially healthy organization, the duties of development are often separated from that of a business manager. One person is to keep both eyes on current finances, while another devotes their energies to securing developmental funds for the future. It can be likened to the President-Principal model in operating schools. Yet the business director here had to serve in both capacities, which obviously limits her abilities to do either to the best of her abilities. In Catholic schools today, fundraising and development take full-time efforts.
Regarding the St. Joseph Christian Life Center’s budget preparation, the diocese required a zero-based budget formula. Historically, this would give all concerned a better sense of expenditures. There had been no subsidy from the diocese for some years. The operations were independent, with little oversight, until the last eighteen months when the diocese helped to take part in the final strategic plan which attempted the necessary action to revive The Center.
At the time of final attempts, an advisory board presented the strategic plan, which included an enhanced focus on programs, different fundraising pieces, and additional personnel totaling 26 full-time and part-time staff, collectively. Some may wonder how personnel can be added when finances are tight. Using the finance director as an example, a person working full-time with the financial books cannot take on the necessary jobs of fundraising and development? Sometimes, organizations need jumpstarting.
In the end, in almost 2 years of adjusted programming efforts and all the rest, The St. Joseph Christian Life Center just didn’t get the necessary numbers to assure its’ survival, and the diocese made the difficult and painful decision to shut it down. The Center was to be closed in October. Some people were still angry while others were just sad. The finance director lamented, “The diocese had to make a decision and it became difficult to manage the necessary balance between mission and money.”
Interview #3: Finance Coordinator, Secretariat for Education, Diocese of Cleveland
Now that I had conducted two site-based financial directors' interviews, I wanted to get another perspective of the financial operations of a Catholic organization on a different level. The Finance Coordinator for the Secretariat of Education works out of the diocesan offices at Cathedral Square, across the street from St. John the Evangelist Church, on East Ninth Street, downtown. He immediately related to me that his perspective is not one of a school or a retreat center but on the big picture of all the schools in the diocese.
The Finance Director of the diocese, another position, works with the six diocesan-owned high schools. The coordinator works with the private elementary schools. As opposed to a public school finance coordinator/director who oversees the financial operations of schools, the position in the diocese is consultative, respecting the cherished principle of subsidiarity in Catholic schools and parishes. The work also supports two diocesan-owned elementary schools. As the coordinator put it, “We work as a district of schools, not as a school district.”
I was given a good number of public domain handouts, including operating procedures, examples of financial and balance sheets, and the flow chart of duties within the Secretariat of Education. The finance coordinator position reports to the superintendent of schools.
Continuing on with my pressing need to understand governance, the coordinator reiterated that the position is consultative and not decision-making regarding schools. There is a financial reporting handbook for schools and parishes which holds policies and procedures, budgeting, and accounting systems, called ACS, a company that developed software for schools to use. In the case of accounting, schools must oblige to the system. Everyone seems to understand that a streamlining approach to reporting is best for all. Thus, reading reports is simplified and is helpful so that schools can understand each other better and use common terminology. Annual schools surveys and financial reports are filed at the diocesan finance office.
In the interview, we discussed school funding models, a primary theme of my course in school finance. A few years ago, Cleveland went to a cost-based/needs-based tuition initiative called Providing Access to Catholic Education – PACE. There are two types of voucher systems for families in need. One is the Cleveland Scholarship and Tutoring Program, as discussed in the VASJ interview. The program works with low-income families in the Cleveland school district. The CSTP can provide up to $3,450 per student.* The second voucher system is Educational Choice, an across-the-state program with a maximum aid allowance of $4,250.* This program is for students in failing school districts, as evaluated by the state. These forms of vouchers can provide 75-90% of tuition payments.
He related that although vouchers are welcomed, some Catholic school proponents are leery about vouchers leading to further government inspection of Catholic schools. He cited that schools can do as they please in governance, but that in order to receive government funding, it is essential that state standards be met. He cited an example in nutritional services funding, where the state mandates that specific forms be followed. Essentially, Catholic schools must align with government regulations on health and safety.
In the opinion of the finance coordinator, Catholic school tuition is too high; Catholic education has become an entitlement. According to him, parishes need to change their attitudes toward subsidy and embark on visionary and bold stewardship programs. Then I asked what a typical day in the office entailed. The finance coordinator answers a lot of phone calls from school offices, though these make up a minority percentage of calls when compared with calls from parish offices. Areas that schools call about are per-pupil cost ratios, teachers’ salaries, and employee benefits along with questions on how to present school tuition plans. The finance director knows it is important to see the whole picture and he tries to help schools identify with this outlook. In response to how diocesan subsidies are paid out, the answer was monthly.
Since the finance coordinator has a unique perspective in his position of Catholic schools in the Secretariat for Catholic Education in The Diocese of Cleveland, I asked about the future of Catholic schools in the diocese. “There needs to be a Catholic presence in all areas of the diocese, and there is also a need for commitment in the city, not just the suburbs, to provide educational opportunities to families who are looking for safe and structured education for their children.”
As the interview continued, I was given an explanation of the distinction between consolidating and clustering. Consolidation is when two entities decide to work together on their own. Clustering, on the other hand, is when, because of the lack of personnel (priests), deficit spending, and changing demographics, a mandate has come from the Bishop that new, cooperative efforts are made in two or more parishes. Cluster meetings are closed to the public, though information delineated from them is made public in written form. Bishop Anthony Pilla initiated the Vibrant Parish Life program several years ago, and after his retirement, the new Bishop, Richard Lennon, has taken the program to its’ next stage. This is the hard and painful work of merging or consolidating parishes and schools where there are needs, to form a new association. This can mean having to close a parish and school and having parishioners and students move to the next closest parish and school that can best accommodate them. The root causes of the clustering process are population shifts, financial difficulties, and shortage of priests.
The finance coordinator said that clustering is a two-edged sword. It may be necessary to cluster for ongoing “vibrant parish life,” but it is difficult for people to give up a past held dear for so long. Still, it is an obligation of The Church to make things work well. It is a social justice issue to provide the poor with opportunities to better themselves, and children’s needs for academic and spiritual training must be met. “We can never fail to recognize the obligation to the poor.”
In his off time, the coordinator represents his own parish as a facilitator of the clustering process of parishes in the diocese. He said that consolidation is necessary, but the main question is “how do you go about doing it?” In his cluster, he says the process is challenging and parishes still want to have their own school. When the suggestion that individual parishes could keep their schools open in a one-room schoolhouse approach, the diocesan coordinator said this would not work and it would be difficult for these types of schools to get accredited. Technology issues could be a further problem, though there was no further elaboration. When one school consolidates with another, one school is left vacant. Alternative uses can be that of using the space as a senior center or citing an example in a town on the west side of Cleveland, a vacant school is now being used as a counseling center. Vacant school rooms can also be used as parish ministry offices.
I have an interest in strategic planning. It is a real gift for those who have the ability to see far into the future and make long-range plans accordingly, including stakeholders in the planning phases. Touring the Cleveland-East Catholic churches, I have seen four parishes located within a mile of each other, with two of the parishes located right around the block from each other. A priest at Holy Cross Parish in Euclid explained to me that in the case to which I speak, one is a Croatian parish, on a side street, and the other is an Irish parish, on the main street. Back in the nineteenth century, ethnic parishes built churches amidst their local communities, without regard to the building efforts of other ethnic parishes nearby. In Cleveland, the German and Irish parishes took over the main thoroughfares, while other ethnic churches were relegated to the side streets. Hence, we now have a situation where the difficult decisions of clustering have been made because of the close proximity of churches that serve fewer parishioners than ever before.
The Bishop asked the finance coordinator, in his role in the strategic planning of the diocese, to identify which schools were at-risk. He developed a process to assist parishes and schools, in collaboration with the finance officer, in helping them make informed decisions. This came to be known as The Elementary School Finance Project, which was distributed in December of 2005. In it, parishes and schools were provided with a summary report, showing what the Secretariat could do to support them. The coordinator makes himself available for presentations to schools in reference to the project. Another unfortunate resource I was given was the spiral-bound Procedures for Closing a Parish School. It includes a timeline of tasks and items that need to be accomplished starting almost two years out from the date the school closes its’ doors for the final time. A good portion of the procedures includes guidelines for prayer services and solemn remembrance ceremonies that should be adhered to in order to display the enormity and significance of closing a school.
I asked what mechanisms are in place to ensure accurate financial reporting from parishes. All parishes are given financial handbooks to help their financial councils. Parishes are audited annually, as well as the diocesan high schools with similar measures being taken at the elementary schools. He added that an audit can cost in the range of $17-25,000 dollars, which is difficult for some schools to handle. The Secretariat of Education is putting together a “review” that is similar to an audit but costs less.
Organizations are moving towards more transparency in financial reporting than ever before. I asked about this. Real changes have only come about in the last couple of years, due to the “situation.” There has always been a requirement that parishes make their numbers available, but that it had taken on more of an air of suggestion rather than the actual requirement. As stated earlier, parishes are given a specific format to provide the numbers to the diocese. Further, at the behest of the USCCB, parishes are called on to make available the names and titles of parish finance councils, the dates and times of their meetings, samples of accounting procedures, and the coming fiscal year budget. The pastor and all finance council members must sign off on these items.
In summary, all three of my interviews with financial specialists were welcoming and forthright. They were happy to assist me in my continued learning of the financial aspects of Catholic organizations. They are obviously seasoned professionals. I am grateful for their assistance and I learned a lot.
*Voucher award amounts have increased significantly since 2007
Note: Originally written in 2007.
Join the Facebook group Fresh Eyes on Catholic Education for more insights.