Financial Meltdown — Diocese of Providence Slashes Health Benefits to Employees

Financial Meltdown — Diocese of Providence Slashes Health Benefits to Employees

New documents secured by GoLocalProv show that the Diocese of Providence’s financial situation continues to deteriorate and the Diocese is now dramatically increasing the contribution of teachers and employees to their health benefits.

Employees of the Diocese who have family healthcare plans will have to pay $2,000 annually more.

This comes just weeks after the Diocese made cuts to the Lay Person Retirement Fund. The church slashed benefits and cut some teachers and staff out of the plan despite their schools making thousands of dollars of contributions to the fund on their behalf.

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In addition, documents show that the value of the retirement fund is decreasing by the year. From 2014 to 2017, the fund has decreased in value from $103.8 million to $92.9 million. During this period, La Salle Academy left the Diocese’s fund. According to sources. La Salle made a one-time payment to the retirement fund in order to leave the fund.

It is unclear if the La Salle payment was re-invested in the retirement fund — representatives at the Diocese have refused to answer questions.

Moreover, newly secured documents show that the Diocese pension fund is performing far below the market. According to Diocese documents, the pension fund only delivered a 5.47 average rate of return. But, according to analysis provided to GoLocal, a traditional and conservative investment mix of 60 percent S&P stocks coupled 40 percent aggregate bonds over the same period would have delivered a 9.3 percent rate of return. 

The retirement fund is presently taking in approximately $6.5 million and paying out $10 million.

Rev. Timothy D. Reilly of the Diocese of Providence did not respond to a request for an interview with GoLocal for this article.

Second Financial Hit on Teachers and Staff

The health benefits changes by the Diocese is the second hit on employees.

According to Diocesan documents secured by GoLocalProv in June, the pension fund for a large number of teachers and staff at Catholic schools in Rhode Island is economically unstable.

“The unfunded liability of the Lay Employees’ Retirement Plan will continue to grow and will become untenable in the near future,” states a recent Diocesan document. 

The document, entitled, “Recommendation of Finance Council Subcommittee Regarding the Law Employees’ Retirement Plan," dated October 2017, paints a bleak future for the fund, outlines the causes of the fund’s tenuous structure, and calls for immediate action to stabilize the fund.

Latest Revelation of Diocesan Pension Problems

A second document also secured by GoLocal, which was prepared by the Diocese top financial officers -- Monsignor Raymond Bastia and Chief Financial Officer Michael Sabatino -- was considered by top Diocesan officials at a meeting with Bishop Thomas Tobin.

The document is dated June 19, 2018, and marked “immediate action” and called for drastic cuts to beneficiaries of the fund.  Also, considered at the meeting was an October 2017 recommendation document.

Another dire statement in the report says, "Even with the revised more realistic assumptions, if we make these changes, it will still take 30-35 years to fully fund the Plan."

In August, GoLocal secured copies of Diocese of Providence documents that show that the benefits of many teachers and staff in Lay Employees Retirement Fund will be frozen and for others, they will no longer be eligible for the “Lay Teacher’s Retirement Fund” at the end of the year.

The implications are profound, as potentially thousands of Catholic school teachers and staff will lose the contributions to the pension fund. They will receive nothing.

The August documents show that “As a result of this review, a decision was made that the Lay Employees' Retirement Plan will be ‘frozen’ effective December 31, 2018. A ‘freeze’ is not the same as a termination; generally, a ‘freeze’ means that no new employees can join the Plan, and that benefits will be fixed, and will not grow, after the ‘freeze.’”