The Program Budget Deficit:  The Tip of the Iceberg!

 

By Bill Powell, Former DIOPA Controller and Joe Suprenuk, Former DIOPA Interim Controller, March 17^th, 2006

 

Since the Diocesan Convention’s rejection of a program budget calling for a $1.3 million deficit (and use of Diocesan savings) in November, 2005, there has been exclusive focus on the program budget deficit without regard for the Diocesan-wide deficit we face in 2006.

 

Don’t get us wrong, the program budget is important. However, it only accounted for less than 45% of the total Diocesan deficit in 2005. Piecing snippets of information together (as none is available on a Diocesan-wide basis) we conclude the Diocese over-spent its cash revenue in 2005 by $4.7 million. (if you have the stomach for numbers our calculations presented below). There are DIOPA reports informing us that the 2005 program budget deficit was approximately $2.0 million. If the 2005 program budget deficit was approximately $2.0 million, one should ask, “where did the rest of the money go (the difference between $4.7 and $2.0 million)?”  Good question.  The answer is the $2.7 million of deficits not incurred through the program budget were incurred by unbudgeted expenditures not reported against the program budget, some excessive legal fees in the episcopate budget, and expenditures on Wapiti ‘brick and mortar’ and Wapiti salaries and operating expenses.

 

The point we are trying to make is that even if the program budget has a “0” (zero) deficit in 2006 and if there is no plan (and we haven’t seen one) to address our non-program budget spending habits DIOPA will need to come up with $2.7 million in cash in 2006. If a program budget deficit of $ 950,000 is approved for 2006, the Diocese will have to find nearly $3.7MM in cash to fund this deficit. Currently, it is believed we have at most $ 300,000 in available cash to fund the Diocesan-wide deficit - less than 10% of our needs.

 

You probably are asking yourself, “surely, someone would not permit this level of spending if these deficits would occur”. Our response is our Diocese has developed a culture of spending first, then scrambling to raise the necessary cash. This is evident with the Wapiti, Holy Experiment, venture where we committed to spend $30 million while we only had $3 million in cash to appropriately fund this project.

 

What can you do?  Start by calling your Diocesan delegates and let them know what you think.  Some questions and issues which must be raised are:

 

(1)    Will the Diocesan Council over-ride the convention-approved budgets, as they have in the past two years, granting the Bishop several hundred thousand of additional spending slack?

(2)    We  need a Diocesan-wide budget of the total deficit for 2006 including all entities such as Wapiti so can know our total exposure

(3)    How much will be spent on Wapiti brick and mortar (capital) in 2006?

(4)    How much will be spent of Wapiti salaries and operating expenses totally in 2006 (not just the amount included in the program budget)?

(5)    We need to eliminate the ‘unbudgeted’ category of expenses which eliminates accountability for spending and allows million dollar deficits to fly
            undetected under the radar.

 

Total DIOPA-Wide Cash Deficit Calculation 2005
Millions of Dollars
				2005
Withdrawals from Savings:				Millions of $
To fund Program Budget + Unbudgeted Expenses				2.75
To fund Wapiti as a Grant				0.75		Source:  Jan CFO report
To fund Operations through Year end				0.75
To fund Wapiti through Year end				0.15
Total Withdrawn from Savings				4.40		Sub Total
Decrease of Cash on Hand				0.30		Feb CFO report p 30 & 2004 audited financial statements
Increase of Amount Owed				0.04		Feb CFO report p 30 & 2004 audited financial statements
Net Cash Deficit				4.74		Total Net Cash Deficit