Clarifications of Facts & Figures in Vigil Announcement
Prepared by
H. Richard Grafer

Please be aware of certain errors and misunderstandings contained in the announcement about the upcoming vigil. 

To begin with "operating surplus" and "reserves" refer to two different things.  Operating surplus refers to the operating results for the year.  An entity can have an operating surplus or an operating deficit.  In private industry parlance, that means the same thing as having net income or a net loss.  "Reserves" on the other hand, refer to unrestricted net assets, which is like equity. In my analyses, I have refined the term "reserves" further to include only liquid cash reserves not having a substantiated future need, which I refer to as "free cash reserves". 

Unfortunately, the announcement confuses operating surplus (or deficit) with reserves (or free cash reserves).  Charles Trunz was talking about operating surplus (or deficit) while the announcement below makes it appear that he was talking about reserves. The Diocese has been operating at a deficit for the past several years.  This has been eating away to some extent at the reserves.  It is true that the reserves are still quite large, but an operating deficit can, obviously, not be allowed to continue indefinitely.

Concerning the free cash reserves, the announcement refers to a number ($268 million) that is more than two years old and is incorrect.  The correct number as of  8/31/07 was $247.2 million.  More importantly, my latest analysis as of 8/31/08 (published in July 2009) indicates that free cash reserves equaled $138.9 million.  The decline from $247.2 million to $138.9 million was attributable to the operating deficit experienced in fiscal 2008 and a valid restatement by the DRVC related to the future need for cemetery reserves that I previously classified as "free".  Although fiscal 2009 financial statements have not yet been published (they are about to be), I'm sure they will show a continuing operating deficit and further erosion in the free cash reserves, and I suspect that the same is true for fiscal 2010 (beginning in 9/09) to date.  Whether or not this justifies the actions being taken is debatable.  However, I think it's important that we have the correct information when reaching a conclusion.

H. Richard Grafer
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For detailed information about Diocesan Free Cash Reserves please visit
LIVOTF's web site

FINANCIAL ACCOUNTABILITY
Diocesan Free Cash Reserves
August 31, 2008
Prepared by H. Richard Grafer