THE CATHOLIC VOICE — 1AMAy 19, 2014

Fiscal Year 2012

Everything we have is a gift from God, and sharing our gifts with others is part of being a true disciple of Christ. Our Lord and savior

expects us to be accountable, prudent and transparent in how we use the gifts entrusted to us by the generous parishioners who fund the many ministries and programs of the Church. These ministries are essential if we are to fulfill the mission Jesus gave the Apostles and to all of us.

In closing, I also see this report as a way for me to say thank you for your faithful stewardship and care of the Church here in the Diocese of Oakland. Whether you share your gifts with your parish or the “wider Church” through the annual Bishop’s Appeal or by some other means, know I am grateful for your generosity. As your new Bishop, I am also humbled and thankful for your warm welcome. I look forward to meeting you as I travel throughout the Diocese. Please continue to pray for me that I can fulfill the mandate given me by Pope Francis to be a true Good Shepherd after the model of Christ. With your help I am sure we will meet our

financial challenges. I entrust you all to the Sacred Heart of Jesus and his Blessed Mother.

Yours Sincerely in Christ,

+Michael C. Barber, S.J. Bishop of Oakland

My Dear Brothers and Sisters in Christ,I am pleased to provide the 2012 Annual Financial Report of the Diocese of Oakland. This report presents the audited statements of activities of the central services of the Diocese of Oakland. These services include parish and school assistance, clergy and seminarian support, the Department of Evangelization and Catechesis, other ministries, and administrative activities otherwise known as the Chancery, including the expenses of running my office. Additionally, this report includes summaries for several other Diocesan entities.

The Diocese is in good financial condition. In fact, Moody’s Investors Service recently confirmed our A3 credit rating. Nonetheless, there is no question we as a Community of Faith in the East Bay face a number of financial challenges. Initiatives were begun before my arrival in the Diocese to begin addressing them. I am committed to being open and transparent as we move forward together to address the financial challenges we share.

The publication of the Annual Financial Report of the Diocese of Oakland is but a first step in my commitment to you, the faithful stewards and parishioners who lovingly and generously share your resources with the Church of Oakland as it strives to bring the Gospel Message to all.

Diocese Oakland

of

2012 Diocese of Oakland Annual Financial ReportThe mission of the Diocese of Oakland is to know Christ better

and make Him better known.

Dear Members of the Church of the Diocese of Oakland, The members of the Diocesan Finance Council advise the Bishop and his staff in the oversight of financial matters of the Diocese. Our responsibility includes approving the central services’ annual operating budget, reviewing the financial statements and audit reports for all diocesan entities, and identifying potential financial risks that may not otherwise appear in financial statements. Having determined areas that may need improvement, we advise the Bishop on appropriate plans to remedy the financial challenges faced by our local Church.This report covers the 2012 financial condition and results of operations of the Diocese and provides information on the ministries managed by the Bishop’s staff. You may wonder why we are not reporting 2013 information. The reason is, our auditors have not completed their audits of our 2013 financial statements. In general, revenues for the Diocese in 2012 remained flat and expenses were within budgeted amounts. We experienced some significant increases in the costs of providing employee health insurance coverage. On the bright side, there was an increase in gifts to the annual Bishop’s Appeal and, as financial markets improved, increases in investment returns. The Diocese continues to be challenged by its debt obligations, which are discussed in this report. Although we have sufficient savings and other assets to make our debt payments on schedule, we need to

Letter from the Diocesan Finance Councilreduce annual borrowing costs. Accomplishing this task will allow us to improve the Diocese’s flexibility and provide for the expansion of existing ministries and development of new programs to serve the parishes and people of the Diocese.

As members of the Diocesan Finance Council, we welcome Bishop Barber as our shepherd and leader and look forward to working with him. Your financial support of the Diocese and your parish is important and will continue to be vital as we go forward. Thank you for your generosity. We hope this report provides you with a helpful understanding of the financial affairs of the Diocese of Oakland. With your continued support, the Finance Council is committed to providing good stewardship, oversight, and assistance to Bishop Barber and his staff in the financial management of the Catholic Church of the East Bay.

Sincerely yours,

William Utic, ChairDiocesan Finance Council

Diocesan Finance CouncilBill Atkinson Transfiguration Parish, Castro ValleyJohn CallagySt. Perpetua Parish, Walnut CreekJeannette DeLaGarzaCorpus Christi Parish, PiedmontDavid MechlerSt. John Vianney Parish, Walnut Creek

Bill Utic, Chairperson St. Joseph Parish, FremontKip Wixson Transfiguration Parish, Castro ValleyDavid L. Ash St. Monica Parish, MoragaPatrick Devine Our Lady of Grace Parish, Castro Valley

Catherine “Lan” TranSt. Jerome Parish, El CerritoGary BongSt. John Vianney Parish, Walnut CreekRev. George Mockel, Vicar GeneralMichael Canizzaro, Chief Financial OfficerPaul Bongiovanni, Controller

A2 — THE CATHOLIC VOICE MAy 19, 2014

Diocese of Oakland

Financial Health of the Diocese of Oakland, a Letter From the CFOThe Diocese of Oakland is a vibrant, growing community of the faithful. In order to carry out our mission “to know Christ better and make Him better known”, the Diocese has a system of administration to manage the spiritual and temporal needs of this community. As the Catholic population of the Diocese expands, our ministerial, educational and assistance programs need to keep pace.

Our Diocese is in good financial condition. In fact, Moody’s Investors Service recently re-confirmed our credit worthiness with an A3 investment grade rating. Nonetheless, our parishes, schools, Catholic Charities, cemeteries and the people who manage them continue to face financial challenges.

Like businesses and families, the Diocese has borrowed to fund large, non-recurring, one-time expenditures. Borrowing has allowed the Diocese to spread payment for non-recurring costs over a longer period of time, without adversely affecting the ministries and services supported by the annual operating budget.

The Diocese’s current debt obligation originated in 2007 with a $114.7 million bond issue. Proceeds from the bond issue were used to refinance and consolidate previous debt and provide additional funding:

• $65 million was used to fund the difference between the $121 million raised from donors and real estate sales and the construction cost of the Cathedral Center (Cathedral of Christ the Light, mausoleum, chancery, bishop’s residence, conference center, Cathedral Shop, a café, underground garage, plaza and financing)

• $17.5 million has been used for parish and school loans for various capital projects and other growth-related needs

• $12.5 million was used to pay approximately half of the Diocese’s $25 million cost for settling sexual abuse cases in 2004 and 2005

• $10 million was invested in the much-needed rehabilitation and development of our diocesan cemeteries

• $10 million was reserved for debt service

As with any home mortgage, the total debt service paid (interest and principal) over time is much greater than the initial amount borrowed. Since 2007, the Diocese has paid $43 million in interest on the bond financing. Cathedral Center capital campaign pledge payments and the Diocese’s operating budget have covered the interest payments, but pledges made for the construction of the Cathedral will soon be completed. The bond debt service burden will fall not only upon the Diocese’s annual operating budget, but also upon the accumulated unrestricted assets of the Diocese which are used to endow its operations.

The Diocese of Oakland runs on a very tight annual budget. That budget relies on a combination of fundraising, assessments and investment returns to fund the administration and many ministries we provide in support of the local Church. To improve the overall financial flexibility of the Diocese, prevent large reductions in operations, services and ministries, and to create room for new and expanded ministries for our growing East Bay community, we must reduce the portion of the annual diocesan operating budget used to service debt.

To accomplish this improvement in financial health and capacity for growth, the Diocesan Finance Council has recommended decreasing our debt by $50 million from $114.7 million to $65 million. The $50 million in debt reduction will be accomplished by utilizing proceeds from property sales, liquidation of investments, and a portion of the funds contributed to the upcoming diocesan capital campaign. In addition, the Council has recommended we restructure our remaining debt to extend upcoming payments over a longer period of time, freeing up more of the annual budget for improved diocesan ministries, operations and services. This balanced approach will reduce the debt to a more sustainable level and help the Diocese retain sufficient investment assets to support its annual operating budget.

Further reduction of debt below the $65 million level will come from annual debt service payments, further liquidation of assets, and potential future diocesan capital campaigns.

Thanks be to God we have been blessed with the great leadership we have had in the past and can look forward to in the future.

Michael CanizzaroChief Financial Officer

Diocesan Revenue & Expense SourcesAs stated in the “Financial Health of the Diocese of Oakland, a Letter from the CFO” (left), the management structures of the Diocese of Oakland are clear and well defined. Several corporations make up the financial picture for the Diocese. In 2012, the revenue for all diocesan entities (including parishes, Catholic schools, Catholic cemeteries, Catholic Charities of the East Bay, the Cathedral of Christ the Light, and central services) totaled just over $238 million, while expenses totaled almost $234 million. Diocesan revenue by entity is broken down in the chart below, and more information for each entity is provided on the page to the right.

1  

2  

3  

4  

5  

6  

Our Cemeteries$20.18.4%

Commonly Known AsOur Parishes

Our Schools

Our Cemeteries

Catholic Charities of the East Bay

The Cathedral of Christ the Light

Civil CorporationThe Roman Catholic Bishop of Oakland

The Roman Catholic Welfare Corporation of Oakland

Roman Catholic Cemeteries of the Diocese of Oakland and Subsidiaries

Catholic Charities of the Diocese of Oakland

Christ the Light Cathedral Corporation and Catholic Cathedral Corporation of the East Bay

Our Schools$117.649.4%

Our Parishes$72.130.3%

Central ServicesAdministration

$17.67.4%

The Cathedral of Christ the Light

$4.41.8%

Catholic Charitiesof the East Bay

$6.32.6%

Revenue for all Diocesan Entities(without eliminations)

($ Millions)

Total Revenue = $238.1 million

Credits & Information

This Annual Financial Report is a publication of the Diocesan Finance Council of the Diocese of Oakland. If you have questions or concerns regarding this report, please call the Finance and Accounting Office, 510-893-4711.

This Annual Financial Report was designed by Lisa VanDoorne at Paradigm Public Relations, 253-514-1711.

THE CATHOLIC VOICE — 3AMAy 19, 2014

Fiscal Year 2012Catholic Charities of the East BayRooted in compassion and human dignity for all, Catholic Charities of the East Bay works with youth, children and families to promote self-sufficiency, strengthen families and pursue safety and justice. For fiscal year 2013, Catholic Charities reported total revenues of $6.3 million. Revenue sources include individual contributors ($1.4 million from parishioners), grants, government contracts and program service fees. Total expenses were $6.1 million. Program expenses support:• Mental Health and Violence Prevention Programs that provide

immediate and sustained support to the family and friends impacted by community violence as well as community violence prevention programs

• Safety Net and Asset Development services, which enable individuals and families to become self-sufficient through support services, especially housing assistance

• Immigration and Naturalization services include legal services, education and outreach to strengthen and support both immigrant and refugee families in the East Bay

• Education and Workforce Development program services include job readiness, placement and retention and advancement in the workplace. This set of programs includes early childhood and adult education programs.

The full audited financial statements for Catholic Charities can be found at http://www.cceb.org.

The Cathedral of Christ the LightThe two Cathedral corporations were formed to directly serve the Cathedral of Christ the Light and the ministries performed therein. The Christ the Light Cathedral Corporation is charged with fundraising activity for the benefit of the Cathedral of Christ the Light, including the capital campaign now coming to a close, major gift cultivation and solicitation, and special events. The Catholic Cathedral Corporation of the East Bay administers raised funds to reduce debt, pay for operations and maintenance, provide for a future endowment and make Christ better known in the community.In 2012, revenues from fundraising, rental income, shop sales, and other income totaled $4.4 million. Program and support expenses totaled $10.5 million, including $4.1 million in interest expense and $2.6 million in depreciation.

Our Parishes Though the Catholic Church is truly universal, we most often experience Church in our local parish. It is at the local parish level healing, teaching, reconciling, and the sanctifying mission of Christ become most evident. Our Diocese now has over 170,000 Catholic households, celebrating our faith in 84 parishes spread across Alameda and Contra Costa counties.Every parish relies on the financial support of parishioners. In 2012, revenues for all parishes exceeded $72 million. Revenue sources include offertory, donations, program and mi nistry income, and special events. Diocesan and national second collections taken up in our parishes do not get recorded as revenues by the parishes, but rather are recorded as liabilities (i.e., funds collected/held for others) before they are remitted to the Diocese for pass through to the ultimate recipient beneficiaries.Expenses for parishes totaled almost $68 million, and include clergy salaries, staff costs, building and grounds care, program, ministry and special event expenditures, and diocesan assessments. The diocesan assessment is approximately 12% of parish income, and is one of the funding sources for the operating budget for diocesan level ministries and services. These services are listed in the central services’ consolidated statements of activities on page 4 of this report.

Our SchoolsThe 44 elementary and nine Catholic high schools in the Diocese are a vital part of the teaching mission of the Church, and are an expression of the educational ministry of our parishes and our Bishop. These schools, in collaboration with parents and guardians as the primary educators, are committed to educating the whole child by providing an excellent education rooted in Gospel values. As stated by the United States Conference of Catholic Bishops in To Teach as Jesus Did, Catholic schools fulfill the threefold mission of Catholic education to: 1) proclaim the Gospel, 2) build community, and 3) serve our brothers and sisters. Each school is fully accredited by the Western Catholic Education Association (WCEA) and the Western Association of Schools & Colleges (WASC).Revenues, support and other income for our schools for fiscal year 2012 totaled $117.6 million, and include tuition, assistance from Financial Aid-Catholic Education (FACE), The BASIC fund, fees, contributions, parish and diocesan support, individual school fundraising, and support programs. Expenses for fiscal year 2012 totaled $114 million, and include costs for wages and benefits, non-wage instruction, fundraising programs, plant operations and maintenance, depreciation, and other expenses.

Our CemeteriesThe Roman Catholic Cemeteries of the Diocese of Oakland, dba Catholic Funeral & Cemeteries Services (the CFCS), is a California nonprofit religious corporation dedicated to serving the needs of our faith community. CFCS provides funeral and cemetery services across the Diocese, as well as educational outreach to parishes and caregiver organizations. Founded in faith, their mission is to provide guidance and wisdom on end-of-life services. While CFCS does charge for services, it is committed as a charity to offer innovative programs that provide financial assistance, free options, and programs to meet the needs of our faith community. In addition, the cemeteries participate in a free altar wine program, which can save the average parish $500 to $1,000 per year.Revenues and other income from cemetery and funeral services for 2012 approximated $24 million. Total expenses for the cemeteries totaled almost $19 million, and include cost of goods sold, personnel and professional fees, land lease costs to the Diocese, general office expenses, building and grounds care, interest and tax expenses, and advertising costs.

Catholic Charities of the East Bay

Our Schools

The Cathedral of Christ the Light

Our Parishes

A4 — THE CATHOLIC VOICE MAy 19, 2014

Diocese of Oakland

The Central Services Administration is comprised of the ministries and services of the Chancery. Their purpose is to provide ministry program support for all activities surrounding the faith life of the people of the Diocese of Oakland and administrative oversight for all separate corporations, including parishes, Catholic schools through the Roman Catholic Welfare Corporation of Oakland, Catholic Charities of the Diocese of Oakland, Christ the Light Cathedral Corporation, the Catholic Cathedral Corporation of the East Bay, and the Roman Catholic Cemeteries of the Diocese of Oakland. Offices accounted for in the following financial statements include: Safe Environment; Ethnic and Cultural Ministries; Communications; clergy, diaconate and seminarian support; Evangelization and Catechesis (Hispanic Ministry, Youth Ministry, SPRED, Religious Education and Formation, Social Justice); the Tribunal and Canon Law; Mission Advancement; and the Office of the Bishop. See further offices and services delineated in the financial statements below.

Below are the audited, condensed statements of activities for the Chancery offices with revenues and expenses for 2012 and 2011. For more information on services provided by these offices, or to download the audited statements, please visit www.oakdiocese.org.

2012 2011REVENUES Bishop’s Annual Appeal $ 2,002,819 $ 1,920,713Parish assessments 5,421,363 5,434,072Gifts, grants, bequest 1,075,904 658,045Dividends & interest 1,448,402 1,232,434Ministerial department revenue 1,101,924 1,152,496Catholic Voice 1,190,470 1,125,533Cemetery rent (land use) 1,350,400 1,350,400Interest income on deposit & loan fund 1,203,538 1,325,234Insurance revenue, net 2,070,443 1,827,911Other income 774,114 1,102,038Total revenues 17,639,377 17,128,876

EXPENSESCentral Services Services and Administration 56,043 90,861 Pastoral Life Administration 140,442 132,725 Ethnic & Cultural Ministries 234,556 241,768 Seminarians/Vocations 949,452 995,863 Priests & deacons formation & support 349,800 326,489 Stewardship & Pastoral Planning 129,142 177,131 Resources Finance & Accounting 902,756 894,287 Facilities Planning & Services 226,889 223,535 Insurance Benefits & Loss Control 254,324 261,207 Youth Retreat Center 166,770 199,037 Development 596,779 389,953 Canon Law 510,929 448,759 Office of the Chancellor Chancery Administration 372,807 346,832 Human Resources 281,295 257,244 Safe Environment 340,005 274,399 CYO 227,105 217,956 Evangelization & Catechesis 1,264,678 1,143,671Communications 418,101 497,974Office of the Bishop 923,053 930,695Catholic Voice 1,155,136 1,153,365Parishes, Schools/Diocesan General Interest expense on deposit & loan fund 727,763 644,261 School subsidies 455,641 487,536 Parish subsidies 125,799 183,247 Capital grants 127,369 117,125 Clergy retirement 904,991 136,966 Unassigned clergy 531,525 463,970Legal expenses 1,287,115 672,613Professional fees 537,018 544,720Provision for uncollectable receivables & loans 1,884,148 670,579Overhead Grants, assistance, contributions 216,712 201,221 Property expenses, seismic & capital grants 1,491,820 1,335,591 Assessments & dues 239,068 236,649 Depreciation 121,807 131,990 Other 1,150,357 1,290,276

Total expenses 19,301,195 16,320,495

CHANGE IN NET ASSETS BEFOREOTHER INCOME (LOSSES) (1,661,818) 808,381

OTHER INCOME (LOSSES)Gain on sale of land, property & equipment 1,128 2,335,811Interest income on notes to related parties 4,089,588 4,078,193Bonds/other related financing interest expense (7,312,108) (7,292,542)Net realized/unrealized gains (losses) on marketable securities 4,988,963 (2,125,997)

Total other income (losses) 1,767,571 (3,004,535)CHANGE IN NET ASSETS BEFOREIMPACT OF PENSION RELATED CHANGES 105,753 (2,196,154)PENSION RELATED CHANGES OTHER THAN NET PERIODIC PENSION COSTS (946,000) (2,229,000)

CHANGE IN NET ASSETS (840,247) (4,425,154)

NET ASSETS, beginning of year 25,101,121 29,526,275

NET ASSETS, end of year $24,260,874 $25,101,121

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The Roman Catholic Diocese of Oakland, Central Services Administration Consolidated Statements of Activities

For the Years Ended December 31, 2012 and 2011

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Ministerial department revenue represents service fees charged and collected by various departments of the Chancery. More notable such revenue includes Diocesan Youth Retreat Center use fees, Safe Environment live scan fingerprinting fees, CYO team participation fees, the Department of Evangelization & Catechesis’ faith formation and other workshop fees, and processing fees assessed by the Marriage Tribunal.

Insurance revenue, net represents the excess of revenue ($26 million) over expenses associated with the administration of centralized insurance programs in the Diocese. These insurance programs, including employee benefits (e.g. health, dental, vision coverage and workers’ compensation), are reflected in these figures. And, importantly and significantly, the risk management and insuring of all diocesan activities through general liability, property, earthquake, and other insurance programs are represented in the insurance revenue, net.

Clergy retirement and pension related changes other than net periodic pension costs are best understood in combination. These expenses include the disbursements to fund priest retirement plans, to pay for health coverage for our retired priests, to contribute to their long-term care plan, and to pay the cost of operating Bishop Begin Villa, a retirement facility supported by Mercy Retirement and Care Center. Additionally, generally accepted accounting principles require us to present the difference between assets of the priest retirement plans and the plans’ actuarially determined obligations as an asset or liability, depending on the funding status of the plans. For the years ended December 31, 2012 and 2011, this accounting requirement resulted in the recording of additional expense of $933,000 and $2,194,000, respectively. These large accounting adjustments reflect a significant increase in the unfunded status of the priests’ pension plans.

Legal expenses include services provided by counsel in a myriad of general business matters. Legal expenses were notably higher in 2012 than during 2011. In 2012, expenses increased because of our defense and settlement of an appellate court matter which was decided favorably by the State Supreme Court. Additionally, extraordinary uninsured defense expenses in a real estate matter were incurred.

Provision for uncollectible receivables & loans represents the annual change in the reserve for parish and school loans and receivables which may not be collected in full. This provision for uncollectible receivables and loans is required by generally accepted accounting principles. In 2012, we increased our estimate of uncollectible loans associated with long ago, closed elementary schools at St. Augustine Parish and St. Paschal Baylon Parish.

The other category of overhead consists principally of the following: 1) the Roman Catholic Bishop of Oakland’s subsidizing a portion of the Cathedral Parish’s occupancy expenses, 2) property expenses for Diocesan and parish properties, including ones held for future development and/or sale, 3) priests’ convocation expenses (in 2011).

Bonds/other related financing interest expense is principally the interest cost of the Diocese of Oakland’s bonds payable obligation of $115 million. Please see page 2, “Financial Health of the Diocese of Oakland, a Letter from the CFO” for a discussion of the use of the proceeds from the bonds issuance.