Report F ISCAL Y EAR E NDED J UNE 30, He has done for me? - Psalm 116:2

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1 D I O C E S E O F B R I D G E P O R T Bishop s STEWARDSHIP Report F ISCAL Y EAR E NDED J UNE 30, 2008 How can I repay the Lord for all the good He has done for me? - Psalm 116:2 D EAR F RIENDS IN C HRIST, This stewardship report is not merely a statement of revenue and expenses. Rather, it helps tell the story of the family of faith we call the Diocese of Bridgeport. From one end of Fairfield County to the other, this family which numbers some 410,000 souls worships in 87 parishes, educates its children in 39 award-winning schools, and provides religious education for over 35,000 children. It is a family made up of generous and good priests, deacons, and religious. It includes devoted, hard-working parents; young people experiencing the joy and challenge of growing into adulthood; and a growing number of seminarians responding to a call to the priesthood. Our family is also enriched by single men and women generously placing themselves at the service of others. This family of faith is not inward-looking. Rather, it has an open heart and an open door for any and all who seek to know Christ and to live the Gospel. We are a people who listen to the Word of God and proclaim the Word of God. We are a family that draws life from the Mass and Sacraments, and seeks to draw others into the Church s sacramental life. We are a family of faith that bears witness in word and deed to what it believes and how it worships. THE LARGEST PRIVATE PROVIDER OF CHARITY & EDUCATION IN FAIRFIELD COUNTY In these days of extraordinary economic hardship, our family of faith resolutely refuses to think only about its own challenges. Rather, as a people of hope we look to the common good of society and to the dignity of each person. This family trait coupled with your splendid generosity to the Annual Bishop s Appeal and to your parishes has helped to make the Diocese of Bridgeport the largest private provider of charitable, social, and educational services in Fairfield County. Without these services, many people in our cities and towns across Fairfield County would have nowhere to turn. The services which our family of faith offers the broader community are not an optional extra; they are an essential part of the social fabric. The current recession has set this plain and constant fact in sharp relief. You know the importance of managing your own households well. The same is true for the household of God here in Fairfield County. The report you are about to read reflects the hard work of pastors, diocesan boards, school advisory boards, parish councils and parish finance councils, and hundreds of volunteers who generously give of their time, talent, and treasure. The care and accuracy of this report is also a testament to my co-workers in the Catholic Center whose labors are marked by a deep love for the Church coupled with competence and professionalism. Among others, I would like to mention and thank Msgr. Jerald Doyle, Vicar for Administration; Nancy Matthews, Chancellor; Msgr. Dariusz Zielonka, Vice-Chancellor; Norm Walker, the Diocesan Chief Financial Officer; Dr. Margaret Dames, Superintendent of Schools; Sr. Alejandra Keen, Director of Pastoral Services; Msgr. Kevin Royal, Vicar for Clergy; Louise Stewart-Spagnuolo, Human Resources Director; Dr. Joseph McAleer, Director of Communications; Al Barber, President of Catholic Charities; Cindy Fox, Finance Director of Catholic Charities; our Diocesan Finance Council as well as the Pastors on our College of Consultors; and the Presbyteral Council, as well as countless others whose dedicated hard work enables our family of faith to use effectively our resources for the mission of the Church in Fairfield County. Their work far exceeds what any financial report can capture. In this report you will find the condensed financial statements for fiscal years 2008 and 2007 for The Bridgeport Roman Catholic Diocesan Corporation (the Diocese ), Catholic Charities of Fairfield County, Inc., and Faith in the Future Fund, Inc. In addition, commentaries by Norm Walker on the Diocese and Faith in the Future financial statements, and by Cindy Fox on the Catholic Charities financial statements, are presented. The condensed financial statements were derived from the complete financial statements audited by Eisner LLP, an independent certified public accounting firm. The reports are available for download online on the diocesan website: I invite you to examine these reports carefully. Before you do so, however, I would like to share some highlights of the year ending June 30, A special supplement to Fairfield County Catholic, February 7, 2009 Photos by John Glover, Karen Leffler, AP Wide World

2 A YEAR OF SERVICE AND EVANGELIZATION With the economic crisis first and foremost in everyone s mind, it is easy to overlook the accomplishments of fiscal year 2008 (which concluded on June 30, 2008). The visit of our Holy Father, Pope Benedict XVI, in April, the launch of the Year of Saint Paul in June, and World Youth Day in Australia in July set the tone for evangelization and spiritual renewal. I would like to highlight just a few of the many achievements: Catholic Schools are in the news. Saint Mary School in Bethel was named a Blue Ribbon School by the U.S. Department of Education, the highest national honor. This year, 13 more Catholic schools have been nominated for Blue Ribbon status, placing them in the top 10% of all schools in the U.S. Catholic Charities continues to work miracles across the county, 24/7. The core services feeding the hungry, welcoming the stranger, counseling the troubled continue to see increased demand, especially in this economic downturn so disastrous for the poor. Affordable housing programs continue to expand, and our adoption services have been reinvigorated as Family Directions. Pastoral Services assists our parishes in enriching the faith lives of individuals and families, from Youth Ministry, support for Directors of Religious Education and catechists, special education, and college campus programs to Marriage Preparation and Adult Education. Year III of the five-year Pastoral Plan for Evangelization, Following in the Footsteps of Christ, mirrored the Year of Saint Paul with a successful Missionary Congress and the forthcoming Lenten Confession Campaign in all 87 parishes. Communications are more vital than ever. The diocesan website, was redesigned with live news feeds and videos, and easier ways to register for events and make a secure donation. Vocations are also thriving, thanks be to God. We now have 28 men studying for the priesthood, and will ordain six new priests in May. Our priests have also embarked on a promising professional formation program called Good Leaders, Good Shepherds. Parish Finance Services continues to support our 87 parishes in their mission of good stewardship with the implementation of the new Parish Administration & Finance Manual and its standards and practices. All parishes are also adopting a church management software system that will maximize their ability to maintain parish records, communicate with parishioners, and enable electronic giving. A YEAR OF CHALLENGE When the new fiscal year began on July 1, 2008, no one could have predicted the dramatic downturn in the economy last fall. It has touched all our lives and impacts the work we do. Although the present report covers the year that has passed, it also looks ahead to the challenges we are facing to maintain the volume and quantity of vital services provided by the Catholic Church in Fairfield County. In good times and bad, the Diocese of Bridgeport is always a study in contrasts. It contains some of the nation s most beautiful neighborhoods and some of its poorest streets. It is a place of growing diversity with Mass celebrated each Sunday in 14 languages. And like every family, our family of faith has its share of ups and downs, joys and sorrows. Our commitment to parishes in poor urban areas and to the education of young people and families from disadvantaged neighborhoods requires a good deal of sacrificial love on the part of all of us. Often parishes and schools in these parts of the Diocese find it difficult to contribute to employee benefit and insurance program expenses. Although administered with great care, the expenses of the lay pension plan exceeded what we could reasonably hope to collect. We also had some one time professional fees (legal and forensic accounting) related to Saint John Parish in Darien and Saint Michael the Archangel Parish in Greenwich. And while the Annual Bishop s Appeal, thanks to your generosity, hit a record, nonetheless it was short of goal for two reasons: first, because some of those funds represent multi-year pledges from donors for activities not currently funded by the Appeal; and second, because of the funds returned to parishes as part of the incentive program begun last year. These and other challenges are being addressed with the help and cooperation of advisors and senior diocesan leadership. Here are some of the steps that have been taken: The operating budget of the Catholic Center has been reduced by 10%, including salaries of Catholic Center employees who earn above $40,000 per year, which have been reduced up to 15%. This will achieve significant savings while preserving jobs and maintaining the high level of service to parishes and the community. New participation in the lay pension plan has been frozen. We are implementing a new cash balance plan for future participants, and have made revisions to our health care plan to bring about more employee involvement in buying health care services. The Cathedral Cluster Endowment Campaign has begun to meet a funding gap in the Cathedral Education Cluster schools, representing the six inner-city Catholic elementary schools in Bridgeport that offer hope to the most disadvantaged of young people. Pastors and Administrators of our 17 parishes in the City of Bridgeport have been meeting over the past year to find ways to share resources and cut costs without jeopardizing service to the Catholic faithful. The Development Office and the Parish Finance Services team are assisting parishes with increased parish offertory campaigns and in implementing the ParishSOFT electronic offertory system. None of these steps have been easy. While we cannot guarantee no further reductions, we are hopeful that these are very effective first steps. OUR GRATITUDE Sound financial stewardship is more than a means to an end; rather, it is a necessary expression of our gratitude to God for the spiritual and material blessings He has showered upon our local Church. As we enhance our financial resources, we enhance our ability and scope in doing the Lord s work in our parishes and communities. It is you, our Catholic faithful, who make this possible. We all share this responsibility, whether you make a donation to the Annual Bishop s Appeal which supports the essential good works of the Catholic Church in Fairfield County, or give to your parish at Sunday Mass. It is in this spirit that I thank all of you, members of our Diocesan Family of Faith, for your generous contributions and participation in the life of our Church. May it reap great rewards in serving the Lord and bringing us closer to His saving grace. Please be assured of my prayers for you and your loved ones as we all face difficult times ahead. Faithfully in Christ, Most Reverend William E. Lori, Bishop of Bridgeport

3 3 Bridgeport Roman Catholic Diocesan Corporation Commentary on Diocesan Audited Combined Financial Statements for the Years Ended June 30, 2008 and 2007 (All amounts in thousands) by Norm Walker (right), Chief Financial Officer of the Diocese of Bridgeport RESULTS OF ACTIVITIES Revenues and gains Revenues and gains improved in most areas in fiscal 2008 compared to the prior year, with one very notable exception, investment income. While investment results remained positive, investment income, net of fees, amounted to $781, a drop of $4,767 from the prior year s record $5,548. The minimal returns were substantially better than returns for index portfolios with equivalent asset allocations that ranged from losses of 2.9% to 5.3%. Annual Bishop s Appeal amounts reported in the Diocesan financial statements include multi-year Appeal pledges in the year the pledge is made, as required by generally accepted accounting principles. (Those Appeal amounts differ from Appeal results reported by our Development group as they defer recognition of the portion of multi-year pledges until received in cash in later years.) Annual Bishop s Appeal and other contributions and bequests to the Diocese increased in fiscal 2008 to $11,219 as compared to $10,459 in the prior year. When combined with Appeal contributions going directly to Catholic Charities and Diocesan schools, not included in the Diocesan combined financial statements, the total for Appeal and other contributions and bequests was $12,480 in fiscal 2008 compared to $11,876 in the prior year, a 5% increase. As in prior years, Annual Bishop s Appeal contributions are dedicated to funding the many ongoing services provided by the Diocese, including: Central administration and curriculum for the Diocese s 39 Catholic schools, with student enrollment of 10,600 and 850 teachers and other professional staff. Parish Life and Ministries, including the Pastoral Plan for Evangelization; Saint Cyril of Jerusalem School of Catechesis; Family Life and Pro-Life programs; supporting religious education programs for children and youth; supporting the R.C.I.A process; Ministry for People with Disabilities; publishing the Fairfield County Catholic for 100,000 Catholic families every two weeks; the Safe Environments Program for the protection of children; and the Diocesan Tribunal, handling annulments of marriages. Saint John Fisher Seminary Residence and the vocations program, with 28 seminarians. Clergy and Religious Personnel, serving 250 active and 56 retired priests and 112 Deacons, including ongoing skill development programs and days of recollection for continuous formation of our priests; the Permanent Diaconate Program for training and education of active Deacons and 17 men in formation; ministries for pastoral outreach including chaplains in hospitals, correctional centers, and nursing homes; and operating the Catherine Dennis Keefe Queen of Clergy retirement home for Diocesan priests. Parish Finance Services that completed the implementation of the Bishop s Six Key Elements program for enhanced parish financial controls and monitoring to provide good stewardship of financial resources entrusted to parishes, The Bridgeport Roman Catholic Diocesan Corporation Condensed Combined Statement of Activities For the years ended June Changes in unrestricted, temporarily and permanently restricted net assets: Revenues and gains: Annual Bishop's Appeal and other contributions and bequests $ 11,219 $ 10,459 Employee benefit and insurance programs revenues from other Diocesan entities 16,130 15,873 Cemeteries and other operating revenues 10,324 9,909 Cathedraticum from parishes 2,795 2,281 Investment income 781 5,548 Insurance recoveries related to prior years' claims Total revenue and gains 41,450 44,859 Expenses: Services and financial contributions to other Diocesan entities and other parties 13,245 15,972 Operations 6,758 6,399 Employee benefit and insurance programs 18,760 21,151 Administration and general 7,411 8,001 Fundraising 1,429 1,194 Total expenses 47,603 52,717 Decrease in net assets before adjustment to recognize funded status of pension and priests' post-retirement healthcare plans (6,153) (7,858) Adjustment to recognize funded status of pension and priests' post-retirement healthcare plans 2,128 4,912 Decrease in net assets (4,025) (2,946) Net assets at beginning of year: 60,354 63,300 Net assets at end of year $ 56,329 $ 60,354 The Bridgeport Roman Catholic Diocesan Corporation Condensed Combined Statement of Financial Position June 30, Assets Cash and cash equivalents $ 4,350 $ 3,565 Receivables, net 14,203 13,124 Investments 39,755 45,365 Property and equipment, net 49,192 47,504 Total assets $ 107,500 $ 109,558 Liabilities Payables, other than notes, accruals and refundable advances $ 10,818 $ 11,443 Notes payable to financial institutions 6,902 3,671 Conditional asset retirement obligations 3,720 4,376 Pension and other retirement obligations 29,731 29,714 Total liabilities 51,171 49,204 Net Assets Unrestricted 31,438 34,997 Temporarily restricted 4,169 4,688 Permanently restricted 20,722 20,669 Total net assets 56,329 60,354 Total liabilities and net assets $ 107,500 $ 109,558 and began the implementation in parishes and the Diocese of the ParishSOFT church management software including family directories, sacramental records, compliance with the Safe Environments program, the Kenedy Directory, pledge records, and electronic giving (EFT) for parishoners. Appeal contributions are also used to make direct contributions to Catholic Charities, the Cathedral Education Cluster schools (the six inner-city elementary schools in Bridgeport), all other Diocesan elementary schools, the five Diocesan high schools, and the Cardinal Shehan Center and McGivney Center after-school programs in Bridgeport. Complete financial statements are posted now on

4 B i s hop s S t e wa r d s h i p r e p ort The Diocesan employee benefit and insurance programs continue to be the largest source of funds to the Diocese. The employee benefit programs (health, pensions, and workers compensation) cover all lay and clergy employees of the Diocese and most Diocesan entities (parishes, schools, Catholic Charities, Cardinal Shehan Center) who work the required minimum hours per week. The insurance program is for property, casualty, and liability insurance for Diocesan entities. The revenues from those programs represent amounts billed to the other Diocesan entities to cover their portion of the related expenses with the objective being to break even as the programs are essentially self-insured. Those program revenues from other Diocesan entities were $16,130 in fiscal 2008, a slight increase from the total of $15,873 in the prior year as the programs have not changed. Those revenues have been reduced by approximately $2,800 and $2,000, respectively, for uncollectible amounts, primarily from inner-city parishes and schools. Cemeteries and other operating revenues also increased slightly to $10,324 in fiscal 2008, a $415 increase. Cathedraticum was $2,795, up $514 from the prior year reflecting increased parish offertories and a reduction in uncollectible amounts from inner-city parishes. Overall, revenues and gains were $41,450 in fiscal 2008, down $3,409 from the prior fiscal year total of $44,859, reflecting the drop in investment income of $4,767 partially offset by the improvements as noted above. Expenses Services and financial contributions to other Diocesan entities and other parties were $13,245 in fiscal 2008, a decrease of $2,727 from $15,972 in the prior year. The decrease was primarily attributable to a $3,769 decrease in contributions to Diocesan schools and after-school programs principally reflecting: Appeal donor contributions to the Cluster for operations, reducing the need for contributions from the Diocese to cover the shortfall from other sources, and an additional $300 of Appeal donor contributions directly to the Cluster, reducing the Appeal funds from the Diocese. Non-recurring contribution in fiscal 2007 of $208 to assist with the combination of Saint Peter and Sacred Heart Schools in Danbury from non-annual Bishop s Appeal funds. The decrease in contributions to Diocesan schools and after school programs was partially offset by increases in other services and contributions as follows: Decreases from Faith in the Future contributions to Diocesan schools included in fiscal 2007 catch-up distributions that were $1,369 in excess of normal distributions, primarily to Diocesan elementary schools. The catch-up distributions were for the years , consistent with the Faith in the Future distribution policy adopted in fiscal Parish Life and Ministries increased $340 reflecting a new position of Minister for the Disabled, filling three open minister positions (Youth, Adult Education, and Elementary School Catechesis); professional services (outside contractors) in those ministries; and World Youth Day in 2008, with no comparable activity in Non-recurring recognition in fiscal 2007 of the transfer in 1984 of the Cardinal Shehan Center facility to the Center itself of $1,156 (non-cash) that had not previously been recognized. Clergy and religious personnel services increased $274, reflecting increased compensation and benefits at the Catherine Dennis Keefe Queen of Clergy retirement home for Diocesan priests; the Permanent Diaconate Program; and the Good Leaders, Good Shepherds continuing education program for priests. Decrease in contributions to the Cathedral Education Cluster schools of $1,000 resulting from $600 of non-annual Bishop s

5 5 Ministries for pastoral outreach increased $247 reflecting increases in hospital chaplains and additional priests assigned to special ministries and religious order priests. Vocations and Saint John Fisher Seminary increased $185 reflecting increased tuition expense, language classes, and health care insurance. Parish Finance Services increased $170 reflecting the purchasing of software and hiring of a new ParishSOFT coordinator; professional services for our web-hosted QuickBooks system; and printing of the new Parish Administration & Finance Manual. 1.6% 2.0% 24.2% 2% Contributions to Catholic 6.4% Charities from the Annual 2.9% Bishop s Appeal through the 3.1% Diocese increased $116 as Appeal donor contributions directly to Catholic Charities decreased an equivalent amount. (Total Appeal funds to Catholic Charities remained at $1,500.) Operations expenses were $6,758 in fiscal 2008, an increase of $359 over the prior year with the only notable specific increase being at Saint Catherine Academy reflecting occupancy, depreciation, and interest expense related to its new facility at Holy Cross Parish in Fairfield. Employee benefit and insurance program expenses related to other Diocesan entities were $18,760, a decrease of $2,391 from the prior year. The decrease was attributable to improved experience in all insurance areas (liability, property, casualty, and workers compensation) and to a decrease in employee benefit expense for lay pensions partially offset by an increase in employee health care expense. Unfortunately, the decrease in fiscal 2008 lay pension expense that resulted from record pension investment results in fiscal 2007 will be short-lived as both the decrease in pension investment income for fiscal 2008 and the losses on pension investments experienced in the fall of 2008 will result in increases in pension expense in fiscal 2009 and beyond. The amount of those increases is dependent upon future investment results. Administration and general expenses were $7,411 in fiscal 2008, a $590 decrease from the prior year. The decrease is solely a result of a $715 decrease in depreciation and accretion (non-cash) from correction of an error in the initial recognition of conditional asset retirement obligations in fiscal Absent the correction, administration and general expenses would have increased nominally. Fundraising expenses were $1,429 in fiscal 2008, an increase of $235 over the prior year. The increase was primarily due to upgrading positions within Development. While Development has traditionally been devoted to the Annual Bishop s Appeal, in fiscal 2008 Development was also leading the Cathedral Education Cluster Endowment and Operations Campaigns and assisting parishes in increased offertory campaigns. The combined gifts and pledges to the Appeal and the Cathedral Education Cluster Campaigns (not included in the combined financial statements) result in a fundraising expense of less than 10% of funds raised, an excellent result by any standard. Overall, expenses totaled $47,603, a decrease of $5,114 from the prior year total of $52,717. The decrease resulted from the decreases in contributions to Diocesan schools and after-school programs, $3,769, and in employee benefit and insurance programs, $2,391, partially offset by the various increases commented upon above. Allocation of Externally Managed Faith in the Future and Cemetery Care Fund Investment Portfolios June 30, % 3.2% 7.2% 18.3% 10.9% 15.6% Equities Alternative Investments Fixed income Large cap growth Large cap value International stocks Small/Mid cap growth Small/Mid cap value Emerging markets Small cap value Hedge funds Real estate investment trust Futures fund Debt securities & mutual fund Money market funds Money market funds Change in net assets from revenues, gains, and expenses before other changes in net assets Total expenses exceeded total revenues and gains by $6,153 in fiscal 2008 as compared to $7,858 in fiscal The primary contributors to these deficits from ongoing activities are: The level of uncollectible amounts of revenues intended to cover employee benefit and insurance program expenses, $2,810 in fiscal 2008, primarily from inner-city schools and parishes, Professional fees (legal and forensic accounting) relating to Saint Michael s in Greenwich, Saint John s in Darien, and various other issues of $1,527 in fiscal 2008, Annual Bishop s Appeal 2008 contributions, after reductions for uncollectible amounts, amounts designated by donors for activities not funded by the Appeal, and amounts returned to parishes as incentive for exceeding 2008 parish Appeal goals, fell short of the Appeal goal by $916, and Lay pension expense exceeded by $374 in fiscal 2008 the amounts that could feasibly be billed to Diocesan entities. These causes are being addressed. Specifically, in the fall of 2007, the Cathedral Education Cluster Endowment Campaign was begun by the Diocese, together with other fundraising efforts, to fund the annual gap of approximately $1,100 per student (1,377 students) between revenues (principally tuition, Annual Bishop s Appeal contributions, grants, and non-appeal donor contributions) and the cost per student of education in the six Cathedral Education Cluster schools. This gap is currently reflected in both the uncollected revenues for employee benefit and insurance programs and Diocesan contributions to the Cathedral Education Cluster schools for operations. To date, the Endowment Campaign has raised nearly $6,000 in endowment pledges and approximately $1,000 in pledges for other Cluster purposes. Further, Development and Parish Finance Services are assisting parishes to increase regular offertory through the ParishSOFT EFT offertory contribution system for parishioners and a formal increased offertory campaign program that 35 parishes have implemented beginning in the fall To date, the results of increased offertory efforts indicate increases on an annual basis of more than 20% for most parishes, and additional parishes will participate in the fall of These increases will help parishes meet their obligations for employee benefit and insurance programs and increase Cathedraticum revenues for the Diocese as well.

6 6 From the expense side, we expect that the professional fees will be significantly reduced in fiscal 2009 as key causes are nonrecurring. Further, the Bridgeport Diocesan Pension Plan for lay employees, a final pay based defined benefit plan, was frozen to new participants effective July 2, Current participants are not affected. Employees who would have become participants in that plan after that date may become participants in the new Diocese of Bridgeport Cash Balance Plan. Under the defined benefit Cash Balance Plan, a stated percentage of current compensation is contributed together with guaranteed interest credits at the rate for long-term U.S. government securities, plus 1%. The new plan also provides portability of plan balances for participants leaving Diocesan employers. Similar changes have been made by many entities in recent years and these changes will reduce pension expense over the long run. Additionally, the health care plan for employees was revised July 1, 2008 to bring more employee involvement into buying health care services and moderate future increases in health care program expenses. Through December 2008, the changes are on track to reduce total health care expenses approximately $1,000. The changes in the pension and health care plans reflect the economic realities of our times. Finally, in light of the general economic deterioration in late 2008, we have reduced compensation and other expenses, in approximately equal proportions, that will result in aggregate expense reductions of $1,000 on an annual basis. Other changes in net assets In fiscal 2008, the recurring adjustment to recognize the funded status of the pension and priests post-retirement health care plans was a positive $2,128, reducing the decrease in net assets for fiscal 2008 to $4,025. The recurring adjustment was $2,784 less than in the prior year, reflecting the decline in investment results for the Bridgeport Diocesan Pension Plan and Retirement Plan for Priests assets. Investment returns, net of fees, declined to 1.2% in fiscal 2008 from 12.4% in the prior year for the plans in total. FINANCIAL POSITION Assets Receivables, net, increased $1,079 from the prior year end principally from a $1,500 advance to Trinity Catholic Middle School in Stamford for major renovation of its facilities. The advance was funded with proceeds from a term loan and will be repaid with proceeds from a fundraising campaign undertaken by the middle school. This increase was partially offset by a decrease in pledges receivable, net, resulting from more timely collections. Investments, representing principally Faith in the Future and cemetery care funds, decreased $5,610, primarily representing liquidations of cemetery care funds to partially fund both property and equipment additions, $2,200, and the excess of expenses over revenues, $2,900, discussed above. The only significant property and equipment additions were for a community mausoleum at Saint Michael Cemetery in Stratford and renovation of facilities at Saint Catherine Academy at Holy Cross Parish in Fairfield. The Faith in the Future and cemetery care funds externally managed portfolios represent $34,563, 87%, of total investments of $39,755 at June 30, The allocation of those portfolios to classes of investments is shown in the accompanying chart (see 5). Overall total assets decreased $2,058 to $107,500 at fiscal year end from $109,558 at the prior year end due to the reduction in investments noted above. Liabilities The major change in liabilities was the $3,231 increase in notes payable to financial institutions resulting from the following (noted above): $1,500 funding for advance to Trinity Catholic Middle School to fund major renovations $1,300 partially funding the excess of expenses over revenues $450 funding for renovation of facilities at Saint Catherine Academy The decrease in conditional asset retirement obligations of $656 was attributable to the correction of an error of $715 in the initial recording of those obligations in 2006 as noted above. The largest Diocesan obligation continues to be for pension and other retirement obligations. At June 30, 2008, an increase in discount rates to 6.75% from 6.25% at the prior year end reduced the plans projected benefit obligations and offset the decline in fair value of the plans assets resulting in virtually no change in the excess of the obligations over the plans assets, or funded status, $29,731 compared to $29,714 at the prior year end. The increase in the discount rate resulted from using rates that correspond to the specific timing of expected future benefit payments rather than a more general longterm (30 year) rate. The decline in fair value of the plans assets occurred because investment returns, while still positive, 1.2% noted above, were down significantly from the prior year, 12.4%, and together with contributions to the plans were not sufficient to cover pension payments. On an accrued benefit obligation basis, reflecting only participant earnings to date, and using the expected long-term investment rate of return on plan assets, 7.5% for the Bridgeport Diocesan Pension Plan and 7.0% for the Retirement Plan for Priests as the discount rate, the plans are 93.9% and 92.1%, respectively, funded at June 30, 2008 as compared to 99.6% and 96.9%, respectively, at the prior year end. The decreases in the percentages funded reflect the declines in the investment returns noted above. Through December 31, 2008, there have been further declines in fair values of the plans investments, reflecting the broad-based declines in marketable securities generally, as the plans have had negative investment returns approximating 25% from June 30, While these declines have no near-term impact on pension payments to retirees as those payments can be funded with current contributions to the plans from Diocesan entities and remaining investments, unless the market value of the investments recovers, future years pension expense will increase significantly to make up for these declines. Overall, total liabilities increased $1,967 to $51,171 at fiscal year end from $49,204 at the prior year end, and the changes discussed were the only notable changes. Net Assets Total net assets decreased $4,025, as discussed under Results of Activities above, to $56,329 at fiscal year end from $60,354 at the prior year end.

7 7 Catholic Charities of Fairfield County, INC. Commentary on Audited Financial Statements for the Years Ended June 30, 2008 and 2007 (All amounts in thousands) by Cindy Fox (right), Finance Director of Catholic Charities RESULTS OF ACTIVITIES Revenues Catholic Charities revenues (unrestricted and temporarily restricted), in fiscal year 2008 were $10,195 compared to $9,600 in the prior year. Sources of revenue for Catholic Charities in fiscal year 2008 continue to include: grants from government agencies (49%); contributions including United Way and parish special collections (16%); Annual Bishop s Appeal (14%); program and other revenue (12%); and fundraising and in-kind contributions (9%). The increase in total revenue of $595 (6%) principally reflects an increase in revenue from grants from government agencies that was partially offset by reductions in Annual Bishop s Appeal, program, and other revenue, and fundraising and in-kind contributions. The reduction in Annual Bishop s Appeal contributions is due to a $50 pledge for the 2008 Appeal received and recorded in fiscal year 2007, resulting in a $100 reduction, year over year. The reduction in program and other revenue is primarily attributable to reductions in investment income, and the decrease in the fundraising and in-kind contributions is primarily due to reductions in fundraising activity at the Haitian American Catholic Center in Stamford. Expenses Catholic Charities is comprised of five major program service groups: behavioral health, food, family, community, and housing. Program expenses for fiscal year 2008 were $8,590 compared to spending of $7,865 in the prior year. This increase of 9.2% resulted from increased focus and expansion of the food and housing programs in response to the needs of the community. The increases in these programs were primarily for increased staffing (compensation and benefits) and for food and rental assistance. Fiscal year 2008 general and administrative expenses were $1,372 compared to $1,327 in the prior year, an increase of 3.4%. This increase reflects normal expense increases from year to year. Fundraising expense from year to year was flat. Changes in net assets Revenues exceeded expenses in fiscal year 2008 by $109 as compared with $285 for The significant factors in this change are set forth above. As a non-profit social services agency, these results are in line with expectations, positioning Catholic Charities to be responsive to the needs of the community as they evolve over time. FINANCIAL POSITION Assets Total assets decreased from the prior fiscal year by $339. This decrease was primarily the result of reductions in cash and cash equivalents of $812 offset by increases in grants due from government agencies, $275, and amounts due from the Diocese of Bridgeport, $364. Included in the latter amount is a refund of the advance made by Catholic Charities for the Haitian American Catholic Center (HACC) property (included in property and equipment at June 30, 2007) of $135, as the Diocese reassumed responsibility for HACC at June 30, Property and equipment additions of $153 for food delivery vehicles and technology and infrastructure improvements were offset by the transfer of the advance for the HACC property to amounts due from the Diocese and annual depreciation resulting in a net reduction of $148 in property and equipment. Liabilities Total liabilities decreased by $448 from the prior year. This reduction resulted from normal fluctuations due to timing in both accounts payable and accrued expenses (primarily wages) as well as the payoff of a loan from the Diocese of Bridgeport and the final spend down of the Catholic Charities USA emergency services grant which funded services for the families of World Trade Center disaster victims. Net Assets For the years ended June Changes in unrestricted and temporarily restricted net assets: Revenue from all sources Government grants $ 5,000 $ 4,283 Contributions including United Way and parish special collections 1,598 1,565 Annual Bishop's Appeal 1,450 1,550 Program revenue and other revenue 1,240 1,272 Fundraising and in-kind contributions Total revenue from all sources 10,195 9,600 Expenses Behavioral health 1,286 1,192 Food services 3,031 2,784 Family services 1,869 1,770 Community, social and workfare services 1,560 1,520 Housing Total program expenses 8,590 7,865 Administration and general 1,372 1,327 Fundraising Total expenses 10,086 9,315 Increase in net assets $ 109 $ 285 Catholic Charities of Fairfield County Inc. Condensed Statement of Financial Position June 30 Assets Cash and cash equivalents $ 578 $ 1,390 Investments Annual Bishop's Appeal and other Diocese of Bridgeport receivables, net Other receivables and prepaid expenses Property and equipment, net 909 1,057 Total assets $ 3,205 $ 3,544 Liabilities Accounts payable and accrued expenses $ 656 $ 851 Accounts and notes payable Diocese of Bridgeport Refundable advances Conditional asset retirement obligations Total liabilities 784 1,232 Net assets Catholic Charities of Fairfield County Inc. Condensed Statement of Activities Unrestricted 1,882 1,699 Temporarily restricted Total net assets 2,421 2,312 Total liabilities and net assets $ 3,205 $ 3,544 Overall, net assets increased by $109 during the fiscal year ended June 30, 2008 as discussed under Results of Activities above. This increase will allow Catholic Charities to continue to be responsive to the changing needs of the community in Fairfield County. Complete financial statements are posted now on

8 8 Faith in the Future Fund, Inc. Commentary on Financial Statements for the Years Ended June 30, 2008 and 2007 (All amounts in thousands) by Norm Walker, Chief Financial Officer, Diocese of Bridgeport FAITH IN THE FUTURE RESULTS OF ACTIVITIES Investment income, net of management fees, decreased to $239 in fiscal 2008, a decrease of $2,583 from the prior year record results of $2,822. This represented an investment return of 0.7%, net of fees, a decrease from 13.3% in the prior year. The decrease corresponds with the deterioration in investment results generally but is substantially better than index portfolios with equivalent asset allocations where investment results were a negative 5.3%. Occasional contributions have been received in the years since the 1996 Faith in the Future Campaign, and $51 was received in fiscal In fiscal 2007, contributions received were offset completely by recognition of uncollectible amounts of prior year pledges. The Board of Faith in the Future has a policy of making annual distributions from the common donor endowment at a rate of 4.5% of the trailing twelve quarter (from December 31) average fair value of endowment funds invested, so long as such distributions would not reduce the fair value of endowment funds invested below the amounts contributed. Distributions were made at the 4.5% rate to the common donor endowment beneficiaries (Diocesan high schools, elementary schools, vocations, and the Saint John Fisher Seminary, and to support religious education programs in Diocesan parishes) in fiscal 2008 amounting to $810. In fiscal 2007, distributions had been made at the 4.5% rate together with catch-up distributions to Diocesan elementary schools, vocations, and the Saint John Fisher Seminary and to support religious education in programs in Diocesan parishes that had not previously received such distributions, amounting to $2,812 in total. As a result of the decrease in investment income, net of management fees, expenses (distributions) exceeded revenues in fiscal 2008 and net assets decreased $520. Through December 31, 2008, the fair value of the Faith in the Future Fund endowment fund investments has declined by approximately 27% from June 30, 2008, reflecting the broad-based declines in marketable securities generally, and is below the amounts contributed. Consistent with the Faith in the Future Fund Board policy, no distributions will be made until the shortfall, approximately $3,900, has been made up. 23.6% Faith in the Future Fund, Inc. Condensed Statement of Activities For the years ended June Changes in unrestricted, temporarily and permanently restricted net assets: Revenues: Contributions $ 51 $ - Investment income 238 2,822 Total revenue 289 2,822 Allocation of Externally Managed Faith in the Future Investment Portfolio June 30, % Expenses: Distribution of endowment investment income 810 2,812 Distribution of donor contributions designated for scholarships - 47 Total expenses 810 2,860 Decrease in net assets (521) (38) Net assets at beginning of year: 22,596 22,634 Net assets at end of year $ 22,075 $ 22,596 Faith in the Future Fund, Inc. Condensed Statement of Financial Position June Assets Investments $ 21,628 $ 22,133 Receivables from Diocese of Bridgeport Pledges receivable, net Cash and cash equivalents Total assets $ 22,075 $ 22,596 Net Assets Unrestricted $ - $ (21) Temporarily restricted 1,667 2,262 Permanently restricted 20,408 20,355 Total net assets 22,075 22,596 Total liabilities and net assets $ 22,075 $ 22,596 securities mutual fund, and money market funds as shown in the accompanying chart (below). The allocations to alternative investments represented moving funds in fiscal 2008, primarily from the debt securities mutual fund, to broaden the investment allocation. 19.5% Equities Large cap growth Large cap value International Small/Mid cap growth Small/Mid cap value FINANCIAL POSITION Emerging markets Investments continue to represent the vast majority of Faith in the Future Fund assets, 98% at both June 30, 2008 and The decrease in investments of $504 at June 30, 2008 from the prior year is the net result of the activities commented upon above. The investments are all externally managed. The investment allocation at June 30, 2008, consistent with the perpetual nature of the Faith in the Future Fund, includes marketable equity securities, alternative investments, debt 1.7% 2.1% 6.5% 2.8% 3.2% 3.2% 7.3% 10.7% 16.2% Alternative Investments Small cap value Hedge funds Real estate investment trust Futures fund Fixed income Debt mutual fund Money market funds Money market funds Complete financial statements are posted now on