Archdiocese of Indianapolis Restructuring Presented by: Jeff Stumpf, CFO Roman Catholic Archdiocese of Indianapolis, Inc. John S. (Jay) Mercer, Attorney MERCER BELANGER

Why did we need to consider restructuring? The USCCB in cooperation with the National Diocesan Attorneys Association recommended formalizing the structures of dioceses. Recent court decisions have ignored canon law in reviewing the structures of diocese. Recognition of canon law in corporate documents will provide civil law recognition of canon law. Formal restructuring will assist in isolation of liability risk. Civil law compliance will assist with interaction with secular enterprises, i.e. Grants and fundraising.

What goals did we look to achieve through restructuring? Maximized Canon law norms to civil legal structure (recognizing separateness of juridic persons). Maintenance of Financial strength (credit rating). Maintain flexibility in administration and continue to use existing internal controls and structures as much as possible. Properly recognize Archdiocesan control verses parish or regional control (central payroll, insurance, purchased services). Full recognition of Canon law through the use of reserved powers. Protect assets from liability claims. Understand the limitations of restructuring.

How did we go about restructuring? Employed a deliberate process. Involved a multi-disciplinary group including canonical advisors, civil legal counsel, financial experts, parish representatives, school representatives and priests. Reviewed the possible legal structures. Selected a structure that most closely conforms civil law structure to Canon law requirements. Set goals related to restructuring.

What we have done so far? Reviewed the recommendations from the USCCB. Held a meeting with all of the Indiana Bishops and their legal counsel and discussed the issues related to restructuring. Formed a multi-disciplinary group to make preliminary recommendations. Prepared drafts of incorporation documents. Sought and received review by canonical experts. Made presentations and solicited advice from Management Council, Priest Council, Finance Council, Policy and Legal Affairs Committee, High School Presidents and Bond counsel.

Existing Structure Roman Catholic Archdiocese of Indianapolis, Inc. An Indiana not for profit corporation. Owns and operates many of the agencies that operate from the Catholic Center. Roman Catholic Archdiocese of Indianapolis Properties, Inc. Holds title to all real estate of the Roman Catholic Archdiocese of Indianapolis, Inc. and the various new corporations. Manages and insures the real estate. Parish real estate held in trust for parishes. Catholic Community Foundation, Inc. Holds and invests all cash and securities of Archdiocesan and parish endowments. Financial and support services provided by vendors and Roman Catholic Archdiocese of Indianapolis.

Existing Structure New Agency Corporations: Bishop Simon Brute College Seminary, Inc. Catholic Youth Organization of the Archdiocese of Indianapolis, Inc. Catholic Charities of the Archdiocese of Indianapolis, Inc. Our Lady of Fatima Retreat House, Inc. Mother Theodore Catholic Academies, Inc. St. Mary’s Child Center, Inc.

Existing Structure New High School Corporations: Bishop Chatard High School, Inc. Our Lady of Providence Junior Senior High School, Inc. Cardinal Ritter High School, Inc. Roncalli High School, Inc. Father Thomas Scecina Memorial High School, Inc. Seton Catholic High School, Inc.

Corporate Restructuring Parishes Separate Parish Corporations Parish operations Parish schools Receives services from Roman Catholic Archdiocese of Indianapolis, Inc. Real property held in trust by Archdiocese of Indianapolis Properties, Inc. Parish Corporations pay both Archdiocese and Properties for services provided under written agreements. Employs parish employees and parish school employees. Funds in excess of operating needs are held in trust by Catholic Community Foundation, inc. Priests are employed by the Archdiocese of Indianapolis, Inc.

Parish Board of Directors 3 - members all ex-officio* Pastor or Administrator Parish Council President/Chairperson Finance Council Chairperson * If the parish has a Parish Life Coordinator then that person will serve as the 4 th board member

What does the Board of Directors do? Hold an annual meeting and document the approval of the major activities that have occurred during the year. (Acceptance of the minutes of active committees). Establish Committees as needed. Annually register the Corporation with the Secretary of State. Provide a written report of the financial operations of the Corporation to the Member. Serve as the President, Secretary and Treasurer of the Corporation.

What are the Canonical Reserved Powers of a Pastor? Provide for the pastoral and sacramental care of the assigned Parish. Care and administration of the temporal goods of the parish (cc ). The Pastor’s interaction with the parish finance council (c. 537). Safeguarding and management of the Parish’s property at the assigned parish, to include maintenance of insurance policies insuring the property (c Section 2-1). Provide oversight and management of the collection of the Parish’s revenue and income with respect to the assigned Parish (c Section 2-4). Continued on next slide.

Canon Law Reserved Powers of a Pastor (Slide 2) Provide oversight and management of the Parish’s debt obligations with respect to the assigned parish (c Section 2- 5). Provide oversight and management of the Parish’s investment and allocation of funds with respect to the assigned parish (c Section 6). Provide oversight and management of the Corporation’s records with respect to the assigned Parish (c Section 2-7). Provide a written report to the Member, at least annually, with respect to the financial operations of the assigned Parish (c Section 2-8). Provide oversight and management of the annual budgets (c Section 3).

Parish Structure of the Archdiocese of Indianapolis Finance Council Advisory to Pastor Parishioners are appointed by the Pastor Parish Council Advisory to Pastor Parishioners are appointed or elected Parish Corporation – Pastor is the President and has responsibility for operation decisions. Member – Archbishop appoints Pastor. Holds broad reserved powers. Directors – Pastor/ Administrator, Parish Council President and Finance Council Chairperson. Governance of the corporation is subject to the canonical reserved powers of the Pastor. Roman Catholic Archdiocese of Indianapolis, Inc. Provides services to parish corporation pursuant to a written service agreement. Paid or reimbursed by the parish corporation. Roman Catholic Archdiocese of Indianapolis Properties, Inc. Parish real property held in trust by Archdiocese of Indianapolis Properties, Inc. and leased back. Non-parish real property held in trust and leased back. Catholic Community Foundation, Inc. Invest excess cash and securities. Funds held in trust for Parish. Parish Personal Property (cash and securities) Owned by Parish. Cash and securities in excess of operating needs held in Catholic Community Foundation, Inc. of which parish is a participant. Pastor Service Agreement Ownership of Assets Invest & Borrow Funds Real property held in trust

Canonical Reserved Powers of the Archbishop? Approve the mission and vision statements for the Corporation, and assure compliance with philosophy, mission, vision and core values of the Corporation. Interpret and change any statement of mission, philosophy, role and purchase of the Corporation. Continued on next slide.

Archbishop Reserved Powers (Slide 2) Approve any amendment to the Bylaws and Articles of Incorporation of the Corporation. Appoint individuals to offices entitling them to serve as the members of the Board of Directors. Remove any member of the Board of Directors or Officer of the Corporation. Approve and recommend the formation of legal entities, the sale, transfer or substantial change in use of all or substantially all of the assets of the Corporation, or the divesture, dissolution, closure, merger, consolidation or reorganization of the Corporation. Continued next slide.

Archbishop Reserved Powers (Slide 3) Approve the acquisition, sale, lease, transfer or other alienation of property of the Corporation, other than in the usual and regular course of the Corporation’s business or when alienation is above specified financial levels set in accordance with Canon Law. Approve any disposition of the assets of the Corporation at the time of its dissolution.

Role of Archbishop as Member *Archbishop exercises his reserved powers conferred by Canon Law (subject to his obligation to seek consultation and consent) in governing the corporations. Archbishop Sole Member of each corporation with power to appoint or approve Board members Roman Catholic Archdiocese of Indianapolis Properties Inc. Member: Archbishop – appoints Board. Board Members: Archbishop, Vicar General, Chancellor, Chief Financial Officer. St. Elsewhere Parishes Member: Archbishop – appoints Pastor and exercises reserved power. Board Members Pastor, Parish Council and Finance council President. Other Corporations (high schools, CYO, St. Mary’s Child Center, Catholic Charities, Mother Theodore Academies) Member: Archbishop – appoints Board. Board Member: Per Bylaws. Catholic Community Foundation, Inc. Member: Archbishop – appoints Board. Board Members: Community Leaders. Priest Personnel Board Council of Priests Finance Council Roman Catholic Archdiocese of Indianapolis, Inc. Member: Archbishop – appoints Board. Board Members: Archbishop, Vicar General, Chancellor, Chief Financial Officer. Board of Consulters

Existing Roman Catholic Archdiocese of Indianapolis Properties, Inc. Holds title to all real estate, high school, and Archdiocese. Leases property to entities pursuant to leases. Parish real property held in trust pursuant to trust agreement. New 150+ parish corporations Parish operations Parish schools Receives services from Roman Catholic Archdiocese of Indianapolis, Inc. Real property held in trust by Archdiocese of Indianapolis Properties, Inc. Pays both Archdiocese and Properties for services provided under written agreements. Employs parish employees and parish school employees. Funds in excess of operating needs are held in trust by Catholic Community Foundation, Inc. New Roman Catholic Archdiocese of Indianapolis, Inc. Catholic Center operations Agencies Provides services to parish corporations and high school corporations pursuant to written service agreements. Corporation is paid by parish or high school for services rendered. Funds in excess of operating needs are held in trust by Catholic Community Foundation, Inc. Employs Pastors, Catholic Center staff and agency employees. New Other corporations (high schools, CYO, St. Mary’s Child Center, Catholic Charities, Fatima, etc.) Receives services from Roman Catholic Archdiocese of Indianapolis, Inc. and rents real estate from Archdiocese of Indianapolis Properties, Inc. Pays both Archdiocese and Properties for services provided under written agreements. Employs current agency employees. Funds in excess of operating needs are held in trust by Catholic Community Foundation, Inc. Proposed Entity Structure Real property held in trust Lease real estate

What work needs to be done? Continue education programs on restructuring. Continue to implement communications plan. Present planned name of parish and d/b/a (60 days). Legal filings. (parish corporations.) Formal corporate meetings. Identify Board members and submit for approval. Approve Bylaws and initial meeting resolutions. Follow up and assistance of new entities.