BOSTON – Although the situation in the Archdiocese regarding its finances is extremely difficult and it is getting worse every day, there are some young educated economists who have introduced a series of initiatives which, if implemented, would salvage the Archdiocese’s long term future.
Some such initiatives have been proposed by Michael Psaros, a prominent economist and businessman who a few months ago was appointed Archdiocesan Council Treasurer of the Archdiocesan Council. These ideas were included in his reply email of September 26 to Lazaros (Louis) Kircos, Archdiocesan Councilmember, Detroit Metropolis Finance Committee Chairman, Archon Regional Commander, L100 Member and L100 Audit Committee member.
Kircos had written, also on September 26, and copied many Councilmembers. Addressing Psaros and Council Vice Chair George Tsandikos, Kircos wrote among other things that “it is inconceivable to me that there is this much turmoil at the Archdiocese; that the chief administrative officer resigned or was forced to resign; that ‘bankruptcy’ is rumored; and with all that, there has been no official communication to our governing body – the Archdiocesan Council.
“The impact of these events is devastating to our Church and worsens each passing day.We Councilmembers cannot help our Church if we have no information.If fact, it is worse because we are getting questions about what is happening and we can only respond that we have been told nothing.So instead of helping to possibly calm the situation, fears deepen.We know that you are extremely busy and I am grateful for your efforts, but you must keep us informed.”
In his reply, Psaros wrote among other things, “please understand that Vice Chairman George Tsandikos, Ms. Cathy Walsh and I serve the Archdiocese with the blessing of, and under the direction of, his Eminence, Geron Archbishop Demetrios.
“In response to your first question, only his Eminence (for purposes of this communication henceforth, ‘Archbishop Demetrios’) can call for a meeting, including the meeting in question.
“Second, his Eminence is working towards a structured and formal communications strategy to answer the meritorious questions you raise below. I tried to respond immediately, and without consultation with my brother Officers (for this I ask for their forgiveness – we are a team, act as a team, and I humbled by their faith and commitment to our Church).
“We agree with you that the Archdiocesan Council and Omogenia should receive a full explanation of recent events and the actual financial position of the Holy Archdiocese. Please understand we are working in ‘real time.’”
Psaros emphasized to Kircos that “the first critical step to communicate recent events was a meeting, chaired by his Eminence, where the Executive Officers provided full disclosure on recent events to the Executive Committee.
Psaros assured Kircos that “the commitment and objective of my fellow National Officers is to create an institution with accountability and transparency. Leadership 100 is a vivid example of what is achievable and what will be achieved with respect to the GOA” and lists a series of measures that are implemented.
He wrote that “under the leadership of His Eminence, we have made important changes in a brief period of time.The GOA accepted the resignation of Jerry Dimitriou, Head of Administration in September 2017. His responsibilities were assumed by his Grace, Bishop Andonios, Chancellor of the GOA.
“On April 4th, 2017, the position of Chief Financial Officer was created and Fr. Soterios Baroody was retained to serve. His Eminence could not have made a better selection. Prior to the creation of the CFO position, his Eminence and the National Officers of the GOA had almost no visibility into the true financial position of the Holy Archdiocese.Upon embarking on his work The GOA’s CFO, Father Soterios asked for a 60-day period of discovery, which was exhaustive and exhausting.
“Shortly into Fr. Soterios’ tenure, Vice Chair George Tsandikos, Fr. Soterios and I met with Grant Thornton.This meeting was critical to our subsequent understanding of the truth.
“What we quickly determined was that the GOA lacked even the most basic internal controls with respect to expenditures, vendor and travel management, and other basic matters of basic corporate governance.A simple review of the ‘deficiency letters’ included as part of Grant Thornton’s recent audits is an example of deficiencies with respect to internal control that were not addressed, year after year. I ask why?Anyone that read the audit would have read the deficiency letters.Why were these basic deficiencies not addressed? With the blessing of his Eminence, Fr. Soterios moved quickly to implement basic internal controls.
Once Fr. Soterios reported the true financial position of the GOA at the beginning of July, we discovered the GOA had a material structural operating deficit (costs exceeded revenues). I think this is important – prior to the first week of July, 2017, neither His Eminence nor the National Officers had an honest and true picture of the GOA’s financial position. Historically, that structural deficit was funded by blessed benefactors who have fallen asleep in the Lord.We further discovered that to fund the deficit over the past two years, segregated/restricted accounts were invaded. Let me be clear – we were shocked by this.
“With the blessings of His Eminence, and under the leadership of His Grace, Bishop Andonios, immediate actions have been taken to reduce operating costs to bring revenues and expenditures into alignment with the objective of eliminating the structural deficit of the GOA.We had to act decisively. However, the internal cash flow of the GOA is acute and remains acute.
“For the first time, controls have been implemented to ensure professional controls of all expenditures and proper corporate governance.
“This is very important: Grant Thornton was engaged in May, 2017 to conduct a thorough ‘Operations Review’ throughout the summer. Grant Thornton was tasked with providing recommendations on how to create a world-class ecclesiastical not-for-profit institution from an internal controls, practices and procedures perspective.Grant Thornton was asked for its honest, unvarnished, and critical recommendations. I am an informed consumer of these reports, and believe Grant Thornton has done an excellent job. We have already received a draft preview. We believe we will be in receipt of their final report within a week. Grant Thornton has been asked to work with his Grace and Father Soterios to turn its very specific (if not granular) recommendations into standard operating procedures to be implemented.Phase I and Phase II of Grant Thornton’s work is expensive.I have funded the Operations Review and its follow-on work personally.We will report the summary of Grant Thornton’s recommendations to the Finance Committee. Once again, this is happening in ‘real time.’
“In my humble opinion, the GOA’s immediate objective must be to close the structural operating deficit.
“Please note that the assumption for closing the deficit is Stewardship equal to 2016 – approximately $22 million of unrestricted inflows.If this number is reduced, the need to reduce costs further will increase.
“In the medium term, without increasing the burden on our parishes, we must find a way to replenish the cash in the segregated/restricted accounts that were ‘invaded.’ This can only be accomplished through a budget surplus or gifts.
“We look forward to continuing this critical dialogue.”
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