The new St. Damien Church on Molokai. Upgrades to the Co-Cathedral of St. Theresa. A rectory for St. Rita Church in Nanakuli.
These parish building projects and dozens of others have been made possible through financial support from the Parish and School Revolving Fund. Though many parishioners have not heard of this diocesan system of savings and loans, it plays an important part in the life of the local church.
On July 17, Bishop Larry Silva issued a new set of statutes for the Parish and School Revolving Fund, or PSRF. The document details the functions of the fund and outlines the responsibilities of the diocesan leaders in charge of it.
According to diocesan finance officer Lisa Sakamoto, the updated rules mark a big step for the diocese. Although the fund has been around for decades, Sakamoto said the new guidelines show the effort being taken to ensure parishioners of its utmost transparency.
“It’s standard operating procedure for dioceses throughout the nation to set up these revolving funds or to have parish savings and loan funds,” she said. “We’re just following best practices.”
The PSRF is essentially a diocesan “bank,” said Sakamoto. The PSRF statutes note that all 66 of the Islands’ parishes must deposit with the diocese “all monies in excess of the amount of cash required to support 60 days of operation.” Parish schools are urged to do the same, unless the Augustine Educational Foundation is handling their assets.
These deposits are held in savings for the parishes and schools. They earn interest at a rate determined by the diocese, and can be withdrawn from the PSRF for various purposes. Parishes and schools can also turn to the PSRF for loans to finance building or capital projects.
High level of accountability
Currently, the PSRF holds more than $23 million. Monitoring this cache are Sakamoto and the Diocesan Finance Council, a 12-member group of mostly lay financial experts. The Investment and Loan Committee, comprised of finance council members and diocesan staffers, advises Bishop Silva on all decisions regarding the PSRF.
This high level of internal accountability is one of the advantages parishes and schools have over investing their money in a commercial bank. The PRSF statutes call for quarterly reports by the diocesan finance officer of its investments and loans. It is mandatory as well that an annual audit of the fund be done by an independent certified public accounting firm.
The fund is also kept separate from general diocesan assets. Sakamoto and the finance council make sure that none of the PSRF deposits are comingled with diocesan ministries or programs.
“We provide protection for the benefit of the parishes and schools,” Sakamoto said.
The PSRF also provides a unique streamlined connection between its managers and clients. The finance council and Investment and Loan Committee deal directly with parishes and schools and are continually aware of their financial situations. They look at markets with the aim of finding the best savings interest rates and loan terms to benefit the parishes and schools.
Sakamoto said parishes and schools presently earn interest at 2 percent for savings and pay 5 percent on loans. It is a reasonable fiscal balance, she said, that allows the fund to be sustainable.
“From a math perspective, if I get 5 percent on $10 million, and I have to pay 2 percent on $30 million, they kind of even out,” she said.
Applying for a loan
These management considerations and the robustness of the Parish and School Revolving Fund make it a good resource for loans. The PSRF has an efficient system for lending money to parishes or schools that are looking to improve their facilities with construction or capital projects.
According to the PSRF statutes, Bishop Silva must preliminarily approve a project before a parish or school can apply for a PSRF loan. Pastors must write a letter of intent outlining a plan for the project and a budget estimate.
Following the bishop’s OK, the pastor and parish or school team then meets with the diocesan advisors. The Investment and Loan Committee reviews various criteria for the loan, including parish or school operations costs, offertory cash flow and past ability to repay loans.
The committee determines loan amounts, a payback schedule and interest rate to be charged. They present the loan request to the bishop, who ultimately approves or rejects it.
This system “provides better governance,” Sakamoto said. “The bishop always has final authority on everything, but he has advisors now.”
St. Damien Church, built in Kaunakakai, Molokai, in 2011, is an example of the assistance provided by the revolving fund. The cost of the project was $3.4 million. Parishioners were able to raise $2 million for the construction and received a $1.4 million loan from the diocese to finance the rest.
For other parish and school needs, the new PSRF statutes allow the diocese to create an “emergency fund” to aid in unexpected situations. There is also a provision for interest-free loans or grants to help parishes with less credit-worthy statuses.
“It provides more of a collegiate spirit helping the parishes,” Sakamoto said. “We have better access to funds for the benefit of other parishes who need the help.”
Sakamoto hopes parishioners will review the PSRF statutes on the diocesan website (www.catholichawaii.org) to better understand how their parish contributions are being used for the betterment of the local Catholic community.
“To the extent that we can earn income within the fund, that will allow us to help those parishes truly in need,” Sakamoto said. “The bishop has that option within this governance structure which we never really had before.”
