FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT

THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

June 30,2012 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City Missouri

CONTENTS

Page

INDEPENDENT AUDITORS' REPORT 3

FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION 4

STATEMENT OF ACTIVITIES 5-6

STATEMENT OF CASH FLOWS 7

NOTES TO FINANCIAL STATEMENTS 8-27 CPAs and Management Consultants One South Memorial Drive, Ste. 950 St. Louis, MO 63102-2439 ph 314.231.6232 Kerber, Eck & Braeckel LLP fax 314.231.0079 www.kebcpa.com

Independent Auditors' Report

Board of Directors The Catholic Diocese of Jefferson City- Chancery Office Jefferson City, Missouri

We have audited the accompanying statement of financial position of The Catholic Diocese of Jefferson City- Chancery Office (the Diocese) (a Missouri corporation, not-for-profit) as of June 30, 2012, and the related statement of activities and cash flows for the year then ended. These financial statements are the responsibility of the Diocese's management. Our responsibility is to express an opinion on these fmancial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedmes that are appropriate in the circtm1stances, but not for the purpose of expressing an opinion on the effectiveness of the Diocese's intemal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Note 15 to the financial statements, the Diocese had not determined the funded status of its priests' retirement and health defined benefit plan in accordance with accounting standards generally accepted in the United States of America. The effects of that departure on the financial statements are not reasonably determinable.

In our opinion, expect for the effect on the financial statements of the matter discussed in the preceding paragraph, the financial statements referred to in the first paragraph present fairly, in all material respects, the fmancial position of The Catholic Diocese of Jefferson City- Chancery Office as of June 30, 2012, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

St. Louis, Missouri November 7, 2012

Other Locations Belleville, IL • Carbondale, IL • Springfield, IL • Jacksonville, IL • Cape Girardeau, MO • Milwaukee, WI THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

STATEMENT OF FINANCIAL POSITION June 30, 2012

Assets Cash and cash equivalents $ 810,633 Investments Funds on deposit with The Catholic Diocese of Jefferson City Fund Pooled investments 1,814,598 Depositor's fund 1,395,134 Other investments 50,030 Accounts receivable, net 721,490 Promised contributions receivable, net 256,726 Accrued interest and investment income 14,760 Prepaid expenses 38,247 Loans made to parishes and other entities 172,210 Land, buildings and equipment, net 590,897 Total Assets $ 5,864,725

Liabilities Accounts payable $ 124,503 Accrued liabilities Compensated absences 66,887 Property and casualty insurance claims 286,987 Pledges payable 163,195 Deferred revenue 6,926 Funds held in custody for others 254,403 Total Liabilities 902,901

Net Assets Unrestricted Undesignated 528,382 Designated for land, buildings and equipment 590,897 Designated for other purposes 385,605 Total Unrestricted Net Assets 1,504,884 Temporarily restricted 2,572,975 Permanently restricted 883,965 Total Net Assets 4,961,824

Total Liabilities and Net Assets $ 5,864,725

See accompanying notes to the financial statements.

4 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

STATEMENT OF ACTIVITIES Year Ended June 30, 2012

Temporarily Permanently Unrestricted Restricted Restricted Total Support and Revenues Charitable Support Contributions and Bequests $ 1,466,470 $ 2,034,220 $ 6,050 $ 3,506,740 Diocesan Share of National Collections 16,195 8,317 24,512 Grants 601,866 601,866 Parish Assessments Cathedraticum 969,996 969,996 Infirm Priests and Religious 252,454 252,454 Priest's Retirement 325,000 325,000 Seminarian Formation 400,357 400,357 Other Revenues Program Sales and Fees 1,088,621 53,925 1,142,546 Health Insurance Premiums 7,098,160 7,098,160 Property and Casualty Insurance Premiums 1,211,925 1,211,925 Investment Income Interest and Dividend Income 54,588 33,034 87,622 Realized Loss on Investments {7,021) 5,016 (2,005) Unrealized Loss on Investments (20,371) 17,116 {3,255) Other 6,872 7,971 14,843 Net Assets Released from Restrictions 1,434,531 {1,434,531) Total Support and Revenues 14,297,777 1,326,934 6,050 15,630,761

Total Expenses (page 6) 15,561,449 15,561,449

Net Increase (Decrease) in Net Assets (1,263,672) 1,326,934 6,050 69,312

Net Assets at July 1, 2011, as originally reported 2,442,910 1,246,041 877,915 4,566,866 Prior Period Adjustments 325,646 325,646 Net Assets at July 1, 2011, as restated 2,768,556 1,246,041 877,915 4,892,512

Net Assets at June 30, 2012 $ 1,504,884 $ 2,572,975 $ 883,965 $ 4,961,824

See accompanying notes to the financial statements.

5 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

STATEMENT OF ACTIVITIES Year Ended June 30, 2012

Temporarily Permanently Unrestricted Restricted Restricted Total Expenses Worship Liturgical Commission $ 5,452 $ $ $ 5,452 Evangelization Mission Office 418,546 418,546 Other 160 160 Community Health Insurance Premiums for Parishes 7,027,822 7,027,822 Property and Casualty Insurance Expense 1,185,091 1,185,091 Care of Infirm Clergy and Religious 452,750 452,750 Catholic Missourian 434,611 434,611 Clergy Retirement 353,385 353,385 Youth Ministry 270,888 270,888 Vocations Office 188,061 188,061 Marriage Tribunal 143,783 143,783 Community Reconciliation 104,893 104,893 Communications Office 77,305 77,305 Pro Life Activities 68,587 68,587 Newman Communities 43,500 43,500 Other 590 590 Education Seminarian Formation 552,592 552,592 Catholic Schools Office 286,056 286,056 Religious Education Office 217,634 217,634 Ministry to Priests 176,485 176,485 Diaconate Formation 34,383 34,383 Ministry Refugee and Immigration Services 372,881 372,881 Catholic Charities of Central and Northern Missouri 330,890 330,890 Hispanic Ministry 197,854 197,854 Hospital Ministry 135,785 135,785 Episcopal Oversight Central Administration 1,305,945 1,305,945 Finance Office 312,301 312,301 Office of the Bishop 256,399 256,399 Office ofthe Chancellor 211,018 211,018 Properties Office 86,136 86,136 Office of the Vicars and Moderator of the Curia 56,936 56,936 Presbyteral Council 3,734 3,734 Fundraising Stewardship Office 248,996 248,996

Total Expenses (page 5) $ 15,561,449 $ $ $ 15,561,449

See accompanying notes to the financial statements.

6 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

STATEMENT OF CASH FLOWS (INDIRECT METHOD) Year Ended June 30 2012

Cash Flows from Operating Activities Change in Net Assets $ 69,312 Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities Depreciation 83,391 Contribution of non-cash assets to Catholic Charities of Central and Northern Missouri 26,115 Net unrealized and realized loss on investments 5,260 (Increase) Decrease in: Accounts receivable, net 98,156 Promised contributions receivable, net (79,320) Pledged contributions receivable- Jubilee Fund, net 64,050 Accrued interest and investment income (4,615) Prepaid expenses 349,573 Increase (Decrease) in: Accounts payable (28,483) Pledges payable (77,223) Accrued liabilities (39,960) Deferred revenue (384,745) Funds held in custody for others (77,651) Net Cash Provided by Operating Activities 3,860

Cash Flows from Investing Activities Loan collections from parishes and other entities 6,355 Purchase of investments (4,227,948) Sale of investments 3,895,573 Purchase of land, buildings and equipment (67,139) Net Cash Used in Investing Activities (393,160)

Net decrease in cash and cash equivalents (389,300)

Cash and cash equivalents at July 1, 2011 1,199,933

Cash and cash equivalents at June 30, 2012 $ 810,633

See accompanying notes to the financial statements.

7 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30,2012

NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Information

The Catholic Diocese of Jefferson City - Chancery Office (Diocese) is not-for-profit organization that is exempt from income tax under Section 50l(c)(3) of the Internal Revenue Code. The Diocese is also a corporate body under the Code of Canon Law of the Roman Catholic Church. The Bishop, as local ordinary, exercises the pastoral mission entrusted to him by the Lord Jesus of sanctification, teaching and leadership, in communion with the Church Universal, under the leadership of its chief pastor, the Pope.

To carry out this mission, the Diocese is organized into five strategic areas of ministry and oversight. Through Worship and Evangelization, the Good News is preached to the people who live in the 38 counties of the Diocese and to mission churches throughout the world. Through Community, the Diocese and its ministers are a sign and source of unity, by their example and as a guide to holiness by being a bond with the Church Universal and as the guardian of scriptural and ecclesial teaching that comes from Christ and the Apostles. Through Education, the Diocese helps the faithful to grow into a fuller spiritual maturity, preparing them for the work of service in building up the Kingdom of God. In Ministry, the Diocese and its ministers meet the needs of the people, healing their hurts and giving them hope in Christ's name. Finally, through Episcopal Oversight, is the exercise of responsibility over the resources entrusted to our care for the mission of the Church.

The accompanying financial statements are presented in a manner to identify the various activities and departments of the Diocese as they relate to the five strategic areas of ministry and oversight as described above. The principal activities and departments ofthe Diocese are:

Worship Community Spiritual Renewal of the Laity Catholic Missourian Diocesan Liturgical Commission Charismatic Renewal College and University Communities Evangelization Communications Office Diocesan Pastoral Council Community Reconciliation Mission Office Marriage Tribunal ProLife Activities Education Care for Infirm Clergy and Religious Ministry to Priests Senior Communities Diaconate Formation Vocations Office Diocesan Schools Office Youth Ministry Office Religious Education Office Parish Property and Casualty Insurance

8 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

General Information (Cont'd)

Education (cont' d) Community (cont' d) Lay Ministry Formation Parish/School Employee Retirement Seminarian Studies and Health Insurance Benefits

Ministry Episcopal Oversight Hispanic Ministry Buildings and Properties Hospital Ministry Central Administration Refugee and Immigration Services Finance Office Support for Catholic Charities of Office of the Bishop Central and N orthem Missouri Office of the Chancellor Office of the Vicar General Presbyteral Council Stewardship Office

The accompanying financial statements include the assets, liabilities, net assets and financial activities of the Diocese of Jefferson City - Chancery Office, which is fiscally responsible to the Bishop of the Diocese of Jefferson City. The following entities, being separate 50l(c)(3) corporations or trusts, are excluded from this report:

Priests' Mutual Benefit Society Diocesan Excellence in Education Fund, Inc. The Jefferson City Diocesan Chancery Building Fund, Inc. The Catholic Diocese of Jefferson City Fund The Diocese of Jefferson City Jubilee Fund The Diocese of Jefferson City Jubilee Retirement Trust Fund Parishes within the Jefferson City Diocese Fr. Augustine Tolton Catholic Regional High School in Columbia Helias High School in Jefferson City Catholic Charities of Central and Northern Missouri Diocese of Jefferson City Real Estate Corporation

Various religious orders, lay societies and religious organizations which operate within the Diocese, but which are not fiscally responsible to the Bishop, and parishes and their related institutions, have not been included in the accompanying financial statements.

9 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

General Information (Cont' d)

On July 1, 2011, the Diocese of Jefferson City- Chancery Office transferred the operations of its Prison Ministries, Family Life Office and Social Concerns to the Catholic Charities of Central and Northern Missouri. On January 1, 2012, the Diocese of Jefferson City- Chancery Office transferred the operations of its Refugee and Immigration Services to the Catholic Charities of Central and Northern Missouri.

Basis of Accounting

The books and records are maintained and the financial statements are prepared on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred.

Basis of Presentation

The Diocese is required to report information regarding its assets, liabilities, and net assets according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets, based upon the existence or absence of donor-imposed restrictions.

Unrestricted Net Assets

Include all non-designated and designated resources available for support of diocesan operations.

Temporarily Restricted Net Assets

Include all resources whose use is limited by donor-imposed stipulations that either expire by the passage of time or can be fulfilled by actions of the Diocese pursuant to those stipulations.

Permanently Restricted Net Assets

Resources whose use is limited by donor-imposed stipulations that neither expire by the passage oftime nor can be fulfilled or otherwise removed by actions of the Diocese.

10 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30,2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents are defined as cash balances held in bank accounts and short term investments with an original maturity no longer than three months. Deposit accounts designated for long-term purposes or received with donor-imposed restrictions limiting the use to long-term purposes are not considered cash and cash equivalents.

The Diocese also maintains some deposits with the Catholic Diocese of Jefferson City Fund. However, the Diocese does not consider funds on deposit with the Diocese of Jefferson City Fund to be cash equivalents and accounts for them like other investments.

Income Taxes

The Diocese is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code and State of Missouri taxes under the applicable statute. In addition, due to religious activities, the Fund is not required to file an IRS Form 990. With the exception of third party advertising in the Catholic Missourian, the Diocese has no activities that would cause imposition of the unrelated business tax provision of the Internal Revenue Code. The Diocese has no unrelated business income for the year ended June 30, 2012.

The Dioceses' Forms 990T Exempt Organization Business Income Tax Return, for the years ending 2011, 2010 and 2009 are subject to examination by the IRS, generally for three years after they were filed.

The Financial Accounting Standards Board (F ASB) issued Accounting Standards Codification (ASC) Section 740-10. ASC Section 740-10 clarifies the accounting for income taxes by prescribing the minimum standard a tax position is required to meet before being recognized in the financial statements. The Diocese has not taken any uncertain tax positions that should be accounted for under ASC Section 740-10.

11 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

Investments

Investments are reported at fair value. A majority of the Diocese investments are managed with investments of affiliates in the Catholic Diocese of Jefferson City Fund (DJC Fund). Fair value of the underlying investments in the DJC Fund as well as other investments was determined using Level 1 inputs for equity funds, which are quoted market prices for identical securities in active markets; and Level 2 inputs for cash and cash equivalents and fixed income securities, which are quoted prices for similar securities in active markets. Level 2 inputs were derived using the market approach, which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business. The fair value was derived from investment broker statements as of June 30, 2012.

Pooled investment fund interest and dividends, realized gains and losses, and unrealized gains and losses are allocated based on the proportionate share of each entity's fair value at the time of allocation. The financial statements of each entity reflect only that entity's share of the pooled fund.

Promised Contributions Receivable

Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized only when the conditions on which they depend are substantially met and the promises become unconditional.

Accounts Receivable

Accounts receivable are stated at unpaid balances, less an allowance for doubtful accounts. The Diocese provides for losses on accounts receivable using the allowance method. The allowance is based on experience and other circumstances. It is the Diocese's policy to charge off uncollectible accounts receivable when management determines the receivable will not be collected.

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NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

Contributed Services and Facilities

No amounts have been reflected in the financial statements for donated services. The Diocese pays for most services requiring specific expertise. However, individuals volunteer their time and perform a variety of tasks that assist the Diocese with specific programs, campaign solicitations and various committee assignments. The number of volunteer hours donated could not be estimated.

The Diocese conducts operations primarily in the Chancery. This facility is held in trust in the Diocese of Jefferson City Real Estate Trust. The facility is currently leased to the Diocese for a nominal amount under an informal arrangement while a lease is being written. For the year ended June 30, 2012, use of the donated facility was valued at $320,625 and is reported as a contribution and related rent expense in the accompanying Statement of Activities.

Pledges Payable

Unconditional grants are recorded when approved. Conditional grants are recorded when conditions are substantially met and the expenditures are approved.

Land, Buildings and Equipment

It is Diocese policy to capitalize property and equipment over $1,000. Land, buildings and equipment are stated at cost (if purchased) or at market or appraised value at date of gift (if received as a donation).

Depreciation of property and equipment is computed using the straight-line method. Buildings have a useful life of 40 years. Building improvements have an estimated useful life of 15 years; equipment, vehicles and furnishings have an estimated useful life of 5 years.

Assessments

Parish assessments represent the current year's assessment to each parish. The Diocese has three assessments. The Cathedraticum is assessed at the beginning of the fiscal year and billed in monthly installments. The Infirm Priest and the Seminary/Priest Retirement assessments are billed in full at Christmas and Easter, respectively. Assessments are recognized for income purposes at the point they are first assessed and not as billed.

13 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)

Health Insurance Premiums

The Diocese offers all diocesan employees (parish, school, clergy and diocesan staff) a health insurance plan provided by Christian Brothers Employee Benefit Trust. Premiums are paid by the Diocese on behalf of the participants and the various parishes and schools are then billed by the Diocese. The amounts reflected in the Statement of Activities as revenue reports only the portion of the premiums and benefits billed and received on behalf of parishes, schools and non- diocesan staff. Insurance premiums expense for diocesan staff is included in the departmental expense totals presented in the statements.

Subsequent Events

The Diocese evaluates events and transactions occurring subsequent to the date of the financial statements for matters requiring recognition or disclosure in the financial statements. The accompanying financial statements consider events through November 7, 2012, which is the date the fmancial statements were available to be issued.

NOTE 2- DETAIL OF SELECTED ACCOUNT BALANCES

Accounts Receivable Accounts Receivable as of June 30, 2012 is summarized as follows:

Parishes within the Catholic Diocese of Jefferson City $ 765,379 Catholic Diocese of Jefferson City Fund 4,500 The Diocese of Jefferson City Jubilee Fund 4,030 The Diocese of Jefferson City Jubilee Retirement Trust Fund 2,320 Catholic Charities of Central and Northern Missouri 12,430 Other accounts receivable 54,831 Total Accounts Receivable 843,490 Reserve for uncollectible accounts (122.000) Net accounts receivable $ 721.490

Promised Contributions Receivable Promised contributions receivable as of June 30, 2012 is summarized as follows:

Temporarily restricted for Catholic Stewardship Appeal $218,584 Less: allowance for doubtful accounts (21,858) Net $ 196 726 Temporarily restricted for parish stewardship educator 60,000 Net promised contributions receivable $256.726 14 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 2- DETAIL OF SELECTED ACCOUNT BALANCES (Cont'd)

Loans Made to Parishes and Other Entities

The Diocese has given loans to various parishes and entities. As of June 30, 2012, the outstanding balances ofthese loans were as follows:

Visitation of the Blessed Virgin Mary $ 72,459 Our Lady of the Snows 50,500 Our Lady Queen of Peace 18,000 Other entities 49,251 Total Loans Outstanding 190,210 Less: Current Loans Outstanding (110,250) Allowance for Uncollectable Loans (18,000) Long-Term Loans Outstanding $ 61.960

Land, Buildings and Equipment

The composition of land, buildings and equipment consisted ofthe following at June 30,2012.

Buildings and Improvements $ 1,418,298 Equipment, Vehicles and Furnishings 333,207 Land 251.084 Total Land, Buildings and Equipment 2,002,589 Accumulated Depreciation (1 ,411 ,692) Land, Buildings and Equipment, net $ 590,897

Pledges Payable

The Diocese had made pledges to fund various capital campaigns and activities. As of June 30, 2012, the outstanding balances ofthese pledges were as follows:

Conception Seminary-A Living Tradition $ 163,195

The Conception Seminary-A Living Tradition pledge is to be paid from one-third of the net proceeds of each year's Night of Awareness banquet (formerly Vocation Investment Partnership banquet). As the amount paid varies from year to year based on the net proceeds of the banquet, the Diocese does not classify a current and long-term portion for this pledge.

15 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 2- DETAIL OF SELECTED ACCOUNT BALANCES (Cont'd)

Funds Held in Custody for Others

This amount represents funds received and held by the Diocese as an agent for others. The composition ofbalances at June 30, 2012 is as follows:

Retirement Payments $ 74,928 Overseas Relief Collection 5,179 Helias Tuition 5,562 Mission Sunday Collection 13,742 Human Development Campaign 17,343 Communications/Education Collection 41,798 Retired Religious Collection 23,983 Home Missions Collection 53,895 Mass Stipends 3,401 Mission Cooperative 3,217 Operation Rice Bowl 4,305 Extension Society Seminarian Endowment 6,500 Other 550

Total Funds Held in Custody of Others $ 254,403

NOTE 3- DETAIL OF NET ASSETS

The nature and amount of net assets at June 30, 2012 were as follows:

Unrestricted Net Assets:

Undesignated $ 528,382

Designated- Land, Buildings and Equipment 590,897 Property and Casualty Insurance 162,636 Aquinas Academy 8,194 Infirm Clergy/Consecrated Life 214.775 Total designated 976,502

Total Unrestricted Net Assets $ 1.504.884

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NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 3- DETAIL OF NET ASSETS (Cont'd)

Temporarily Restricted Net Assets:

Catholic Stewardship Appeal $ 1,478,808 Peru and Central American Missions 370,292 Pro-Life 8,632 YIP/Seminarian and Graduate Priestly Education 133,374 Community Reconciliation 230,266 Sauer Scholarship Endowment 5,789 Simon Scholarship Fund 31,847 Albert Johns Education Fund 1,010 Leong Poetry Project 1,537 Bishop McAuliffe Endowment Fund 102,879 Seminarian Studies 26,904 Hispanic Ministry-Home Missions Grant 70,000 Mudd Family Endowment 633 Stewardship Office 111.004

Total Temporarily Restricted Net Assets $2.572,975

Permanently Restricted Net Assets:

Simon Scholarship Fund $ 429,108 Albert Johns Education Fund 50,000 Leong Poetry Project 12,000 Seminary Burses Fund 9,110 Sauer Scholarship Endowment 70,000 Bishop McAuliffe Endowment Fund 305,882 Mudd Family Endowment 7,865

Total Permanently Restricted Net Assets $ 883,965

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NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 4- RETIREMENT PLANS

There are three retirement plans. Substantially all lay personnel and clergy of the Diocese are participants in a defined contribution plan. Priests are also members of a retirement plan through the Priests' Mutual Benefit Society. In addition, the priests also have the option to participate in the Diocesan Priests 403(b) plan. The Bishop authorizes annual contributions to each of the three plans.

Employee Retirement Plan

The lay retirement plan is a non-ERISA 403(b) plan. Contributions to this plan are not taxable to the employee and are deposited into individual annuity contracts. Individual parishes and diocesan entities contribute 3% of their eligible employee's gross wages. To be eligible, an employee must be customarily employed the equivalent of 20 hours per week. Lay personnel throughout the Diocese which were participating in the plan and hired prior to January 1, 2008 are fully vested. Beginning January 1, 2008, newly hired employees vest over a six year period. The contribution on behalf of eligible Chancery employees totaled $44,616 for the fiscal year ended June 30, 2012.

The Jubilee Retirement Trust Fund is a not-for-profit corporation established June 26, 2008 to provide support to the Bishop, the Catholic Diocese of Jefferson City, and the contributing entities to assist them in providing for the retirement needs of the lay employees and Deacons covered under the Catholic Diocese of Jefferson City's Tax Deferred Annuity Plan. The Trust Fund's source of income is mainly contributions. As of June 30, 2012, the Chancery Office has not contributed any funds to the Jubilee Retirement Trust Fund.

Priests' Retirement and Health Plans

The Priests' Mutual Benefit Society is a nonprofit organization designed to provide retirement and health insurance benefits exclusively for retired or disabled priests of the Diocese of Jefferson City. The Society was organized on April 1, 1988, to provide benefits to priests who retired after July 1, 1981. The Society is administered by a Board of Trustees consisting of the Bishop, four elected priests, and two persons appointed by the Bishop. The Diocese contributed $325,000 to the Society for the fiscal year ended June 30, 2012.

18 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 4- RETIREMENT PLANS (Cont'd)

Priests' Retirement and Health Plans (Cont'd)

Benefits to the Plan are determined by the Bishop following a recommendation by the Trustees of the Trust. The monthly pension benefit was $1,553 during the year ended June 30, 2012. A priest is normally eligible to participate in the Plan at age 70 with at least 20 years of service. A priest who retires prior to age 70 will have a reduced benefit of one half of one percent per month for every month prior to age 70 the priest actually retires. A priest who retires prior to completing 20 years of service with the Diocese because he was incardinated into the Diocese or ordained after age 50, would have a reduced benefit as determined by the Bishop after consultation with the trustees of the Trust. The amount of benefit payable at any time to a participant in the Plan may be adjusted upward, downward or eliminated altogether by the Bishop following consultation with the trustees of the Trust.

The Diocese also administers the Diocesan Priest 403(b) Retirement Plan which was created February 1, 2001, as a supplement to the Priests' Mutual Benefit Society. For the fiscal year ended June 30, 2012, individual parishes and diocesan entities contributed $2,600 per priest to the priest's 403(b) plan. The amount is paid 100% by the parish unless a priest is assigned to multiple parishes or other diocesan entities, in which case the amount is allocated proportionately. All active priests are eligible. Priests are 100% vested in both the employer contribution and any elective deferrals they may make. The amount paid by the Diocese for its share of priest's 403(b) contribution allocation was $32,626 for the fiscal year ending June 30, 2012.

Detailed information on specific coverage and eligibility under each plan is available in the respective plan documents which is available from the Finance Office of the Diocese.

NOTE 5- COMPENSATED ABSENCES

In accordance with accounting principles generally accepted in the United States of America, a liability must be recognized for accrued compensated absences if payment relates to past services, the right to payment vests or accumulates, and payment is probable. The Diocesan policy for compensated absences meets these criteria. The amount of the liability as of June 30, 2012 was $66,887.

19 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 6- COMMUNITY RECONCILIATION

As part of the Charter for the Protection of Children and Young People, the Diocese must undergo a compliance audit to measure its compliance. The most recent compliance audit was completed September 21, 2011. The results of that audit showed that the Diocese was fully compliant with the Charter for the Protection of Children and Young People and there were no recommendations or required actions to be taken.

In addition to committing to the protection of children and young people, the Bishop also assured the people of the Diocese that " ... no part of your contributions to the Catholic Stewardship Appeal will be used for any costs related to the abuse issue. Nor will these needs be met from any parish assessments. For these costs, we are raising funds from private donors." As such, all expenses incurred because of the abuse that has occurred have been paid from restricted donations made specifically for that purpose and other funds that have not come from any Stewardship Appeal or parish assessment.

For the fiscal year ending June 30, 2012, the Diocese had expenses of $104,893 directly related to the Community Reconciliation efforts described above. As of June 30, 2012, the balance of net assets restricted for Community Reconciliation was $230,266 as listed in Note 3 to these financial statements.

NOTE 7- RELATED PARTY

The Diocese of Jefferson City - Chancery Office is related through the Bishop of the Diocese of Jefferson City to the following entities: The Priests' Mutual Benefit Society; The Catholic Diocese of Jefferson City Fund; Diocesan Excellence in Education Fund, Inc.; The Jefferson City Diocesan Chancery Building Fund, Inc.; Parishes within the Jefferson City Diocese; the Fr. Augustine Talton Regional Catholic High School in Columbia; Helias High School in Jefferson City; The Diocese of Jefferson City Jubilee Fund; Catholic Charities of Central and Northern Missouri; Diocese of Jefferson City Real Estate Corporation and The Diocese of Jefferson City Jubilee Retirement Trust Fund. The Diocese maintains separate books and records. All financial information for the above entities is presented separately and is excluded from this report.

20 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30,2012

NOTE 7- RELATED PARTY (Cont'd)

The Catholic Diocese of Jefferson City Fund holds deposits on account of $1,395,134 and investments of $1,814,598 as of June 30, 2012 for the Diocese. The Diocese received administrative fees of $48,000 from The Catholic Diocese of Jefferson City Fund for the year ended June 30, 2012. The Catholic Diocese of Jefferson City Fund paid $66,387 in interest and realized gains to the Diocese for the year ended June 30, 2012. The Diocese received contributions from the Fund of $750,000. The Diocese made deposits to the Fund of $1,466,714 and withdrew funds on deposit in the amount of $226,434. The Diocese transferred $1,000,000 of funds held in deposits to investments with the Catholic Diocese of Jefferson City Fund.

The Diocese contributed $325,000 to the Priests' Mutual Benefit Society for the fiscal year ended June 30, 2012. The Diocese also invoiced the Society $107,618 during the year for reimbursement of retirement payments, health insurance premiums, accounting and administrative support and conference fees. As of June 30, 2012, PMBS has paid the full amatmt invoiced.

The Diocese of Jefferson City Jubilee Retirement Trust Fund was invoiced by the Diocese of Jefferson City- Chancery Office for accounting service fees in the amount of $9,000 and 403(b) administrative costs of$25,088. As of June 30, 2012, the outstanding balance was $2,320.

The Diocese recognized revenue of $10,257,892 from the various parishes for the year ended June 30, 2012. The Diocese holds $190,210 in loans outstanding for various parishes and related entities as of June 30, 2012. The allowance for uncollectable loans was $18,000 as ofJune 30,2012.

During the fiscal year ended June 30, 2012, the Diocese invoiced the Diocese of Jefferson City Jubilee Fund $48,690 for administrative fees and miscellaneous expenses paid on their behalf. The Diocese of Jefferson City Jubilee Fund owed the Diocese $4,030 for these miscellaneous expenses as of June 30, 2012.

On July 1, 2011, the Catholic Diocese of Jefferson City - Chancery Office transferred the operations of its Prison Ministries, Family Life Office and Social Concerns to the Catholic Charities of Central and Northern Missouri. On January 1, 2012, the Catholic Diocese of Jefferson City - Chancery Office transferred the operations of its Refugee and Immigration Services to the Catholic Charities of Central and Northern Missouri. Net amounts contributed to Catholic Charities of Central and Northern Missouri were $330,890 for the year ended June 30, 2012. The Diocese committed to covering the cost of any salaries and benefits incurred for personnel transferred with these operations for up to five years, should the fund raising activities of Catholic Charities of Central and Northern Missouri prove inadequate.

21 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 7- RELATED PARTY (Cont'd)

During the fiscal year ended June 30, 2012, the Diocese invoiced Helias High School $626,747 for miscellaneous expenses paid on their behalf

As of June 30,2012, the Diocese held related party accounts receivable for:

Parishes $ 765,379 Catholic Diocese of Jefferson City Fund 4,500 Diocese of Jefferson City Jubilee Fund 4,030 Diocese of Jefferson City Jubilee Retirement Trust Fund 2,320 Catholic Charities of Central and N orthem Missouri 12,430 $ 788.659

NOTE 8- CONCENTRATION OF CREDIT RISK

The Diocese places its cash and cash equivalents with credit-worthy high quality financial institutions. Balances on interest-bearing accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Non-interest bearing account balances are covered by FDIC insurance up to an unlimited balance. From time to time, cash balances may exceed Federal insurance limits.

Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risk in the near term would materially affect the amounts reported in the financial statements.

22 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 9- ENDOWMENTS CUPMIFA STATE)

The Diocese holds and maintains the following endowments: Albert Johns Education Fund, Bishop McAuliffe Endowment Fund, Leong Poetry Project, Mudd Family Endowment, Sauer Scholarship Endowment, Seminary Burses Fund, and Simon Scholarship Fund. Each endowment has been established with donor restricted funds. As required by generally accepted accounting principles, net assets associated with endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

Endowment Net Asset Composition by Type of Fund as of June 30, 2012 is as follows:

Total Net Temporarily Permanently Endowment Unrestricted Restricted Restricted Assets Donor-restricted Endowment Funds $ $ 143,696 $ 883,965 $ 1,027,661

Changes in endowment net assets as of June 30, 2012 are as follows:

Total Net Temporarily Permanently Endowment Unrestricted Restricted Restricted Assets Endowment Net Assets, Beginning of year $ $ 96,343 $ 877,915 $ 974,258 Contributions 15,630 6,050 21,680 Investment Income 55,166 55,166 Amounts Appropriated for Expenditure (23,443) (23,443) Endowment Net Assets, End ofYear $ $ 143 696 $ 883,965 $ 1 027,661

23 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 10- FUNCTIONAL ALLOCATION OF EXPENSES

The Diocese categorizes its expenses as follows:

Program expenses relate to activities that result in goods and services being distributed to beneficiaries that fulfill the purposes or mission for which the organization exists. The Diocese considers all expen·ses, excluding management and general and fund-raising expenses to be program expenses.

Management and general expenses relate to the administrative activities that are not identifiable with a single program or fund raising activity but that are indispensable to the conduct of those activities and to the Diocese's existence.

Fund-raising expenses relate to activities that involve inducing potential donors to contribute financially or in-kind to the Diocese.

A summary of functional expenses for the year ended June 30, 2012 is as follows :

Program Expense $13,079,984 Management and General Expense 2,232,469 Fund-raising Expense 248,996 $15.561.449

NOTEll-FAIRVALUEMEASUREMENT

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

A portion of the Diocese investments are held in a pooled investment account with the Catholic Diocese of Jefferson City Fund. Pooled investments include common stocks, equity mutual funds, municipal bonds, U.S. government agency securities, fixed income mutual funds and cash and cash equivalents. The Diocese investments at June 30, 2012 were allocated 40% equities and 60% fixed income.

The Diocese deposits funds in excess of three months of operating needs in the Catholic Diocese of Jefferson City Fund. The Depositor's fund program operates similar to a money market account and pays interest on the deposited funds competitive with current market rates. Interest rates on deposits varied at June 30, 2012 from 1.75% to 3.75%, depending on the term ofthe deposit.

24 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 11-FAIR VALUE MEASUREMENT (Cont'd)

Fair values of assets measured on a recurring basis at June 30, 2012 are as follows:

Cost Fair Value Levell Level2

Pooled investments Equity securities $ 714,958 $ 720,348 $ 720,348 $ Fixed income securities 1,068,524 1,094,250 1,094,250

Depositor's Fund 1,395,134 1,395,134 1,395,134

Total $ 3,178,616 $ 3,209,732 $ 720,348 $ 2,489,384

NOTE 12- PROPERTY AND CASUALTY INSURANCE

The Diocese administers a property and casualty insurance program for the Diocese, parishes, schools and other Diocesan entities. The Diocese's risk management plan includes retention of the first $50,000 for each property claim and $250,000 of each general liability claim. There is also a separate deductible of$100,000 for wind peril claims. Claim amounts in excess ofthe self- insured retentions are covered by commercial excess insurance.

Generally accepted accounting principles require that a liability be accrued for reported claims as well as claims incurred but not reported. The Diocese has recorded a reserve for losses under this self-insured program of $286,987 at June 30, 2012 which includes a reserve for known losses and for estimated losses incurred but not reported. The estimated loss for incurred but not reported claims is based on an actuarial determination. Although management believes the reserve for losses is adequate, the ultimate liabilities may be in excess of or less than the amounts provided.

A summary of the activity in the reserve account for the year ended June 30, 2012 follows:

Property and casualty reserve at June 30, 2011 $ 313,728 Current year claims expense 247,991 Claims paid (352,724) Property and casualty reserve at June 30, 2012 $ 286,987

25 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 13- CONTINGENCIES

The Diocese has guaranteed regularly scheduled principal and interest payments with a cap of up to $300,000 per year to the Missouri Health and Educational Facilities Authority on behalf of Fr. Augustine Tolton Regional Catholic High School for construction bonds. The bonds have a maturity date of June 15,2017.

The Diocese is involved in various pending or potential claims. At this time few of the matters have involved formal complaints, demands for specific remedies or litigation. Among the pending or potential legal claims against the Diocese some are related to allegations of past misconduct by priests. Based upon consultation with outside legal counsel, the ultimate resolution of the pending or potential claims cannot be predicted with certainty, thus it is impossible to estimate the amount or range of potential loss.

NOTE 14-PRIOR PERIOD ADJUSTMENTS

Prior to June 30, 2012, the Diocese did not recognize an estimated liability for claims incurred but not reported under their property and casualty insurance program. During the year ended June 30, 2012, the Diocese obtained an actuarial derived estimate of this liability at June 30, 2011 and recorded a prior period adjustment to recognize the estimated liability for claims incurred but not reported of $172,486. The effect of correction of this error was to increase accrued liabilities and decrease net assets at June 30, 2011 by this amount.

In June 2008 the Diocese transferred its real estate holdings to an irrevocable trust and named the Diocese of Jefferson City Real Estate Corporation as the trustee. The Diocese is the beneficial owner of the property transferred. During the year ended June 30, 2011, this property was removed from the assets of the Diocese reporting entity. A prior period adjustment has been made to record the Diocese's beneficial ownership in this property. This property is recorded at cost under Land, buildings and equipment in the accompanying Statement of Financial Position and depreciation is recognized in the related Statement of Activities. The effect of this adjustment was to increase the cost and related accumulated depreciation of land and buildings by $1,640,662 and $1,142,530, respectively as of July 1, 2011. Depreciation expense recognized for the year ended June 30, 2012 related to these adjustments was $37,393.

26 THE CATHOLIC DIOCESE OF JEFFERSON CITY CHANCERY OFFICE Jefferson City, Missouri

NOTES TO THE FINANCIAL STATEMENTS June 30, 2012

NOTE 15-DEPARTURE FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The Diocese sponsors a defmed benefit retirement and health plan for the retired and disabled priests of the Diocese as further discussed in Note 4. Generally accepted accounting principles (GAAP) require plan sponsors of defined benefit pension plans to recognize the funded status of its pension plans in the statement of financial position and recognize changes in funded status through changes in unrestricted net assets. This funded status is measured as the difference between the fair value of the plan assets and the projected benefit obligation which is actuarially determined. The Diocese accounts for the plan on a pay as you go basis, consequently, these financial statements do not recognize the funded status of the plan nor do they include significant disclosures required under GAAP for sponsors of defined benefit plans which rely on the actuarial valuation. The effect of this departure from accounting principles generally accepted in the United States of America on the Diocese's financial statements has not been determined.

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