Q & A from Joe Spaniol

A group of employees emailed Joe Spaniol with a number of questions and received these responses

    •    What agreement does the Diocese of St. Cloud have with Christian Brothers?
    ◦    We have the summary plan description.  We have a contractual agreement with them originating in the early 90’s

•    Are all of the 180 member organizations underfunded equally? Did some pay in adequately and some not?
    ◦    All 180 member organizations are underfunded equally, to our understanding.

    •    Are all member organizations subject to same payment schedules and payouts? Is the St. Cloud Diocese lumped in with all 180 member organizations? Did the same Christian Brothers notice go out to all 180 members?
    ◦    The notice you received was written specially for the Diocese of St. Cloud for our employees. Each member of the plan received their own specific numbers based on the number of individuals within the organization who are vested into the plan and the amount they have put in. Numbers were calculated for each organization based on the particular numbers/data from each site. The liabilities at each site would be different based on that, but share the same underfunded status percentage.

•    Who determined how much each member organization had to pay in to meet their employees’ payouts?
    ◦    Christian Brothers determined the payment schedule to stay within the plan to fund the employees vested into the plan.  This is based on the individual participant data information – (birth dates, dates of employment, current age earnings etc)

    •    Did each member decide what it would pay into a Christian Brothers plan or did Christian Brothers make that determination?
    ◦    Christian Brothers provided payment charts for members to choose the percentage of salary they would pay in for employees and there are corresponding accruals the retired employees are paid out based on those numbers. This was often a year to year decision at which level each sit would choose to pay-in.

    •    Annual statements were mailed to participants. Did these statements adequately reflect the financial status of Christian Brothers? The November, 2024, Summary of Financial Condition for the Plan year ending on June 30, 2024, makes no mention of any financial difficulties. When did Christian Brothers know that they couldn’t meet their obligations? This kind of problem cannot have happened in less than a year.
    ◦    Christian Brothers alerted us this year of this issue and there were no prior indications of this from them to member organizations.

    •    Why didn’t Christian Brothers contact individuals directly about this issue instead of going through the diocese?
    ◦    We are not sure why Chrisitan Brothers chose their communications methods as they did. We can guess that because this is an employer provided benefit, the employers will need to make decisions on how they will handle this issue. Once notified we began discussions on how we would be facing this as an organization and created our communication plan out of that.

    •    Who monitored the Christian Brothers funds to assure that they were adequate to meet the payouts to members? Did/does the Diocese of St. Cloud have a review board to monitor Christian Brothers finances?
    ◦    The Diocese hired Christian Brothers to manage these funds.  Because this is a multi-employer pension plan we are not required to carry the plan on our balance sheet. 

    •    Does Christian Brothers have insurance to cover their commitments? (I understand that the federal government backs some retirement plans. Does the retirement plan held by Christian Brothers fall under a covered government or any other insurance plan?)
    ◦    This plan does not fall under government covered insurance for retirement plans. We are looking into all options for funding, including Christian Brothers' obligations.

    •    What safeguards did Christian Brothers have in place? Their actions seem irresponsible.
    ◦    The plan has a “valuation” done annually.  The actuary then communicates to CBS the funding etc. 

    •    Only lay people are affected according to the diocesan letter. Are other current or former diocesan employees covered under separate plans which are unaffected?
    ◦    This affects all lay people of all parishes and schools in the diocese, as well as diocesan employees. Priests have a separate plan.

    •    Are lay people who worked within the diocese represented on the team Bishop Neary appointed? If they are not represented, they should be appointed immediately.
    ◦    Yes, the team represents mostly people at a variety of places within their careers and longevity who are in this plan and affected by it.

    •    What “options” are we looking at to right the situation?
    ◦    We are currently and thoroughly investigating with the expertise of USI every option for what may happen next so that we can best identify the pros and cons of each and what will be best for our employees/retirees moving forward. These include but are not limited to staying with this plan and finding ways to fund the shortcoming and a variety of strategies that include leaving Christian Brothers and managing this through a new plan. 

    •    Could Christian Brothers file for bankruptcy? What is the worst outcome?
    ◦    We are not sure the future of Christian Brothers, but this is a possibility with any organization.  Christian Brothers has many arms, including investments, insurance, 403-B plans. 

    •    Can member organizations remove themselves and their funds from CB?
    ◦    Yes, they can. And we are looking at what these options look like and weighing them with every other option.

Joseph Spaniol
CFO
Finance Office
Diocese of Saint Cloud
214 3rd Avenue South, St. Cloud, MN 56302
p=320.529.4606
C=320-249-0963