By Gretchen Keiser, Staff Writer

ATLANTA—The proposed new Catholic school in west Cobb County will not be constructed unless it can be self-supporting and can be built and operated self-sufficiently without archdiocesan funds.

In addition, this free-standing model will apply to any other new schools built in the archdiocese and even to renovations of schools, according to officials of the Department of Catholic Education.

Parents in the St. Joseph School community in Marietta, and other interested families, will be sent questionnaires in the next few weeks to measure support for a financially self-sufficient school and the tuition rates that would be tied to that model.

It is projected that parents would need to raise $3 million in initial capital. This would be applied to the cost of building the new school, which is currently estimated to be about $24 million. The school community would have to service the remaining $21 million debt. School tuition would have to be set at approximately $6,300 for the first year of operation and would have to increase “moderately” after that, according to a Jan. 24 letter to St. Joseph School parents from Donald T. Sasso, Secretary for Education.

“This is a tremendous financial leap from where St. Joseph School is presently and the survey is designed to measure the commitment of the community to meet these financial necessities,” Sasso wrote.

While it had been projected previously that the school could possibly open in August 2002, with the new financial model proposed for the school, and with the new data gathering, feasibility studies and other work that would be needed, that date “is an impossibility,” the letter said.

In fact, the proposed school is not a certainty at all unless the community supports this self-funding model.

“The data gathered will determine when and if construction can go forward along any timeline,” the letter said.

For a community that went to bat aggressively to support and win needed zoning for the proposed new school and that struggled emotionally with the question of leaving the site of the original school, this is distressing news.

“There was a deep division over this (proposed new school) here,” said Father Paul Berny, pastor of St. Joseph’s Parish. Town hall meetings and other emotional sessions took place in order to win support for moving St. Joseph’s School to the new west Cobb site. Some left the parish as part of their reactions to it, he said, while others lobbied intensively and with great commitment of time and energy for the building of the new school at the new site. Only this past fall it seemed the process would reach closure with the building of the new school. Now that is in question.

“Now all we’ve done is cause division and we’re back to square one,” Father Berny said with emotion Jan. 30. “Now there is so much uncertainty about this.”

While still studying the financial information, the pastor said he was deeply concerned.

“I don’t see any feasible way, without an archdiocesan (financial) commitment, that we can move forward,” he said. “I don’t see how it’s possible financially for the parents of the school to build a new school. It would certainly put tuition outside an affordable range for families.”

Kathi Stearns, vice chancellor for special projects for the archdiocese, acknowledged that “it has been a very painful process for the community.”

“It has been a very difficult decision for the archbishop and the archdiocese,” she said. “We want to build more schools, but we have to be fiscally responsible.”

The new financial model changes a funding approach for schools taken by the archdiocese since 1998. According to the letter sent by Sasso to parents, Archbishop John F. Donoghue has stated that this new model will apply to all new schools, except those termed “an extraordinary mission.”

“Archbishop Donoghue has mandated that any new schools, unless they are designated as an extraordinary mission of the Archdiocese, must be stand-alone financially solvent institutions,” the letter said.

The change has come about because of debt that has already been taken on by the archdiocese from recent school projects, including building the five new schools, which opened in 1999 and 2000, and building an addition to St. Pius X High School in the late 1990s. Also, the two new Catholic high schools opened with low enrollment and, as a result, have deficits that realistically will continue for several more years until they are at capacity. This has added to the debt that must be handled by the archdiocese.

Under an ad hoc task force model set in 1998, new schools were to contribute one-third of their debt repayment over a 20-year period back into an education fund. Archbishop Donoghue, in light of a variety of developments, has decided instead to forgive the debts of the five new schools.

The archdiocese constructed the five new schools—three elementary schools and two high schools-under a new entity of the archdiocese called Catholic Education of North Georgia, Inc.

The land acquisition and construction costs are being paid for through a variety of funding sources. One source is $12 million collected in the 1997 Capital Campaign, “Building the Church of Tomorrow,” for Catholic schools.

Borrowing was also used by the archdiocese to build the elementary schools and bond issues were sold to cover the cost of the two high schools.

The total indebtedness is estimated at approximately $80 million by Gary Meader, chief financial officer for the Department of Catholic Education. This includes two bond issues totaling $46.9 million for the two high schools and a bond issue of $4.28 million for the St. Pius X High School addition. It also includes debt on the line of credit for the building of the three new elementary schools and for a small portion of the construction of the other schools, which could not be included in the bond issues. This debt on the line of credit totals $25.625 million, Meader said.

Construction costs were approximately $8.5 million apiece for Queen of Angels School, Roswell, and Holy Redeemer School, Alpharetta, and $6.8 million for Our Lady of Victory School, Tyrone, according to Michael McNamara, chief financial officer of the archdiocese.

In addition, the high schools did not open last fall with full enrollment in their freshman and sophomore classes. Blessed Trinity High School in Roswell, a 1,000-student school, which was targeted to open with 500 students in those two grades, has approximately 213 students this year. Our Lady of Mercy High School in Fairburn, a 500-student school, which was targeted to open with 250 students in the ninth and tenth grades, has approximately 77 students this year. The high schools are operating at a deficit as a result.

“We built state-of-the-art facilities and the students did not come,” Stearns said. Although the archdiocese expects the high schools to reach capacity in the future, feasibility studies are now mandated for the proposed west Cobb school to ensure that enough families would send their children to the school.

Also the cost of operating the new schools, particularly the elementary schools, which opened in August 1999, was higher than anticipated, Stearns said. Salaries were higher than projected and there was miscommunication with the new school communities and between archdiocesan departments regarding the schools. “This new model addresses these misconceptions and misperceptions,” Stearns said.

The parents at St. Joseph School and surrounding Cobb County parishes lobbied strongly for the new school when neighbors of the proposed site opposed a Special Land Use Permit before the Cobb County Board of Commissioners. With strong public showing of support from Cobb County Catholics, the commissioners twice voted to grant the permit, clearing the way for construction of the new school.

The proposal has been to build a new Catholic elementary school and a new Catholic middle school on the site. The existing St. Joseph School, on the grounds of St. Joseph Parish, which operates at capacity with 475 students and lacks room to expand, was to have closed when the new school opened. The new schools combined were projected to serve a 1,000-student body.

“The recent financial difficulties we have experienced with school funding have brought about a new posture as regards new schools that are to be built,” Sasso said in an interview.

“This posture, which has been mandated by the archbishop, is that any new schools will have to be stand-alone, financially solvent institutions.”

“The archdiocese is not in a position to be amortizing any new debt.”

Sasso said the funding plan that was in place for the five new Catholics schools did not materialize.

“The plan fell apart due to the lack of communication that was taking place. There wasn’t enough income and expenses were greater than were initially projected,” he said. “Tuitions were not set at the levels they needed to be set at.”

Tuitions at the three elementary schools under Catholic Education of North Georgia are currently $4,100 a year.

The high schools “were a different problem,” Sasso said. The elementary schools opened at capacity, or near to capacity, without a great deal of marketing. The high schools needed to be marketed to attract students and were not marketed until very close to their opening dates. The first plan, to open with both ninth and tenth grades, was changed in early 2000 to open with only ninth grade. This reverted back to opening with ninth and tenth grades after Archbishop Donoghue replaced his Secretary for Education, Msgr. Terry W. Young, with Sasso and also named new vicars general. With extensive marketing last spring, the re-addition of the tenth grade and a new scholarship fund, the high schools are now launched and are growing in enrollment and will add 11th grades this coming fall.

As these events unfolded, the effort to move forward on the proposed west Cobb County school was ongoing, Sasso said. “The master plan was to allow for diocesan participation in the funding ... Once we really got into it we realized that the diocese could not fund further construction because of the debt it was carrying.”

“At the present time we can’t take on additional debt that has to be amortized immediately with bonds” such as would be the case with the west Cobb school, Meader said. “We don’t have the cash flows.”

He also said the archdiocese cannot take on the additional debt that has to be repaid should the school fail to meet its projections regarding enrollment.

Although the five new schools do not have to pay their construction debt, the schools will face tuition increases in order to cover their operating costs and they will be required to have balanced operating budgets, Sasso said.

McNamara said that the smaller schools, Our Lady of Victory School at 250 students and Our Lady of Mercy High School at 500 students, would not have carried any debt repayment in any case because it would be infeasible. He said that the two larger elementary schools and Blessed Trinity High School would have been expected to repay one-third of their debt. He said it was expected that the high school would have a deficit for a period of time and would not have been able to repay the one-third until some years in the future.

However, in meetings he attended with representatives from Queen of Angels School and Holy Redeemer School last spring, following a controversy over school funding and proposed budget cuts, it was communicated that the schools would not have to repay the construction debt.

Meader, the retired chief financial officer for Cotton States Insurance Group, who becomes full-time chief financial officer for the Department of Catholic Education in June, said that the plan he has developed, which has been approved by the archbishop, will use parish assessments already designated for Catholic schools to retire all the bond debt according to the bond issue terms and to retire the line of credit debt. Parishes currently contribute 15 percent of their offertory over $250,000 toward Catholic schools.

The bond issue terms extend forward approximately 25 years, Meader said. He projects conservatively that the line of credit debt can be paid off by approximately 2018. The debt also includes approximately $2.1 million remaining debt on St. John Neumann Regional School in Lilburn, Meader said.

“We’ve got a plan. We believe this plan will work,” Meader said. “We are going to work in enhancing the plan. You have a whole new management team in the Department of Education to go forward.”

Another piece of the plan, Meader said, is for all the Catholic schools of the archdiocese to contribute to a tuition assistance fund so that families can receive help to meet the cost of educating their children in Catholic schools.

Through the capital campaign of the archdiocese, a $20 million tuition assistance endowment fund was created. The earnings from the fund were to be applied to tuition assistance.

“We will use part of the earnings of that fund to provide for tuition assistance,” Meader said. However, he said, “that won’t be enough initially to cover all the tuition assistance we’ve got right now.”

The Independent School Consultants being used by the Department of Catholic Education at this time developed a proposal that will be utilized to build up tuition assistance further, Meader said.

Each elementary school will be assessed $66 per student and each high school will be assessed $100 per student to create an additional tuition assistance fund and those assessments on a per student basis will increase in proportion to whatever tuition increases occur at that school in the future. For example, if there is a 5 percent increase in tuition, there will be a 5 percent increase in the assessment for tuition assistance.

This assessment will apply to all the archdiocesan Catholic schools, Stearns said. “It is everybody’s responsibility to help with tuition assistance.”

While the details of the self-funding model are being absorbed by parents at St. Joseph School, parishioner Jay Mehaffey, who has served on a school advisory board and as parish zoning liaison for the west Cobb school site, is encouraging parents to express their opinions on the forthcoming survey. “I think that is where you are going to hear the voice of the parents,” he said.

Asked to assess parents’ reactions, Mehaffey said, “First and foremost, parents are angry. Parents believe they have been misled. A number of parents believe that they were promised this new school.”

While the capital campaign did not include the west Cobb County school, Mehaffey said some of those who went to homes soliciting donations to the campaign did tell people “that monies would, in fact, fund that school.”

Some people that gave “believed their monies would go to that new school,” he said, although he agrees that it was not among the five new schools.

Mehaffey said he is encouraging people to “be prayerful, be respectful, be constructive.”

“When that survey comes to you, that is your place to express your feedback.”

Tuition at St. Joseph’s School is currently $3,250. To propose tuition in the range of $6,300 is troubling to him as a matter of principle, as well as financially, he said.

“That’s not what I fought for. I didn’t fight for an elitist Catholic school. I fought for a true school for the masses.”

Among the approximately 130 families who have children at St. Joseph’s School currently, that tuition figure is viewed as very high, he said. In the greater community of west Cobb County, he added, there are probably families very committed to Catholic education who may be able to pay a higher tuition. Finding common ground between those viewpoints, those needs and constituencies may be the great challenge, he said.