• The Archdiocese of Milwaukee is facing a $3 million budget deficit
• The deficit is due to lawsuit settlements and a failed attempt to sell its central office building
• Trouble selling the Cousins Center, which houses most of its central offices, is likely due to the poor real estate market
• More trained lay ministers may qualify parishes for certain ministries, allowing the archdiocese to cut spending

High operating costs and lawsuit settlements contributed to a $3 million deficit in this year's budget for the Archdiocese of Milwaukee.

The archdiocese's Chief Financial Officer John Marek said financial planners were aware of the deficit when the current budget was drafted last year.

The archdiocese tapped into its reserve savings to pay settlements for several sexual abuse lawsuits in California in 2006. Now, Marek said, much of those savings are depleted and the archdiocese was forced into debt to cover costs.

The archdiocese hoped to sell the Archbishop Cousins Catholic Center, 3501 S. Lake Drive, where most of its central offices have been housed for the last 20 years, Marek said. But a company interested in purchasing the center pulled out and the Cousins Center has not sold in more than a year.

Because the center has not sold, unanticipated operating costs of running the offices in the center add to the deficits.

Expecting the center to be sold, the archdiocese leased office space at the St. Joseph Center, 1501 S. Layton Blvd., to house some department offices until the archdiocese purchased a new central location, he said. The leased space also adds to costs.

Sister Mary Ann Walsh, a spokeswoman at the United States Conference of Catholic Bishops, said every parish and diocese is expected to be self-sustaining.

While there is an association of financial advisors at the United States Conference of Catholic Bishops, she said she is not aware of any program or policy to aid an archdiocese in financial difficulty.

Mark J. Eppli, a Marquette professor of finance and a Robert B. Bell, Sr. chair of real estate, said the weak real estate market is a likely factor in buyers' hesitation to purchase the Cousins Center.

"It's clearly a buyers' market," Eppli said, because there is plenty of property for sale. But while property prices are low, it is difficult to get loans because of the country's slow economy.

Though there is plenty of space available on the market, he said, the recent loss of jobs decreases demand for big commercial properties like the Cousins Center, making lenders less willing to lend.

A big real estate project like the center often requires a lot of development, Eppli said. Redeveloping the land would take a lot of money and time. Coupled with slow economic growth rates, it could take many years before a company would be able to turn a profit, he said.

Eppli said it is a risky undertaking and many businesses lack the resources or will to invest in real estate.

"It's not, 'If you build it, they will come,' " he said.

A strategy the archdiocese could use, he said, is to reduce the carrying cost, or cost to own the property. He explained a company may be interested in the land but may not be sure if the property will be profitable.

The archdiocese could accept a refundable down payment in good faith from the company and take the property off the market for a while, reserving it in a sense for the company.

After the company researches the property and its cost and benefits, it can either purchase the land or take back its down payment, and the property will be put back on the market.

To fill the budget gap, the archdiocese plans to cut costs and increase revenue, Marek said.

The archbishop's annual Catholic Stewardship Appeal, a campaign for donations to fund ministry programs, is $400,000 over expectations, Marek said.

He said this money goes to programming and does not help fund operating costs or lawsuit settlements. Other sources of revenue are "on track" to surpass goals, he said.

Catholic grade schools are not affected by the archdiocesan deficit because each is funded by its own self-sustaining parish.

Another possibility being evaluated is delegating certain ministries provided by the archdiocese to the parish level. A new influx of trained lay ministers allows such programs to be taken off the archdiocesan budget and placed on parishes instead, Marek said.

"There may be things that don't need to be done at the diocesan level," he said.