Letter says decline of stock market related to the coronavirus prompted compensation fund’s 90-day pause.

The COVID-19 pandemic has gone far beyond keeping parishioners out of church and absent from Mass in the Catholic Diocese of Erie.

The diocese said the crisis has so affected its finances that the diocese has suspended payments from its special fund for victims of clergy sexual abuse.

The 13-county diocese, which on March 17 suspended public Masses due to the coronavirus, has halted operation of the compensation fund for at least 90 days because of the sharp decline in the stock market related the coronavirus outbreak, the fund’s administrators and the diocese said on Tuesday.

They both indicated that the downturn on Wall Street has significantly reduced the value of the diocese’s investments.

Neither the fund nor the diocese detailed the amount of the losses, but they put more pressure on financial resources that Erie Catholic Bishop Lawrence Persico said were under stress even before the pandemic.

The diocese’s expenses related to the clergy abuse scandal, including payments to the victims, had strained the diocese’s finances but they remained solvent, Persico said on Feb. 19, after the Catholic Diocese of Harrisburg filed for bankruptcy.

The Catholic Diocese of Erie created its fund for victims, called the Independent Survivors’ Reparation Program, a year ago, and the diocese since then has paid out about $6 million in claims to at least 50 victims or survivors, according to the diocese. About 40 claims remain unresolved and they are on hold during the 90-day pause of the fund’s operation, the diocese said.

The independent administrators of the fund are Kenneth Feinberg and Camille Biros, based in Washington, D.C. They told claimants’ lawyers of the suspension of the fund in a letter on Tuesday.

"The Diocese has notified us that the ISRP is funded by a line of credit, which is secured by the Diocese’s historic investments," according to the letter, a copy of which the Erie Times-News received from the law firm of Adam Horowitz, of Fort Lauderdale, Florida.

"The unforeseeable and severe decline of the stock market caused by the COVID-19 pandemic has significantly devalued the Diocese’s historic investments," according to the letter. "This has caused the bank to reduce the Diocese’s line of credit, which has negatively impacted its ability to make payments as part of the ISRP at this time."

After the 90-day suspension, the diocese will "reevaluate the need for a continued suspension of the ISRP," according to the letter.

The administrators said they will stop evaluating claims during the 90 days. The diocese said the claimants will be notified when the reviews resume.

In a statement on Tuesday, the diocese said "the move will affect the approximately 40 remaining claimants who have filed claims that have yet to be determined. All other claimants who have accepted settlements have already been paid; payments also will be made to those claimants whose payment is pending."

The national organization Survivors Network of those Abused by Priests criticized the decision.

"This is a hurtful and deceitful move that clearly shows that the best pathway for survivors to get justice is through the court system and not church-run programs," S.N.A.P. said in a statement.

The Catholic Diocese of Erie joined a number of the state’s other Roman Catholic dioceses in creating the separate compensation funds in response to Attorney General Josh Shapiro’s call for the General Assembly to amend the civil statute of limitations to allow for the filing of suits over old incidents of abuse.

Shapiro advocated for the changes following his office’s release, in August 2018, of the 884-page grand jury report that detailed allegations of child sexual abuse against 301 "predator priests" in the Roman Catholic Church across Pennsylvania over the past 70 years.

In December, when Persico most recently released figures on the Catholic Diocese of Erie’s fund, he said the diocese had spent $12 million on abuse-related claims and costs, including $5.9 million in payouts from the compensation fund. The Erie diocese has not disclosed how much money it has available for its fund, though Persico has said the diocese is covering the payouts and related expenses using budget surpluses and income from investments rather than giving at the parish level.

On Wall Street, the Dow Jones industrial average has lost as much as a third of its value over the last month, from its record high on Feb. 12. The Dow rose by 2,100 points, or 11.37 percent, on Tuesday as federal lawmakers worked on a financial stimulus package.

In their letter about the suspension of the Catholic Diocese of Erie’s fund, the administrators described the pandemic, the stock market drop and the effect on the diocese’s finances "unforeseen and unprecedented developments."

Contact Ed Palattella at epalattella@timesnews.com. Follow him on Twitter @ETNpalattella.

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