By Bruce Schreiner
The Associated Press

LOUISVILLE - A $25.7 million settlement with sexual-abuse victims drained much of the Louisville Catholic archdiocese's available funds and will force deeper spending cuts and higher parish assessments, a church official said Wednesday.

The archdiocese outlined its financial situation after the near-record settlement in July with 243 victims who claimed decades of abuse by priests and others affiliated with the church.

The assessments, now at 5 percent of parish income, will grow to 8 percent by June 2005 to help generate more money for the archdiocese, said Brian Reynolds, chancellor for the archdiocese.

Parish contributions go to help support retired priests, fund the diocesan newspaper and support archdiocese programs and services.

The archdiocese has 123 parishes in 24 Kentucky counties.

The archdiocese also will cut back community service grants as well as reduce tuition assistance for students attending Catholic high schools in Jefferson and Nelson counties, Reynolds said in an interview.

The archdiocese previously announced it was cutting 50 staff positions, 20 percent of its work force, as part of $2.4 million in spending reductions.

"I'm pleased that we have come up with a reasonable plan to address present finances and to rebuild the financial security for the future," Reynolds said.

The financial update was included in a mailing to 72,000 Catholic households that included an apology from Archbishop Thomas C. Kelly for failing to "respond appropriately" to victims and offenders.

Kelly said the church will emphasize education, outreach and prevention in response to "this terrible crime."

The archdiocese said its investments totaled $60.7 million on June 30, days before the church paid the settlement. About half of that - $29.6 million - could be tapped to pay the settlement. Most of the rest was locked in endowments and restricted investments, the archdiocese said.

Besides increasing parish assessments, the archdiocese will sell two properties to generate more money.

Parish assessment will increase to 7 percent on Jan. 1, and will go up another 1 percent in June 2005, Reynolds said. Each percentage point increase is expected to raise an extra $1 million, he said. Reynolds said the higher assessment will still remain among the lowest in the nation.

Also being cut: $1.7 million for expansion of Trinity High School and about $225,000 of tuition assistance for Catholic high school students.

Parishioners were told the settlement was not covered by insurance because most of the sex-abuse cases dated from the 1950s to 1970s, before the archdiocese's insurance was packaged under one carrier.

The archdiocese did receive $3.3 million from insurance companies for legal expenses related to sex-abuse litigation.

In his letter to parishioners, Kelly said he had "learned a great deal about sexual abuse and its impact on people's lives and about changes that need to be made in how the church responds to this terrible crime.

"I apologize for those times when I failed to respond appropriately to victims and offenders," Kelly said.

"My pledge is to work humbly and vigorously with you to make sure our church is accountable, compassionate and just in dealing with the crime of childhood sexual abuse."