Little progress in talks (over residential schools): finances show improvement.

The national church's financial situation has shown a slight improvement, mainly due to technical factors, but negotiations with the federal government over limiting liability from residential schools lawsuits continue to move at a slow pace.

However, a government spokesperson conceded in a recent interview, that Ottawa has virtually stopped adding churches to lawsuits as third parties, a key request the churches have been making.

Representatives of the four churches involved in the lawsuits, including The Anglican Church of Canada, met in Ottawa with federal negotiator Jack Stagg for a full day on Sept. 27, said Archdeacon Jim Boyles, Anglican general secretary and chair of the church group.

Both sides agreed not to comment on the content of the talks. "The churches and the government have agreed to keep a low profile," said Cindy Clegg, a spokesperson for Mr. Stagg. However, she added, "The federal government is very optimistic that we will have an agreement."

She also noted that the Justice Department has virtually ceased adding the churches to lawsuits naming the government as a defendant, as a good-faith gesture.

Mr. Boyles commented, "We continued our discussions and negotiations. They are sensitive negotiations and it's not helpful to negotiate through the media. We will report more publicly at some point whether they succeed or fail," he said in an interview.

It was the fifth negotiating session since Mr. Stagg was appointed by the Prime Minister in June to carry out the federal cabinet's mandate that the residential schools issue - which threatens to bankrupt the national Anglican church and other church groups -- be resolved.

The churches are seeking to have the government limit their liability. Hundreds of aboriginal Canadians are suing the federal government and various entities of the Anglican, Roman Catholic, United and Presbyterian churches, claiming damages for abuse suffered in a national residential school system that operated from the mid-nineteenth century to the 1970s.

According to published reports, the government is seeking to have the churches pay a portion of estimated liability (the figure of $95 million for the Anglican church has appeared in news reports, but not been confirmed), and the churches say they are unable to pay such huge amounts. The churches also would like "credit" for the many therapy programs they are supporting in native communities.

"The topics are difficult. There are different positions expressed. As time passes, the possibility of an agreement becomes more urgent for the Anglicans. I'm still mildly hopeful that we can reach an agreement," said Mr. Boyles.

The church committee expects to meet Mr. Stagg again sometime in October, Mr. Boyles said.

Meanwhile, staff at General Synod headquarters in Toronto heard that the national office's financial resources will be able to hold out beyond the end of 2001. "We've said we are going to run out of liquid assets by the end of this year. That will not quite happen. Our assets are diminishing but not quite as fast as we thought," Mr. Boyles told a meeting of staff in mid-September at the national office.

Legal costs have declined, he said, because "we've directed our lawyers across the country to stop spending money at the rate they were spending money." In other words, he said, they've been directed to do only those things mandated by the courts.

Legal expenses are now running at about $80,000 per month, instead of $100,000 per month in the first half of the year, said Jim Cullen, director of finance, in an interview. "We've said we'll have legal costs of $1.2 million (for 2001). It'll probably be about $1 million or $900,000," he said.

Another factor is "slow settlement of claims" said Mr. Cullen. "We have a large liability there but payment has been deferred during appeal of the Lytton case," he added. The church has been found liable for $1 million in damages stemming from several cases of sexual abuse at St. George's School in Lytton, B.C., but the decision is being appealed.

Income from the diocese is "holding up" this year, said Mr. Boyles. "We expect to come in with the income we planned. On the expenditure side, we are on track. We'll have a balanced budget for this year. Next year, the dioceses have indicated their commitment will hold up and next year will be a hold-the-line budget in terms of our expenditures," he said.

While the national office continues to pay legal fees from assets, not from income, it is looking at how it might realize the value of its fixed assets, one of which is the Anglican Book Centre, a nationally known retailer of religious books and other items.

"We've been talking to some dioceses that might be interested in taking it over," said Mr. Boyles. However, General Synod officers haven't definitely decided to take that course, he said.