state arts action network
A-F G-K L-R S-Z
SAAN Professional Development Conference Call Notes
May 17, 2006
4:00 p.m.
Topic: State Cultural Trusts
Speakers:
John Barsness, Montana Arts
Christina Garcia, Missouri Citizens for the Arts
Jan Selman, Arts Leadership League of Georgia
Sheila Smith, Programs Committee chair welcomed SAAN members to this quarter’s professional development conference call. Today’s topic is State Cultural Trusts. There is quite a bit of interest in alternative funding for arts and culture. Many states are running deficits and state trusts are one thing that is on peoples' minds.
John Barsness
Montana Arts
John began by offering a little history. The state of Montana taxed each ton of coal at 30 percent. This tax was called the Severance Tax. The tax rate is currently at 12 percent after a change in the mid-80s. The state of Montana amassed a billion dollars in the Coal Trust Fund. Half of this amount was invested, the other half was put into other projects. Only a supermajority of 75 percent of the state legislature can spend the investment portion. Thus, it has never been touched. In 1978, Montana Cultural Advocacy organizations worked hard to set aside one and one-half percent of interest for cultural and artists' interests. They needed to repair infrastructure, etc. Some was spent on mural with a little left over. That money was given out in grants. That was the beginnings of the Montana Cultural Trust. There are about $8 million in it today. It has been down to $4 million at one point.
The Cultural Trust worked very hard to establish this fund. The Cultural Trust Fund doesn’t have the 75 percent legislative protection. They are one of the last earmark funds that is still floating around. This is dangerous as a bare legislative majority can eliminate it.
The interest rate varies with market conditions, so the amount awarded in each session varies. The trust fund forecasts out for three years.
The grants at the beginning, 1978, were informal. Since then, 16 citizens are appointed to a panel to set policy on how grants should be given out and rank applications.
After they rank the applications, then the fiscal analysis comes in and makes them lower the total money available.
On average, the Cultural Trust awards anywhere from $300,000 to $1 million per two-year legislative session. About 11,000 grants have been awarded in the history of the trust fund.
In the second year, the money is often reduced.
Applications are due by August 1 in even numbered years. The panel reviews applications September–October. The applicants must testify before a congressional committee. The congressional committee likes to hear from them as it is direct way for the legislators to see where the grant money is going. There are normally about 90 testimonials at three minutes each, with two minutes for questions.
The congressional committee can adjust amounts paid out. In general, they only change about 10 percent of awards.
Fifty-five percent of the grant money goes to arts organizations. Forty-five percent goes to the humanities.
The bill goes through both houses. FYI, the President of Senate, who sponsored the bill, is running against Conrad Burns.
The governor signs it in April and grantees get notified after July 1. The money doesn’t get awarded until January in order to get more interest built up. Thus, the groups are spending the matching funds July–January.
Questions:
Sheila: Would you prefer that this process go through a normal appropriations process?
John: No, he likes it this way as the money is dedicated.
They want to try to get better ways to keep money from being cut, etc.
Allen Hoffman: When you say that reductions are made, what then happens to the surplus amounts?
John: The surplus stays in fund, but not available until the next session.
Marla Musick: Are the grants on a matching basis?
John: Yes, one to one either a cash match or an kind match.
Drew Buchholz: Does the money not go to state arts council?
John: Yes, the arts council administers it, but the legislature tells them where the grant money goes.
Drew: Do more powerful legislators get more money from their district?
John: No, not really.
Monica from NV: Are these moneys in addition to regular appropriations to the state arts council?
John: Yes, they have a separate budget, and they do have additional grant programs.
Drew: Has the legislature ever tried to cut the arts budget because the trust exists?
John: Yes, they keep trying.
Judy Weiner: Political football?
John: While it is legal to make an end run for a separate bill to obtain a grant, this has not happened. Montana legislators do not touch this, or it could be a free for all. Montana has an open meeting law which allows for a public comment period at all meetings of nonprofits.
Allen: Regarding the reductions. Who makes these decisions to make a 10 percent, etc. reduction?
John: It is actually written into the language of the bill. Fiscal analysis makes this call.
Allen: This is not a political decision, but fiscal oversight?
John: Yes
Drew: In the trust fund's first years, was money granted out or was the trust allowed time to grow?
(John was unsure, but thinks money was spent that first year based upon what was guessed would be there.)
Drew: Just spending the interest?
John: Yes, but have to guard against the principle being absorbed into the general fund.
Christina Garcia
Missouri Citizens for the Arts
What is it?
The Missouri Cultural Trust Fund is an invested endowment, established in 1998, that is funded by 60 percent of the income tax collected from nonresident professional athletes and entertainers. Enabling legislation: Chapter 185, Section 185.100 and Chapter 143, Section 143.183 of the Missouri Revised Statutes.
The corpus of the trust was projected to grow to $100 million over a period of time. The interest was earmarked for funding two new grant programs.
Who manages it?
The trust fund is overseen by the Missouri Arts Council Cultural Trust Board and managed by the State Treasurer.
Where are the funds spent?
Originally, the trust was intended to strengthen Missouri arts organizations through two stabilization programs: Capital Incentive Program and Organizational Development Program.
The Capital Incentive Program (CIP) supported endowment fundraising for long-term earned income, and construction fundraising for new or rehabilitated arts facilities. A list of the CIP program participants who privately raised $25 million is below.
The Organizational Development Program was a program for small, midsized, and minority arts organizations. Examples of projects include: strategic planning, board and staff development, marketing and fundraising, and technology training and acquisition. This second program was never implemented due to budget cuts.
When did the original intent of the trust change?
In FY 2002, appropriations for the trust and the Missouri Arts Council general revenue budgets were severely reduced (eliminated entirely in FY 2004). The programs of the trust were suspended. The Missouri Arts Council began spending the trust’s interest and corpus on administration, operations, and its 40-year-old grant programs, since general revenue was virtually eliminated.
Capital Incentive Program Participants FY 1999–FY 2001
18th and Vine Authority, Kansas City—Established a $105,000 endowment for the American Jazz Museum
The Albrecht-Kemper Museum, St. Joseph—Small art museum raised $687,000 for endowment
Friends of Chamber Music, Kansas City—Raised $541,000 for endowment
Friends of Historic Boonville—Community arts organization raised $240,000 for renovation of Thespian Hall
Forum for Contemporary Art, St. Louis—Gallery raised $1,400,824 for construction of new facility
Gillioz Theatre Arts Center, Springfield—Raised $280,500 for renovation of this Springfield landmark
Juanita K. Hammons Hall for the Performing Arts, Springfield—Raised $89,500 for endowment
Kansas City Art Institute, Kansas City—College for the Fine Arts raised $1,000,000 for gallery renovation
Kansas City Artists Coalition—Artist co-op raised $30,000 for endowment
Kansas City Ballet—Missouri’s largest ballet company raised $2,281,750 for endowment and construction of a permanent home adjacent to the new Performing Arts Center
Kansas City Symphony—Symphony raised $3,700,000 for endowment
Kemper Museum of Contemporary Art, Kansas City—Museum raised $60,000 for first-ever endowment
KSMU Public Radio, Springfield—Raised $150,000 for endowment
Laumeier International Sculpture Park, St. Louis—Sculpture park raised $16,000 for first endowment
Lyric Opera of Kansas City—First-ever endowment campaign raised $3,300,000
Nelson-Atkins Museum of Art, Kansas City—Museum raised $3,250,000 for new facility and endowment
Opera Theatre of Saint Louis—Renowned opera theater raised $1,300,000 for endowment
Performing Arts Foundation of Kansas City—Raised $125,000 for the Folly Theatre endowment
Saint Louis Symphony Society—World famous symphony raised $1,000,000 for endowment
Sheldon Arts Foundation, St. Louis—Concert hall and gallery raised $143,000 for first-ever endowment
Sikeston Cultural Development Corporation—Raised $200,000 for renovation of Sikeston depot for a cultural center and to establish an endowment
State Fair Community College, Sedalia—College raised $2,000,000 for new contemporary art museum
Springfield Area Arts Council—Local arts council raised $1,693,449 for cultural endowment to benefit 24 arts organizations in 19 southwest Missouri communities
Springfield Symphony—Symphony raised $179,984 for endowment
Webster University Conservatory, The Repertory Theatre of St. Louis, and Opera Theatre St. Louis—In a joint project, raised $1,740,500 for renovation of Loretto-Hilton Center
Cultural Trust Board voted to cancel all contracts, etc. in 2005. This pitted smaller groups against larger organizations. There was a huge backlash. Trust participants threatened lawsuits. The new chair of the arts council resigned.
In February 2006, the Cultural Trust Board voted to reinstate their contracts. But nothing was to paid out unless the legislature put in $3,000,000 per year.
This current budget year, the legislature has appropriated $600,000. The governor has recommended another $2.5 million. This is going through the legislative process.
The trust fund is projected to be depleted by end of 2007 if changes are not made. She is uncertain if legislature will restore funding.
Another issue that they are dealing with is legislation to just eliminate the trust fund.
I hope this brief summary gives some insight on Missouri’s Cultural Trust Fund and what has happened over the years. I’m always happy to answer more questions if you wish.
Marla: Please explain the status of the corpus.
Christina: The corpus or principle has been spent down. They would be a 1 to 2 match in general. Instead of the corpus growing $100,000 annually. It has been spent down to $4 million.
Allen: Please go back to status of the initiate in Kansas City that failed two years ago for stadium deal/tax.
Christina: Stadiums wanted funds for new stadium. The arts tried to team with them, giving them 60 percent and leaving the rest for arts and other groups. The stadium signed a new lease on the second year of the fight and it was dropped. They dodged a bullet.
Christina: They are spending about $3 million a year from the trust. Basically spending what they are taking in.
Sheila: Have private organizations stopped contributing?
Christina: Yes
Monica: Is the administration of trusts set up differently? Is this the cause of the problems?
Christina: She has heard trust has been mismanaged for years. It has become a nightmare to everyone involved.
Drew: They have a senator that just introduced a nonresident athlete bill.
Christina: The estimate was that the state would get $2-3 million annually. The actual collection was $20,000,000. The state organizations underreported the collection of dollars.
Drew: Are the organizations/promoters struggling to get entertainers to fill out forms?
Christina: No, this has been pretty much worked out.
Jan Selman
Arts Leadership League of Georgia
Quick history: The drive to establish a trust fund started when she was state arts council chair, under Governor Zell Miller. He liked the idea of a cultural trust. She approached American Express to be a partner. They were excited about it. She hired a consultant to look this over. At that time, Governor Barns came in and he wasn’t interested in a cultural trust, at least in his first term. When Governor Purdue came in, a new director was hired to replace Jan.
This spring, the current executive director of the State Arts Council decided to move forward with the cultural trust fund idea.
Unfortunately, the executive director did it in a very stealthy mode. She called a statewide meeting for the next day meeting on the legislative proposal.
She had also arranged a press conference for the next Monday. If there had been any disagreement, the legislator would have been left out to dry.
Some more history, each legislative chamber appointed a “Hawk,” who can go into any committee meeting to speak or vote. He basically enforces the Speaker's wishes.
This bill had a Hawk attached to it. The arts community was taken off guard, and because of the way it was handled, the field became suspicious and threatened to boycott the trust fund as it had numerous flaws. The executive director went into hiding; she was sick for four weeks. Thus, there was nobody there to answer questions. No attempt to educate the field as to why it is a good idea.
Her organization has been trying to figure out what to do.
They issued a legislative report to the field when it came out that can be viewed in three ways:
- Enabling legislation
- Appropriations of $1 million of seed money
- Set up of 501c3 which would be the trust fund
All trustees were to be appointed by the governor and the legislature.
The Speaker Pro Tem is the sponsor of the legislation, and he is a very strong arts supporter. Jan shared with him other legislation that she had received from SAAN members.
When Jan realized this flawed piece of legislation was going to pass, she asked the Speaker Pro Tem to move it to a study committee so no action would take place this year, which he did. This bought them some time.
They then held a think tank to figure out how this should operate.
She has been attempting to contact other states, thanks to the SAAN and to John and Christina.
Her organization will serve as a resource for the study committee. At recent GACAA conference a couple weeks ago, the chair of appropriations committee, Senator Jack Hill, was a guest speaker. He has decided that the Senate will also do a study committee for funding for the arts.
That is where they are now.
Shiela: Those who already have trusts, what is your advice to Jan?
Allen: Can Americans for the Arts put together put together a summary sheet for cultural trusts to help out groups like Jan’s. The National Council of State Legislatures might also have summaries.
Gretchen: Create a grid comparison without the SAAN making judgments. Know who in the state to contact to get the answers, etc.
Allen: How it works in Connecticut. Starting in 1998, they have had an Arts Endowment Fund for arts related organizations only. There is currently $17 million in the fund right now. At year end, the principle tosses off interest—about $800,000 a year and that money can not be touched. It is reported three months after the fiscal year ends and three months after that it is distributed. This formula encourages organizations to raise their own private capital. The more they raise, the more they get. They have about 90 organizations that get part of this money around the year. The distribution ranges from $300 to $90,000. They are rewarded for increasing their own contributions.
Monica: If the interest in not touchable by the legislature, how was this built in to the authorizing legislation?
Allen: The reason is that the office of the treasurer does the investment, which is a totally separate operation. You get what you get. The principle increased by about a million dollars each year.
Monica: How does the principle increase?
Allen: In the last six or so years, $1 million goes through bonds to endowment fund.
In 1988, they started with a $3 million investment. From 1989 to 1994, the legislative investment ranged from quarter of million to half a million per year. With the 1995 investment, they were regular for the next few years.
In order to have a successful and stable trust fund, you want to look to secure the money to “guarantee” that the money will be there. You will need to build it into your statutes, which is not an easy task.
Sheila: Thanks to everyone, this call was helpful. She talked about the upcoming conference and the professional development sessions.
