Facing only the second deficit in its 34-year history, the Loft Literary Center said Tuesday it is cutting two full-time program employees and imposing pay cuts ranging from 1 percent to 6 percent on the remaining staff of 16. Leadership will take the biggest percentage cuts to their pay.

"There was no major event that precipitated it with the exception that our endowment, which we do draw upon, has taken a substantial downturn," said Beth Schoeppler, director of development and communications for the Minneapolis-based nonprofit.

The last time the center ran a deficit was in 1992 in the wake of a recession that was significantly milder than this one. The Loft’s latest cutbacks follow news last December of similar reductions at Intermedia Arts and In the Heart of the Beast Puppet and Mask Theatre.  

The Loft’s cuts, which include a reduction in the employee retirement match, are expected to save about $39,000 for the fiscal year ending Aug. 31 and about $88,000 in 2010. Schoeppler said the cuts were designed to "get out in front" of an unpredictable economy without hurting the center’s core mission of teaching and promoting writing. The Loft derives most of its income from class tuition, foundation grants, individual donors and memberships. But even the cuts will not stave off deficits, which the center plans to cover with accumulated surpluses.

"We did have two or three large nonrenewable project grants we knew were going to end ... so we looked at the decreasing promise of being able to replace them because of the economy and the way funders are looking at new projects," Schoeppler said. "We wanted to be as prudent as we can. We will have a deficit this year unless a miracle occurs. We’re trying to make (the cutbacks) as small as possible without cutting programs."

The center’s endowment plummeted 29 percent to about $1.6 million during the stock market freefall, but its draw of about $85,000 is a "tiny portion" of its $2 million annual budget, said finance director Nancy Gaschott. She’s holding out hope of reporting better news at the end of the center’s fiscal year in August.

"Maybe there won’t be a deficit and maybe the stimulus will work faster than we’re expecting," she said. "But we tend to be a very fiscally conservative organization and that has served us well for 34 years."

Want to help the Loft work through its slump, and perhaps your own in a down economy? Consider taking a class, Schoeppler says.

The center already is seeing unemployed folks coming through the door and inquiring about writing classes and scholarships. How that demand translates into income remains to be seen, she says. While fall registration was up, spring registration is still under way. "We have a real strong sense of people saying, 'now is the time for me to pursue a dream' ... whether it’s to process their feelings, or engage their creativity as they’re going through a job search, or writing the next New York Times bestseller."

Find information about classes here, and get busy on that memoir in time for May's memoir festival.