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MN Orchestra board member: We seek our musicians' partnership to build a strong future

orchestra players
Courtesy of the Minnesota Orchestra/Greg Helgeson
We are asking for our musicians’ partnership in building the Minnesota Orchestra's future.

I welcome the opportunity to respond to Paula and Cy DeCosse’s recent questions to Minnesota Orchestra board and management. As a member of the orchestra’s board — which bears a fiduciary responsibility to the organization — and as a personal donor to the orchestra, it is important to me that these issues are answered fully.

Why is management only now tackling the budget deficits that have been mounting for at least three years? 

  • Management did not wait until now to tackle this structural deficit problem. Management has been assessing the problem and its options continually since before the recession even hit.
  • To understand how we’ve tackled the issue, it’s important to recognize that our organization has two primary cost structures: our administrative budgets and staffing costs, and our musicians’ costs.  
  • With regard to administrative budgets and staffing, our management made immediate and significant cutbacks in response to the recession. Orchestra staff took a wage freeze, salary reduction and had their pension contributions from the Minnesota Orchestral Association reduced by more than 40 percent — and the size of the staff has decreased by 20 percent since 2009.   (We’ve done a very good job of managing these costs over the long term, too. Over the last decade, all costs in the organization — minus those of musician costs — have actually decreased by 6 percent.)  
  • With regard to our musicians, who are a unionized work force governed by a labor contract, we don’t have the flexibility to make immediate changes in response to the economy. The best we can do is request that our players consider midterm contract modifications, and this is exactly what we did in both 2009 and 2010. The musicians agreed to a one-year wage freeze in 2009, but they turned down our request for a 22 percent salary reduction in 2010. It was the musicians’ legal right to do so, but it has made the cliff we face today all the steeper. Indeed, the expiration of the musicians’ contract in October was our first real opportunity to address these challenges with musicians, and that is at the heart of our current contract negotiations.

If the orchestra is in a financial crisis, why did the management undertake a huge and costly building project?

  • Our Building for the Future Campaign was launched in 2005 — before the recession and well before the last musicians’ contract was signed.
  • The building project was smartly downsized, following the recession, from $95 million to $50 million. Our community has responded enthusiastically to it, understanding that a renovated Orchestra Hall is part of the solution to the financial issues the orchestra faces. This should be emphasized: Generating more incremental revenue from an expanded and improved hall is one of the primary revenue-generating initiatives in our strategic plan – and it should benefit musicians.  
  • It is important to note that there is a difference between one-time capital expenditures, which often attract donors for a variety of reasons, and ongoing expenditure commitments, like salaries and benefits. The vast majority of donations we received for the hall campaign would not have been contributed to the orchestra if there were not a building project to support. 

Why was the mission statement changed?

Our mission statement was changed in our new strategic plan to signify a new emphasis around serving our community. This language change is important, not because the “orchestra” isn’t part of it, but because it communicates a pivotal shift in what we see as the role of symphony orchestras in the 21st century. A shift to a more community-minded and responsive organization is a positive and needed repositioning for our orchestra.

Where is the trust that is imperative to maintaining a great organization?

  • Our Board of Directors is made up of 80 volunteers who support the Minnesota Orchestra with our time and personal donations to the Annual Fund, Symphony Ball and the Building for the Future campaign. Why would we want anything but the best for the organization?
  • Our board negotiating committee trusted musicians enough to share exhaustive amounts of information with musicians in these negotiations in order to be transparent. This information includes our most recent audited financials; three years of monthly finance committee, board and executive committee minutes; detailed reports on all our fundraising activity; quarterly investment reports dating back three years; our investment policies and objectives; and a comprehensive actuarial report on our defined benefit plan. 
  • The information all portrays the same picture:  The Minnesota Orchestra is doing an excellent job of raising money in a difficult environment – but it needs to realign its income and expenses in the aftermath of a major recession – exactly as many other organization’s have already done.

What kind of future are we building?

  • We are building a future in which the Minnesota Orchestra plays a new role in its community, offering not only great performances onstage but also community outreach as a necessary part of the orchestral player’s job, rather than as an occasional extra;
  • We are building a future in which a renovated Orchestra Hall draws new audiences to an art form in need of enlivening;
  • We are building a future in which the orchestra responsibly spends each year the income that it generates and no more;
  • We are building a future in which the orchestra focuses its fundraising on artistic initiatives rather than on bridging growing financial gaps each year.
  • Most important, we are building a future in which an artistically and financially strong  Minnesota Orchestra thrives for decades to come.

We are asking for our musicians’ partnership in building that future. The board knew these negotiations would be challenging, and we deliberately shared our contract proposal on the first day of negotiations back in April to allow ample time for discussion. Almost eight months later, we are still waiting for a counterproposal from our musicians. We believe the board and the community that supports the Minnesota Orchestra deserve that level of respect. It is only a counterproposal, and ensuing conversation, that will bring our orchestra back to the concert stage — where we all want it to be.

Jon Eisele is a member of the Minnesota Orchestra board of directors.

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Comments (11)

So why a lockout?

I assume there is stuff I don't understand but, why anyone thinks a lockout and cancellation of performances is a good idea/strategy...totally escapes me.

Revenue problem

As good as they are, the musicians don't bring in enough revenue to cover their present salaries and benefits. As a result, payroll has to be adjusted to match revenues.

Missing info in Orchestra Board account

Jon Eisele's statement echoes that of the MN Orchestra Board president and several Board members in the Mpls Star-Tribune: that the Board has planned superbly and is only awaiting a "counterproposal" from the musicians.

Something has gone terribly wrong with the Orchestra Board and its president: the statements simply do not acknowledge that millions were raised for the renovation of Orchestra Hall without revealing to donors and patrons that the Board's well laid plans also would require a staggering 30% and more reduction in musician salaries. How many donors would have contributed had they known this — $50 million for enlarged space and 30% salary cuts for the musicians who play there?

The Board has done many wonderful things over many, many years. But by obscuring the equation of $50 for the building matched with 30% salary cuts for musicians to "balance" the Orchestra's finances, it has "built a future," in Mr. Eisele's words, of distrust.

The reaction of many is measured in the musicians' sold out concert under Skrowczewski in October, Edo de Waart's sold out Beethoven 9th concerts in mid-December, and in the fact that not a single living former conductor has come forward to support the Board's treatment of the musicians.

Response to Mr. Eisele

I wrote a response to this response on my blog, Song of the Lark.

http://songofthelark.wordpress.com/2012/12/04/response-to-jon-eiseles-mi...

An excerpt:

I couldn't help but note that Mr. Eisele ignored the DeCosse's question, "Has the community raised almost $47 million to renovate an Orchestra Hall that will not include a first-rate Minnesota Orchestra?" That's troubling, especially when it's probably the most pertinent question that the DeCosses raised.

On top of that, there are no answers in Mr. Eisele's piece to questions like:

- Why the orchestra trumpeted its financial health from 2008-2010 [ http://songofthelark.wordpress.com/2012/10/15/the-mysterious-disappearin... ]
- Why Mr. Henson misled the state legislature
- Why an independent analysis would be harmful
- Why orchestra experts like Drew McManus, Robert Levine, and Bill Eddins are so off-base in their assessments
- Why we shouldn't be listening to all the former music directors who claim these cuts will be catastrophic
- Why there was a $6 million draw from the endowment in 2011 that did not go to operating expenses [you can learn more about the Orchestra's finances here - http://songofthelark.wordpress.com/2012/11/10/what-we-know-about-minneso... ]
- How much revenue will come from the newly renovated hall, and how

Etc., etc., etc.

"We believe the board and the community that supports the Minnesota Orchestra deserve that level of respect."

I look at it another way. I believe the community that supports the Minnesota Orchestra deserves the respect of the board. They are there to serve us and the musicians. Serving us would include submitting to a full independent financial analysis. This isn't about the musicians anymore. It's about the taxpayers who footed the $14 million bill for the Orchestra Hall renovation.

Endowment and operating expenses

I suggest taxpayers would not approve extra taxes to subsidize musicians salaries and benefits 3 times the average MN wage.
And withdrawing from savings(endowment) to pay operating expenses is the road to bankruptcy for any organization.

Words

"Management did not wait until now to tackle this structural deficit problem." In fact, management was an integral part of creating and masking this problem. In the act of answering questions with lots of words, Mr. Eisele echoes management's strategy of giving out lots of numbers...which don't make sense or inspire trust.

Misplaced focus

The one time cost of upgrading Orchestra Hall is not related to the fundamental on going issue with musician payroll. Year after year, the musicians simply do not attract enough patrons at prices sufficient to pay their salaries.

Maybe not

Mr. Westgard,

Your assessment may be too hasty. According to Mary Schaefle, a local nonprofit professional who has been analyzing the Orchestra's 990s... "Unrestricted gifts decreased by close to $750,000 in three years, or almost 25%. I wondered whether focusing on the [Building for the Future] campaign would have a dampening effect on general, or annual, contributions. We can’t say for certain, but it’s tempting to think that the same effort for the Orchestra as a whole would have eased or erased the deficit."

http://songofthelark.wordpress.com/2012/11/16/what-we-know-about-minneso...

So it is not crazy to wonder if the "one time cost" of Orchestra Hall adversely affected other aspects of the organization's fiscal health. This a point that management has yet to address in any substantive fashion. Their position is especially difficult since they made a point to brag to the international press about their financial success in 2009 and 2010. I have heard from several people via my blog who say they would have given much much more to the Orchestra if they had only been told that the organization was in such deep trouble in 2009 and 2010. But now these same people don't trust Orchestra management to be straight with them about the organization's finances, or to use their contributions wisely in future. I imagine there are others who feel the same. I feel that these patrons' concerns ought to be addressed, perhaps within the context of a public meeting or in-depth interview with an orchestra expert such as Drew McManus.

This is one reason why an independent financial analysis would be welcomed by so many in the community, and not just by musicians. Also, as Mary Schaefle wrote in the blog entry I linked to above: "A respected leader in performing arts management, preferably orchestra management, would be the best person to review the strategic plan to ensure it is sound."

Unsatisfied

As a postscript to this entry, note that the DeCosses were apparently not satisfied with this article.

http://minnesota.publicradio.org/display/web/2012/12/06/arts/minnesota-o...

Excerpt:

Paula and Cy DeCosse, two donors featured in the Orchestras' fundraising materials, describe themselves as mid-level donors.

In a hand-delivered letter addressed to Henson and Board Chair Jon Campbell they said they are halting their annual donations, and removing the Orchestra from their wills, Paula DeCosse said.

"And we suspended them because we don't agree with the direction that management seems to be taking," she said. "It seems to us that they are raising money for a building at the expense of the orchestra."

No wonder things have blown up.

This is the board response? Aside from describing a typical corporate downsize Mr. Eisele doesn't actually say anything here, it's just executive mumbo jumbo bullet points and all. If he really wanted to explain something he would just tell us what are the expenses, what are the revenues, and what is the deficit if any? Without this information we are presumably expected to just take Eisele's word for it that extracting a 40% pay cut from the musicians is necessary. When someone declares an intent to explain something, like how they want to work with someone to solve a problem, and then delivers a bunch of bullet point mumbo instead, I'm not inclined to trust them.

The most I can get out of this is that the board can't extract the same concessions form union workers that it has from the other staff so they're going to bust the union. That's the reason for the lockout. That's typical executive thinking, and it has nothing to do with working together.

Answers

Why is management only now tackling the budget deficits that have been mounting for at least three years?

Their horoscopes said it was time.

If the orchestra is in a financial crisis, why did the management undertake a huge and costly building project?

They were really, really stupid.

Why was the mission statement changed?

They wanted to put new stuff in and take old stuff out.

Where is the trust that is imperative to maintaining a great organization?

Des Moines.

What kind of future are we building?

One that has an orchestra.