DIA Millage

On August 7, 2012 voters in Macomb, Oakland, and Wayne counties were asked to vote on a new tax to fund the Detroit Institute of Arts (DIA). While the DIA is spent over two million dollars to advertise that "art is for everyone", many of us have more pressing uses for our own hard-earned tax dollars than to maintain an art museum that is owned by the City of Detroit.

Based on their marketing materials, the DIA claims they will have to close their doors in three years if the taxpayers don't bail them out. Yet, according to their 2011 annual report (see link below), the DIA has over $180 million in cash on hand- of which nearly $100 million is not "donor restricted". Clearly they are not in the financial vise they claim to be. Additionally, the DIA successfully grew it's net assets from 2009 to 2011 by approximately $50 million dollars according to their financial statements.

So what is the real reason the DIA and the City of Detroit want your tax dollars? Here are some possibilities:
  • To pay the DIA Director, Graham Beal, whose last reported salary was in excess of $426,000/year (not including benefits). By comparison, the President of the United States is paid $400,000/year and the Governor of Michigan will earn $159,300 in 2012, up from $1 from 2011. Henri Loyrette, the Director of the world famous Louvre Museum in France, home of the Mona Lisa, earns a salary of $109,224/year.
  • To pay the DIA "Executive Vice President of Planning & Administration", Annmarie Erickson, $236,867/year to create and promote public-subsidy schemes such as this one.

  • To pay the total $4.2 million the DIA spends annually on administrator salaries.
  • On February 1, 2018 (midway through the ten-year millage) the operating agreement between the City of Detroit and the DIA's Founders Society will expire. The City of Detroit is under no obligation to renew the agreement and can seize full control of the DIA along with our tax dollars. Furthermore, the unelected and appointed local Art Authorities are not required, in-writing, to cease disbursements of tax dollars collected in the event the DIA operating agreement with the Founders Society is not renewed.
As stated in their audit notes: "The City of Detroit continues to own the Museum's permanent art collection, including works of art acquired prior or subsequent to the operating agreement, as well as the Museum building and grounds." Despite this, the City of Detroit suddenly feels it's no longer feasible to provide any funding to support the DIA. In 2011, the City of Detroit provided $500,000 to fund the DIA's operation and upkeep. In 2012, the city of Detroit has cut all funding to support the DIA. The City of Detroit did however find it feasible to budget over $1.2 million this year to fund the Charles H. Wright Museum of African American History despite terminating all funding for the DIA.

A TALE OF TWO ART MUSEUMS

While the DIA falsely attempts to mislead voters by presenting itself as a draw for economic growth in our area, the sun shines bright in nearby Toledo, Ohio- home to the Toledo Museum of Art (TMA). Despite the close proximity to the DIA, the world-renowned TMA does not appear to be plagued by the threat of imminent closure in the absence of public or taxpayer funding.

The Toledo Museum of Art, founded in 1901, spans 6 buildings on a 36 acre campus.  The TMA remains a privately-endowed, non-profit institution and opens its collection to the public, free of charge, six days a week (309 days a year).

Despite being in a smaller market and having another major art museum in Cleveland, the TMA has reported assets of $273 million compared to $194 million for the DIA. Conversely, the TMA was able to operate its sprawling campus on $14.1 million in FY2011, while the DIA spent almost twice as much at $27.6 million.  With its larger asset pool and lower operating cost, the TMA is able to fund its operation through investment income and annual fundraising while simultaneously providing free admission to all. We hope the DIA will look into emulating this model of self-sustainability rather than forcing an additional burden on weary property owners.

WHAT IS THE SOLUTION?


There are many possible solutions that the DIA can implement to remain viable without being a burden on taxpayers. The DIA currently has an agreement in place with the City of Detroit to manage and maintain this City's asset. This agreement expires in 2018, midway through then ten-year tax the DIA is trying to impose. At that point, the City of Detroit is under no obligation to renew the agreement. In 2018 the City of Detroit can resume control on the DIA'a operation and the tax dollars coming-in from the suburbs to support it. In light of the City of Detroit's handling of other financial matters this tax is not a responsible use of public resources.

A more responsible approach would be for the DIA to maintain viability is outlined below:
  • The DIA should continue to ramp-up its fundraising and endowment acquisition efforts so that they can support operations.
  • The DIA can expand re-allocation of endowment dividends to buy themselves some time to build their endowments. Despite their repeated public claims that their endowments are donor-restricted to art acquisition, they have successfully (and quietly) obtained re-allocation of trust distributions from the Tannahill Trust and Kanzler Foundation Endowment for the Arts. Wayne County Probate Court has allowed the DIA to use these funds for operations, instead of art purchases, for the next five years.
  • The DIA can take out a line-of-credit, using their endowment fund as collateral, to cover any operating fund deficits while they grow their endowment. The DIA and has done this in the past with success: In 2007 the DIA took out a $25 million line-of-credit to use as "working capital", of which they paid back in-full. Then again in 2009, the DIA borrowed $1.7 million to pay for a new boiler facility.
  • The DIA must continue streamlining their cost of doing business to bring it in-line with fundraising and dividend revenues.
  • Explore the possibility of leveraging their billion-dollar art collection (as valued by the DIA). This can include options such as: bonding, short-term artwork exchanges to keep their exhibits "fresh", etc.
Taking these actions is a long-term solution that allow the DIA to remain viable indefinitely without requiring involuntary taxpayer support or public funding.


We have obtained the DIA's most recent audited financial statements:

Click here to see the DIA 2011 Audited Financial Statements
Click here to see the DIA 2010 Form 990 Tax Return


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