Reverse Robin Hood
Wednesday, Aug 14, 2013 - Posted by Rich Miller
* As the Tribune reported not long ago, some of Chicago’s greatest cultural institutions are struggling now because the wealthy people who run their boards of directors botched their finances…
The turn of the millennium was a heady time for many Chicago cultural institutions. Cheap loans, high investment returns and swelling endowments spawned a slew of new attractions along the lakefront and around downtown.
The Art Institute built its Modern Wing. The Adler Planetarium expanded. The Goodman Theatre constructed a new home in the recently re-energized theater district. New exhibits sprang up at the Field Museum and the Museum of Science and Industry. The Chicago History Museum underwent a gut rehab.
Cultural institutions were joining in the economic bonanza sweeping the country and, as with for-profit companies and individual homeowners, some would pay dearly for taking financial risks.
Encouraged by boards that included some of Chicago’s most influential corporate leaders, many museums and arts organizations decided to leverage their gains by borrowing tens of millions of dollars to fund expansions, renovations and other big-ticket projects. […]
“The recession blew a lot of people’s projections and plans,” said Carroll Joynes, co-founder of the University of Chicago’s Cultural Policy Center. “But the plans would have been unrealistic in many cases and freighted with not very good risk assessment, even if the economy had kept humming.”
* The Field Museum was especially hard hit…
The museum’s financial problems stem from a decision over a decade ago to issue $90 million in bonds for construction projects that included a subterranean storage center for much of its collection. The museum’s board assumed it could raise enough money through a capital campaign to keep the museum on solid footing.
But when that didn’t happen, it had to begin dipping into its endowment. Finally, in December, the museum announced that it would cut $5 million from its budget — $3 million of that from the science program — and would try to raise its endowment by $100 million.
* So, partly in reaction to this, the General Assembly passed a bill that would allow museums and aquariums to reduce the number of required free admission days by half, from 52 down to 26.
The bill passed with strong majorities in both chambers, but Gov. Pat Quinn vetoed it yesterday…
“Many Illinois families can only visit these museums on the 52 days that they are currently open to residents free of charge,” the governor wrote in a letter to lawmakers that explains his veto.
“Limiting the number of days our aquariums and museums are available free of cost would disproportionately limit access to our lower-income families,” he said. “I cannot support any legislation that seeks to reduce exposure to the vast educational resources on display at our museums, particularly for those in our state that are most vulnerable.”
While the problems at the museums and other cultural institutions are certainly severe, cutting free days to make up for the financing mistakes of society’s elite is just plain wrong. It is the sort of template that has been used ever since the great crash. Rich people screw up, poor people gotta give up.
The veto is vintage Pat Quinn. And he makes some solid points.
The veto has a political advantage as well. Sen. Kwame Raoul, a potential Quinn primary challenger, was a co-sponsor of the legislation.
Heh.
- 47th Ward - Wednesday, Aug 14, 13 @ 11:22 am:
Many if not all museums and large cultural institutions are either publicly owned or subsidized by taxpayers. The big museums used to be required to offer one free day per week. A few years ago they got the law changed to allow for 52 free days per year. Guess what they did? They put their free days in January, February and other months where attendance is weak. Thanks for nothing.
Chicago’s cultural institutions are fantastic, but they are also arguably the most over-funded institutions in the state. Quinn’s veto is a very smart move.
- Downstate Illinois - Wednesday, Aug 14, 13 @ 11:23 am:
Rich, take a look at our state parks and historic sites. We want them to be available to everyone so we don’t charge any admissions. Yet in our state’s permanent budget crunch we don’t have money to operate them so many sit closed to all.
- lincolnlover - Wednesday, Aug 14, 13 @ 11:24 am:
Working in a state museum, I have mixed feelings on this. While our admission is much, much lower than the Museums in the Park, its still an obstacle to some families. On the other hand, when we have a special event, there are those who claim they can’t afford the $2 requested donation, but are then seen buying $5 corndogs later on. When its said and done, some one has to pay for it. Taxpayers have indicated they don’t want to (or can’t) pay, so where does it come from?
- dupage dan - Wednesday, Aug 14, 13 @ 11:32 am:
What is the alternative? Sending the bill to the museum board and expect them to cough up? That’s like expecting the GA to personally cough up 100 billion dollars (or whatever the amount is) to fix the pension.
People got stars in their eyes during the heady days of the economic bubble. It happened to a wide range of folks, homeowners, dotcom investors, gold buyers, museum boards. When the bubble burst, the equity disappeared. How to make up the shortfall? Raising rates at the museums may be perceived as a necessity but it is ill-advised. Attendance is already weak and raising fees is not going to turn that around. I think they should be allowed to raise their rates as long as they understand there won’t be a bailout when attendance/revenue tanks.
- Judgment Day - Wednesday, Aug 14, 13 @ 11:43 am:
This one kind of kicks up a hornet’s nest to me. Lots of these ‘issues’ were created by specially constructed bonding instruments (ARS = Auction Rate Securities; SIV = Structured Investment Vehicle; and GIV = Guaranteed Investment Vehicle).
The ARS style bonding were all short term financing that were always being ‘rolled over’ at what was supposed to be lower, stable rates. And then 2008 came around, and oops, not so much.
There’s still a lot of on-going litigation over these things.
Affected museums, lots of hospitals, even places like Jefferson County, Alabama. And with the Federal Reserve driving interest rates down into the ground for investors, there was no way the return on the investments made with bond money was sufficient to make up the shortfall on the actual bonded indebtedness.
This was all of us (not just rich folks) getting fleeced by Wall Street and the crooked, lying, thieving banksters in particular.
- ChrisB - Wednesday, Aug 14, 13 @ 11:51 am:
I worked at MSI during summers in college. Fun place, and the people there are great.
I get that reducing free days isn’t good, but what is the alternative? Do the museums raise rates, effectively making even more cost prohibitive to a family? They gotta figure out a way to pay bills, just like everyone else.
A lot of people only saw the positives before 2008, but that doesn’t mean that we should tie their hands and throw them all overboard.
- Ahoy! - Wednesday, Aug 14, 13 @ 11:55 am:
Maybe we should appoint some average joe’s to these boards, you know people who actually have to have a budget because they’re not fabulously wealthy. This would help diversify the boards thinking.
It’s a tough situation because someone has to pay the bills, I see both sides.
- wordslinger - Wednesday, Aug 14, 13 @ 11:55 am:
I think the only answer to this is for the Civic Committee to lobby the rating agencies to lower the boom on the debt of these institutions to force the irresponsible Civic Committee members on their boards to cut the pay and benefits of full-time employees.
Ty, chairman of the Shedd board, sound like a plan?
- Soccermom - Wednesday, Aug 14, 13 @ 12:13 pm:
Word, you are absolutely right. I know a little about the finances of these institutions, and I will go with you to meet with the ratings agencies. These people need to be taught a valuable lesson.
Seriously — let’s go. I’m all in. Cowgirl up.
- Bill White - Wednesday, Aug 14, 13 @ 12:18 pm:
Word, word!
- Chavez-respecting Obamist - Wednesday, Aug 14, 13 @ 12:37 pm:
Sending the bill to the museum board and expect them to cough up?
I’m for this. They lost the money, they should replace it.
- PublicServant - Wednesday, Aug 14, 13 @ 12:51 pm:
===Rich people screw up, poor people gotta give up.===
This is the rule, but don’t expect it quoted by IPI, or anyone on the Civic Committee…well execpt maybe for Ty since he apparently can’t keep the secret methods of the 1%, well, secret.
- John Shedd - Wednesday, Aug 14, 13 @ 12:55 pm:
We have a spot in our shark tank for you class warriors who think rich people are the cause of museum money problems. My old boss, Mr. Field, can find a good spot for you in his place, too. And I doubt the “average Joes” you want to put on our board would cough up our minimum contributions for board members or bring any more expertise to our operations than the union slugs you put on your pension boards.
- Cod - Wednesday, Aug 14, 13 @ 12:58 pm:
When I was a kid, all the museums in Chicago were substantially funded by taxpayer money and all were free.
The dramatic investments in museum facilities and upgraded exhibits began around 1990 when public funding was gradually reduced. Museums could either remain free and die a slow death, or survive by issuing revenue bonds that required admission fees. They chose the latter, which also required investment in improved attractions to draw visitors.
I wonder why, despite those decades of increasing wealth and productivity and the post-Reagan demise of unions, we can no longer “afford” to have free public museums? Ty and the Civic Committee would say it all went to the pensions the state failed to pay into, leaving the 100B unfunded liability.
- Downstater - Wednesday, Aug 14, 13 @ 1:07 pm:
Legislators/Boards need to be the adult in the room. It is always easy spending someone else’s money, when you aren’t held accountable or aren’t at risk.
- The Ghost of John Shedd - Wednesday, Aug 14, 13 @ 1:16 pm:
@John Shedd You do remember that we worked as a grocery store clerk and a stock clerk (one of the “Average Joes”) right?
- wordslinger - Wednesday, Aug 14, 13 @ 1:18 pm:
–We have a spot in our shark tank for you class warriors who think rich people are the cause of museum money problems.–
There’s really not a shark tank at the Shedd — there’s some bonnetheads and blacktips in some environments, but they’re harmless.
Gee, JS, just who is responsible for the museum finances if not their board members?
Who victimized you this time? The usual “mid-level employees acting on their own without adequate supervision?”
That always works for the Justice Department. Give it a whirl.
- Ahoy! - Wednesday, Aug 14, 13 @ 1:25 pm:
John Shedd,
I don’t think anyone is saying rich people are the cause of the money problems. I do think most people believe that bad money management was part of the problem. Are the money problems caused by too many free days?
Also, is there really a limit to how much a board member has to pay to sit on a board that receives public funds?
- Frank - Wednesday, Aug 14, 13 @ 1:30 pm:
The result of the veto will likely be an increase in admission fees…don’t know how that’s gonna be good for the people Quinn claims to be helping.
A good solutions would have been to give the museums their decreased number of free days but require them to hold them on set days, like the 1st and 15th of every month. That way they couldn’t stack the days in january and folks who need the financial break would know when it’s available.
The governor probably could have accomplished that with an amendatory veto, but why try to figure out a responsible, good government compromise when cheap headlines can be made. This is Pat Quinn we’re talking about.
- Skeeter - Wednesday, Aug 14, 13 @ 1:31 pm:
As a regular at most of these place (Museum of Science and Industry, Shedd, Field, Art Institute, Lincoln Park Zoo, and the Peggy Noetbart (spelling?) Nature Museum, I see both sides of this.
Yes, they do appear to be struggling. I get that they need more funding and adding free days will not help.
However, daily tickets are amazingly expensive. I don’t know how people from the suburbs (or tourists) can justify the cost.
On the other hand, memberships, in context, are dirt cheap. For my family of four, if we go twice a year to each place we’ve paid for the membership. In reality, we are usually at one of the museums nearly every weekend. I suspect there are a lot of people like us.
It seems that increasing membership costs, and perhaps decreasing the daily fee, might be a more effective strategy for these places. Keep the free days, and make the people who go a lot pay their fair share.
- wordslinger - Wednesday, Aug 14, 13 @ 1:45 pm:
Skeeter’s right about annual memberships being bargains.
When my kids were young, memberships to Brookfield Zoo and Museum of Science and Industry were musts. We’d pack lunches and let those little lunatics loose til they passed out.
The annual cost was a little more than the price of two single visits. We’d go to the zoo dozens of times year-round (we’re close) and the Museum of Science Industry often in the winter months. Great days.
The high price of the daily visit is for the tourists. If you’re from out of town and walking by the Art Institute, how can you not go in, if you’ve never been, even at $23?
- Ray del Camino - Wednesday, Aug 14, 13 @ 1:52 pm:
I was on a big tourist attraction’s board in a big city when I lived in Texas. There were those who donated big money, and those who donated work, organization, and expertise. I was one of the latter. Am I an average Joe? I don’t know, but the point is that there are ways for the non-rich to work on those boards. (Btw, that particular institution is growing at a healthy clip w/o these financial disasters.)
- dupage dan - Wednesday, Aug 14, 13 @ 1:59 pm:
=== - Chavez-respecting Obamist - Wednesday, Aug 14, 13 @ 12:37 pm:
Sending the bill to the museum board and expect them to cough up?
I’m for this. They lost the money, they should replace it ===
Sure - then we can send the pension payout bill to each individual state rep/senator.
I suppose you could be silly with your post but it is tiring to read these useless posts anyway. Not even mildly humorous.
- anon - Wednesday, Aug 14, 13 @ 2:11 pm:
The memberships are typically quite disproportionately exorbitant for single people. I feel like I am being discriminated against when asked to pay 80% of what a family of four is charged. Maybe not making it all about the children would increase the attendance.
- particle61 - Wednesday, Aug 14, 13 @ 2:19 pm:
>
wow, that’s the same fix our legislators have decided upon in a head-spinning act of bipartisanship with regard to the matter of state pensions - make those who paid out of every paycheck pay for the irresponsibility of those who did not make their required payments -
I love those ’save the rich&politicians by punching the regular floks’ plans that get churned out of our statehouse!
- who said that Illinois government can’t work? Our leaders display their cooperative & harmonious bipartisanship every time they take their failures out on ‘the little guy’
- wordslinger - Wednesday, Aug 14, 13 @ 2:25 pm:
–The memberships are typically quite disproportionately exorbitant for single people. I feel like I am being discriminated against when asked to pay 80% of what a family of four is charged–
Nothing personal, just business. More fannies through the gates, more potential sales in the gift shops and restaurants.
- Skeeter - Wednesday, Aug 14, 13 @ 2:29 pm:
I can tell you that other than Lincoln Park Zoo, I never went to the museums before we had kids.
And we would only go to the zoo because I lived in Lincoln Park and it was a nice place to go for a walk.
Memberships are priced better for families because I’m pretty sure that’s most of their business.
That being said, memberships are still under-priced.
It is unfortunate that people who live in, hypothetically, Streeterville, can go to the museums every week while poor kids living even closer do not have the same opportunity. That seems contrary to the mission of the museums, at least as I see that mission.
- Judgment Day - Wednesday, Aug 14, 13 @ 2:36 pm:
“I think the only answer to this is for the Civic Committee to lobby the rating agencies to lower the boom on the debt of these institutions to force the irresponsible Civic Committee members on their boards to cut the pay and benefits of full-time employees.”
Unlikely to work. Been a while since I looked at any of that crap, but much of the bonded indebtedness (in terms of financing instruments, much of it is pretty exotic stuff) that these folks are having to deal with has covenants which protected the bond holders (accelerated redemptions, penalties, etc.). And the buyout provisions were ‘difficult’, to say the least.
Your approach (assuming it wasn’t snark) would probably just make the situation worse.
Litigation (mostly over ‘Warranties and Representations’ made by the folks pushing this dreck into the marketplace) may be the answer - we should know sometime this next year from the outcome of several cases currently making their way thru the courts.
- wordslinger - Wednesday, Aug 14, 13 @ 2:36 pm:
–It is unfortunate that people who live in, hypothetically, Streeterville, can go to the museums every week while poor kids living even closer do not have the same opportunity. That seems contrary to the mission of the museums, at least as I see that mission.–
I believe most library branches have day passes you can check out for free.
You can still get a lot done with a library card and you can’t beat the price. It wouldn’t kill the kids to stick their noses in a book, too.
- wordslinger - Wednesday, Aug 14, 13 @ 2:38 pm:
JD, it was most definitely snark, lol.
- 47th Ward - Wednesday, Aug 14, 13 @ 2:39 pm:
One of the better kept secrets is the Museum pass anyone can check out of their local libraries. Good for free admission to any of the Museums in the Park.
- 47th Ward - Wednesday, Aug 14, 13 @ 2:40 pm:
Great minds Wordslinger…
- shore - Wednesday, Aug 14, 13 @ 2:54 pm:
The free days are really important in getting kids/families/students other folks a chance to see and get inspired/educated. Completely against this, especially when they’re handing depaul $100 million for a basketball stadium.
- Chavez-respecting Obamist - Wednesday, Aug 14, 13 @ 2:57 pm:
Those passes are only available for people with children. Not that I mind that, it gives people with children and not a lot of disposable income a way to get in places they might not be able to afford otherwise.
I’m a member at the History Museum because it’s the one I’m most likely to drag unsuspecting out-of-towners too. I use my city-resident discount at any of the other ones.
- anon - Wednesday, Aug 14, 13 @ 3:07 pm:
If the free library passes are denied to people without children, that would truly be discriminatory. Actually, one of my favorite Chicago museums is located far from the tourists and charges no admission. The National Museum of Mexican Art in Pilsen is a small jewel and I always stuff some cash in the donation box. http://nationalmuseumofmexicanart.org/
- low level - Wednesday, Aug 14, 13 @ 3:36 pm:
World class cultural institutions that are popular destinations for tourists who come to Chicago every year. Added to that the incredible amount of new homes built on old railyards surrounding said cultural institutions.
Yep, Chicago is done for just like the guy said in Crains.
- Joan P. - Wednesday, Aug 14, 13 @ 4:20 pm:
“I believe most library branches have day passes you can check out for free.”
As has been said, you have to have a kid with you. They are also very limited in number, so it can be very hard to get one.
“Maybe not making it all about the children would increase the attendance.”
It’s not just the cost of an individual membership that’s a deterrent to folks without kids. It’s also because exhibits are geared to kids. Yes, it’s nice to have signage at a child’s level (both in terms of placement and language). Unfortunately, that’s often done to the exclusion of information written for people who can understand words of more than two syllables.
- Excessively Rabid - Wednesday, Aug 14, 13 @ 5:12 pm:
These are some of the same charming individuals who think the only solution to the state’s financial woes is to repudiate the obligations it has incurred. Along with running the museums into the ground, they’ve over developed the lakefront. But what’s done is done. I guess this measure may be necessary. But blank the people who got the museums into this mess, and as far as the veto, blank Quinn.
- Amalia - Wednesday, Aug 14, 13 @ 5:45 pm:
what, the common unwashed want something for free from the business types meets socialites playgrounds we call cultural institutions? every time I see some pix from a funder with the folks who have run these places into the ground I want to scream. Oh the audacity. and I still decry the amount of money for the Bean, the Gehry structures, all of it in that tiny space of ground filled with expensive art. I guess that’s one way to keep the commoners out of a museum, put some art outside and hope they won’t comment on being keep out of the indoor spaces. good for Quinn.
- wordslinger - Wednesday, Aug 14, 13 @ 5:51 pm:
–Completely against this, especially when they’re handing depaul $100 million for a basketball stadium.–
DePaul is actually putting up a lot of money, which doesn’t compute.
You know somehow it ties into gambling at McCormick Place. The fact that Emanuel chooses not to share his vision with you is none of your business.
“You know who I am? I’m Rahm Emanuel — I made my bones when you were banging cheerleaders.”
In his dreams he’s Moe Green. His influence and power has always been derived from others and still is.
- Anon - Wednesday, Aug 14, 13 @ 6:16 pm:
Why have statutory free days at all? Why not leave it to the governing board? Taxpayers support Soldier and Cellular Fields, and the are no legally imposed “free games.” Why micro-manage from Springfield. Can anyone say: “Free rides for seniors?”
- wordslinger - Wednesday, Aug 14, 13 @ 6:26 pm:
–Why not leave it to the governing board? Taxpayers support Soldier and Cellular Fields, and the are no legally imposed “free games.” Why micro-manage from Springfield. Can anyone say: “Free rides for seniors?”–
I have an explanation for you, cousin.
The Cominskey deal is the worst for taxpayers in all of sports, in all of history, in all of the world. The Bears at Soldier Field is pretty close.
So let’s not aspire to that.
For the others? Dude, read their mission statements and examine their public/private history.
I’m glad you woke up yesterday, but don’t presume you have it all figured out yet.
- ejhickey - Wednesday, Aug 14, 13 @ 6:33 pm:
what happens if the museums default on their bonds and file for bankruptcy?
- Juvenal - Wednesday, Aug 14, 13 @ 6:42 pm:
Get back to me when the same folks calling for the heads of every political leader fire their CEOs and then resign from the boards of these institutions.
- wordslinger - Wednesday, Aug 14, 13 @ 6:46 pm:
–what happens if the museums default on their bonds and file for bankruptcy?-
I get “The Old Guitarist.” And Van Gogh with the one ear.
And a couple really big and old Buddhas for my garden.
And “American Gothic.” Those guys crack me up.
- 47th Ward - Wednesday, Aug 14, 13 @ 9:34 pm:
It’s interesting that the Detroit art museum the city owns the collection and may have to liquidate it at auction in the bankruptcy case. A city purchasing art is unique in the US. Many cities own the museum buildings but not the collections, which are either purchased by, or donated to, nonprofit orbs that operate the museums.
Could you imagine the debate in the city council over which pieces to acquire for the Art Institute? I seem to recall some Alderman leading a raid on the place to remove one particular painting some years ago. I don’t think elected officials are the best judges of art we can find.
But if they need to liquidate to pay the bills, I’m hoping to pick up Nighthawks for a song. That’d look pretty cool in my den.
- wordslinger - Wednesday, Aug 14, 13 @ 10:08 pm:
47, from my understanding, Chapter 9 provides protection from having to sell assets such as art and Belle Isle, plus the Big Kahuna, the water and sewer system, which serves the whole metro.
The hedgies have been circling Detroit like vultures for some time, looking to pick off the good stuff on the cheap.
And the Big Dogs of Finance, Goldman and Wells Fargo, have been making plenty of money off Detroit as their loan sharks.
Ironic that taxpayers, including those in Detroit, had to bail their sorry asses out
when they screwed up robbing everyone while tanking the world economy.
Destroy the world economy while screwing up robbing people, then get bailed out by the people you were robbing, and start all over again.
Have we all lost our minds?
I’ve had it with these financiers. They’re supposed to grease the wheels of commerce, not give it to you without the grease.
- Anonimo - Thursday, Aug 15, 13 @ 9:21 am:
Wow, up until now I had generally positive feelings about Sen. Kwame Raoul, now I’m rethinking my initial assessment. I work hard and make decent pay but with the cost of living in Chicago I would never be able to treat myself, let alone anyone, to Chicago’s museums. The cost of admission to the museums is so high I can only ever go on the free days. Last time I went to a free day at the Shedd I waited an hour-plus to just reach the front door - I’d hate to think what would happen if they cut their days in half.
Rich you’re absolutely right about how this legislation was an example of reverse Robin Hood. I’m glad Gov. Quinn used his veto power.