Anxieties are growing at the Otago Museum Trust Board
about financial pressures which could result in the museum
drawing down substantial amounts of its funding reserves to
maintain services in coming years.
Museum organisers said early this year that the museum would
dip into its reserves for the first time for many years by
spending more than $300,000 to improve salaries and offset
At a recent end-of-year board meeting, museum treasurer Mike
Horne emphasised the museum was still in a sound financial
position, but a tabled projection report warned of further
''significant concern'' by mid-2014.
This was because monies that were ''straightforwardly
accessed'' by the museum by that stage would fall by several
million dollars to only $3 million, ''on the basis that no
other revenue is sourced''.
The planning ''target range'' of having the equivalent of
between six months to 12 months of spending on hand would
require the funds to be between $3.4 million and $6.8
By mid 2014, the museum would be ''below the lower limit of
this range'', the report said.
Equivalent cash reserves amounted to $7,065,434 on June 30
this year, and are projected to fall to about $4.6 million by
The possibility of deferring major items of capital
expenditure -''such as gallery revitalisations and
redevelopments'' - in order to preserve the funds and
maintain investment income could only work ''until the
visitor experience is compromised'', the report warned.
Board chairman Graham Crombie said museum services were not
under immediate threat, but financial pressures would clearly
grow in the longer term.
In an earlier draft submission to the Dunedin City Council's
draft annual plan 2012-2013, approved at a board meeting in
April, the board noted that the museum ''greatly''
appreciated the council's annual operational contribution to
The museum also acknowledged the council was not in a
position to ''increase its operational contribution'' over
that financial year, starting on July 1. The museum would
need to ''address the consequences'', through its own
endeavours, of a second annual ''nil increase'' in council
funding. This meant self-resourcing income was needed to
cover ''inflationary impacts and known significant increases
in electricity and insurance''.
At the end-of-year meeting, the board considered various
scenarios facing the museum if financial pressures continued
to mount and city council funding was not increased in coming
The projection report warned the ''total balance of cash on
hand plus financial assets'' should not fall below ''our
budgeted annual operational expenditure for at least a
six-month period but more prudently a 12-month period''.
''Below this puts the museum at risk if a genuine emergency
arises and could curtail our ability to take up development
opportunities on, or coming on to the horizon.''