Board sees funds pinch at museum

Graham Crombie
Graham Crombie
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 rising costs.

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 million.

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 mid-next year.

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.

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 years.

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.''

Otago Museum tragedy

These people talk about their future funding as if it would be a cataclysmic tragedy if they had to spend some of their copious reserves. Their last annual report shows that they have reserves of over $14 million, which tends to increase each year because the ratepayers of Otago/Dunedin pay them more than they can spend each year. Otago ratepayers pay them $4 million each year and their latest report shows that $673,000 was unspent ($824,000 previous year). These surpluses have been used to build-up their reserves which include $4.5 million in company shares and bonds.

While the museum is building it's financial empire of sharemarket investments, the thing for the museum board members and the DCC councillors to remember is that this funding is not free; it was paid for by hard-working citizens throughout Otago. The reason we pay these people is to run a museum not to pay their managers huge salaries and speculate on the sharemarket.

I calculate that the Otago Museum can (and should) survive without the $4 million/year of council funding for the next 3½ years by using their $14 million of reserves. The DCC and the other councils should no longer be fooled by the whinging and whining about how the museum needs more money.[Abridged]

Better yet

Give them all a pay reduction if they cannot live within their means. The last guy in charge earned more than John Key. In my view, no one in charge of a museum in a town of 100,000 full time residents should be paid anywhere near as much as a prime minister in charge of a country of 4 million. 

Live within your means or shut the doors. The poor struggling ratepayers cannot afford to prop up anything else. 

Improve salaries?

Define 'improve salaries', as there are a number of significantly well-paid staff working here. Why should the council continue to fund the museum further if they have reserves of over $7m? There are plenty of council funded and council controlled organisations that could use additional funding. 
If council is looking for ways to save money, perhaps rather than a funding increase, or plateau, they should reduce it for the museum

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