Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Standing Committee on City Services & Budgets

FROM:

Director, Office of Cultural Affairs

SUBJECT:

Vancouver Museum - 2002 Revised Operating Plan & Supplemental Grant Request

 

CONSIDERATION

RECOMMENDATION

GENERAL MANAGER'S COMMENTS

COUNCIL POLICY

Council has approved annual operating grants to the Major Exhibiting Institutions to support their ongoing operations since their formation.

Approval of a grant requires eight affirmative votes.

PURPOSE

This report presents a revised request for supplemental funding from the Vancouver Museum based on the Vancouver Museum Commission's revised operating plan for 2002 - 2003, and recommends that prior to the 2003 operating grant review, the Vancouver Museum submit a three-year Business Plan which does not rely on further supplemental funding from the City.

BACKGROUND

The Vancouver Museum has been the keeper and interpreter of the City's history since 1894. Occupying a City-owned building in Vanier Park, the Museum is operated by an independent non-profit society, the Vancouver Museum Commission. In addition to safeguarding the City's valuable collection of archeology, ethnology, human and natural history artifacts, the Museum provides a range of exhibitions and public programs focussed on the past, present and future of Vancouver.

The City currently provides capital and operating support through grants to the Vancouver Museum Commission, as well as janitorial services, utilities, grounds and building maintenance through the City's Building Management Department. In 1996, Council approved a series of actions to revitalize the Vancouver Museum, including a capital investment of $3 million in a series of phased improvements to the City-owned building. Phases 1 and 2 of the capital project are complete. Phase 3 - the Joyce Walley Learning Centre - is scheduled to open in mid-November.

When Council approved a series of recommendations for the revitalization of the Museum in 1996, it also granted supplemental funds of up to $200,000 per year for three years. This was in recognition of the challenge in rebuilding the Museum's revenue generating capacity. The funds were targeted to marketing, education, collection registry and fund raising. Revitalization has taken longer than anticipated. Recognizing this challenge, Council approved a fourth supplemental grant in the amount of $160,000 in 2001.

This past June, in the context of its 2002 annual operating grant review, the Vancouver Museum made a further supplemental grant request in the amount of $150,000. Council deferred consideration and directed the Museum to review its request and develop a viable operating plan - one that allows the Museum to move forward without reliance on continued supplemental funding from the City.

Council also deferred the recommendation to adopt proposed criteria and guidelines for considering future supplemental requests from the major exhibiting institutions until suchtime as a consultation process with the institutions could occur. Staff note that this report is being presented prior to the consultation process to be consistent with the other two supplemental requests that were reviewed and presented in July. The consultation process will be completed in advance of the 2003 annual grant review.

DISCUSSION

The Vancouver Museum has worked hard to address its projected deficit in 2002 and has already implemented a budget management program. The revised projected deficit for 2002 has been reduced from ($249,066) to ($85,066) after amortization. The Museum has implemented the following changes to its 2002 operations, which has a potential net savings/increased revenues of $164,000:

· Closed on Mondays $ 5,000
· Increased Admission Fees $ 12,000
· Increased Donations & Rental Income $ 15,000
· Staffing (attrition/contracts) $ 40,000
· Use of Accumulated Surplus $ 42,000
· Transfer of Capital Costs carried in Operating Budget $ 50,000
Net Savings $164,000

Staff have reviewed this revised plan with the Museum and note that the Museum has made substantial progress since its original supplemental request to Council in June. The Museum will now be open to the public six days a week. The Monday closure from September to June is expected to have minimal impact on the public and on revenues; it is outside the summer tourist season, and the Museum hours will be compatible with other cultural institutions in the City and with its co-tenant, the H.R. MacMillan Space Centre who is also closed on Mondays.

Increased admission fees from $8 to $10 for adults, $7 to $8 for seniors and $5.50 to $6 for students reflect the first increase in five years, and are reasonable in comparison with other like institutions. Additional rentals have been booked for the new Walley Centre and $10,000 in new donations are in hand. Inventory in the gift shop has been reduced to low levels to preserve cash flow and a larger proportion of inventory is now on consignment. The Museum currently has an accumulated surplus of $57,000. The Museum proposes to take $42,000 into its operating budget, leaving $15,000 as a minimal cash reserve.

One part-time position has been eliminated through attrition, and two contract positions in the areas of Marketing and Sponsorship have been terminated. The Museum proposes to transfer these areas of responsibility to the CEO. While this translates into a short-term cost saving for the institution, staff have concerns about the longer term impact of these changes. Staff continue to be concerned about the Museum's ability to grow its earned revenues and private sector donations to a level comparable with other like organizations. In previous reports, staff have noted that it is essential that the Museum develop a sustainable operating plan which increases fund raising and development initiatives, particularly in the areas of annual giving and private sector support. This will require the active engagement of Museum staff and Commissioners in both annual and capital campaigns.

The Museum has been working diligently on the new Joyce Walley Learning Centre, which is currently under construction and is on schedule to open this Fall. The Museum has raised $306,000 to date towards the capital costs and anticipates having enough in its capital budget to enable a transfer of $50,000 back into operations. This transfer covers a portion of capital costs for fund raising, exhibit research and development which have been carried in the operating budget.

While the Museum has made every effort to reduce costs and increase revenues in its operations, the institution has not been able to achieve a balanced financial position in 2002 and is therefore seeking Council's support for a 2002 supplemental grant in the amount of $85,000.

Staff have reviewed the Museum's revised operating plan for 2003 and note that the continued modest level of investment in new and changing exhibitions challenges the Museum's ability to increase visitor attendance and revenues. The reduction of key positions in 2002 in the areas of Marketing and Development that are to continue in 2003 further challenge the Museum's abilities to maintain and increase revenues.

OCA and Finance staff have reviewed the budget projections and assumptions for 2003 and notwithstanding the above concerns, the financial projections are reasonable in relation to other local exhibiting institutions. Staff believe that with the opening of the new Walley wing and with the continued extraordinary efforts by both the Museum staff and Commission to increase private sector support, the projected growth in revenues is feasible. City staff will use these revenue targets to measure the Museum's performance in 2003 as part of its annual grant review.

FINANCIAL IMPLICATIONS

The 2002 "Other" Grants budget designated for the Major Exhibiting Institutions is fully allocated. Should Council support a supplemental grant to the Vancouver Museum Commission, the source of funds would be Contingency Reserve.

If Council chooses not to support all or a portion of this request, then the Museum will need to manage its deficit through other means, including an operating line of credit. This willnegatively impact the Museum's ability to achieve a balanced budget in 2003 which is targeted in the current revised operating plan.

CONCLUSION

Staff have reviewed the Vancouver Museum Commission's revised operating plan for 2002 -2003 and present for Council's consideration a supplemental grant request of $85,000, with the recommendation that the Vancouver Museum submit a sustainable 3-year Business Plan in 2003 that does not include further supplemental funding from the City.

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csb021003.htm

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