Art Funding Takes It On The Chin: What's The Impact?

Arts funding cuts have hit Ann Arbor with a gut punch. Governor Jennifer Granholm's 2010 budget eliminated all arts funding, although some money has been restored since the February announcement. In response, local arts groups have cut staffing and slashed budgets.

The arts' contribution to Ann Arbor's economy is significant. Ann Arbor SPARK's July 2008 analysis of creative employment found that the sector employs 4.6% of Washtenaw County's total workforce, accounting for 10% of total county payroll. The study by the area's economic development non-profit included both non-profit and for-profit arts workers, such as architects, interior designers, graphic artists, musicians and other performers.

The Arts Alliance, an Ann Arbor-based county-wide arts advocacy group, conducted a county-wide study in 2002 showing that arts and culture had a $165 million economic impact, including $57 million in household income generated. During the study year, 2.4 million people enjoyed cultural activities in the county, not including the Art Fairs.

Our arts organizations generate big bucks – and they also have a big advantage over their peers in other Michigan cities.

"We have an unusually collaborative cultural and creative community here. Other communities might still be fighting over how to split the pie – we've moved past that to how can we get the most out of the pie and get more pie," says Tamara Real, President of the Arts Alliance. "Also, we have some vision of where we want to go – the Washtenaw County cultural master plan was published last year. Before the crisis hit, we had already mobilized."

The city-wide gloom factor, however, is heavy. The Michigan Council for Arts and Cultural Affairs (MCACA), the state arts-granting agency, may not distribute grant money already promised in the current budget. Last fall, Ann Arbor groups were on track to receive more than $560,000. Many are still waiting for 35% or more of their funding.

"We may be cut off from our remaining grant this year - $20,000 (out of $51,800 total)," says Russ Collins, executive director of the Michigan Theater.

University Musical Society could lose $88,000 of its total $206,700 in MCACA funding, UMS President Ken Fischer said. Two years ago, UMS did not receive 38% of its MCACA award.

"Things aren't any better now. We are fewer by five full time employees (as of April 30) and there are salary cuts for those at the upper salaries of 2-7%. I'm just keeping my fingers crossed that that (MCACA) money will come," Fischer says.

The arts community body blows aren't just from state funding cuts. Corporate grants have vanished. Foundation grants are disappearing. Individual contributions are tanking.

"Private giving is down 30%. Corporate giving is down much more than that. The anchor organization (MCACA) grant we've gotten these past many years will be eliminated. We're expecting zero dollars (from the state) next year," Collins says.

"We eliminated three full time and several part time positions, as well as across-the-board budget cuts of over $100K. It's tough - revenues are down. We went into cutting early because the direction was clear. That helped us."

In anticipation of better times to come, the Michigan Theater has added new business initiatives, including buying new digital 3-D projection equipment, so it can be part of new developments in the film exhibition industry, Collins says. The purchases were financed with a loan from Bank of Ann Arbor.

But there is a small ray of light: Bank of Ann Arbor will continue its support of Sonic Lunch, the free summer midday concert programs on Thursdays at Liberty Square Park, as well as sponsorships and loans to non-profits, bank VP Michael Cole says.

And last Friday (May 1), the National Endowment for the Arts announced it would give $1.3 million to Michigan arts groups, much of it through MCACA, including $70,000 for UMS. Including lay-offs and salary cuts, UMS cut its overall budget for next year by 12 percent, and reduced the number of events it will present from 70 this year to 60 for next season.

"The thing not to do is lower standards, to diminish what we do," Fischer says. "We want to make a statement to our audience: We're still here for you. We're not going to skimp on the quality of what we do."  

Though UMS is an independent organization, it is buoyed by support from the University of Michigan for its educational programs, he added. Overall, contributions are down, although Fischer said UMS expects to achieve its budget for the number of tickets sold this season. The group is budgeting for at least a 25% drop in contributions next year.

The prospects for a funding turn-around are slim to none, according to Jennifer Goulet, president of ArtServe Michigan, a Wixom-based, state-wide arts advocacy group.

"Looking forward – and being mindful that deep budget deficits are projected for the current year - it will only get worse. We want to identify alternative and sustainable funding sources, looking at other states as models," Goulet says. "We're looking at developing a cultural trust fund through a public-private partnership. Missouri taps into income tax collected on out-of-state entertainment that performs in the state (for example)."

Ann Arbor is known for its rich and diverse arts and cultural resources and attractions that make it such a vibrant community, she says. Proposed state funding cuts would have a negative impact statewide, Goulet says.

The Ann Arbor Art Center (A2AC) is an important part of downtown Ann Arbor – not just the art scene – with a large and colorful headquarters, gallery and classroom space on West Liberty Street. A2AC President Marsha Chamberlin says the organization is holding its own. "We're a lot smaller than we were three years ago. Our operating budget is $300,000 less. The number of staff is down. Still, the people here have an amazing level of energy," she says.

To preserve its core activities, the A2AC consolidated into its Liberty Street headquarters and sold an auxiliary class building on Felch Street. That allowed the center to make improvements to the main building, get out of debt and end up with a small savings cushion, Chamberlin says.

"Overall, we've been able to maintain our programming at the level we've always done it," she says. She points out that the art center, unlike performing arts presenters, can adjust class schedules based on registration.

Both corporate and individual donations to the center are down about 30%. Ticket sales for the year's biggest fundraiser, Winefest, are slow – only half the tickets are sold with two weeks to go, highly unusual as the event normally sells out well in advance. "We're being hyper, hyper-cautious to continue to operate in good shape," Chamberlin says.

Long-term, the impact of arts funding cuts could be devastating to the state's future, according to Lou Glazer, president of Michigan Future, Inc., an Ann Arbor-based think tank. "Disinvesting [in the arts] now, no matter how difficult the climate, is a strategic mistake," Glazer says.

"Prosperous economies today and tomorrow are going to be largely driven by concentrations of talent….in big metropolitan areas, central cities. One of the characteristics [they look for] is a vibrant arts scene. It's one of the amenities that really matters."

It's tough, obviously, to make the case for a public company to continue arts support these days, Glazer adds. Yet those same companies need access to pools of talent – and the arts are part of an overall quality of life that talented people seek.

"People in the city and the county have gotten a real wake-up call," Glazer says. "We thought we were insulated from economic downturns by the university – it turns out we're not."

The biggest hurdle for Michigan is that we have not accepted the knowledge economy as the source of future growth – not the wrong-headed rebuilding of a factory-based economy, Glazer says.

Ann Arbor doesn't have that problem. The city is moving in the right direction of denser downtown development, many parks and a walkable downtown, although he would like to see it go even further to compete with better-positioned cities such as Madison, Wisconsin. "Madison today is in a better position than Ann Arbor. It's creating the kind of vibrant community that young people are looking for," he says.

Glazer sees glimmers of hope here – for a long time, the idea of creating a walkable, arts and culture-filled community to spur economic growth wasn't part of the conversation. Now people are having the debate.

"We may be losing, but we'll just have to keep working on it. We're going to come out of this recession in such bad shape, I can't imagine that people won't understand," he says.

The university is playing a bigger role in helping the region and the state grow the economy, but its approach is the same as that of Ann Arbor SPARK: commercializing technology, not creating community, Glazer concludes.