Meeting of the Board of Regents | March 2010

THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234

TO:	Cultural Education Committee
FROM:	Jeffrey Cannell
SUBJECT:	Report and Discussion on Office of Cultural Education Finances/Staffing
DATE:	March 2, 2010
AUTHORIZATION(S):

 

SUMMARY

 

Issue for Discussion

The discussion will focus on the status of the Cultural Education Account, the primary source of funding for the State Museum, Library, Archives and Office of Educational Television and Public Broadcasting.   Staff will provide an update on efforts to assure adequate revenues to support these programs now and in the future.

The discussion will also focus on the impact on staffing by the current fiscal situation.  OCE is unable to fill many vacant positions, including key leadership positions in the areas of collection stewardship.  Staff will provide an update on the programmatic challenges presented by staffing reductions.

Reason(s) for Consideration

 

              To approve proposals for Board action to remediate the structural funding shortfall.

Background Information

The Cultural Education Account is the primary source of funding for Office of Cultural Education, funding virtually all of the staff and services of the State Museum and the Office of Public Broadcasting and Educational Television, and a substantial portion of the staff and services of the State Archives and State Library.  Revenues deposited to this account are drawn from fees levied by county clerks.  These revenues have declined by 40% since their peak in 2004 to a level significantly below the cost of operating these programs.  In addition, more than $60 million has been transferred from this account since its inception in 2002 through the budgetary process and more than $4 million additionally is budgeted to be transferred this fiscal year.  As a result of this, the cash balance of the account is negative $3,691,330 as of February 25, 2010.

The Executive Budget proposes to eliminate, over the next two years, the transfer of funds to support the programs of the New York State Theater Institute and the Egg.   If enacted, these eliminations will reduce the level of deficit in the Cultural Education Account.  However, Revenues are still insufficient to meet programmatic needs.

The declining financial status of the Cultural Education Account was the subject of a Board discussion at its April 2008 meeting and as a result, the Board designated the stabilization of the Cultural Education Account as one of its legislative priorities for the 2009-2010 session.  Although the legislation was introduced in both houses of the Legislature in 2009, it did not emerge from committee.

OCE is currently unable to fill critical current and anticipated leadership vacancies in the area of collection stewardship area.   The current fiscal constraints and the strict hiring freeze system hamper OCE’s ability to maintain our current programs.  In addition, we are challenged to redefine the qualifications and requirements for the Civil Service titles in OCE in order to evolve the staffing our programs in the face of new technologies, research trends and information environments.

Proposed Handling

Office of Cultural Education staff will provide a brief financial report and will seek the Regents advice in planning for advocacy in the coming budget and longer term remedies for the structural issues.

 

Attachment

 

 

 

 

 

 

 

Report to the Board of Regents on the Cultural Education Account

March 2010

History

Chapter 83 (Laws of 2002) created the Cultural Education (CE) Account and transferred Office of Cultural Education (OCE) functions from the State General Fund to the CE Account. It provides virtually all operational funding for the State Museum, State Archives, State Library, and Office of Public Broadcasting and Educational Television; pays the salary of more than 300 employees; funds the purchase of State Library collections and the research facilities of the State Library and State Archives; and supports public galleries, public programming and education, and scientific and historical research in the State Museum.

The legislature established the CE Account based on the 1989 Local Government Records Management Improvement Fund (LGRMIF), which helps local governments manage and preserve records by providing them with professional advisory services, training, and grants to improve records management. The LGRMIF is funded by a $5.00 fee for recording, entering, indexing, or endorsing a certificate on any instrument in a county or for assigning an index number to actions pending in County or Supreme Court. Chapter 83 kept the LGRMIF fee in place and added a $15.00 surcharge to support the new CE Account. Counties retain $.25 of each LGRMIF surcharge and $.75 of each CE Account surcharge to defray their costs.

Collapse of the Revenue Source

The CE Account fee structure generated historically high revenues in the first two years, generating $47,436,183 and $46,510,317 in FY 2003-2004 and FY 2004-2005 respectively.  The revenue has declined 40% to about $28,900,000 in the current fiscal year to a point where it cannot support the cost of operation of the Office of Cultural Education’s programs as shown on Chart 1, which compares the CE revenue level since 2003 to the current cost of OCE Operations.  A moving average analysis of the CE account based on Local Government Records Management Improvement Fund revenues back to 1990 suggests that the average annual revenue level for the CE account if in existence since then would be around $32,000,000. 

 

Cost of OCE PS, Fringe, and Indirect: $28,090,933

Revenue during Last 12 months: $28,946,600

Cost of all OCE Operations: $35,686,665

Chart 1:  Trends in CE Account Revenue

Each data point on this chart represents the total revenue earned during the immediately preceding 12 month period.  This chart shows the precipitous and steady decline in revenue from its peak in October 2004.

Use of Account Revenue for Other Purposes

The severe decline of the CE Account has been compounded by significant annual fund transfers from the CE Account to non-OCE programs including the Empire State Performing Arts Center, the Summer School of the Arts, and the  New York State Theatre Institute. Transfers from the CE Account since its inception total $62,000,000.

Of that, $27 million was for programs not related to Cultural Education and $35 million was for long-term Cultural Education capital projects. The 2010-2011 State Budget proposes to end transfers to support non-OCE programs.

What is the Urgency Now?

The CE Account balance is fully depleted.  During the summer of 2009, the cash balance fluctuated between negative $1,000,000 and $3,000,000.  The account is currently nearly negative $3,700,000 and if all outstanding obligations and revenue were factored in, the negative balance would be much higher.  Current revenue is projected only to be slightly more than the personal service costs (including the related fringe benefits and indirect cost) alone.   Essentially, once payroll costs are covered, any spending for fundamental non-personal services (such as leases, and book budget purchases) forces the account balance even more negative. In order to correct the negative balance stated above, a modification to the existing fee structure or a different funding source, must be found. The current negative balance has had the effect that approval to expend funds for OCE’s programs and services is delayed or withheld.

2009 Legislation Assembly bill A-6783 and Senate bill S-3640 were introduced in March 2009. The bill chiefly proposes increasing fees for the CE Account by adding $7.50 to the current $15.00 fee, $.25 to be retained by the counties.  This would provide approximately $14,250,000 to the CE Account and $500,000 to counties at present transaction levels. A-6783 was reported by the Assembly Tourism, Arts and Sports Development committee and referred to Ways and Means.  S-3640 was taken up by the Senate Codes Committee.  Because of concerns about increasing the fee for assigning a court index number, the bill was amended to remove that provision, reducing projected revenue to approximately $12,000,000.  Neither bill emerged from Committee.   

What Must be Done Immediately

It is recommended that the Regents work with staff to achieve the following goals:

 

• Passage of the legislation to stabilize the Cultural Education Account.

 

• Development of longer term strategies to sustain adequate funding for the programs of the Office of Cultural Education.

 

• Action to assure that Cultural Education programs continue to receive timely spending authority to continue effective operations, notwithstanding the revenue shortfall, until revenue relief can be achieved.