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August Primary: DIA Millage Proposal Raises Questions

Tri-county proposals spur debates over Detroit-suburbs ties, museum finances and property tax levels in the Aug. 7 primary.

Mary Cassatt, Vincent van Gogh and Diego Rivera are among candidates for local support in Metro Detroit's Aug. 7 primary elections. A millage request by the Detroit Institute of Arts – the museum displaying their art – will be on ballots in Macomb, Oakland and Wayne counties.

Each county's elected commissioners this spring approved language for a 0.2-mill proposal to support the DIA as a regional resource. In addition to nominating candidates for congressional, state, county and local offices on Primary Day, voters will be asked to answer that yes-or-no DIA tax question.

An impassioned debate has begun to intensify, as it always does when property taxes and city-suburban relations are involved. The political landscape also is shaped by economic uncertainty and some communities' tax proposals for parks and recreation, public safety and education. Other countywide requests Aug. 7 include a .59-mill renewal for Oakland's Public Transportation Authority and a .04-mill renewal for Macomb veterans' services.

Facts and views about the DIA millage are summarized here:

Ballot language

The three county boards of commissioners this year established separate Art Institute Authorities, allowed under a 2010 state law, to submit the August millage question and monitor the use of funds if it passes. The four-sentence ballot wording (see attached PDF file) asks for a yes or no vote on a tax "to continue providing art institute services to benefit the residents" of the voter's county. The phrases "Detroit Institute of Arts," "DIA" and "museum" aren't used.

Tax impact

A levy of 0.2 mills means 20 cents per each $1,000 of taxable value. Property owners would pay $10 for every $100,000 of taxable value shown on municipal tax statements.

Duration

The 10-year tax would begin with December 2012 property tax bills and end in 2021.

Money for DIA

Voters will see one of these estimates of 2012 revenue to be generated: Macomb, $4.9 million; Oakland, $9.8 million; Wayne, $8.3 million.
In exchange, residents and school groups from counties approving the millage can visit the DIA anytime without a general admission fee.

Museum governance

Detroit owns the DIA’s collection, building and grounds. It transferred museum management last decade to a nonprofit operating authority, governed by a board of directors from the tri-county area.

Reason for proposal

"The DIA does not receive any funds from the state, city or county," the campaign's FAQ page states. "Elimination of all public funding for operations has required the museum to turn almost entirely to the private sector, an operating model that is not sustainable, particularly in the current economy."

Additional operating revenue for a decade is needed to avoid reducing the current DIA public access of 36 hours over five days each week, executives say. "An operating endowment of $72 million provides funding for approximately 20 percent of annual operations," millage campaign spokesman Bob Berg tells Patch.

Passage by all three counties, according to the online statement, "will allow an expansion of operating days and hours to better accommodate public and school groups. ... The museum's ultimate goal is to become financially self-sustaining ... [through] fundraising [that will] focus on building an operating endowment."

Impact of rejection

"The urgency of the situation requires success in all three counties for operational stability," the official statement says. "A DIA without millage support [in all three counties] will not be the DIA we know today."

The media handout suggests the possibility of "a severe reduction of museum services and programs," perhaps including the end of school tours and "opening selected galleries only on weekends." In , DIA director Graham Beal concludes: "The millage will help ensure that the DIA is around for future generations to enjoy."

The museum's TV ad campaign began June 26, as reported by Crain's Detroit Business. A half-minute commercial (attached to this report) uses the tagline "Art is for everyone –it's what we save for our kids." As museum scenes are shown, a narrator says: "Imagine this: special exhibits, school field trips, art workshops – gone. The Detroit Institute of Arts is at risk of closing its doors. But we can save it by passing a low-cost millage."

Those scenarios and emotional language are crafted as part of a campaign that also includes a website, Facebook page and high-caliber consultants from the Dewey Square Group, a national political advisory firm with a Grosse Pointe office, and Berg Muirhead and Associates, a Detroit public relations agency.

Each side's arguments

Ballot proposal wording

  • Critics say: Omitting Detroit or DIA from the proposal’s wording is misleading.
  • Backers say: County election officials drafted the ballot language, which complies with the 2010 state law authorizing county Art Institute Authorities.

August vs. November vote

  • Critics say: A November vote would bring wider voter participation.
  • Director says: "While there are fewer major candidates and issues on the August ballot, there is still sufficient voter interest," DIA Director Beal said in his reply to . "The smaller ballot allows issues-based campaigns the ability to fully make their case to voters. Less 'noise' around the presidential election allows the DIA to communicate more effectively and cost-efficiently."

Admission fees

  • Critics say: Charging visitors more would be fairer than a regional tax affecting nonusers.
  • Backers say: Admission fees of $4-$8, depending on age, provide 3 percent of DIA revenues. Closing the operating fund gap that way would make the museum far too costly for many people to visit. "The existence of the DIA benefits every resident in Michigan, especially school children in the tri-county area," the campaign site says. "A cultural resource like the DIA is ... necessary for a healthy, vibrant society and is crucial in attracting businesses to the tri-county area."

Bailout?

  • Critics say: Suburban taxpayers shouldn’t bail out a mismanaged museum that spent $158 million on remodeling from 2001-07.
  • Backers say: "The DIA's financial situation is not due to poor management, but is a result of several factors – mainly the loss of state and city support and the recession that has made fundraising much more difficult," Beal says in his Patch letter. "The DIA has been and continues to be fiscally responsible. In addition to balancing the budget every year, the museum's financials are subjected to annual outside audits and consistently receive the highest rating."
    Spokesman Berg, a former Detroit mayoral press secretary, told Patch: "Renovations that were carried out at the DIA were badly needed, carefully planned and implemented with a goal of assuring a modern facility that will continue to serve this region for many generations." The project cut operating costs, he said in an email response, by adding "advances in building design and mechanical facilities that have occurred in the 80 years since the DIA was first opened."

Sell the art collection

  • Critics say: The DIA has millions of dollars worth of stored art that could be sold.
  • Backers say: "We are not in the business of selling art. We hold art to be viewed by this generation and the next," DIA Chief Operating Officer Annmarie Erickson said via Twitter in May. More recently, spokesman Berg told Patch: "One of the fundamental accepted practices of major art museums worldwide as that art work cannot be sold off to cover operating expenses. Any attempt to sell art would immediately undermine the DIA's position in the art world and render it unable to cooperate with other museums in putting together exhibits such as the Rembrandt exhibit. The region would lose its standing as home to one of the world’s great museums."

Who controls the money?

  • Critics say: Counties won't control how local tax money is used.
  • Director says: "The art authorities in each county, whose members are appointed by the commissioners and county executives, will ensure the DIA is using millage revenue only for museum operations," Beal noted at Rochester Patch. "And the DIA is required to submit an annual audit."

Voters' voices

Following are comments from residents around the three counties:

  • Rochester, pro-millage: "What is Michigan and the tri-county area willing to risk in lost jobs, tourism revenue and the like if we begin to lose our cultural institutions like the DIA? ... No one will want to relocate to Metro Detroit or raise a family here without cultural attractions." – , 41
  • White Lake, anti-millage: "The language on the ballot for the DIA millage request does not mention that it is for the Detroit Institute of Arts. If you don't pay attention to newspapers, you're likely to think [it] was for a facility or facilities in Oakland County. ... We cannot pick up the tab for bad management of all of the Detroit facilities." – , 56, Lakes Area Tea Party member
  • Macomb Township, pro-millage: "The region should be willing to support several institutions that ... benefit the Detroit-Metro area. The Detroit Zoo and the DIA are two locations that need to be first-class to benefit the education and enjoyment of our children and depict us as an area that cares about our social environment." – , 57
  • Rochester, anti-millage: "This should have been placed on the November ballot when more residents will vote. Oakland County should not pick up the tab for the bad management of facilities owned by other governmental units." – , 68, past Republican member of Oakland County Commission
  • Livonia, pro-millage: "It would be a very significant loss if they would have to downsize their operation, restrict their hours." – Mayor Jack Kirksey, quoted by Livonia Observer
  • Rochester Hills, anti-millage: "It is important that organizations such as the DIA, Detroit Science Center, etc. are run with fiscal responsibility. ... As much as I am a strong proponent for the arts, this is a bad ballot proposal and I will be voting no." – , 52
  • Sterling Heights, pro-millage: “The DIA is not only an important educational and cultural center for Detroit, but for all southeast Michigan.” – David Flynn, Macomb County commissioner, quoted by The Romeo Observer
  • Macomb Township, anti-millage: “If the DIA is unable to sustain itself through means other than taxation, it is time to replace those in charge with others who can manage current resources and go out and seek sponsors, donors, contributors to cover expenses.” – , 85

Grosse Pointe

BIll Champion July 11, 2012 at 08:39 PM
You might want to start with the DIA's annual report, which includes audited financials, available at its website http://www.dia.org/assets/pdf/annual-report-2010.pdf.
Pete Waldmeir, GP Woods July 12, 2012 at 01:29 AM
Mark, whoever you are, you're still a wuss. I'd call you worse, but this is, after all, a family forum. Sign your name, jerk.
Mark July 12, 2012 at 02:48 AM
Is this what we are to expect from the might Pete Waldmeir? After 30 years of journalism and winning awards not a mighty roar but a soft whimper? I challenge you on your baseless comments and the best you can muster is "wuss" and what can only be described as a petulant "jerk"? If calling you out on your taunts is being a jerk I have no problem with that label.
Katie July 12, 2012 at 02:56 PM
Bill, thanks for the link. The statements are as of June 30,2010 (not sure where June 30,2011 is?). For the current fiscal year just ended June 2012 – it looks like the most current financials would not be available (based on when the auditors signed off in 2010) until after October of this year. Some useful information from the 2010 report: NOTE A regarding Net Assets states ”Unrestricted net assets are not restricted by donors, or the ••donor-imposed restrictions have expired. Under this caption are three sub-categories of unrestricted net assets: 1) Operating funds, 2) Board Designated, where the entire balance can be spent for operating purposes, as directed by the Board of Directors (Board), and 3) Board Designated Endowment, where only the income, not the principal, is spent for operating purposes, as directed by the Board”. NOTE E—Net Asset Classification of Endowments seeks to preserve (responsibly) all endowment assets …”The DIA has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain purchasing power” (the value) “of the endowment assets… Endowment assets include those assets of donor designated funds that the DIA must hold in perpetuity or for a donor-specified period(s), as well as board designated funds.” ....(continued)
MRSPirateLarz July 12, 2012 at 02:57 PM
You sir, are aware that signing your real name on anything on the internet is an open invitation for trouble, i.e.: hackers, fraud, etc... correct? So perhaps instead of worrying about someone's real name on an internet forum you should be more concerned with the very real point of contention that person had with your post! I agree with Mark, your original comments concerning Alan seem very off. What gives? And for a family forum as you put it, you certainly seem to have no problem demonstrating to any children that may read these comments exactly what bad behavior comes from a bully. You act like a bully on this forum. If you are so worried about your image in a family forum perhaps NOT acting like a bully would do you some good!
Katie July 12, 2012 at 02:59 PM
NOTE I. “The DIA has a defined benefit pension plan (the Plan) covering substantially all its employees. The benefits are based on years of service and level of compensation…” In 2010 there was $6.9M in unfunded pension plan and $1.58M in post-retirement health benefits. Effective July 1, 2009, the DIA adopted a 401(k) plan to replace the defined benefit pension plan”. A little confused here because also under NOTE I, it states, “defined benefit plan being frozen as of June 30, 2009” ? Under the new 401K plan,”…the DIA will contribute 3 percent of the salary of eligible employees and will match 100% of the employees’ elective deferral contributions up to 2 percent of the employee’s salary” (e.g 5%). “The ability of the DIA to provide funding will be reviewed annually and will be based on available resources.’ From NOTE J, it looks like they have cut programs & operational activity expenses (Conservation, publication, learning, public programing, exhibitions, curatorial, museum services, marketing/PR, retail, food, auxiliary/volunteer) 31% - and support services (admin., membership/development, maintenance/security) about 18% from 2009-2010. FROM NOTE L – REDUCTION IN FORCE, In “March 2, 2009, the DIA reduced its workforce by approximately 20%...costs associated with this reduction in workforce included termination benefits provided to employees who were involuntarily terminated …$832,500.” ....(continued)
Katie July 12, 2012 at 03:01 PM
The 12/31/2011 Donor report is out on the website – separated by cumulative giving and for 2011, but not by classification (restricted/unrestricted). For what it’s worth, to me, it looks like they’re going in the right direction. I would have preferred voting on this in November and I would like to see a more updated financial picture. My general questions would be (1) planned utilization of the current Net Unrestricted Board Designated funds? (2) projected annual income (over the next 3 -7 years) that can be utilized as operating funds as generated from the current Net Unrestricted Board Designated Endowment balance? (3) Generally, how much of the annual giving (donations) is able to be used for operations? (4) Future fundraising plans?
MRSPirateLarz July 12, 2012 at 03:07 PM
Thanks for posting all that Katie! That is really useful. I agree it looks like they are going in the right direction. And as a point of interest, a lot of the problems that are plaguing the DIA happen to be a problem for most of our cultural institutions in Southeastern Michigan, large and small alike. There used to be more city and state support but that has largely dried up for obvious reasons. Now these institutions are having to widen their donor bases (both corporate funders and individual contributions) and for some organizations doing so is far removed from what their standard operating procedures have been that they are struggling just to tread water. The DIA is under some wonderful management that is trying very hard to bring the DIA back on its feet, secure its future and make it a self-sustaining cultural asset to our community for long into the future. The management of the DIA does not want to ever have to be in this predicament again... at least from what I have been told.
Katie July 12, 2012 at 03:12 PM
oops. Re:Pension plan: Effective July 1, 2009 is the 401(k). The defined benefit plan was frozen as of June 30, 2009. Same calendar year, different fiscal year.
Shelby Township July 26, 2012 at 10:37 PM
I don't see how the DIA, with $100 million of unrestricted funds and a total fund balance of $175 million, can claim they they'll fail (close their doors) without these millages. Part of their operating plan is to increase their fund balance to $400 million by the time the millages expire in 10 years. Doesn't sound like they're going broke to me. It just looks like they want the tri-county taxpayers to bail them out from the tax cuts they received from the state. If this was such a good plan why don't the ballot proposals mention that the County Art Institute Authorities will be turning over the monies they collect to the DIA? Why do they say an Institute Services Provider instead? Was this done to confuse voters into thinking the millages were going to support Art in their own county? Very shady.
MRSPirateLarz July 26, 2012 at 10:45 PM
Currently the museum is operating at a small deficit since it currently recieves no aid from the city OR state. The DIA is also DEBT FREE and has a small endowment already, but that is being used currently to supplement the operating costs that it can't currently cover . Any money the DIA has received in recent years from the state and/or city has been for capital only (meaning building repairs, not operating costs).The millage, if passed in all 3 counties, will sustain the museum's current level of services operating costs for the next 10 years. This will allow the museum to focus on establishing and building an endowment fund that would continually grow and sustain the museum.... conceivably forever. If the millage only passes in 1 or 2 counties then the plan is the same, just a smaller amount of services and a harder time to establish/build the endowment. IF the millage doesn't pass? Within a few years, bye-bye DIA. The DIA would spend the next few years slowly closing programs, and start packing up its collection for safe keeping in hopes of finding a way to survive. If no survivial is found in the few years, then the DIA would have no choice but to close, permantly. I don't know what happens to the collection (ie: would the collection get sold, or stored, or???)
MRSPirateLarz July 26, 2012 at 10:46 PM
Oh and the operating costs for the current level of services? Is roughly $23 million/year. So a balance of $175 million does not last long.
Shelby Township July 26, 2012 at 11:09 PM
Yes, we've heard that story before. If the millage doesn't pass "x" will go away. The TV commercials say the same thing but they also say that if the millage passes new programs will be added to the DIA. So this millage isn't just about "keeping the doors open" it will also fund new programs. So the question is, how much money does the DIA really need to "keep the doors open"? Obviously, it's not the amount that is being asked for. Plus your comment about "$175 million does not last long" should scare anyone that is voting on this millage! The $23 million/year operating costs don't all come from the $100 or $175 million fund because only $2 million was taken from that fund to subsidize operations for last year. So at that rate $100 million would last a long time.
MRSPirateLarz July 26, 2012 at 11:24 PM
Russ, you have a very good point about the $100 million not lasting long. I had not thought about it in that context. I believe that part, if not all, the new programs that they are referring to would be the free admission, an expansion of some of their current programs (ie: the PTSD theraphy, senior art theraphy, etc...) and specialized funding that they will get (that I believe is contingent on the passing of the millages) for buses to be provided from the different counties to help get people who have limited means to these programs. Plus, school trips to the DIA would be free as well. And as far as how much do they need to keep the doors open, I don't know the actual answer but keeping the doors open and keeping the level of services and exhibits that are currently open are two different things. However, knowing the answer to that question would be helpful! I will do some digging and see if I can find an answer to these questions...
BIll Champion July 26, 2012 at 11:35 PM
I would recommend that everyone read the thoughtful article by Mark Stryker in the Detroit Free Press last week at: http://www.freep.com/article/20120722/ENT05/207220515/The-push-for-a-millage-Detroit-Institute-of-Arts-past-puts-its-future-in-jeopardy
Diane Smith July 27, 2012 at 01:38 AM
I am voting no. Mostly due to the misleading language.
John F Martin July 27, 2012 at 01:52 AM
Soooo, you'd rather see a great museum suffer and rob countless children and adults access to this amazing cultural resource because you don't like the language? I hope you're joking. And it's not misleading - my 4-year gets it.
Diane Smith July 27, 2012 at 02:19 AM
Not joking John. Perhaps you would like to tell me how to vote on every other issue and candidate. My four year old grandson gets the word Democracy.
MRSPirateLarz July 27, 2012 at 02:23 AM
Well whether it is misleading or not.... Diane is still entitled to feel how she feels and vote how she sees fit. It's just good to know that people are going to go out and vote. I'm sorry that you are not voting in favor of the DIA Diane, but at least you are exercising your right to vote. I would love to know what part of it you find misleading (for my own benefit, not to argue you on it in any way)
Shelby Township July 27, 2012 at 02:38 AM
How about the fact that the ballot language doesn't mention "Detroit Institute of Arts" or "DIA" anywhere in it? Instead it says the tax revenue will be forwarded to an "Institute Service Provider". But I'm sure John's 4-year old knows what that means (sarcasm).
MRSPirateLarz July 27, 2012 at 03:18 AM
Russ, do you know where I can find a copy of the actual ballot language? I want to see that for myself.
MRSPirateLarz July 27, 2012 at 03:19 AM
Haven't found the ballot language yet but I did find this: Why doesn’t the ballot language include the fact that the millage is for the Detroit Institute of Arts? The ballot language was drafted by County election officials. The proposal insures compliance with State legislation, which authorizes the establishment of a County art institute authority. This authority can assess and collect a millage that is dedicated exclusively to supporting art services. http://www.artisforeveryone.org/faq/#Why_doesnt_the_ballot_language_include_the_fact_that_the_millage_is_for_the_Detroit_Institute_of_Arts
MRSPirateLarz July 27, 2012 at 03:22 AM
By the way, from my understanding.. voting yes means that a county authority will be set up by people who are NOT part of the DIA to secure and direct where and how the funds are spent that are collected from the millage. Also, there will be 2 people from each county (that passes the millage) that will be appointed by the county arts authority to sit on the executive board of the DIA. So in theory there is some checks and balances in place.
Shelby Township July 27, 2012 at 03:23 AM
You can look up the ballot language at https://webapps.sos.state.mi.us/mivote/SelectPublicBallot.aspx
MRSPirateLarz July 27, 2012 at 03:27 AM
Thank you!
Shelby Township July 27, 2012 at 03:29 AM
You are welcome.
Katie July 27, 2012 at 12:03 PM
"The DIA never seriously invested in building its endowment until the late 1990s". Wow. Not to dwell on the past, because nothing can be done about it now, but that is almost unbelievable and seriously depressing. Getting rather tired of bailing out poor leadership.
BIll Champion July 27, 2012 at 12:49 PM
Katie, keep in mind that until the late 90's the DIA was managed by the City of Detroit and its employees were unionized City employees. The Founder's Society took over management in 1997 or 1998. Graham Beale didn't arrive until 1999.
Katie July 27, 2012 at 02:13 PM
Bill, Thanks. I didn't realize the City had control that long. Big surprise. Everything they touch turns to (@#$%. Now if we could get control of Belle Isle.
Mr.Q July 28, 2012 at 04:05 PM
Though I'm late to the conversation here, I'd like to say that I fully support the mil for the DIA. It's considered one of the best art institutes in the country (and was -- and possibly still is -- the fifth largest museum in the country, with a well respected collection). Having said that, it appears to me that the ballot language is open for interpretation on where the money goes and how much of it. Might we see other longtime established arts organizations receiving funding? And, how many people in the tri-county area have homes that have value at $100k? It would be a small amount of dollars for most residents, and certainly more beneficial to those people.

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