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Debate with city delays funding for council

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Fans sing along as lead vocalist Kevin Cronin of REO Speedwagon performs the hit song
Fans sing along as lead vocalist Kevin Cronin of REO Speedwagon performs the hit song "Don't Let Him Go" Saturday, Aug. 17, at Rock the Park, held at Mill Race Park.

The 9th annual Biggest Block Party Ever took place on Saturday, July 26, 2014 in downtown Columbus.
The 9th annual Biggest Block Party Ever took place on Saturday, July 26, 2014 in downtown Columbus.

Submitted Photo
Organizers say the First Fridays for Families event is aimed at everyone, especially families.
Submitted Photo Organizers say the First Fridays for Families event is aimed at everyone, especially families.

In the end, a group that programs most of the arts events in Columbus every year received expected funding from the city.

But the Columbus Area Arts Council is re-evaluating whether it will continue to seek grants from the city after a months-long standoff over whether the arts council could have the money and what strings might be attached.

For the past three decades, the arts council received city funds from a line item in the parks department budget each year.

The arts council routinely budgeted the city money into its operational plan, using it to pay for programing, salaries and office operations, said Karen Shrode, arts council executive director.

The yearly payments ranged from $77,875 in 1986 to $148,140 in 2013. In 2008, the arts council received nearly $200,000 in city taxpayer money.

“We have an expectation that for years and years we’ve gotten that funding, and so we are going ahead and building programs based upon the expectation of those dollars,” Shrode said. “We’re using it for programs, operating costs and to pay salaries.”

But when the money didn’t arrive starting at the beginning of this year, that was Shrode’s clue that the city had changed the way money would be distributed. The money usually arrived from the city in six installments, for as long as she can remember, Shrode said.

In addition to the city money, the city has given the arts council office space rent-free in The Commons, which is managed by the city’s parks department. That space is valued as an in-kind yearly donation to the arts council of about $20,000.

At one point, arts council leaders were not sure they would get the funding they were counting on when approving their arts budget for this year.

Moveover, they said they were initially unclear about guidelines and the funding application process implemented by Mayor Kristen Brown earlier this year.

What became clear, however, is that the funding relationship between the city and the arts council had changed.

The city’s payments to the arts council had been made under a longstanding agreement made with city officials, outlined in a memorandum of understanding signed in 1995 by the arts council, the Commons Board, the Parks and Recreation Department, the Irwin-Sweeney-Miller Foundation and Irwin Management, Shrode said. That year, $100,757 was awarded to the arts council to cover operational expenses, she said.

The memo of understanding with the arts council was signed by then-Columbus Parks and Recreation Board President Ronald Reinking, who died in 1995.

That memo says the city would pay the salaries of the art council’s executive director, assistant director, administrative assistant and bookkeeper, Shrode said. That agreement was made with the understanding that the arts council was helping manage the former Commons building. It became null and void after the old Commons closed in December 2007 and the new Commons opened in June 2011, Shrode said.

However, even without a new formal written agreement, the money continued to be included as a line item in the city’s parks budget and was given to the arts council every year, Shrode said.

The arts council received $148,140 in city funding in a lump sum on July 10, identical to what the arts council received in 2013. The grant represents about 20 percent of the arts council’s expected income for this year, Shrode said.

To get that money, however, this year’s process was different.

New grant process

At the end of 2013, city officials decided to remove the arts council money from the parks department budget and transfer it into a fund for capital projects.

The city administration decided to require any group seeking city funding, including the arts council, to fill out an application to obtain economic development income tax (EDIT) funding, Brown said.

A committee made up of Brown, City Attorney Jeff Logston, Operations and Finances Director Matt Caldwell and Board of Works member Bob Crider was created to designate and discuss grant applications and make recommendations to the Board of Works about whether a grant should be awarded.

The arts council filled out a city EDIT grant application and submitted it April 9. For months, nothing happened with the arts council application.

If the city was going to give the money to the arts council, Brown said she wanted something in return.

The mayor requires that recipients use the grant money for purposes that fit the city’s strategic priorities, outlined in her Advance Columbus initiative. The initiative advocates advancing health and safety for Columbus residents, improving infrastructure, advancing economic prosperity and job opportunities.

The arts council was required to list the specific objective the money would be used for in the Advance Columbus plan. The art council’s grant application identified itself as being aligned with the Cultural and Creation Capitol and Welcoming Community categories.

In previous years, the arts council did not have to promise to use the funding for any specified reason. Even with the change, Shrode said, the arts council thought it could use the money for operational costs.

Brown said the arts council should not use the city grant money for operational needs, even if that is how the money was used in the past. Additionally, she said the city should have some say about how arts council funds are spent because the grant is funded by taxpayers.

“What I’ve tried to do the last couple of months is to see if there was any willingness of the arts council to let the city have any say or direction on how the money was spent,” the mayor said in July. “I don’t think that’s going to happen.”

Brown said the arts council has not done some tasks she had asked it to do, something she had hoped to tie to the grant funding.

Her requests included:

Helping Columbus ArtFEST coordinator Bob Anderson with its annual juried art show.

Creating a website listing all community arts events.

Helping establish a free arts series in the Commons for the community.

Shrode said the arts council has not taken on these suggestions due to the increased costs and effort that would be required.

Debating board makeup

As the arts council application lingered without a decision, Shrode said, the organization’s operational funds were going into the red.

Since the city funds no longer come out of the parks annual budget, the arts council’s executive board met in early summer to consider changing its bylaws to remove the city parks director and a parks board member from the executive board. That decision has yet to be made.

Changing the arts council’s bylaws is part of a two-year process to revamp its own strategic plan, said Sarah Cannon, vice president of the council’s board of directors.

“All arts organizations have certainly learned over the past few years that we need to do everything we can to be self-sufficient,” Cannon said, speaking of increased difficulty in securing public or private grants. “We’re evolving in that way and have been since way before this situation came up.”

Even though arts council funding won’t come from the parks department anymore, Parks Board President David Jones said there is a need to have parks representation on the arts council executive board.

Despite the money coming from EDIT funds rather than the parks budget, a relationship still exists between the parks department and arts council, Jones said.

The parks department oversees The Commons, where the arts council has its office space, and where its First Friday events are held. The city’s Mill Race Park hosts the arts council’s Rock the Park event.

“Excluding all representation from that board is a little harsh,” Jones said.

Mill Race Center request

The arts council isn’t the only Columbus nonprofit to struggle with the city’s new grant procedure.

Mill Race Center requested $50,000 from the city, but in April received $19,800, the same amount it got in 2013. Mill Race leaders initially assumed they would continue to receive money from the parks department budget this year but instead were told by city officials to apply for an EDIT grant.

Bob Pitman, Mill Race Center director, said he knew an increase wasn’t guaranteed but thought the city would support greater funding to serve a client base of residents age 50 and older. The center uses the city funding to support wellness programs and services, which Pitman said fits the Advance Columbus strategic plan.

Since Mill Race had budgeted for $50,000 from the city, the agency is exploring ways to make up its financial shortfall, Pitman said.

Mill Race Center is considering selling the Town and Garden senior housing apartment complex, valued at $295,000, said Lynne Sullivan, president of the Mill Race Center board of directors. The center also will receive a bequest of $130,000 this year, which could be utilized, Pitman said.

Logston said the Mill Race Center funds were designated within the city’s EDIT fund budget as a “cart before the horse” transaction to make sure the same amount of money was available in 2014 that the center received last year. Since the application process was new for this year, it was the first time to designate EDIT funds for Mill Race.

Ryan Brand, a city councilman and arts council board member, said the city should have a clear timeline on when EDIT grant applicants can expect to know if they have been approved for funding, unlike delays and confusion the arts council and Mill Race Center experienced this year.

“I don’t think it (the delay) was necessary whatsoever,” Brand said. “I think the arts council was caught off guard.”

Seeking clarity on procedure

Brand said organizations such as the arts council and Mill Race Center create their budgets a year in advance and have factored in city grants as an expected funding source.

He said next year, both groups could ask the Board of Works for clear guidelines and timelines for grants, or they could ask the city council for money from a different fund.

But Brand said this isn’t the first or last time the arts council will run a deficit.

“Operating in the red is a temporary condition for an organization like the arts council because many times with the funding streams there’s a timing issue between when we receive that funding, whether it’s from sponsors, donors or grants,” he said.

Brand and Shrode said their biggest concern was the uncertainty of knowing if and when they would receive the city grant.

If the grant had been rejected, the arts council would have had to take money out of its savings account to cover those operational expenses, arts council board treasurer Scott Poling said.

“We’re budgeting staffing. We’re doing programming budgeting based on a set of assumptions that we’ve developed at the end of the year for the next fiscal year,” he said. “We want to know up front what that’s going to be so we can operate for the rest of the year and hopefully not operate in the red.”

The art council’s 2013 annual report indicated the group had more than $500,000 in reserve among its total assets.

Shrode said none of the money in its savings account comes from the funds the arts council has received from the city.

Brand said that while the fund could be used to absorb financial setbacks, it’s important not to tap into it too often.

“You can fundraise for programs,” Brand said. “You can’t go to your supporters and say, ‘Our rainy day fund is low because we had to dip into it. Would you be willing to make a contribution?’ It’s not a very good position to be in as an organization.”

Republic staff reporter Megan Banta contributed to this story.

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