Task Force Presentation - Scientific and Cultural Facilities District
Transcription
Task Force Presentation - Scientific and Cultural Facilities District
2015 SCFD Reauthorization Task Force Report to Board of Directors April 23, 2015 1 Most Extensive and Inclusive Process in SCFD History • 300 responses to stakeholder surveys • 330 individuals volunteered and participated in one or more phases of the process • Those volunteers collectively spent over 2,300 hours identifying, analyzing, discussing and evaluating issues raised, and untold hours studying materials prior to meetings. • To date, more than 60 individuals have shared their thoughts by submitting written communication to the board or speaking at public board meetings 2 Task Force Members Kristy Bassuener Susan Beyda Susan Connelly Karen Douglass Tony Garcia Jim Harrington Andrea Malcomb Dave Montez Shepard Nevel Tier I Cultural Council Tier II Cultural Council Tier III Former Bd Member Tier III Former Bd Member Current Bd Member Michelle Nierling Lisa Rigsby Peterson Dan Ritchie Deven Shaff Rhetta Shead George Sparks Gary Steuer Elaine Torres Steve Wilson Local Government Tier II Tier I Tier III Cultural Council Tier I Foundation Current Bd Member Tier II Facilitated by Karla Raines, Corona Insights 3 Task Force Overview • Goals of the Task Force & Work Groups : Serve the Public Well Ensure a Strong and Sustainable SCFD • Task Force was charged by the board with: Reviewing work group options that would require legislative change Making recommendations 4 Overview • Task Force was asked to address 15 issues with statutory or legislative implications • Plus, as time allowed, 3 issues not addressed by work groups and for which the board sought the task force’s recommendation • 18 issues are organized by: • Recommended • Not Recommended • No action required • Not addressed 5 Categories • Recommended • • • • • • Eligibility – 4 issues Tier III – 2 issues Tier II – 3 issues Tier I – 1 issue Tax Levies – 1 issue Administration – 1 issue • Not recommended – 2 issues • No action required – 2 issues • Not addressed – 2 issues 6 Eligibility Recommendations • Allow maximum of two SCFD eligible organizations per Federal Employer Identification Number (FEIN) / Taxpayer Identification Number (TIN) Local government entities currently have the ability to create multiple sub-divisions that can receive SCFD funding. This can confuse the public and decrease transparency for use of public funds. • Redefine Cultural and Scientific facilities in statute The statute includes definitions of Cultural and Scientific. Both disciplines have evolved since they were narrowly defined in the statute in 1987. Looking to 2030 and beyond, those definitions need to be broader and more flexible to adjust for both current and future ways to engage and serve the public. 7 Cultural Scientific Current disciplines Facilities Facilities Cultural Facilities Art Music Theatre Scientific Facilities Dance Zoology Botany Natural History The primary purpose of the SCFD is "to provide for the enlightenment and entertainment of the public through the production, presentation, exhibition, advancement or preservation of art, music, theatre, dance, zoology, botany, natural history, or cultural history.” Cultural History Re-organizing Cultural & Scientific Disciplines Physical Natural History Sciences Life Sciences Earth Sciences A Cultural or Scientific Organizations Cultural History Performing Arts Visual Arts A cultural or scientific facility is one whose primary purpose enlightens and entertains the public through the production, presentation, exhibition, advancement or preservation of visual arts; performing arts; cultural history; natural history; natural sciences, e.g., earth, life or physical sciences; as these terms are defined by the SCFD board. Eligibility Recommendations (continued) Recommended Board Policy to complement Statutory language • Performing Arts may encompass literary arts if there is a clear public performance component, e.g., spoken word and all other eligibility criteria are met. • Scientific organizations may encompass science, technology, engineering or math if there is a clear public component, and all other eligibility criteria are met. 10 Eligibility Recommendations (continued) • Require minimum operating income threshold of $25,000 or 10 years existence for organizations seeking eligibility This is a new requirement to institute a minimum threshold to demonstrate financial and organizational capacity to serve the public well. 25 years of serving the public has demonstrated that organizations below the $25,000 threshold may have difficulty demonstrating financial and organizational capacity to use SCFD funds. Existing organizations will be grandfathered. • Increase years of existence requirement from 5 to 7 years for Tier II and from 3 to 5 years for Tier III IRS requirements to apply for and maintain 501c3 status have relaxed significantly over the years. SCFD can no longer rely on this information to effectively vet prospective recipient organizations. Increasing the years of existence requirements helps demonstrate long-term viability in serving the public. 11 Tier III Recommendations • Exclude the ability of Tier IIs to apply for Tier III funding Originally, Tier IIs were allowed to apply for Tier III funds to ensure that available funds were granted. Today, requests for Tier III funds exceed funds available, making the original language obsolete. • Cultural Councils may consider financial and organizational capacity in funding decisions Some councils already consider financial viability in addition to organizational capacity when considering grant applications and making grant awards. This will codify their practices and may further encourage effective funding decisions by giving them statutory authority. 12 Tier II Recommendations • Add a regional service requirement to Tier II qualification criteria The Tier II tax levy is collected from all seven counties; thus these organizations should demonstrate service to the entire region through official requirement. The requirement will be defined by the SCFD Board. • Modify Tier II threshold adjustment factor by using the trailing two-year CPI Currently, the Tier II threshold is adjusted annually by the most recent Consumer Price Index (CPI), which is announced in February. Organizations do not know the required threshold until after the close of their qualifying fiscal year. This timing makes it difficult for smaller Tier II and larger Tier III organizations to plan for qualification. Using the two-year trailing average allows the change factor to be known in advance of the qualifying fiscal year. 13 Tier II Recommendations (continued) • Modify Tier II Intra-Tier Distribution by adding free attendance Current formula is 50/50% weighting between revenue and paid attendance, which is a disincentive for organizations to provide free programming. Current paid attendance factor has a greater mathematical impact on dollars awarded than does the revenue factor. SCFD Board will set the weighting of the three factors: paid attendance, documented free attendance, and revenue. The Task Force encourages the Board to weight the factors such that the change does not have a significant adverse impact on any organization and in fact is incremental. Reducing the period of time the Board has to wait between modifying formula from 5 years to 2 years will provide increased flexibility to serve the public well. 14 Tier I Intra-Tier Percentages • Task Force recommends that the SCFD Board accept the collective recommendation of the Tier I organizations regarding the Intra-Tier percentages. Subsequent to adjournment of the task force, the 5 tier I organizations agreed to new percentages as follows: Organization DMNS DAM ZOO DBG DCPA Current % of Tier I 25.00% 20.83% 24.24% 11.75% 18.18% Recommended New % of Tier I 24.50% 20.33% 24.24% 13.25% 17.68% The Task Force did not think themselves qualified to formulate an alternative to the collective view of the Tier I organizations. 15 Tax Levy Adjustment Objectives • Evaluate current funding in light of the growth in the number of Tier II (271%) and Tier III (83%) organizations. • Address funding shortfall affecting several Tier II organizations (7 of 26 under 8%). • Address funding shortfall affecting large Tier III organizations (13 of 14 under 8%). • Provide additional funding in first year of reauthorization to address these shortfalls. • Through additional funding, enable Tier II and III organizations to better serve the public. • Recommend changes that are incremental. 16 Tax Levy Adjustment Process • Numerous alternatives considered: Eliminate the base Change the base Change the percentages below the base Change the percentages above the base Create a new inflation based tax levy formula • The process was an exercise in the art of compromise. 17 SCFD Tax Levy Change New Base $38,000,000 Current Below $38MM: 64 / 22 / 14 Above $38MM: 57 / 26 / 17 Base $38,000,000 Below $38MM: 65.5 / 21 / 13.5 Above $38MM: 64 / 22 / 14 18 Tier I Distributions $60,000,000 $52,216,897 $50,000,000 $34,553,200 $40,000,000 $21,680,588 $30,000,000 $20,000,000 $10,000,000 $- Tier I SCFD Funding From 2000-2015, Tier I Annual Distributions grew by 59.4%. DCPA added in 2006. From 2015 to 2030, Tier I Annual Distribution projected to grow by 51.1%. 19 Tier II Distributions $25,000,000 $21,084,900 $20,000,000 $15,000,000 $11,301,725 $10,387,092 $10,000,000 $5,000,000 $- Tier II SCFD Funding From 2000-2015, Tier II Annual Distributions grew by 8.8%. DCPA moved in 2006. From 2015 to 2030, Tier II Annual Distribution projected to grow by 86.6%. 20 Tier III Distributions $16,000,000 $13,640,127 $14,000,000 $12,000,000 $10,000,000 $7,243,825 $8,000,000 $4,587,737 $6,000,000 $4,000,000 $2,000,000 $- Tier III SCFD Funding From 2000 to 2015, Tier III Annual Distributions grew by 58% From 2015 to 2030, Tier III Annual Distributions projected to grow by 88% 21 Tier III Distributions by County $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- Series1 Adams 14.3% Arap 20% Boulder 9.5% Broom 2.3% Denver 30.5% Doug 8.1% Jeff 15.3% 22 Percent of SCFD Distribution by Tier 80.0% 70.0% $33.4MM $52.2MM 65.1% 60.1% 60.0% 50.0% 40.0% $10.9MM 30.0% 21.3% $21.1MM 24.3% $7.0MM 20.0% 13.6% $13.6MM 15.7% 10.0% 0.0% 2014 Tier I 2030 2014 Tier II 2030 2014 2030 Tier III 23 First Year Change 2017 to 2018 $2,000,000 +13.4% $1,500,000 $1,567,000 +13.8% $1,000,000 $1,031,000 $500,000 $- $(500,000) -$618,000 -1.73% $(1,000,000) Tier I Tier II Tier III 24 Growth Comparison Projected Compound Annual Growth by Tier Over Next 10 years 6.00% 4.00% 3.00% 4.96% 4.88% 5.00% Average Inflation past 10 years = 2.42% 2.85% 2.00% 1.00% 0.00% Tier I Tier II Tier III 25 Administrative Percentage Recommendation • Increase SCFD Administrative Percentage to 1.5% of total revenue collected • In SCFD’s 25+ year history, the .75% of revenue allocated to administration has never been sufficient to cover the actual operating costs. SCFD has relied upon interest income, an unreliable funding source, to make up the difference. • The SCFD operating budget is less today than it was in 2000. • Since 1990, SCFD has grown by 1 county cultural council, and 1 Tier I, 21 Tier II, and 108 Tier III organizations to over 275 organizations today, but the Admin staffing has not increased. • Additional funding is needed to ensure: that eligibility is properly verified, and that the taxpayer dollars (over $50 million) provided to the District are properly administered and accounted for, and that the District fully complies with the statutory authorization. 26 Options NOT Recommended • Lower Tier II threshold to include large Tier III organizations Whether due to funding caps or other county guidelines, most larger Tier III organizations receive a low percentage (<8%) of their operating income from SCFD. Although this issue was of great concern for TF members, the TF decided not to recommend lowering the Tier II threshold. The TF does recommend that each Council review its internal policies and its grant request maximum dollar caps, and consider the impact those caps may have on large Tier III’s ability to provide programming to the public. The recommended increase in Tier III funding should help to make this possible. • Should there be a fourth tier? Inadequate funding for large Tier III’s was also an impetus for considering a fourth tier, but TF members felt the issue should be addressed through revised Council practices as noted above and the inter-tier levy distribution. 27 Options Where No Action is Required • Develop new audiences and enhanced services for underserved populations and youth The metro area’s population has grown and changed significantly since 1988. Organizations will need to serve all segments of the community throughout the District in a greater variety of ways and with more free and reduced cost options. This is a general policy statement of value and importance that can be implemented without a statutory mandate. • Movement of money between Tiers II and III When a Tier III organization grows to meet Tier II requirements, there is no mechanism for increasing funds to Tier II, and vice versa. Although there was a desire to address this issue, because voters approve the tax levy percentage assigned to each of the Tiers, funds from one tier cannot be moved to another without a public vote. 28 Additional Options Not Addressed • A. Sunset provision (Number of Years) There was inadequate time to address this issue. • B. Elimination of 5% Discretionary Provision There was inadequate time to address this issue. 29 Conclusions • On behalf of the Task Force, thank you for entrusting us to help shape the future of SCFD. • Our belief is that responsible, fair, accountable and transparent use of the tax dollars provided to SCFD will lead to continued voter support. • Our recommendations are forwarded to you mindful of this imperative. Questions? 30