About that $6 million deficit…

The Minneapolis StarTribune is reporting that, at tomorrow’s annual meeting of the Minnesota Orchestral Association, the board will report a deficit for 2011-12 of $6 million on expenses of around $31 million. That’s a pretty impressive number, not least because it’s so much worse than the previous three years and yet so close to the $5 million per year in compensation concessions the board is demanding from the musicians.
The writer, Graydon Royce, seems to be having some trouble figuring out just what’s going on with the numbers – not surprising, given the lack of transparency, if not flat-out deception, the board has demonstrated the past few years in how it reports the orchestra’s financial condition. Unfortunately, this leads him to ask the wrong question:

So the question facing the orchestra board’s 85 members, as they lunch Thursday on sour financial data, is whether the organization can afford itself.

A close look at recent Minnesota Orchestra contracts begs a different question, which is: how did the orchestra manage to run balanced budgets for so many years?
The difference between base salary in 2006-7 and 2011-12 was around $15, 000 per musician, which amounts to an increase of around $1.3 million in wages for the entire orchestra. (I’m assuming, as is usually the case, that titled musicians were not receiving the same percentage increases in their individually-negotiated overscale amounts, but it wouldn’t make a lot of difference to the overall number if they were). Obviously overall musician compensation went up more than $1.3 annually during that period, due mostly to health insurance costs. But that leaves a huge gap between the reported $6 million deficit and what the board claims are unsustainable increases in labor costs.
Essentially the board is claiming that they’re unable to pay, not only for the orchestra they have now, but for the orchestra that they had for a long time before the most recent settlement. No wonder the musicians want an independent analysis of the orchestra’s financial situation. How does an orchestra go from running balanced budgets year after year, well into the deepest recession in our industry’s history, and then start running massive deficits – far above any increase in overall orchestra compensation – when the economy is coming out of that recession? And all this while raising major sums for hall renovation?