Performing Arts Center Use of Unrestricted Endowment Funds

Performing Arts Center Use of Unrestricted Endowment Funds & FY 2013 -14 Budget Amendment Request March 11, 2014

Introduction • Provide overview of PAC history & review details of Endowment Fund structure • Discuss historical financial performance of PAC productions and impacts on General Fund • Provide overview of FY 2014 -15 proposed production season • Outline details of proposed 2014 -15 In-house Production Program • Introduce new concept for funding the PAC in-house productions

PAC History • State-of-the-art facility completed in 1990 • Funded partially with community member donations • Provides valuable community service through affordable access to performing arts • Totals 41, 000 sq. ft. and houses 2 theatres • Seats 550 patrons in the Nellie W. Codding Theatre and 125 patrons in the smaller Bette Condiotti Experimental Theatre • Offers a variety of dance, music and theatre performances

PAC Endowment Fund • Created in 1989 • Intent is to: 1. Generate funds from earned interest to offset operational expenses 2. Keep rental rates and ticket prices affordable to community members 3. Use funds for general charitable purposes of the PAC • Total value = $1, 195, 000 • Consists of two funding types: 1. Restricted ($500, 000) – secured as a base from which interest is generated 2. Unrestricted ($695, 000) – can be used in a manner consistent with purpose of fund

PAC Financial Considerations • In-house production revenues historically exceed costs • Other revenue sources: o rental fees o interest income • Some building overhead and other fixed costs funded by General Fund

PAC In-house Productions • Nine (9) in-house productions since Aug. 2011 earnings = $71, 807) (Net • Events are very popular with over 20, 000 attending in the past three years • Cumulative revenue from ticket sales has exceeded production expenses by approx. 30% • In-house productions have successfully reduced the overall financial impact to the General Fund

Historical Growth Chart PAC Production Growth Trend (Historical Cumulative Net Earnings) $80 000 $71 807 $70 000 $60 101 $50 000 $47 095 $40 000 $62 893 $49 183 $39 274 $30 000 Cumulative N. . . $27 490 $20 000 $10 000 $0 $14 591 $9 942 Willy Wonka Jekyl & Hyde Legally Blonde August 2011 October 2011 May 2012 Wizard of Oz Camelot Forum August 2012 October 2012 February 2013 Young Brigadoon Frankenstein May 2013 October 2013 Scrooge December 2013

Historical Net Revenue Growth Trend $60 000 $55 490 $50 000 (Projected) $40 000 $32 611 $27 490 $30 395 (2 Productions Projected) $20 000 $10 000 $0 FY 2011 -12 (3 Productions) FY 2012 -13 (4 Productions) *FY 2013 -14 (5 Productions) *Note: productions cut in FY 2013 -14 FY 2014 -15 (Projected) (7 Productions + Summer Youth Program) Net Revenue

PAC In-house Productions • Upcoming FY 2013/14 productions include:

PAC In-house Productions

PAC In-house Productions • 7 productions proposed in FY 2014 -15 (plus the Summer Youth Program) 1. Oliver! 5. Applause 2. Bell, Book and Candle 6. Deathtrap 3. Guys and Dolls 7. Mary Poppins 4. Scrooge 2015 Summer Youth Program Start-up (TBD) • Projected net earnings = $55, 490

Projected Net Earnings – FY 2014 -15 Projected Cumulative Net Earnings - FY 2014 -15 $60 000 $55 490 $50 000 $46 940 $42 020 $40 000 $34 370 $30 000 $31 070 Cumulative Net $ + (-) $23 420 $20 000 $17 000 $10 000 $0 OLIVER! BELL, BOOK AND CANDLE GUYS AND DOLLS SCROOGE APPLAUSE DEATHTRAP MARY POPPINS

General Fund Impact (Current Model) • A large percentage of production costs must be committed months in advance • Impacts the General Fund which must absorb upfront costs • Upfront costs include expenses for: o Royalties, Marketing, Construction materials, PT labor • Lag-time for repayment of production revenue to General Fund • General Fund eventually paid back an amount > initial investment • Excess Revenue covers some fixed costs (decreases GF impact)

General Fund Impact FY 2014 -15 Projected $800 000 GF Obligation $121, 000 $700 000 $600 000 $500 000 Expense GF Obligation $176, 000 $400 000 $300 000 $200 000 $100 000 $0 With Productions Without Productions Revenue

Proposed In-house Production Program • Propose using unrestricted endowment monies to fund in -house productions • Benefits include: o Provides ‘seed’ money for in-house productions o Relieves impact on the General Fund o Furthers the intent of the endowment fund… • ‘to provide affordable, high quality programs to the community’ • ‘to be used for general charitable purposes of the PAC’

Other Ongoing Fundraising Efforts… PAC staff actively campaigns for ways to offset production expenses by utilizing the RP Foundation and by seeking the following: 1. Donations § Monetary § Production material items - costumes, equipment, etc. § Marketing - radio air time, mailers, printing services, etc. 2. Volunteers 3. Sponsorships

Fundraising Campaign in Development PAC staff has been working with community members to organize a volunteer group, ‘Friends of PAC’ The purpose of this volunteer organization is to accomplish the following goals: 1. Organize annual fundraising efforts to sell ads in event programs and advertising for the digital slide rotation in the lobby 2. Investigate grants under the umbrella of the RP Foundation 3. Explore other viable fundraising efforts

FY 2013 -14 Proposed Budget Amendment • Staff recommends amending the FY 2013 -14 budget in the amount of $32, 500 • Money would be used as ‘start-up’ funding to re-establish the Summer Youth Program • This program provides a valuable service to youth in the community by training participants for the FY 2014 -15 production of ‘Oliver!’ • Program spans two fiscal years (FY 2013 -14 & 2014 -15) • Anticipated net revenue is $17, 000

Conclusion • Launching this new model would: o provide a mechanism for uninterrupted, affordable, quality community service o have no negative impact on the General Fund – no risk o maintain reasonable rental and ticket rates at the PAC o Reduce General Fund impact for PAC operating expenses