Nassau's Cradle of Aviation Museum at Mitchel Field will be out of cash by the end of November, Comptroller Howard Weitzman said, unless it raises substantial funds in the next two months.
The comptroller's warning is based on a new cash flow analysis of the museum, recently provided to the Nassau County Legislature. The cash report was prompted by concerns about the Cradle of Aviation's financial condition, following a limited financial review of the museum issued in July.
"The Cradle of Aviation has roughly an eight-week window to solve its financial crisis," Comptroller Weitzman said. "This museum, celebrating Long Island's pivotal role in world aviation, is one of Long Island's great cultural resources, but it has suffered from poor stewardship by its board and management team. They need to act immediately to raise the funds necessary to keep from going under."
Comptroller Weitzman continued, adding, "Our report shows that the Cradle of Aviation is generating insufficient revenue to pay its bills and meet its payroll. It is running on fumes. The museum has not paid most of its creditors for months. And this is despite the county's approval of a generous bailout package in April 2006 that provided sharply increased subsidies."
The bailout package forgave the museum's $2.5 million debt to the county and provided a cash infusion of $500,000, of which $350,000 has been paid to date, according to the comptroller's office.
The agreement required the Cradle of Aviation's operator, Museums at Mitchel (MAM), to meet certain revenue and fundraising targets. "The museum's management and board should have realized that the additional subsidies and the revenue targets stipulated in the agreement were never going to be enough to save the museum," Comptroller Weitzman said.
MAM board members told Anton Newspapers that the county has never recorded the $2.5 million debt because it never expected to be repaid. Moreover, the cash infusion recently provided by the county, while greatly appreciated by the board and other supporters of the Museum, puts it in line with what other local governments provide to museums they support every year. Further, trustees state, the comptroller failed to report that the Cradle was promised the $500,000 of county support within the Cradle's Fiscal 2006, which ended June 30, 2006. That support is now drawn out over an extra six-month period, thereby serving to compound the financial difficulties faced by the Museum, according to trustees.
MAM board members believe Weitzman's latest release has "inaccuracies" and "undermines the county's and board's efforts to save this valuable institution." According to trustees, after a prior press release on the museum Weitzman put out, the board deliberately withheld comment. "We did so because we still held out hope that confidence could be restored and funds raised to save the Museum. However, Mr. Weitzman's press release has made those hopes dimmer than ever before."
In the months since the April agreement, Weitzman said the Cradle failed to pursue the aggressive fundraising necessary to right its finances. "Our analysis shows that even in the best case scenario the museum will have a negative cash balance of approximately $174,000 by the end of November," Comptroller Weitzman said.
Deputy County Executive Peter Gerbasi added, "We agree with the comptroller that the Cradle's management and board need to do a better job of raising private funds to help keep the museum open. We've been working with them to provide key assistance, including the recent infusion of $500,000 and the forgiveness of up to $2.5 million in debt. But now it is up to the Cradle's management and board to take the lead in bringing in private sector money, which is the model that successful museums around the country use to achieve their goals."
In accordance with the interim agreement with the county, the museum was required to retain an independent consultant, Lord Cultural Resources, to evaluate the museum and to provide a business plan. MAM trustees said the business assumptions on which the Cradle of Aviation was conceived, which Nassau County supported with $40 million in construction funds, were made long before the members of this board and current county officials became involved. The museum has already expended over $40,000 to Lord Cultural Resources for the Evaluations and Recommendations report and has committed to expend another $40,000 for the business plan. These are funds the museum will have to expend from within the county support money.
"They included assumptions that the Cradle of Aviation Museum would not only meet its heritage preservation and educational responsibilities, but that it would pay down a debt, have an operating surplus and provide income to the county. Those assumptions were badly mistaken and established a definition of success that does not apply to any museum in America or anywhere else in the world, as stated in a preliminary Evaluation and Recommendations report prepared by Lord Cultural Resources, the largest museum planning firm in the world," trustees said.
"For five years, the board of trustees of Museums at Mitchel has been struggling to deal with the consequences of those mistaken assumptions in order to maintain for the people of Nassau County and the region a world class aviation museum. During that time, Nassau County has provided financial support. However, the level of support the Museum has received from the county, and all government sources, including the state, has been much lower than that received from the government by similar museums around the country. Lord Cultural Resources' reported that the average museum in America generates 25 percent of its operating income from government sources, primarily local. Last year, the Cradle received only 6.5 percent of its operating funds from the county," trustees stated.
Although Comptroller Weitzman's analysis takes into account the Museum's recent initiative to reduce part-time staff this month, he believes that measure does little to forestall the crisis. "The cash shortage is too severe to be solved by simply cutting expenses," he said. "What can be done to rescue this cultural resource? Fundraising is the key to the Cradle's survival ... But the current management and board have treated fundraising as a secondary priority," Comptroller Weitzman continued. "They must secure new contributions on an emergency basis and prepare an aggressive fundraising campaign for 2007 and 2008. If the museum's leaders are themselves incapable of effective fundraising, they need to bring in a new team that can generate substantial contributions, and quickly," he said.
The comptroller's report concludes that expected revenues from attendance, building rentals and contributions are inadequate to cover monthly expenses, even with the county subsidies. The analysis notes that the museum's accounts payable total more than $600,000 as of July 31. That amount, however, does not include other current liabilities, one of which is a debt of approximately $434,000 to Nassau County to cover utility costs dating back to 2004. "The recovery of which is now highly unlikely," Comptroller Weitzman said. "This means the county taxpayers will also be stuck with the utility bill."
The report, according to Comptroller Weitzman, discloses that as of July 31, 2006, the museum had cash available for operations of $185,177; had an accounts payable balance of $606,026, approximately one-half of which is more than 120 days old; had drawn down its full bank line of credit of $1.75 million and does not have the resources to repay the loan; had other current liabilities in addition to its accounts payable, including $434,000 for utility payments to the county and $385,000 in disputed payments in litigation over the museum's simulator ride; and has only $30,000 in pledges receivable to be collected in the upcoming year. The report notes that the comptroller's office is unaware of any additional grants or contributions that will bring in the needed funds over the next three months.
The comptroller's limited financial review of the Cradle of Aviation issued in July found that drastic operational changes were necessary if the museum is to achieve viability. The audit stated that the museum has been ineffective in its fundraising efforts; its attendance has been declining; it has spent down almost all of its past donations and pledges and has not generated new pledges; it has not aggressively pursued state or federal funding; its management was to a significant degree "dysfunctional," with key staff apparently unwilling to speak to each other; and it suffers from a lack of competitive procurement and an absence of appropriate financial controls.
Trustees said they and the president "have tried to maintain the Cradle through cost management." Lord Cultural Resources reported that "the operating budget of the Cradle of Aviation Museum is clearly quite low relative to figures for other museums . . . and as a consequence the Museum has had to cut corners." The Museum has occasionally experienced internal control lapses, as previously reported by Weitzman, but none seriously affected the Museum's operations or are unique to the Cradle of Aviation Museum, and all have been corrected.
"The Cradle also has had to deal with bank debt," board members added. "As Lord Cultural Resources said: 'The Museum is one of the very few that has a bank debt. There is only one other museum in the history of the country or internationally that has been operationally self-sufficient based on earned income and successfully paid down a debt.'
"This board has long recognized its own responsibility to raise funds philanthropically to support the Cradle. What those who attack the Cradle of Aviation either fail to realize or do not acknowledge is that donations to museums almost always are in support of specific new exhibits," trustees noted.
"Rarely, if ever, are substantial donations made to support day-to-day operations. And even more rare are donations made to help pay off debt, especially in an atmosphere, such as the one promoted by Mr. Weitzman, suggesting that a museum is about to close. There was never an endowment for the Cradle of Aviation because, as Lord Cultural Resources pointed out, 'it was erroneously assumed the Museum did not need it.'
"The issue now is how this fine museum can not only survive but flourish. This board and the county have both accepted the findings of Lord Cultural Resources, and we have engaged Lord to produce a realistic business plan for the Cradle," MAM board members concluded, inviting Comptroller Weitzman to participate in that process, particularly in discussing how the Cradle can raise philanthropic donations and boost earned income under the difficult circumstances of eroded confidence now faced.
Trustees greatly appreciate initiatives of the current county government to help the Cradle of Aviation Museum to survive and flourish, noting however that it is their responsibility to set the record straight in response to "unfair attacks leveled at the Cradle, with the hope that everyone who has come to admire this museum ultimately can be enlisted to help it succeed."
The complete comptroller's cash report may be read or downloaded from http://www.nassaucountyny.gov/agencies/comptroller/index.html.
Carisa Keane contributed to this story