Meeting of the Board of Regents | September 2009
THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234
Cultural Education Committee
Report and Discussion on Office of Cultural Education Finances
September 1, 2009
Issue for Discussion
The discussion will focus on the status of the Cultural Education Account, OCE’s major financial account, and plans to address structural funding issues. This will provide an update on efforts to assure adequate revenues to support Cultural Education programs now and in the future.
Reason(s) for Consideration
To approve proposals for Board action to remediate the structural funding shortfall.
The Cultural Education Account is the primary source of funding for Office of Cultural Education, funding virtually all of the staff and services of the State Museum and the Office of Public Broadcasting and Educational Television, and a substantial portion of the staff and services of the State Archives and State Library. Revenues deposited to this account are drawn from fees levied by County clerks. These revenues have declined by 42% since their peak in 2004 to a level significantly below the cost of operating these programs. In addition, more than $60 million has been transferred from this account since its inception in 2002 through the budgetary process and more than $4 million additionally is budgeted to be transferred this fiscal year. As a result of this, the cash balance of the account is negative $1,480,291 as of July 31, 2009 and declining.
The declining financial status of the Cultural Education Account was the subject of a Board discussion at its April 2008 meeting and as a result, the Board designated the stabilization of the Cultural Education Account as one of its legislative priorities for the 2009-2010 session. Although the legislation was introduced in both houses of the Legislature, it did not emerge from committee.
Office of Cultural Education staff will provide a brief financial report and will seek the Regents advice in planning for advocacy in the coming budget and longer term remedies for the structural issues.
Report to the Board of Regents on the Cultural Education Account
Chapter 83 (Laws of 2002) created the Cultural Education (CE) Account and transferred Office of Cultural Education (OCE) functions from the State General Fund to the CE Account. It provides virtually all operational funding for the State Museum, State Archives, State Library, and Office of Public Broadcasting and Educational Television, pays the salary of more than 300 employees, funds the purchase of State Library collections and the research facilities of the State Library and State Archives, and supports public galleries, public programming and education, and scientific and historical research in the State Museum.
The legislature established the CE Account based on the 1989 Local Government Records Management Improvement Fund (LGRMIF), which helps local governments manage and preserve records by providing them with professional advisory services, training, and grants to improve records management. The LGRMIF is funded by a $5.00 fee for recording, entering, indexing, or endorsing a certificate on any instrument in a county or for assigning an index number to actions pending in County or Supreme Court. Chapter 83 kept the LGRMIF fee in place and added a $15.00 surcharge to support the new CE Account. Counties retain $.25 of each LGRMIF surcharge and $.75 of each CE Account surcharge to defray their costs.
Collapse of the Revenue Source
The CE Account fee structure generated historically high revenues in the first two years, generating $47,436,183 and $46,510,317 in FY 2003-2004 and FY 2004-2005 respectively. The, revenue has declined 41% to about $28,000,000 in FY 2008-2009 to a point where it can’t support the cost of operation of the Cultural Education’s programs. Historical data (see Chart 1: Trends in CE Account Revenue) suggests that typical revenue levels are much closer to the lower level. If the CE Account had existed between 1990 and 2002, it would have averaged $32,000,000 a year.
Use of Account Revenue for Other Purposes
The severe decline of the CE Account is compounded by significant annual fund transfers from the CE Account to non-OCE programs: $7,600,000 in FY 2007-2008 and $5,000,000 in FY 2008-2009. In the FY 2008-2009 budget this includes $1,200,000 to the General Fund, $650,000 for the Empire State Performing Arts Center, and $3,272,300 for the New York State Theatre Institute. Transfers from the CE Account since its inception total $62,000,000.
Of that, $27 million was for programs not related to Cultural Education and $35 million was for long-term Cultural Education capital projects. In the 2009-2010 State Budget, $4.15 million is legislatively authorized to be transferred to support non-OCE programs.
What is the Urgency Now?
The CE Account balance is fully depleted. During summer 2009, the cash balance has fluctuated between negative $1,000,000 and $3,000,000 and if all outstanding obligations and revenue were factored in, the balance would be closer to negative $4,000,000 or $5,000,000. Current revenue is roughly equal to the personal service costs (including the related fringe benefits and indirect cost) alone. Essentially, once payroll costs are covered, any spending for fundamental non-personal services (such as leases, book budget purchases, and staff travel) forces the account balance even more negative. In order to correct the negative balance stated above, the fee bill must be acted upon now. The negative balance has had the effect that approval to expend funds for OCE’s programs and services are delayed or withheld.
2009 Legislation Assembly bill A-6783 and Senate bill S-3640 were introduced in March 2009. The bill chiefly proposes increasing fees for the CE Account by adding $7.50 to the current $15.00 fee, $.25 to be retained by the counties. This would have provided approximately $14,250,000 to the CE Account and $500,000 to counties at present transaction levels.
A-6783 was reported by the Assembly Tourism, Arts and Sports Development committee and referred to Ways and Means. S-3640 was taken up by the Senate Codes Committee. Because of concerns about increasing the fee for assigning a court index number, the bill was amended to remove that provision, reducing projected revenue to approximately $12,000,000. Both bills remain stalled in Committee.
What Must be Done Immediately
It is recommended that the Regents work with staff to achieve the following goals:
- Passage of the legislation to stabilize the Cultural Education Account.
- Development of longer term strategies to sustain adequate funding for the programs of the Office of Cultural Education.
- Action to assure that Cultural Education programs continue to receive timely spending authority to continue effective operations, notwithstanding the revenue shortfall, until revenue relief can be achieved.