The Baltimore Symphony, like many other orchestras around the country, finished up its 2001-2002 season in the red, but less of it than anticipated. Last spring, a deficit of about $1 million was projected; the final audit put the total at $661,000.
It's the first deficit the BSO has had to carry since 1996, and it looks like it will get worse before it gets better. The current $25 million budget projects a deficit of $515,000, a figure almost certain to rise due to just-announced increases in health insurance premiums. This would put the BSO's accumulated debt at about $1.2 million by the end of the fiscal year, Aug. 31, 2003.
"We've come through a lot in the past, so we're not panicky," BSO president John Gidwitz said yesterday. "But we're not taking this lightly, either. We are determined to meet this head-on. We've worked very hard to avoid falling into a deep hole. But this is a very tough, challenging time for orchestras and all the arts."
Among those other orchestras, the Chicago Symphony posted a $6 million loss for 2001-2002 on a $59.6 million budget; the Houston Symphony $1.6 million on a $22.5 million budget; the New Jersey Symphony $1.1 million on a $15.2 million budget.
Rising health care costs have been a particularly troublesome issue for the BSO, increasing $200,000 in 2001-2002 over the previous year and accounting for $33,000 of the deficit. For 2002-2003, initial indications were that insurance premiums would rise 19 percent, but the orchestra recently learned that the figure will turn out to be between 24 percent and 28 percent, which means that between $50,000 and $100,000 will likely be added to that projected $515,000 deficit for 2002-2003.
The decline in the national economy has added to the pressures, hindering contributions from foundations and individuals. And upheavals in the stock market have taken a sizable bite out of the BSO's endowment, which Mann expects to be at $60 million by Jan. 1, down from a high of $78 million in 2000. The orchestra takes an annual draw of 5.5 percent from that endowment; an extra $250,000 will be withdrawn to bolster the 2002-2003 budget.
(The bond issue approved by voters on Tuesday, providing $1 million for improvements to Meyerhoff Symphony Hall, the orchestra's home base, has no bearing on the BSO's operating budget. Those funds are dedicated to capital expenditures.)
The downturn in the BSO's fiscal situation began a few days before Sept. 11, 2001, when the orchestra's annual gala concert, traditionally the biggest fund raiser each year, brought in $117,000 less than projected. As the 2001-2002 season continued, there was better news. Income from ticket sales to orchestra concerts rose 2 percent from the previous year. But that still fell $280,000 short of projections.
Several scheduled educational concerts were canceled in the wake of 9/11, costing another $100,000 in lost revenue. Non-BSO events presented by the orchestra at Meyerhoff Hall missed revenue goals by $200,000.
Unexpected expenses, such as extra security measures for the BSO's European tour in the fall of 2001 added to the red ink. And some government and foundation grants originally figured into the budget turned out to be smaller than expected.
Still, symphony officials found encouraging elements in the fiscal picture, starting with the whittling of the 2001-2002 debt.
"People have been wonderful, putting in literally thousands of hours in meetings to come up with ways of getting the deficit down," Gidwitz said.
Those meetings, which have involved musicians as well as BSO staffers, resulted in both cost-cutting and revenue-enhancing measures. The former included reduction of three staff positions, the latter included additional BSO concerts sold to presenters and additional rentals of Meyerhoff Hall.
"And the call [for donations] last spring was responded to in a very positive manner," said Philip English, chairman-elect of the BSO's board of directors. "But there's a limit on the extent to which you can go to seek community support. We have not yet achieved the financial model necessary to deal with all of our financial problems."
As for the 2002-2003 budget, the brightest news is that the first draft anticipated a shortfall of $1.7 million. Scrutiny of every budget item brought that figure down by $1.2 million.
Among the measures taken is a hiring freeze in the orchestra; auditions are being held for about a half-dozen positions, but successful applicants will not start until the new budget year begins next September.
"By filling in this year with substitute players, we will realize a savings of $210,000," said Douglas Mann, BSO vice president and chief financial officer.
Subscription ticket sales for the regular 2002-2003 concert series are down about 9 percent from last year, but single-ticket sales are currently on track with projections, and the separate, more informal "Symphony With a Twist" has generated strong sales.