In yet another sign of how the recession continues to weaken local arts organizations, Baltimore Symphony Orchestra musicians agreed to a 12.5 percent pay cut Thursday, as management faced its first budget deficit in two years and an endowment fund now off-limits because its value has slipped too low.
"I think the musicians' eyes have been opened," said Paul Meecham, BSO's president and CEO. "Everyone has recognized that this is not a question of how the symphony has been run. It has been caused by the economy. They can see that the board and staff are doing everything we could in a very difficult situation."
The orchestra had counted on using $2.7 million from its endowment to help cover expenses, but its investment portfolio was battered when the stock market began dropping last year, and it's down 21 percent since August 2008.
The BSO's immediate future is not in jeopardy. And there are encouraging signs, such as a 26 percent increase in the number of individual donors, although that's tempered by a 17 percent decrease in the average gift amount. A balanced budget is projected for the 2009-2010 season, thanks in part to concessions the players have made.
While the BSO has enjoyed enthusiastic responses to performances with music director Marin Alsop, the financial situation has been less upbeat. There was a 21 percent drop in single-ticket sales during the 2008-2009 season, along with declines in corporate, foundation and government funding.
"The world isn't changing any time soon," Meecham said. "We'll be having a talk with musicians in the fall about the following season and beyond, and have a healthy debate about all things."
Such debates are going on in other orchestras. The economic crisis has many people questioning the wisdom of the typical orchestra business model, especially one that calls for year-round employment for musicians. The BSO is one of 17 orchestras in the country with a 52-week contract. There is currently no talk about changing that.
"We worked together and worked hard to find solutions that didn't go there," said Laurie Sokoloff, chair of the BSO players committee. "Marin Alsop and Paul Meecham ... didn't come here to lead anything other than a 52-week orchestra."
This has been a difficult year for all the arts. Locally, the economic downturn contributed to the demise and liquidation of the Baltimore Opera Company; layoffs, furloughs and a canceled exhibit at the Walters Art Museum; canceled or postponed concerts by two chamber orchestras; and layoffs at the Maryland Historical Society.
In April, BSO musicians offered to give back $1 million in raises and other benefits scheduled under their contract for next season. This week's new concessions, in wage reductions and furloughs, total $900,000.
"We had a sense in April that more would probably be needed," Sokoloff said. "It's certainly disappointing, but this is the reality. And almost everybody feels that we can live with the concessions we have made. The musicians would make a lot of sacrifices to make the orchestra stay alive."
That same attitude is helping other orchestras cope with the recession's toll. Players in the North Carolina Symphony have taken a 17 percent pay cut; the St. Paul Chamber Orchestra, 12 percent; the Cincinnati Symphony 11 percent.
"We're seeing endowment issues kick in now, when people who made plans based on projections now realize that the [revenue] stream is not there," said Judith Kurnick, vice president for strategic communications at the League of American Orchestras, a service organization in New York.
The inability for the BSO to take its annual 5 percent draw from the endowment has made a deficit all but inevitable this year. "The waterline is $47.8 million [the minimum needed to allow withdrawals]," Meecham said. "The last reading I saw [of the endowment total] was about $38 million. It had been as much as $15 million below."
Despite the cost-cutting measures, the BSO will end up with "some kind of deficit," Meecham said. He declined to predict the amount. "We're still busy raising money, working very hard to use every last day of the fiscal year, which ends Aug. 31," he said.
In April, orchestra members agreed to take a furlough of 1.3 weeks during the 2009-2010 season. The latest deal calls for five furloughed weeks - two taken next month, the rest next season. Several vacancies in the orchestra will go unfilled and there will be a reduction in pension contributions.
Similar wage and benefit cuts, as well as furloughs, for administrative staff, were announced earlier this year; they have realized about $1 million in savings.
Additional wage cuts and furloughs next season for BSO staffers are possible. "The pain has been spread all across the board," Meecham said. "But there are not many opportunities to lay off more people, without impacting our ability to do our job."
When the BSO musicians agreed to $1 million in concessions in April, they also issued a challenge to the community in the form of a fundraising campaign called "Music Matters: Play Your Part." The goal was to raise $2 million in new and increased giving to the BSO by the end of the 2009-2010 season. Alsop started off the campaign with a $50,000 gift. So far, $750,000 has been pledged.
"Music Matters continues to be a real upper for the orchestra," Sokoloff said. "We are so appreciative of people who have contributed."
Next season's budget will be reduced $3.7 million (13 percent), to $24.9 million.
Despite the uncertainties and challenges at the BSO, Kurnick said, "it's also important to note that there is a sign of shared ownership and shared sacrifice. They're in it together and they'll figure it out together," she said. "I can't believe it's not going to get better for them."