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Monday, August 6, 2012

Responding to the DIA Know Nothings

Like every other current tax issue I have read about, the DIA millage election comes out of a genuine crisis caused by the poor economy.
The reaction of the anti-tax extremists like Doug Tietz is to claim to be patriots and then make a bunch of statements that prove they have absolutely no idea what they are talking about. Much of what these folks often say is also anti-intellectual, anti-culture and anti-common-good for the people.
The beat goes on.
Here's the response of a DIA rep to some of the know-nothing blather...
From Patch...

OPINION: The DIA Responds to Anti-Millage Discussion

Some items in July 28 opinion piece are incorrect and others are either taken out of context or do not give a complete picture of the facts about the Aug. 7 ballot proposal, DIA official says.

Editor's Note: The following was written in response to a July 28 letter to the editor titled OPINION: 15 Reasons to Vote Against the DIA Millage. The italicized portions below are the points as they appeared in that letter to Bloomfield Patch.

2. DIA administration, not the city of Detroit, is asking for the millage for 10 years while the contract with them will end in 5 years. The raised levy from the Tri County may end, all or some, in Detroit treasury.
Response: Totally false. The Art Institute Service Agreement with each of the county arts authorities specifies that if the current operating agreement with the City of Detroit is terminated or amended that the Authority will have no obligation to levy a tax unless a new agreement is approved by the art authority. The money can only be spent in compliance with the contract between the art authority and the DIA and none of it can go into the city treasury.
3. The DIA is doing financially well. Between 2009 and 2011 the assets increased by 50 million dollars to 185 million from 135 million increase by 37%!
Response: Most of that increase is based on an increase in the value of investments in the museum’s endowment following the cratering of the stock market in 2009. In addition, it includes $10 million from the State of Michigan specifically for capital projects, not operating expenses and a $5.5 million reduction in long term liabilities due to the change in the retiree health care plan, an example of the DIA’s prudent fiscal management as it copes with reduced resources.
4. $100 million is available in the bank as unrestricted cash and can be used by DIA at any time.
Response: The $100 million is not unrestricted cash. It includes $57.4 million in board-designated endowment funds and $33.6 million in board-designated funds for non-operational projects. Endowments are designed to generate investment income from their principal, not to have the principal spent down for operating expenses. No responsible funding plan calls for spending endowment principal for operating expenses.
5. Graham Beal, president of DIA compensation was $426.000 plus perks, more than the salary of US president. Governor Snyder compensation is $159,300 annually. Beal partner in the DIA conspiracy is Annmarie Erickson whose compensation is $236,867 plus perks.
Response: While the compensation numbers are accurate, it should be noted that this is not just base salary. The total includes other reportable compensation, bonuses, retirement or deferred compensation, and non-taxable benefits, such as health care. There are no “perks” beyond the compensation.
6. The millage will raise 23 million dollars (Oakland 10, Wayne 8 and Macomb 5 million dollars). This money will be paid by home owners who may have other priorities being elderly, unemployed or having health problems. It is estimated that about 19% of the Tri County residents visit the DIA. Thus these 19% are subsidized by 81% of the population which prefers other entertainments. Moreover, yes, it is free admission to the DIA for the Tri County residents, but admissions are only 3% of DIA revenue. The "free admission" does not include special events, concerts etc. There will be a special charge for it. On top of it there is travel to the DIA and parking.
Response: 79% of DIA visitors were from the tri-county area (Wayne, Oakland and Macomb) – from July 1, 2011-May 31, 2012.
7. In return for giving DIA at least 230 million dollars Tri County residents will get practically nothing. They will get 2 spots on the DIA 44 member forum, but no supervision or control or assets. GM got money from US government and surrendered stocks and other assets, but why does DIA gets a freebie? DIA levy must be rewarded by surrendering DIA assets. What is wrong in creating a DIA branch in Birmingham?
Response: Residents of counties that pass the millage will receive unlimited FREE museum admission, free school field trips, expanded programs for seniors and additional community outreach programs.
11. A troubling question is the fact that governor Granholm eliminated a 10 million annual Michigan contribution. Either the DIA belongs to the city of Detroit or that this gem belongs to our whole state. It is unfair to single out the Tri County because they are thought to have deeper pockets than the rest of the state. 
Response:The only $10 million contribution the DIA received during the Granholm administration was a one-time $10 million grant for capital projects. Cultural organizations across Michigan often receive single grants for capital projects.
12. Rating of DIA per Charity Navigator gives DIA a 2/4 rating or 48% while most museums have a rating that is higher than 60%. This reflects not so good use of available money.
Response: Charity Navigator ranks charities in two separate components, one of which is financial health. The DIA’s two star rating is due to its current financial condition – small endowment and lack of public funding.  Voter approval of the millage will provide operating funds and allow the museum to concentrate its fund raising efforts for the next 10 years on building up its endowment. Both the guaranteed funding of the millage and the opportunity to build its endowment fund will move the DIA much higher on the charity Navigator chart.
13. DIA was compared to Toledo institute of Art which is larger and has no admission fee and is not a burden to Toledo residents.
Response: The majority of Toledo’s $14 million operating budget comes from revenue from its operating endowment of $138 million. The DIA currently receives only 14 percent of its budget of $25 million from interest generated by its $98 million operating endowment.  The millage will allow the DIA to refocus its fundraising efforts to build the operating endowment and move much closer to the Toledo funding model.
Pamela Marcil,
Public Relations Director, Detroit Institute of Arts


  1. I've been unable to verify the claims of either the anti-millage campaign or the DIA with regard to the contract terms between the counties and the DIA. Does anyone have a primary source for either of these?

  2. To really get to the primary source I think we'd have to look at audited financial statements. I do not believe these are publicly available. I don't think most not for profits have to make them available. Tax forms are available but they have very limited information and use a different accounting basis.

  3. I wonder, then, where the anti-millage camp is finding data suggesting that the money could revert to the city of Detroit. From what I read in the state law cited in the ballot proposal, the money raised must go directly to supporting an arts institute, and from the minutes of the county commission meetings where the millage was discussed, it appears that the county arts authority would be able to rescind the funding (and associated levy) entirely if the contract between the city and the DIA changed. Then again, I am not a lawyer nor do I have experience in contract law, so I'm trying to find clarity. The claim has to come from *somewhere* - I just can't figure out where.

    1. John, your assessment of the law is probably correct. The "anti-millage camp" here in Troy has a long history of making "stuff" up. IMHO humble opinion, they have lost all credibility.