Art museum gears for growth

By Todd Cohen

RALEIGH, N.C. – As it prepares to launch an $80 million, publicly-funded effort to build new galleries and renovate its existing building, and kick off a private endowment campaign that could total $100 million, the N.C. Museum of Art is at a competitive disadvantage because state pay for its staff is too low, its chief executive says.

“I think the state should do more of its share in sustaining a competitive quality of staff,” says Larry Wheeler, museum director.

Wheeler is critical of a report in January by the State Auditor’s Office that said the private N.C. Museum of Art Foundation had violated state law by supplementing the salaries of state employees at the museum.

“We have not violated any state regulations or any state laws,” Wheeler says.

The report also said the foundation had “extensive control” over the museum’s daily operations.

Wheeler says the foundation functions mainly as a “private bank for the private moneys” the museum raises, managing its investments and the private share of the museum’s budget.

“We figure out the budget and go to them and say what it will cost to run the museum,” Wheeler says. “They approve the budget and thereby authorize those funds to be spent for the purposes for which they were approved.”

The foundation also employs and pays the museum’s chief financial officer and chief operating officer, and their staffs, who manage its investments and administrative operations, Wheeler says.

And based on discussions it held throughout most of 2005 with the Office of State Personnel and the state Department of Cultural Resources, which oversees the museum, he says, it has reduced to 13 from 33 the number of museum employees paid by the state who also get salary supplements from the foundation.

That reduction resulted from an agreement by the state to reclassify those jobs at higher pay scale.

The foundation continues to pay the entire salaries of roughly 20 employees, Wheeler says.

The museum informed the state auditor’s office while it was conducting its investigation that the changes in supplemental pay “have taken place or are underway,” Wheeler says, but the auditor’s report covered the fiscal year that preceded the date those changes were made.

“What they saw was the previous fiscal year” that ended June 30, 2005, he says.

Public-private partnership

Wheeler says the public-private partnership through which the foundation supplements museum salaries is critical.

“The whole business of having a foundation to reinforce what the state does not do is essential to our success,” he says.

State pay for museum employees is so low, he says, that he has had a hard time attracting and retaining employees in a highly competitive museum marketplace.

It took more than a year, for example, to fill the job of director of education at the museum, Wheeler says, adding that he “lost four candidates because they wouldn’t take the salary being offered,” totaling $70,000.

And Rebecca Nagy, former curator of African art and associate curator of education, left the museum in 2002 to become director of the Samuel P. Harn Museum of Art at the University of Florida, he says.

“I would have lost [more] people if I had not been able to count on foundation subsidies of curators because they were way underpaid when I got here,” he says.

Before he became director in October 1994, Wheeler says, the state agreed the foundation would provide a share of his salary.

“The foundation has always paid a substantial part of my salary,” he says.

In the fiscal year ended June 30, 2005, the state auditor’s report says, the foundation paid Wheeler $111,192 to supplement his $97,261 state pay, and also paid him $135,642 in consulting fees and $13,586 to cover the lease of a car, plus its fuel and insurance.

He also was reimbursed $57,140 for travel and entertainment expenses, the report says.

Wheeler says that in late 2004 he had requested a five-year contract that would include a retirement subsidy plus the possibility of periodic bonuses based on performance.

But the foundation instead gave him the one-time consulting fees reported by the state auditor, he says.

Those fees were given with the agreement that, if Wheeler leaves the museum before five years are up, he must pay back, on a pro-rated basis, the share of the fees for the time he will no longer be at the museum.

Wheeler says he has had to ask the foundation for all his pay increases, and that the state and the foundation each pay his retirement benefits based on a percentage of the salary each pays him.

And for the past two years, he says, the State Personnel Office has asked state Attorney General Roy Cooper for an opinion on the legality of that dual arrangement for the payment of retirement benefits.

“The attorney general has not given any opinion, which may be a good thing because, for 12 years, the foundation and the state have been paying into my retirement plan based on my combined salary, and that I will get retirement benefits based on what the accumulated amount is.”

Pay comparison

Including his state pay and foundation salary supplement, he says, his combined annual salary of $216,000 lags that of his counterparts at other museums.

Among art museums in the U.S. and Canada with annual operating budgets ranging from $10 million to $20 million, compared to $11 million at the N.C. Museum of Art, the top salary is $425,000 and the average salary is $246,198, Wheeler says, citing the annual survey by the Association of Art Museum Directors in New York City.

“So even the average is more than I’m making,” he says. “I’ve always thought for the state to be paying me less than $100,000 was unconscionable, given what I do and what I was hired to do.”

He acknowledges that state officials have “been through difficult years and have done what they could do.”

And he says the museum foundation “realized that as a public-private partnership they could very well justify investing in my compensation, and they have, admirably so.”

The art museum is “considered to have the finest collection of European Old Master paintings in the Southeastern United States,” he says.

During his tenure, he says, the museum’s annual budget has nearly doubled, to $11 million from $5.5 million, while private fundraising has grown to $6 million a year from $1 million.

Of the private dollars raised each year, Wheeler says, individuals contribute roughly half, and corporations and foundations each contribute roughly one-fourth.

Wheeler says he also oversaw a capital campaign in 1998 and 1999 that raised $23 million in private support for endowments and program growth, and most recently secured the gift of Rodin sculptures.

Plans for growth

Now, Wheeler says, the museum is set to add 90,000 square feet of new galleries to the 182,000-square-foot facility that opened in 1983.

Building the new galleries and renovating the existing building will cost nearly $80 million, to be funded mainly with taxpayer dollars.

Wheeler says that funding includes $15 million that Raleigh and Wake County have committed in revenues from the “interlocal” tax on hotels, motels and beverages; $2.3 million appropriated in 2004 by state lawmakers for architectural planning; $6 million appropriated in 2004 by state lawmakers for repair and renovation of the existing building; and $10 million appropriated by lawmakers last year for construction of the new galleries.

And based on conversations he has had with Gov. Mike Easley and lawmakers, Wheeler says, he hopes lawmakers will approve another $40 million this year.

The capital project needs roughly $2 million more in private funds, Wheeler says.

P>He says he also would like to raise $50 million in private funds for an endowment to support museum operations, and another $50 million to support the acquisition of art.

The operating endowment, managed by the foundation, now totals $13 million, and the art-acquisition endowment, overseen by the North Carolina Art Society, totals $5 million.

The museum’s collection, worth roughly $1 billion, is a public asset overseen by the museum’s board of trustees, while the building and grounds are state property overseen by the trustees and the state Department of Cultural Resources, Wheeler says.

Carol O’Brien Associates in Durham will conduct a study in April to test the feasibility of the campaign, which could begin its public phase in 2007, Wheeler says.

Private funds currently are being raised in a “quiet” phase.

Despite his criticism of his salary, Wheeler says. he plans to stay at the museum for the rest of his career, even though he could retire when he turns 63 in August, and even though he frequently is recruited for other jobs.

“I am committed to this museum for the rest of my career,” he says. “I’m not going anywhere.”

But he says financial motivation is critical for him and for the museum staff.

“I’m also aware enough of what my colleagues are paid to expect that I be compensated fairly,” he says, “just as I try to compensate my staff fairly.”

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