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Pittsburgh Symphony Orchestra faces some grim music

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Tuesday, July 27, 2010

Facing its "most difficult financial year in decades," the Pittsburgh Symphony Orchestra is proposing a budget with an $876,000 deficit next year -- its third consecutive year in the red.

The orchestra foresees fiscal year 2011 as the most problematic in decades because of less money from public sources and a reduced endowment draw as a result of the weak economy, wrote symphony President Lawrence J. Tamburri in his application to the Allegheny Regional Asset District for sales tax proceeds.

"These difficulties will challenge the institution to maintain its position as Pittsburgh's leading performing arts institution, a cultural ambassador for the region, a proven economic development tool, and an asset to the community," Tamburri said.

The finance committee of the symphony's board proposed a budget of nearly $31.7 million against revenue of more than $30.8 million. The full board is expected to adopt the budget next month, Tamburri wrote.

In an interview Monday, board Chairman Richard P. Simmons said the state cut its funding from $2.5 million a year to probably $750,000 and RAD cuts its allocation from $1 million to $900,000.

"Put all of these factors together, and the symphony has a significant challenge ahead of it," Simmons said. "However, having said that, one way or another, we'll find a way to get through this period."

The budget includes the symphony's request of $1.25 million from RAD for education and community outreach, performances at Heinz Hall and upkeep of that facility. That's $350,000 or 39 percent more than its current grant, and the district is experiencing its own financial issues.

RAD supports libraries, parks, stadiums and cultural groups such as the symphony with half of the proceeds from an additional 1 percent sales tax in Allegheny County. The other half goes to the county and municipalities. Last year, sales tax collections lagged because of the recession, although they began to bounce back in recent months.

RAD likely will hold a hearing on the symphony's request at the end of August, said David Donahoe, executive director of the district. He declined comment on the symphony's financial woes, saying he had not read its application.

Symphony officials expect a deficit of $2 million in 2010 and no improvement until 2011-12. The group's fundraising campaign, Commitment to Excellence, helped keep it afloat during the economic downturn.

To date, the symphony raised $59 million and is on pace to surpass its original $80 million goal, Tamburri wrote.

Simmons, 79, of Sewickley Heights, the retired CEO of Downtown-based Allegheny Technologies Inc., pledged up to $30 million. The symphony will get more than half of Simmons' gift -- $17.5 million -- after his death, but only if it balances its budget three years in a row.

Simmons emphasized that the orchestra's financial blues have not affected the quality of its performances.

Playing last weekend at the Lanaudiere Music Festival near Montreal, the symphony received a standing ovation and played three encores, he said.

Ken McCrory, a principal in McCrory & McDowell, a Downtown accounting firm, recommended using the principal of the endowment - a move that would require approval not only of the group's board but also the state - to erase the deficit.

"I know that's heresy for many arts boards, but it's not heresy to me," he said. "Special circumstances require special actions. If you need to draw down principal to maintain the integrity of the organization, then that's what you have to do."

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