Treasurer: Arts Council debt exceeds $130,000

Defunct for eight months, the Houma Regional Arts Council will not be able to pay its debts unless it is successful in a pending damages claim against BP or receives other unforeseen assistance, according to the council’s treasurer Joe Kopfler.

The council’s board of directors fired its executive director last September and laid off its entire staff after financial mismanagement turned the balance sheet “upside down,” as Kopfler describes it. Including squandered grant funds, unpaid federal taxes, unpaid compensation to former employees and outstanding debts to local vendors, the arts council’s debt exceeds $130,000, the treasurer said.

“If the community is interested in getting involved to help out in any way to solve this financial mess, I offer my services,” Kopfler said.

The council’s board of directors has not met since November. Parish government ended its lease of office space to the organization in December, and local, regional, state and federal funding have been pulled.

Broke and homeless, the 29-year-old nonprofit organization seems too far gone to save itself, according to Kopfler

CONDUIT OF CULUTRAL PROGRAMMING

The Houma Regional Arts Council, formed in 1985, served as a clearinghouse for cultural grant monies, vetting sub-grantees for state dollars and using money it received to create its own programming. Prior to the financial calamity, it was respected for incubating arts and heritage in Lafourche, Terrebonne and four other regional parishes.

Ten years after its formation, the council began channeling state arts monies. Louisiana’s Decentralized Art Fund Program entrusted grants to nonprofit regional development agencies, who in turn judged requests for funding as made by artists and nonprofit organizations in their region and re-granted the dollars.

The Houma Regional Arts Council oversaw DAF monies for Region 3, which consists of Assumption, Lafourche, St. Charles, St. John, St. James and Terrebonne parishes.

From 2005-2012, the Arts Council distributed more than $1 million in state money throughout its region, $300,000 of which stayed in Terrebonne Parish, Kopfler said. Most initiatives funded either fully or partially with these dollars were offered to the general public at no cost.

Re-grant projects included the Terrebonne Library’s writers’ conference, Nicholls State University’s Swamp Stomp festival, the Rougarou Festival, local theater productions and sculptures installed along Bayou Terrebonne.

For 2013, Region 3 was allotted $54,000 in DAF funding via the Arts Council. As normal, $40,000 was paid to the council up front, with the balance due at a later date.

Although that initial pot of money was pledged to specific sub-grantees, it was spent on other purposes. The Arts Council was a vehicle of other funding sources, as well, and a steady flow of cash allowed Executive Director Glenda Toups to plug existing holes – including, at times, payroll – and move forward.

None of Toups’ managers were aware of the debt cycle, a fact that Kopfler said fueled the crisis.

“Loss of officers, secretary and treasurer, compounded with a lack of good financial oversight and masked by success in obtaining a large grant from the Greater New Orleans Foundation in 2012 all added up to an impending financial collapse,” Kopfler said.

Because the Arts Council had not submitted a necessary accounting of its 2012 financials to the Legislative Auditor by the June 30, 2013 deadline, the auditor’s office flagged the account as noncompliant with state law. This designation came as a surprise to the board of oversight, which found out more than two months later in September.

“It depends upon who’s at the (board) meeting,” Kopfler said last year. “There were some meetings where there wasn’t a quorum. … The fact that they were noncompliant, I don’t think anybody knew it until I brought it to their attention.”

Kopfler, a former board president and member of the executive committee, had termed off of the executive board of directors and was not engaged with day-to-day business of the Arts Council. He learned the council was noncompliant with state law when the state Division of the Arts informed the council the balance of its 2013 funding would be frozen because of the Legislative Auditor’s designation, and that the state wanted the initial $40,000 back so that its office could disburse the monies.

The sum, of course, was not to be found.

The board promptly fired Toups and appointed Kopfler as interim treasurer, a position vacated in July 2013 when then-treasurer Shirely Porche resigned because she was moving out of state. Porche said in September she didn’t know anything was amiss with the council’s finances at that time.

STATE STEPS IN, SHIFTS GRANT MANAGEMENT

All Region 3 organizations or artists who were pledged ’13 DAF money have received their allotments, said Jacques Berry, communications director for Lt. Gov. Jay Dardenne. The state Division of Arts shuffled administrative monies to cover the costs.

Separately, Dardenne tightened accountability protocol for all organizations handling decentralized arts monies. The office now mandates quarterly reports and copies of all payments made and all cancelled checks.

The Arts Council of New Orleans is administering Region 3’s DAF allotment this year.

Proposals were solicited through May, and three community panels – one for Terrebonne, one for Lafourche and Assumption, and one for St. Charles, St. James and St. John – will convene next month to judge the submissions, said Gene Meneray, director of artist services with the New Orleans art council.

The panels are comprised of people from the communities they represent. Their meetings are open to the public: Assumption/Lafourche from 1-4 p.m., July 10, at the Thibodaux Branch of the library; and Terrebonne from 11 a.m. to 4 p.m., July 18, at the parish’s main library branch.

“We know that it’s crucial that the people who know the community best decide who gets funded or not,” Meneray said.

Thirty-four proposals from Region 3 were submitted ahead of a May deadline, Meneray said. In total $54,000 will be awarded, with specific amounts figured for each parish based on a per-capita formula. Terrebonne is in line to receive $17,000, and Lafourche will get $15,000.

New Orleans’ art council continues to solicit panelists. The form to nominate judges – self-nominations are encouraged, Meneray said – is online at artscouncilneworleans.org.

EXTENT OF DEBTS

Upon being named board treasurer, Kopfler began reviewing the Arts Council’s records and turned over all documents state officials requested for their own investigation. Neither review yielded criminal accusations.

“What we learned was that (the arts council) had spent more than it had taken in and had not segregated grant funds in its day to day operations, resulting in a misapplication of grant funds,” Kopfler said.

Outstanding debts, by Kopfler’s accounting, are:

• Local Vendors: $65,000

• Louisiana Department of Arts: $40,000

• Internal Revenue Service/Unpaid Payroll: $18,000

• National Endowment of the Arts/Greater New Orleans Foundation: $8,000

Fundraising events once considered as a way to pay down debt were forgotten as the stack of unpaid bills came into focus. Debts to local vendors further compelled the fractured council to cancel the fifth bi-annual free local music festival Houmapalooza, Kopfler said.

“Our cash in September 2013 was negligible, and we have few remaining assets – some office equipment,” Kopfler said. That office equipment, according to the council’s 2011 fiscal year audit, is worth less than $2,000.

The silver bullet, Kopfler said, would be a successful claim against BP.

LOCALS COULD RECLAIM DAF GRANT MANAGEMENT

State officials do not anticipate being repaid, Berry said, but that doesn’t preclude a nonprofit organization from Region 3 emerging to reclaim DAF management. The potential remains for a nonprofit from the six-parish area to take on the responsibility.

“It’s a policy decision made in Baton Rouge,” Berry said. “Lt. Gov. (Jay) Dardenne would work with the State Arts Council to make that determination should a group of interested individuals make that pitch.”

The lieutenant governor’s spokesman qualified that prospective administrators would be thoroughly vetted to ensure an understanding of the both major components of the position.

“Before we’ll start granting money through them again, we’re going to have to be very, very satisfied that all of the best practices are being followed and they are professionals who understand both the art side and the business side.”