BLEEDING MORE THAN RED INK: IT'S TIME FOR MILWAUKEE PUBLIC MUSEUM OFFICIALS TO COME CLEAN

May 11, 2004 Post, Milwaukee Public Museum, No Theft or Fraud, But....
May  6, 2004 Post, Milwaukee Public Museum:  Did the Directors Read Interim Financial Statements?

The Milwaukee Journal-Sentinel reported in today’s (May 13, 2005) edition (D. Umhoefer, Museum to Slash Jobs: 45% Staff Cut Planned in Effort to Stay Viable) that the first sign of trouble at the Milwaukee Public Museum was a spending freeze put in place several months ago, according to an unnamed Museum employee who tipped the Journal-Sentinel.  AFSCME District Council 48, the union representing a significant number of Museum employees, will undoubtedly find reports of a possible 45% cut in staff the most disturbing revelation in this article.  Not us.... 

Our Guide, Avoiding Trouble While Doing Good, A Guide for the Non-Profit Director and Officer, focuses heavily on the board's role in financial reporting.  You should buy a copy of our Guide today.  Call us at 773-325-2124 for additional information, or visit our website at http://www.charitygovernance.com. We also do on site training.  In June, we will be speaking at two conferences on non-profit governance, including one where will be leading an all-day training session.  A significant portion of both of our presentations will focus on financial reporting issues.  Give us a call if you want to head off problems.

You will recall that prior reports in the Journal-Sentinel indicated that the operating deficit (now purported to be somewhere in the neighborhood of $2.4 million despite record attendance last year) took everyone by surprise, including the board of directors.  You may also recall that County officials were particularly shocked to learn of the deficits (including a projected one for the current year that could mount into the millions of dollars) after the Milwaukee County Board had approved a 20-year lease and subsidy arrangement with the Museum. Yet, Museum officials have claimed there was no effort to mislead the County Board. 

As we said in Wednesday’s post, Museum officials should get the embarrassing facts out as soon as possible.  Right now, “it's death by a thousand cuts” as the facts dribble out.  As we predicted, the embarrassing facts would come from employees talking to the Milwaukee Journal-Sentinel.  That process appears to be well under way and should continue as the Journal-Sentinel once again posted contact information in close proximity to its online version of today's article.

The Journal-Sentinel quotes Museum President Michael Stafford as having said "Wait until all the facts come out."  Mr. Stafford, this story was first broken by the Journal-Sentinel ten days ago—presumably you knew it was coming a day or two before that.  Nobody is stopping you from releasing a timeline of events, board meeting minutes, interim financial reports, management letters from auditors, or the mounds of information that surely are available to you.  Today you are scheduled to meet with the Museum’s bankers in Chicago.  There can be little doubt that you have prepared a slick PowerPoint presentation and all sorts of supporting schedules to make the case for financing.  Nobody is stopping you from making that information public right now. Instead, the public has had to wait for employees to call the Milwaukee Journal-Sentinel on an anonymous basis to get some semblance of the facts.

What is particularly interesting is the absence of comment from the Museum’s board in today’s Journal-Sentinel article, particularly board chairman David Meissner.  We would not find it at all surprising if the board were purposely distancing itself from what has become a public relations debacle.  As we have noted before, the board has some of its own explaining to do.  Where was it when the financial problems were mounting? 

And here are a few more questions:

A.    Who is leading today’s meeting with the Museum’s bankers?  CEO Stafford has indicated that he is the fundraiser and visionary, while financial matters are the province of the CFO, who recently resigned his position for reasons unrelated to the Museum’s problems.

B.    It would be one thing to reduce staff by ten, twenty, or thirty employees.  But who has been minding the store when it is reported that somewhere around 100 of 240 Museum employees will be cut in the coming months?  What impact will such cuts have on the public’ experience when visiting the Museum and on the maintenance of priceless artifacts?  Did the board of directors ever discuss staffing levels?

C.    Why did the Museum departments have credit cards?  As a general rule, business credit cards are a bad idea because they remove one level of control over expenditures.

D.    Did the board mandate the spending freeze that has been reported to the Journal-Sentinel?

E.    Was the board aware of the reported spending freeze?

F.    Does the public even care if there is a Milwaukee Public Museum? We have reviewed the section of the online edition of the Milwaukee Journal-Sentinel that reproduces letters to the editor.  No letters regarding the Museum have been published.  The continuing debate over the nickname for Marquette University’s basketball team appears to be the topic de jour.

G.    Will members of the board of directors be equally silent when the Museum attempts to tap their wallets?

H.    What are the terms of Wisconsin's open-meeting laws?  Why are all these meetings with Milwaukee County officials always behind closed doors?

I.      When will the Museum board call for an independent investigation by a blue-ribbon panel?  Oh, it's coming.  You know you want it.

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