Taylor Rogers | Staff Writer
Filling in the fiscal gaps occupied Wednesday morning’s Trustee Porch Discussion at the Hultquist Center.
Sebby Baggiano, vice president and treasurer, and Geof Follansbee, vice president for development and Chautauqua Foundation chief executive officer, both spoke on the topic of “Financial Sustainability.”
Baggiano opened the porch discussion by referencing the Institution’s financial models developed prior to the creation of the strategic plan. Chautauqua’s board of trustees adopted the plan in 2010, which guides the Institution through 2018.
“We went through the process of building these financial models that essentially took every element of our financial statement and projected them out,” he said.
The Institution used information based on historical trends within the budget and adjusted them appropriately. Baggiano said they then compiled a chart with one line representing revenue and one for expenses. The expenses, which had formerly existed below the revenue line, began to creep above it in the future.
Baggiano said the increase in ticket prices pushed this convergence of revenue and expense lines into the future, and that this could not continue indefinitely.
Additionally, a capital model was developed which identifies the resources needed each year. The capital gap was roughly $1 million, he said. They then combined the two gaps into one and examined ways to avoid it.
Though the money coming in from the gate is the Institution’s biggest source of revenue — about $10 million of the $24 million operating budget — Baggiano said they need to draw more people in, referencing last week’s Porch Discussion on the Institution’s latest marketing strategies.
Baggiano also commented on ways to reduce expenses. The model predicted operating costs to grow 3.4 percent, which is closely reviewed annually. He said he’s examined several aspects of the Institution’s expenses, including maintenance and energy costs.
“That is essentially the financial and capital models that support the sustainability aspect of the strategic plan,” he said.
Chautauqua also relies on the philanthropy from the Chautauqua Fund.
“The Chautauqua Fund has been hugely successful in helping us year to year with that gap,” Baggiano said, also saying money from philanthropy must increase.
As a way to do that, large renovations now require endowment plans, he said.
Follansbee also touched on this requirement, saying these donations are only part of the plan to bring in more money through philanthropy.
“Currently the only known object in the budget when the staff goes to put it together for the fall in the coming year is the amount the (Chautauqua) Foundation has committed as payout from the endowment to the Institution,” Follansbee said.
He added that ticket sales and donations are unpredictable in the budget, but that philanthropy amount is the only stable item. It computes to roughly 3 to 4 percent of the budget.
“It’s way too small,” Follansbee said. “The real challenge for us is how do we increase that.”
But the Chautauqua Fund has been growing at a fast rate — more than 5 percent per year. Follansbee said he’s impressed with the way that fund has been able to sustain its growth through the economic stress of the past few years.
Thanking attendees for their generosity, he said the endowment is getting close to an amount that they haven’t seen since late 2007.
Helen Moss, of Cleveland, asked several questions during the Q-and-A based on the current financial state of the Main Gate.
The number of gate passes sold is static, but increasing revenue comes from an increase in price, something the board of trustees can’t maintain, Baggiano said.
“Logic tells you that you can raise prices for a period of time at a level that outpaces inflation, but you can’t do that forever,” he said.
His hope is that the marketing strategies will draw more people in to Chautauqua, allowing gate prices to stay put.
The Trustee Porch Discussions are held at 9:30 a.m. Wednesdays on Hultquist Center Porch.