Transportation Museum's transition from state funding may be too tough

Published 12:00 am Saturday, December 17, 2011

By Emily Ford
SPENCER — With staff cut by a third and a 25 percent drop in visitors, the N.C. Transportation Museum faces an uncertain future where the Spencer icon must act more like a business and less like a relic to survive.
Attendance has plummeted since the museum started charging admission in July, after the state cut in half $1 million in annual funding. Walking into the museum, which opened in 1983, had always been free.
To save money, the museum has eliminated seven positions, including four layoffs. Once staffed by 18 full-time employees, the facility will operate in 2012 with just 11, including a new executive director expected to be named in January.
Former Executive Director Elizabeth Smith retired Nov. 30, the day before the museum announced layoffs.
The state is scheduled to pull all funding from the museum next year, but advocates hope the General Assembly will extend funding for at least one more year. Museum staff and supporters have traveled to Raleigh five times since May to lobby legislators.
Of the 24 historic sites under the N.C. Department of Cultural Resources, only the Spencer museum charges general admission. While many sites faced budget cuts from the state, only the transportation museum faces the prospect of going from 100 percent funding to zero in 12 months.
Tryon Palace in New Bern has four years to make the transition.
The state has put Spencer “in the lead on this experiment about how fast you can do it,” said Roy Johnson, president of a nonprofit foundation that supports the museum. “It’s clear to us that you can’t do it in 12 months.”
In the aftermath of last summer’s budget cuts, the legislature has launched a sweeping review of state museums, parks and other attractions to determine appropriate staffing and funding levels.
Despite the challenges, the transportation museum will survive, Johnson said.
“Even though we don’t have all the answers at this point, we have the basic conviction that this is going to work out,” he said.
The foundation and museum need help from the community to sustain the operation, he said. More than 150 people volunteer at the museum.
While difficult, the situation is not “the gloom and doom that some may perceive,” Johnson said. “This is a necessary part of our evolution and will ultimately make us stronger.”
Not self-sufficient yet
When Gov. Beverly Perdue proposed eliminating $1 million for the museum, Keith Hardison, director of the N.C. Division of State Historic Sites, said attendance could plummet by up to 30 percent and would take several years to recover.
Hardison was right. And now he insists the museum, which is projected to generate $350,000 in revenue by July 2012, can overcome financial problems and become self-sufficient.
But the museum needs more time, he said.
“We are not generating revenue quick enough in the amount that we had hoped to have seen at this point in time,” Hardison said.
The N.C. Transportation Museum is located on the site of what was once the largest steam locomotive servicing facility of Southern Railway Co.
Constructed in 1896, Spencer Shops at its peak employed nearly 3,000 people.
“This is the soul of this community, and the soul of this community is not going anywhere,” Hardison said. “We’re here to stay.”
The nationwide economic downturn has created a new reality, he said: There isn’t enough money to go around. Like other state-owned attractions, the museum must adopt a market-based mindset, he said.
The transition has been tough.
Interim Executive Director Brian Howell had to tell four employees they will lose their jobs Jan. 1. All agreed to fulfill their duties through December.
“That’s a sign of dedication and character that will surely be missed here at the museum,” Howell said.
The layoffs and three other eliminated positions include a head mechanic, clerical position, collections director, groundskeeper, building maintenance position and two facilities positions.
The museum will save $149,699 in salary and benefits from the four layoffs but won’t see an immediate impact because those workers will receive severance packages, Marketing Director Mark Brown said. The museum also must pay other expenses out of that amount, he said.
Howell, who’s been with the museum for 14 years and was married in the roundhouse, describes the staff as a family and said he will do “as much as I can possibly do to ensure this museum does not have to go through that again.”
Finding additional sources of revenue is the key, he said.
“We have to fulfill our own destiny,” Howell said.
Need: $750,000 a year
Studies have shown the museum can make it without state money, Hardison said. Spencer has a unique combination of attractions not available at any other historic site in the state, as well as a desirable location and close proximity to I-85, he said.
Admission costs $10 for adults and $6 for children, including a train ride. But admission alone won’t sustain the museum. If the 92,000 people who visited the facility last year had paid an average admission fee of $7 each, that would have generated $644,000.
The museum needs about $750,000 a year to operate, Howell said. Johnson puts the number at about $875,000 to maintain enough staff to cover events, exhibits and facility maintenance.
So far, from July 1 to Nov. 30, visitors have paid $76,399 to enter the museum. That proves the museum can generate significant revenue at the gate, Hardison said.
Hardison projects this year the museum will make $350,000 from admission, turntable rides, rental fees and direct support from the foundation.
If the state will continue providing about $576,000, the sum would “allow the museum to operate at a level of quality that a visitor would enjoy and not see a decline in the experience,” Johnson said.
For the first time, the museum is relying on the foundation for operating funds. The foundation, which assists with fundraising, restoration projects and programming, was created in 1977 when Southern Railway started the process of donating the Spencer Shops site to the state.
From its $1.4 million 2011-12 budget, the foundation will give the museum about $100,000 in direct support. Next year, that amount should jump to $150,000, Johnson said.
A 29-page Memorandum of Understanding signed in October by the foundation, museum and N.C. Department of Cultural Resources outlines the complicated relationship.
The foundation pays for museum advertising ($96,000 budgeted for this year) and most special events, like Thomas the Tank Engine, which drew 20,000 people this year, and a train excursion to Virginia and South Carolina, which drew 2,000 people.
Last year, for every $1 spent by the foundation, 90 cents went to programming, said Kelly Alexander, chief operating officer.
The foundation also raises restricted funds for education and restoration projects at the museum, which can’t be used for operational costs. Last year, donors gave $55,000 for projects like restoring the Piedmont Airlines DC3 airplane and maintaining railroad equipment.
According to the memorandum, the foundation agrees to pay the museum:
• Between 7 and 10 percent of proceeds from the gift shop, depending on annual sales. This year, that’s about $26,000.
• $2.50 for each ticket sold to the Thomas the Tank Engine event this year and $5 for each ticket sold next year. Thomas tickets cost about $18.
This year, the foundation will pay the museum $62,000 for all special events, including Thomas and the autumn train excursions. The special events cost nearly $600,000 to put on.
• $1 for each ticket sold to the autumn train excursions. The foundation also will reimburse the museum’s costs related to the event.
Tickets for the excursions cost more than $100. The events were so successful this year, the foundation plans to do twice as many in 2012, Johnson said.
Evolving relationship
The foundation did not try to save the museum jobs.
“That’s a very sensitive subject,” Johnson said. “If we had spent from our reserve to save them, at best it would have been temporary and at worse it would have damaged the foundation’s financial strength.”
The state did not ask the foundation for financial help, he said.
“They told us they were going to right-size the staffing of the museum and did not look to us to write a check,” Johnson said.
In the past, the foundation has paid about $25,000 a year to supplement salaries of museum staff, he said. That practice ended this year when the foundation began paying operational costs.
Foundation and museum employees work side-by-side. It was difficult for some to see layoffs at the museum while the foundation cut no one, Johnson said.
But the foundation, which has five full-time employees, cut two positions several years ago, he said.
“We’ve already gone through this process,” he said.
Foundation staff received a 2 percent raise this year and no bonuses, he said.
So far this year, the foundation has raised $155,000 in grants from government sources, private donors, railroad historical societies and memberships, Johnson said. The foundation has about 1,000 members, a number he said he hopes to double.
The foundation will give the museum $10,500 from memberships this year, another example of the partnership at work, Johnson said.
“The relationship between the museum and the foundation is evolving,” he said. “We are having to learn how to work together more effectively.
“We are all part of one team focused on the success of the museum.”
Ticket prices at the N.C. Transportation Museum, including a train ride
Adults $10
Seniors and military $8
Children ages 3-12 $6
Children 2 and under free
If the train isn’t running, admission is half-price.
N.C. Transportation Museum Foundation budget for 2011-12 (expenses)
Gift shop $350,197
Visitor programs $50,890
Train operations $233,287
Special events $594,815
Salaries and benefits $116,576
Fundraising $100,133
Total budget $1.45 million
N.C. TransportationMuseum visitors
October 2010 October 2011
21,157 14,768
November 2010 November 2011
4,599 3,009
• • •Coming Monday:What will the economic impact of a drop in visitors be at the N.C. Transportation Museum, and the search for a new executive director goes on.
Contact reporter Emily Ford at 704-797-4264.