Art Gallery Incorporation Legacy - Part 2 of 6

Why has Council not Learned from Past Mistakes

In Part 1, we learned of a series of errors that led to the Art Gallery successive deficits which are summarized here.

Summary of Errors

 

1.   Council failed to verify claims that the Gallery would have access to more Government Grants as an incorporated body.

2.   In advance of incorporation Council prematurely delegated the Art Gallery Management Board the autonomy to establish and unilaterally manage its operations for budget years 2016 and 2017

3.   Council failed to provide adequate oversight of the Gallery’s operations during 2016 and 2017 budget years. In spite of having a member of council attending Board meetings and having minutes of Board Meetings the deficit in 2017 should not have been surprise to council.

4.   City Councillors appointed to the Board failed to raise concerns at Board Meetings regarding spending increases and the anticipated grants not materializing as scheduled.

5.   Although there were reports by Board’s Resource Committee Chair, Jon Kepler, on the Gallery’s finances there were assumptions made that Gallery staff were managing in a fiscally responsible manner and no Board member called for quarterly financial reports.

Council’s Recovery Plan

On November 20, 2017 a staff report on the Gallery acknowledged that the Art Gallery Management Board had full control over the Gallery’s finances for budget years 2016 and 2017 and recommended that city staff re-assume control and prepare the 2018 Art Gallery budget. As well staff recommended that the Director once again report to the City Manager. These statements were surprising since I was not able to find any record of Council approving the Board’s full control over the 2016 and 2017 budgets or unilateral supervision of the Director of the Art Gallery.

During this same meeting Council directed that the Art Gallery’s debt be recouped from the city’s annual funding of the Art Gallery over the next ten years. As we later found out the city’s annual funding of the Art Gallery was never reduced so the Art Gallery has never made a payment on their debt.

I found it interesting that this year staff recommended that the cost of the latest consultant’s report aimed at assessing the community’s ability to raise the $16 to $22 million required to build a new or expanded Art Gallery be taken from the Art Gallery’s reserve. This raises the question of why was this reserve not used to pay the Gallery’s debt. We later found that in 2017 this reserve held $443,000 which was earmarked to be transferred to the new corporation.

Owen Sound resident and Chartered Accountant, Diane Ferguson informs us, in a letter she wrote to the editor of the Owen Sound Hub, in 2017, that the city should never relinquished financial control to a Board.

After the massive boondoggle of the Tom Thomson art gallery, little seems to have changed. Reporting from the Owen Sound Hub revealed the minutes of the Tom Thomson Board (from October 2017) conclude that, “Almost every program has overspent and under revenue (sic)”. And that “The Board assumed competent financial management of the Gallery”.  No Board should “assume” financial management. They need to be reviewing the financials on a monthly basis. And being that the City is ultimately responsible, they too should be reviewing financial reports monthly  Diane Ferguson, CPA, CA

This raises two very important points. First, why did Council allow the Art Gallery Board to prepare their 2016 and 2017 budgets and relinquish their oversight responsibilities for the 2016 and 2017 budget years when it was still a city department? Second why was there not a public investigation into how this happened with recommendations on how to prevent a reoccurrence?

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In Part 3 we will examine the details of the Art Gallery planned incorporation along with the loan agreement for the Art Collection.

Art Gallery Incorporation Legacy Part 3