Misrepresentation vs. Reality
The Minnesota Orchestral Association's (MOA's) contract proposal calls for salary cuts of up to 50%.
The proposed salary cuts in the current proposal range from 20 to 40% with the vast majority under 35%. (Specifically, 70% of the musicians would see salary cuts of less than 35%.)
The current proposal offers an average annual salary of $89,000 plus ten weeks paid vacation and additional benefits averaging $30,000 per musician (including healthcare and pension), for a total package of $119,000.
The MOA turned down three musician contract proposals.
Musicians have not presented a single contract proposal since negotiations began in April.
The three offers provided by musicians—to play and talk, to submit to binding arbitration and to conduct an independent financial analysis—are not contract proposals.
The Board has presented its final offer and refuses to negotiate further.
While the Board has been clear that it seeks savings of $5 million annually, the approach we use to achieve these savings can be adjusted through the course of good faith negotiations. We need our musicians to participate for this to happen.
The Board has "cooked the books" to mislead musicians and the public.
Absolutely not. The Board has appropriately fulfilled its fiduciary responsibility to the Orchestra during extraordinary times.
The Board signed a contract with musicians in 2007 that called for a 25 percent pay increase.
The Board's decision to rely on the MOA endowment to help cover these costs through the recession was appropriate and responsible.
At the same time, Board and management were creating a strategic plan that would eliminate the organization's structural deficit once and for all.
We began talking publicly about our structural deficit as soon as the board had ratified that plan.
Our financial position has always been clearly outlined in public documents that include our annual audited financial statements and our 990 tax returns.
Musicians had no idea what the true financial picture of the Orchestra was or how steep the current fiscal cliff would be.
Dating back to 2009, the Board has very thoroughly shared the full financial picture of the Orchestra with our musicians in a series of comprehensive meetings.
In 2010, the Board asked musicians for a 22 percent wage reduction—a clear indication of how steep our challenges were. We said those reductions alone wouldn't solve our problems but it would make the financial cliff we face in 2012 less steep.
The players chose not to take that reduction, as was their legal right, and so instead we are now grappling with these compounded problems.
MOA's refusal to "play and talk" signals an intention to create a second-rate orchestra.
After six months of playing and talking without a single counter-proposal from the musicians, Orchestra board and management concluded that continuing to repeat that activity would only result in more unproductive discussions and costly delays. A "Play and Talk" agreement incurs monthly operating losses for our organization of at least $500,000.
Preserving the future of an exceptional orchestra for generations of music lovers is our highest priority. We await a counter-proposal from the musicians so we can resume negotiations and reach a settlement as quickly as possible.
The Minnesota Orchestra will no longer be world class if this contract is approved.
Many world class arts institutions across the country have undertaken significant cost reductions in order to remain viable following the recession. About half of the nation's "Group 1" orchestras have agreed to significant contract concessions in this time period. These reductions do not mean other arts institutions or orchestras have lowered their artistic standards but rather that they are willing to adapt to changing economic conditions, which we must do too. The Minnesota Orchestra can be both artistically exceptional and financially solvent.
The Orchestra Board raised money to renovate Orchestra Hall that should have been used to pay musicians.
The funds for renovating Orchestra Hall are part of a larger $110 million campaign which began in 2005.
The majority of these contributions ($60 million) are being used for two purposes: to build the future endowment, which will continue to fund musician compensation, and to support artistic initiatives (like touring and recording).
The MOA has money to pay the musicians—it just doesn't want to.
The Orchestra has paid musicians' salaries over the last several years by making additional draws from its endowment. The draw rate was three times higher than a sustainable level in 2011 (17% vs 5%).
That's like taking money out of a 401k to pay normal living expenses. The more that's pulled now, the less there is for the future.
If we continue to draw from our endowment at our current rate, the MOA endowment will be depleted by 2018.
The musicians already took a pay cut in 2009.
The musicians agreed to a one year wage freeze in 2009. They did not offer to take a cut in salary.
The musicians offered to take more cuts but were rebuffed by management.
The musicians did not offer to take any cuts.
They did offer to defer salary increases in exchange for extending the current contract an additional two years. However, this would have further depleted our endowment and put off the problem, not solved it.
Management hasn't taken any cuts internally.
In fact, staffing costs have been lean for many years. Over the last decade, all costs in the organization—minus musician costs—have decreased by 6%. In that same time period, musicians' costs have increased by 26%.
Since the start of the 2007 musician's contract—during which time the players received a 19.2% increase to base salary—the management and administrative team has taken a salary reduction, a wage freeze and had their pension contributions from the MOA reduced by more than 40%. This includes the president.
The size of the staff has decreased by 20% since 2009 due to layoffs.
MOA doesn't want any assistance from a third party to break the stalemate.
Orchestra management strongly supports an independent party involved in negotiations, and a federal mediator is participating in our negotiations.
It is highly unusual to suggest arbitration in a negotiation in which one side has not put forward even a single proposal.
Final and binding arbitration provides no assurance that the Orchestra's financial instability would be solved, even in the short term.
At best, it would delay needed changes for many months while the arbitration unfolds. The Orchestra would incur significant operating losses with each month's delay.
The economy shows signs of improving, so the musicians should not be asked for significant salary reductions.
We hope that if the economy revitalizes it will eventually lead to increases in the Orchestra’s revenue streams and to brighter contract negotiations in the years ahead. Right now, however, we are still contending with economic challenges brought about by the great recession, and these issues will only become exacerbated in the future if we do not resolve them now.
Most importantly, our organization needs to live within the means of a 5% investment draw—not a 17% draw as we had been taking to fund our previous musicians’ contract. A 5% draw ensures that our endowment has the ability to grow and support the Orchestra in the future.
The Orchestra's endowment has been mismanaged.
On the contrary, the MOA Endowment has exceeded investment return benchmarks over the last five years.
The critical issue is that we have taken additional draws from our endowment in order to fund the 2007 musicians' contract—and this has reduced the endowment's value. In short, we have less money to invest because of the salaries from the previous contract.
Our organization needs to learn to live within the means of a 5% investment draw, to ensure the endowment can grow and support the Orchestra in the future.
The musicians simply do not have enough information to have a clear picture of the Orchestra's finances.
Our Board negotiating committee trusted musicians with exhaustive amounts of information in the current negotiations in order to be transparent. This information includes our most recent independently audited financials; three years of monthly Finance Committee, Board and Executive Committee minutes; detailed reports on all our fundraising activity; quarterly investment reports dating back three years; our investment policies and objectives; and a comprehensive actuarial report on our defined benefit plan.
Additionally, the Board has agreed to the musicians' request for a joint financial review to verify the Orchestra's financial position.
President Michael Henson is an "obstacle" to achieving a contract resolution with musicians.
The obstacle standing between Board/management and musicians in achieving a contract resolution is the musicians' perplexing refusal to put forward a single contract proposal of any kind in any form. How can negotiations possibly succeed if one side refuses to participate?
The Minnesota Orchestra is unique among orchestras across the country in the financial issues it is facing.
The recession severely impacted the orchestral industry, as it did most nonprofits that rely on charitable donations and investment returns. Musicians in many other major orchestras across the nation have helped their Boards to address these issues by making significant contract concessions. These include the major orchestras of Atlanta, Baltimore, Dallas, Detroit, Philadelphia and Pittsburgh. Other orchestras, such as Cleveland, have not sought wage concessions but have announced major structural deficits. Every community must find its own solution to the challenges that its orchestra faces, based on what its community can afford.
Most of the musicians will leave if this contract is approved.
We believe our musicians remain committed to this organization and community, and hope they will choose to remain.
Other major orchestras across the country that have undergone a market reset have not seen significant departures from their players.
These orchestras still report a high number of qualified candidates applying for positions that do become available.
The musicians cannot put forward a counterproposal. If they do, management could declare an "impasse" and legally impose its original offer—or management could force the musicians into a strike.
To say that one party can't make an offer in a negotiation runs contrary to the very notion of collective bargaining. The collective bargaining system is based on back and forth negotiations with each side expected to put forward good faith proposals and to "bargain" until a settlement is reached. This is what has happened in all previous negotiations in the Minnesota Orchestra's history—and in every other orchestral negotiation across the country, even in those situations where managers have sought concessions.
Additionally, whether an "impasse" has been reached is a legal determination involving many factors, and managers cannot force musicians to strike. Musicians themselves would need to vote to authorize a strike.