The Minnesota Orchestra and its musicians are engaged in contract negotiations at a critical moment in our organization's history. Like many of the country's symphony orchestras, we have financial challenges that have never been greater, and our musician expenses have never been higher. The Orchestra has managed a five-year contract with its musicians that included a pay increase of 19.2 percent to base salary, just as the organization's revenues were being hit hard by the economy. The organization has been doing everything it can to resolve its financial challenges, from engaging in a $110 million fundraising campaign, to cutting budgets, to launching new marketing and programming initiatives, and renovating Orchestra Hall to make it more inviting to audiences of all ages.

Musicians account for 48 percent of the Orchestra's total costs. (For background: nearly 80% of our total costs support concert-related expenses, and we have now enacted significant cost reductions in all other areas of our business except the musicians' contract.) Their average annual salary is $135,000, plus $35,000 worth of benefits, including a defined benefit pension plan and a comprehensive medical plan. They receive a minimum of 10 weeks paid vacation and up to 26 weeks of paid sick leave each year. Our musicians must play their part in the organization's financial recovery.

Under the new contract proposal, the musicians would receive an average annual salary of $89,000 (including overscale and other additional payments) with a minimum of 10 weeks paid vacation per year, a comprehensive medical plan and a defined benefit pension plan. Musicians can leverage the reputation of the Minnesota Orchestra brand and supplement their incomes by teaching and playing in music festivals during the regular season and during their weeks of vacation. The Orchestra is supportive of this additional employment.

The proposal also requests that musicians play chamber music in community locations and participate in outreach events in our state's schools as part of their contract, which is good for our communities and good for the future of the Orchestra.

From April through September, that is precisely what we did. The Orchestral Association put forward our proposal on the first day of negotiations on April 12, 2012 and to date, we still have not received a contract proposal from our musicians. At this point, "pay and play" activity would result in our organization incurring operating losses of at least $500,000 a month. We cannot continue on this path: we need our players to participate and come forward with a realistic counterproposal.

Since the lockout began in October, the Orchestra has received two resignations and notification from five musicians that they wish to take a year's leave of absence in order to pursue other opportunities. (The musicians' contract allows them the chance to try out a new job—while holding their position open—for one year before resigning from the Orchestra.)

On average, approximately three musicians leave the Orchestra each season to accept other positions.

That is not the case. In 1983, Minnesota Orchestra musicians earned $33,000 a year, and health care and pension costs were more modest, manageable expenses.

Today, we are offering an average annual salary of $89,000 per musician in addition to a benefit package that is far more generous than that of the average professional, totaling $30,000.

The board has listened carefully to the reasons the musicians have publicly articulated for not submitting a counterproposal. Since January, the board has done everything it can to remove the barriers musicians have said stand in the way of them issuing a counterproposal. These include:

• Sharing all fiscal information musicians have asked for, including 2012-15 financial forecasts;
• Pursuing an independent financial review designed to verify the organization’s financial position;
• Returning, with slight modifications, to the former mission statement which is preferred by musicians;
• Pursuing a fundraising feasibility study to determine if additional funding exists in the community to support musician salaries;
• Inviting musicians to meet with the full Board of Directors;
• Offering additional meeting dates

We cannot explain why the musicians have chosen not to issue a counterproposal. 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.

The Board has engaged AKA Strategy, a New York-based consulting firm, to conduct an independent financial analysis. The scope of the review will address concerns the musicians have expressed publicly regarding the accuracy of the Orchestra's audited financials and the assumptions of its strategic plan. Specifically, the review will:

• Test the accuracy of the Orchestra's Fiscal 2012 financial position; and
• Analyze the underlying financial and business assumptions (for marketing, fundraising and investments) upon which the organization's strategic plan is based, testing them for reasonableness and cogency.

The Board agreed to proceed with a joint financial review on January 2. It offered terms for the review by the end of January and suggested an independent financial analyst by February 11. On April 16, citing frustration over Union delays, the Board announced it would proceed on its own with the review. The report's findings will be shared with the Union.

Our Board is made up of community leaders, all of whom are volunteers. They do not financially benefit from their work with the Minnesota Orchestra. To the contrary, they—and the corporations many of them represent—make very generous donations to the Orchestra.

Over the last five years, Board members have donated $46.76 million to the Minnesota Orchestra. Their "gain" comes from serving the community and ensuring the long-term artistic and financial health of the Orchestra.

Yes, it already has. The Orchestral Association has managed its management/administrative staffing costs efficiently over a long time. In all, total costs in the organization—excluding musicians—have decreased by 6 percent since 2002.

Since the start of the 2007 musician's contract, the Minnesota Orchestra administrative team has taken a salary reduction, a wage freeze and had their pension contributions from the Association reduced by more than 40 percent. The average full-time staff salary was $53,000 in fiscal year 2008 and increased to $54,000 by fiscal 2012. (In that same time period, the average musician salary increased from $113,000 to $135,000.) The average staff member earns three weeks of vacation a year. On the Orchestra's 12-member management team, only two leaders currently earn more than the musician's current base salary.

Additionally, the size of the administrative staff has decreased by 20 percent since 2009 due to layoffs—and the MOA contributes 24 percent less to administrative staff medical coverage than it contributes to the musicians' medical coverage.

A renovated Orchestra Hall is part of the solution to the Orchestra's financial issues. It offers an opportunity to attract new audiences, to reposition the Orchestra's role in our community, to resize seating in the auditorium to match demand and to increase incremental revenue within the Hall. The donors who have generously contributed to the Orchestra's capital building project have done so because they want to support the renovation of Orchestra Hall—understanding how critically important it is to the Minnesota Orchestra's future. To date, $47 million dollars has been raised towards our $50 million goal—a sign of our community's support of this project.

What's more, our annual fundraising—which runs concurrently with the capital campaign—is on pace, thanks to donors who understand the importance of supporting our ongoing work.

One of our primary objectives in these negotiations is to have more flexible Union work rules that will allow the organization to better serve audiences. For example, we'd like to be able to schedule concerts on New Year's Eve or New Year's Day—occasions when our audiences enjoy hearing music. We'd like to be able to schedule concerts up to 2 1/2 hours in length to allow for more programming flexibility and longer intermissions for audiences. We'd like to take advantage of more opportunities to participate in community outreach.

Under the proposed changes, the working conditions for Minnesota Orchestra musicians remain respectful and fair, allowing for:

• 21 hours of work (either rehearsal or performance) per week—in order to allow appropriate time for musicians to rehearse on their own
• no more than 5 hours of work per day—for a typical work week
• opportunity to gain tenure
• 26 weeks per year of paid sick leave
• One year leaves of absence without pay with a guaranteed job upon return

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.

Conservatories and orchestras across the country are redefining what it means to be a great musician. It's not just flawless performances of the classics; today's great orchestras must connect with their communities. Everyone who appreciates classical music can be a classical music evangelist—and Minnesota Orchestra musicians can be our best advocates. Our current contract limits the amount of outreach the Orchestra can do in the community because we must pay musicians approximately $100 per hour (on top of their regular salaries) to go into schools, to talk with students and engage in outreach.