Finances off track: Kennesaw museum, gardens expected to run deficit two years in a row
by Hannah Morgan and Leo Hohmann
September 29, 2013 02:10 AM | 5051 views | 19 19 comments | 32 32 recommendations | email to a friend | print
Kennesaw’s top tourist attraction, the Southern Museum of Civil War and Locomotive History, which houses the Civil War-era locomotive The General, has been running annual deficits for more than a decade, and is expected to operate at a deficit again next year. Along with Smith-Gilbert Gardens, the attractions are costing city taxpayers more than a half million dollars each year to keep open.<br>Staff/Jeff Stanton
Kennesaw’s top tourist attraction, the Southern Museum of Civil War and Locomotive History, which houses the Civil War-era locomotive The General, has been running annual deficits for more than a decade, and is expected to operate at a deficit again next year. Along with Smith-Gilbert Gardens, the attractions are costing city taxpayers more than a half million dollars each year to keep open.
Staff/Jeff Stanton
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KENNESAW — The Southern Museum of Civil War and Locomotive History and the Smith-Gilbert Gardens continue to operate in the red and are costing city taxpayers more than half a million dollars per year to keep open.

Kennesaw’s top tourist attraction, the museum, has been running annual deficits for more than a decade, and is expected to operate at a deficit again next year, according to the 2014 budget that was approved Sept. 16.

While some residents cite the positive impact tourists have had on the city, others are concerned that the city is not handling its finances with their tax dollars in mind.

During a City Council meeting last week, Kennesaw resident Patricia Powers expressed concerns that taxpayers were heavily subsidizing the activities of the museum and gardens.

To keep these facilities afloat, “residents are paying a lot of minimal fees, and they need to be funded by the people who use them,” Powers said.

To help the museum and gardens balance their books, the city has been transferring money to them each year from the city’s general fund, which is fed by fees and taxes paid by Kennesaw residents.

In the 2013 budget alone, city officials transferred $557,643 to the gardens and the museum. That figure is expected to rise to $616,322 in the 2014 budget, which was adopted by a 3-2 vote of the council.

How the museum grew its exhibits, and its debt

The Southern Museum of Civil War and Locomotive History began as The Big Shanty Museum in 1972, when Georgia obtained The General locomotive from the state of Tennessee.

It was housed in the old Frey cotton gin, and continued to grow, as more locomotive and Civil War history were added to the exhibits.

The museum’s first big growth spurt took place in 2001 when it received the proceeds of a $4.9 million bond and joined the Smithsonian Affiliations Program, which enabled it to display Smithsonian exhibits and artifacts.

Twelve years later, the city still makes payments totaling about $435,000 per year to retire the bond debt, with $3.2 million still remaining to be paid back, said Pam Davis, the city’s spokeswoman.

Last year, the Southern Museum of Civil War and Locomotive History ran a deficit of $416,458, as its total expenditures were $764,188. The museum only made $347,730 from admission fees, gift shop sales, rental fees and donations.

“It’s basically a huge debt we have to pay for this thing every year,” Councilman Bruce Jenkins said. “I think the original idea was based on assumptions, that it would serve as an anchor to the downtown and be an economic engine for growth. But what they failed to take into account was that the economy would tank and people would have less money for vacations and take their vacations closer to home.”

That means fewer railroad buffs are making the drive from Pennsylvania or New Hampshire to visit the impressive little museum in Kennesaw.

The bond, which was not put before voters for their approval, could be paid off early if the city chooses to do so, Davis said.

“I’ve had grave concerns for years about the cost, that we haven’t been able to find ways to increase the revenue stream against the cost to the taxpayer. It’s been very difficult. …We need to look at some serious, serious answers to get this in a better position for us financially,” Jenkins said. “The late councilman Bill Thrash and I would constantly bring this up every year.”

Jenkins said he voted against this year’s budget, largely because of the museum and gardens becoming a huge burden on the taxpayers.

What irks Jenkins most of all, he said, is that residents have to pay “twice” for the museum — first on their tax bill and second if they choose to actually visit the facility.

Adult visitors to the museum pay $7.50 for museum admission.

“I have always felt that this museum should be free to the residents of Kennesaw. You’ll still get residual income, from family of residents and out of town visitors,” he said. “But I feel like they’ve already paid for this facility once and I don’t feel like taxing them twice is right.”

Grant to partially fuel new expansion

The museum is expecting to receive a $500,000 grant next year from the TEA Federal Highway Administration to build a new education center, which is expected to be matched by the Museum Foundation.

The new education center is expected to cost between $900,000 to $1.1 million, said Davis.

The museum has nine full-time employees while the gardens employ three full-time employees, including a newly appointed executive director, and three part-time employees. Dr. Richard Banz, the museum’s executive director, earns a salary of $64,722.

Gardens not breaking even, either

The Smith-Gilbert Gardens cost the city $314,189 to operate last year, and only brought in $173,000. Next year, the city has $379,274 budgeted for the gardens, but they are only expected to make $180,260.

The gardens rely heavily upon volunteer support, which is considered vital to the running of the gardens, said Carrie Camden, who works at the gardens.

The gardens also host weddings, school groups, and tours of the property, which do not make enough to cover the budget shortfall.

Residents speak out at council meeting

Residents at Monday night’s meeting spoke highly of both attractions, but admitted that they didn’t visit them frequently. Many believe the city should contract with a private company to operate the museum and the gardens. Others proposed a smaller operating budget.

Mayor Pro-Tem Jeff Duckett did not seem overly concerned about the deficits because they help bring tourist dollars into the city. Some have referred to this as the “spin-off effect” of tourist attractions while others call it the “halo effect,” a reference to the fact that the destination itself may lose money but it brings more customers into town and helps support nearby restaurants, shops and other businesses.

Cobb Travel and Tourism estimates the economic impact of the museum to be more than $4 million annually, and the garden’s impact at more than $700,000.

In 2012, the gardens had 6,167 visitors and, so far this year, the gardens have attracted 6,221.

The museum had 32,049 visitors in 2012, and that has grown to 35,792 this year.

“The museum has a ‘halo effect’ to the rest of the downtown,” Duckett said. “It is hard to put a money amount on how much it helps to bring in to neighboring businesses,” Duckett said, adding that the attractions are, “not set up to make a profit, because they enhance the (city’s) quality of life.”

Mayor Mark Mathews said that the museum and gardens add to the quality of life that the residents of Kennesaw expect from their city.

Like parks and recreation, sanitation and public works, the museum and gardens all add to the value of living in Kennesaw, and should not be seen as a business like Kroger, Publix or McDonald’s, which are expected to make profits, he said.

The museum and the garden have their own foundations, he added, which have helped to fund-raise and bring in sponsorships, saving the city from transferring money from the general fund into balancing the museum and garden’s budgets.

Yet Sam Paglioni, a resident who spoke at the meeting last Monday, asked the council to figure out why the attractions are losing money rather than focusing on quality-of-life issues.

Gift shop turnaround

Banz hired an associate, Jenkins said, to run the gift shop, and her efforts have helped to make that part of the operation profitable as sales have jumped 15 percent.

“If we can get the rest of the museum to that point, we’ll have things turned around,” Jenkins said. “That’s what it will take.”

Residents don’t necessarily want to wait very long to see the fortunes of the railroad museum turned around, they said at the meeting.

“If a museum doesn’t change its static display, people are not going to come back. I like the museum, but it needs to be run a little more efficiently,” Paglioni said, before sitting down to a standing ovation from other residents in the council chamber.

Jenkins agreed.

“The question demands, is the halo effect really worth all that this is costing the taxpayer?” Jenkins said. “Are we really getting $600,000 or $700,000 worth of halo generated for downtown?”

Jenkins said he would like to see the City Council consider outsourcing the museum to a private company, just as it has recently done with the city sanitation services, “saving the city thousands of dollars in the process.”

That’s a solution Councilman Matthew Riedemann said he would also like to discuss. He voted in favor of the budget but isn’t happy with the museum and the gardens hemorrhaging cash.

“The museum, as well as the gardens, were charged with the task of raising enough money to run as a business, without being a drain on the general fund of the citizens,” said Riedemann, a recent appointee to fill Thrash’s seat. “I’m still trying to dig in and come up with an intelligent plan. Should we privatize it? I don’t know right now. But all options at this point should be on the table.”

----

The Southern Museum of Civil War and Locomotive History

Address: 2829 Cherokee St., downtown Kennesaw

Employees: 9

Executive Director’s Salary: $64,772

Visitors in 2012: 32,049

Visitors so far 2013: 35,792

Admission: $7.50 adults, $5.50 children ages 4-12

2013 Revenue: $347,730

2013 Expenditures: $764,188

2013 DEFICIT: -$416,458

The Smith-Gilbert Gardens

Address: 2382 Pine Mountain Road, Kennesaw off Cobb Parkway

Employees: 3 full-time, 3 part-time

Executive Director’s Salary: $40,798

Visitors in 2012: 6,167

Visitors so far 2013: 6,221

Admission: $7 for adults $5 children ages 6-12

2013 Revenue: $173,000

2013 Expenditures: $314,189

2013 DEFICIT: -$141,189

Comments
(19)
Comments-icon Post a Comment
No longer City
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September 30, 2013
First and foremost, without the museum, what does downtown Kennesaw have? A few select businesses the City gave grants to and free licenses to open and operate while the existing businesses get harassed by code enforcement and police when trying to conduct business during festivals.

Secondly, the museum does not employe 9 full time employees. Two of the referred to employees are employed through the Kennesaw Museum Foundation. The city doesn't even provide them medical insurance!

Thirdly, the new expansion is being funded by a grant and foundation money...not city funds. The museum will not even have to hire extra employees to man the new building.

If you are going to tell readers to do their research because government run museums do make money, please provide the infirmation you have. Because I've never seen those statistics.

Yes...can the museum be run more efficiently and profitably...ABSOLUTELY!!!! The city hired a marketing firm for an exorbant amount of money where they do virtually do nothing to promte Kennesaw. That money could be spent in a much smarter way, to promote Downtown Kennesaw! An inside marketing team for 1/3 the price would do a much better, more efficient, results driven job. But politics stop that from happening.

The marketing firm was a city decision. Not just a museum decision. Remember, anything the Sourhern Museum of Civil War And Locomotive History does has to be approved through....yes, you guessed it.... The City Of Kennesaw.

I am in strong favor of the museum, I tell many about it. I am in fact NOT a proponent of how it is run either internally or externally. I feel, as a person who has been on many different sides of the City of Kennesaw, you need this museum. But you also need new leadership in both the museum and the city.
Sam Paglioni
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September 30, 2013
Good evening. The facts are available to anyone who wishes to review the CAFR September 30, 2012 report available from the City's website. The facts of the money-losing Museum and Gardens are facts presented in the City financials. Anyone can download the report and, if so inclined, print them out as I did.

The juxtaposition of the spending on the Museum is that of under-funded pensions for our employees and the growing liability of Other Post Employment Benefits (OPEB) which GASB 45 forced cities across America to begin recognizing the expense on their financials. Please understand that I like the museum, but it has to be run in an efficient manner or turned over to a group, such as Kennesaw State University, who could utilize it in their History studies and help fund it.

If the Foundation for the museum could support it, then we would not need the annual transfer of funds from the General fund to the Museum fund; those monies could go to shoring up the pension. Further, the politicians have to focus on changing the benefits package promised to employees. By avoiding that issue the employees will wake up one day to find that they must pay more for the benefits or find them eliminated altogether.

I discovered this on my own by studying the financials of the City. It's the same anyone else could do.

The fact is that the Museum is a money-losing operation in the current configuration.
Joe Bozeman
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September 30, 2013
Southern patriot , I am saying lots about this, but in the proper way. I am sick of accusations that are simply not true about the museum , the museum management, and the museum foundation. Those who want to use the museum as a political football are and will catch my heat. I make comments under my own name . I wish the rest of you would do the same.
Joe Bozeman
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September 30, 2013
Kennesaw Cares, please get you facts correct if you are going to post comments. You stated that Richard Banz fired 95% of the fomer staff. THAT IS A LIE! One former employee has been terminated since Dr. Banz took over the directorship.
@Joe Bozeman
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October 01, 2013
1 full-timer fired; 5 part-timers laid-off; and 4 full-timers quit under pressure. Your support of the government of Kennesaw is commendable but the museum has always been poorly managed.
Joe Bozeman
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October 01, 2013
The comment was that Richard Banz FIRED 95 % of the staff, that is a blatant lie. One employee was "fired", the part time employees were laid off to reduce cost. Now this business about people resigning under pressure is debatable. When new management takes over, it is the employees responsibility to conform to the new rules. I know for a fact that the museum gave every chance possible for the employee who was fired to conform and he chose not to do so. I spoke with every person before they resigned and asked them to conform to the new rules. My advice fell on deft ears , that was their decision not a decision made by Richard Banz.
Excuses, excuses
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September 30, 2013
"The economy tanked" is actually a code phrase for "I have no idea what I'm talking about so I think I'll throw out the Economy excuse". Yes, there has been a national economic downturn, but anyone who takes the time to review Georgia economic reports will see that the Kennesaw/Acworth corridor is one of the healthiest in the State! Why do you think Cabellas is putting up a Store here? Those don't exactly get thrown on every corner like Quiktrips.

Now, as far as the Museum goes there are 2 glaring issues: First, NINE FULL-TIME EMPLOYEES???. Really? Do you know how many small businesses produce more revenue with half that many people? Secondly, when is the last time you've seen anything resembling a marketing effort by the Museum? It's such a niche attraction that people are going to need to be enticed to seek it out. Putting a banner on the front yard is not marketing. Hosting a 5k race is not marketing. Do any of those 9 employees know anything about promotions? Apparently not.
Be Careful
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September 30, 2013
For the city to spend 3.5% of it's budget on these money losing "businesses" is horrible. I bet most people in Kennesaw don't have any idea how much of their tax money is being flushed down the toilet.

To the person who says museums and gardens don't ever make money...not true. Do some research.

Any elected official who is OK with this situation should be voted out of office and the first available opportunity.

As for "quality of life"...maybe, IF the residents actually go to the museum. Which based on the numbers is clearly not the case. If the residents don't go, there is no enhancement to quality of life.

As for the "halo effect", let's see some numbers.

Based on the visitors bureau estimate it's $4,000,000. If you divide that by actual attendance numbers, everyone who visits the gardens and museums spends $111 in Kennesaw.

Really?

So if parents bring their 2 kids, they are spending $444 in the city? I hardly think so and anyone who understands basic math will know those estimates are "pie in the sky" wishful thinking.

To the element of Kennesaw government that is OK with this situation, shame on you.
Kennesaw cares
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September 29, 2013
So what does Jenkins wish to do? Close down the museum? Or is this just pandering to the taxpayer since we have an upcoming election? I will agree there needs to be a change in management from Banz on down. After Banz came in he fired 95% of the staff, some were very long time employees that loved the museum with all their heart and it showed. What did Jenkins and the rest of the counsel do? Nothing. Now your concerned Jenkins? Not buying it. However Jenkins is not alone in this, you have a museum foundation that has no teeth. They see what is going on, and they do nothing. More interested in building new buildings that will put the museum even more in debt. How about building up your exhibits and adding to your collection? Its a pity you can see more civil war artifacts across the street at Wildman's then what you can see at the museum. People there is a vote coming up, let your voice be heard.
Old Man
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September 29, 2013
Museums are important not only for the halo effect, but also to teach people history and appreciation for those who went before us. Maybe this museum needs a new life by a new director and some staff, or maybe privatization is a way, if someone could be found to back it. The city council was right in expansion but at the cost of innovative ways to exhibit things. The gardens and museum will probably never make a profit - I've never heard of any that do. But higher fees and special events encompassing all themes should be investigated. Good luck - it's a great museum with wonderful exhibits, but poor management.
Been There
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September 29, 2013
Jeff Drobney told the city the museum would be self-supporting in 5-7 years after opening. No museum that relies on government support is ever going to make a profit - not the Marietta Museum of History, Gone With the Wind and other government supported museums. Drobney built his reputation on the museum and moved up to Asst. City Manager after bringing in a new director who got rid of the entire staff who had opened the museum in order to "take the museum in a new direction." Richard Banz is a railroad man and thus the Civil War exhibits will remain static. Only a few special events a year, all which highlight railroads are not enough. Maybe they need a new director, staff shuffle, or privatization. This museum is too valuable to waste.

Southern Patriot
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September 30, 2013
I agree, perhaps a new staff would change things for the better. Replace the Carpetbaggers with locals. I'd like to know what Harper Harris and Joe Bozeman have to say about this.
Carol Thompson
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September 29, 2013
I suggest some of the citizens explore the fact that most museums and gardens are subsidized in part by local governments. The folks that paid attention knew this when the Museum expansion was discussed and when the Gardens were being created. We all wish the economy hadn't tanked, but it did, and it really hasn't improved much. I believe, all things considered, that not only has the City of Kennesaw, taken care of its citizens, but so has Cobb County, in spite of the loss of revenue. Be thankful we don't live in Detroit!
TJR
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September 29, 2013


"Mayor Pro-Tem Jeff Duckett did not seem overly concerned about the deficits"

On those rare occasions when Duckett speaks you can see Mayor Mathews mouth move.
Mike P.
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September 29, 2013
and the former museum director now works for the City of Kennesaw-sure hope he doesn't work in finance:).
Sam Paglioni
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September 29, 2013
I was mentioned in the article so allow me to provide some of the thoughts I felt should be addressed by the Council.

1. How can you justify spending on the Museum when the City Pensions are under-funded and the Other Post Employment Benefit package (OPEB) are growing like kudzu on the balance sheet?

2. In this culture of spending, why doesn't the City of Kennesaw maintain a travel and entertainment policy that is audited by someone within the City, versus a "reasonable expense" policy.

3. Why do part-time politicians receive pensions themselves and health benefits which creates an incentive to stay in office as long as possible?

The story of the Museum is simply the symptom of a culture in the City of Kennesaw that enjoys spending the taxpayer's dollar. Mr. Mathews and his voting bloc that control the City point to the "halo effect" but do little to dig into the 4th grade math presented.

$4,000,000 divided by 32,000 visitors means each man, woman and child spends $125 on a visit. A family of four spending $500 for the visit to downtown Kennesaw?

Anyone?
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