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Financial forecast brightens for Symphony

Wednesday, October 29, 2003

By Andrew Druckenbrod, Post-Gazette Classical Music Critic

The Pittsburgh Symphony Orchestra expects to operate with a balanced budget this season.

"We have faced the challenge and we have put together the business plan that would deal with the deficit we had projected for this current year," said board chairman Richard Simmons following the PSO's annual meeting yesterday at Heinz Hall.

The PSO had projected a $2.5 million to $3 million structural deficit for the 2003-04 season, but expects to avoid it through increased endowment performance, augmented annual fund contributions, reduced musicians' salaries, increases in ticket revenue and enhancement of shared services.

 
 
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"If we hit all of those assumptions, we will have a balanced budget, give $700,000 to the musicians' pension fund and pay down our line of credit by $500,000," said Simmons. The PSO was able to end the 2002-'03 season "with net assets increasing by $2.4 million, a result of favorable investment activity," said Chief Financial Officer Bill Hart yesterday. Net assets as of Aug. 31 totaled $108.5 million.

The PSO could still have an operating deficit this season if the budget assumptions are not met by the end of the fiscal year in August 2004. For instance, the PSO expects to receive $500,000 less than it requested from the Regional Asset District. "We would have to find another $500,000 somewhere else," said Simmons.

But he and the board are hopeful that, even without an operating reserve, the positive economic aspects of the PSO will allow for a balanced budget.

"The endowment, which had reached a low of $84 million earlier this year, was over $100 million at end of August," said Simmons. It peaked at $133 million in 2000. "[In particular] for the 12 months ending in August, the endowment earned 18 percent." The PSO draws 6.5 percent from a rolling 12-quarter average of the endowment.

Other positive fiscal factors include fund raising that is $250,000 ahead of this time last year, a new musicians' contract that includes a 7.8 percent wage cut for the first two years, and a 30 percent increase in new classical subscription sales from last year to date, totaling 1,550 new subscribers.

"This doesn't mean we are out of the woods, but we have reversed the trend, and the stock market has helped us rather than hurt us," said Simmons.


Andrew Druckenbrod can be reached at adruckenbrod@post-gazette.com or 412-263-1750.

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