Report to the Board of Regents

Financial Position of the Cultural Education Account

April 15, 2008

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 What is the Cultural Education (CE) Account?

•  A special revenue account established in 2002 to fund the majority of

the programs of the Office of Cultural Education. All OCE functions
previously supported by State General Fund operations appropriations
were transferred to this funding source at that time.

•  Supported by document recording and indexing fees at the county level

and is largely influenced by the real estate market. The fee structure is
unchanged since the inception of the fund.

•  Provides the majority of operational funding for the State Museum, all of
the funding for the Office of Public Broadcasting and Educational
Television, and a substantial portion of the funding for the State
Archives and the State Library, including the book budget.

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 What has the CE Account Funded Since 2002?

•  Continuing operation of OCE’s programs, including refilling of a number

of critical positions lost through attrition

•  Much of the funding for the renewal of the State Library’s Reading
Room

•  $5 million of special projects to enhance Museum exhibits and to care

for and digitize collections

•  $20 million to initiate planning for a new collection stewardship facility

for OCE collections

•  $20 million to support the renewal of the Museum’s galleries

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 Why Do We Need to Discuss the CE Account?

The cash balance in the CE account is likely to be exhausted by next

fiscal year (FY 2009-2010) by forces beyond our control.

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 Why Do We Need to Discuss the CE Account?

The cash balance in the CE account is likely to be exhausted by next

fiscal year (FY 2009-2010) by forces beyond our control:

•  Fee-based revenue has declined sharply from historically

high levels.

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 Why Do We Need to Discuss the CE Account?

The cash balance in the CE account is likely to be exhausted by next

fiscal year (FY 2009-2010) by forces beyond our control:

•  Fee-based revenue has declined sharply from historically high

levels.

•  Significant and increasing amounts of CE account revenue

have been transferred to support non-OCE programs or to
offset the cost of long-term capital projects.

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 Why Do We Need to Discuss the CE Account?

The cash balance in the CE account is likely to be exhausted by next

fiscal year (FY 2009-2010) by forces beyond our control:

•  Fee-based revenue has declined sharply from historically high

levels.

•  Significant and increasing amounts of CE account revenue have

been transferred to support non-OCE programs or to offset the
cost of long-term capital projects.

•  The funding source must absorb non-discretionary program

cost increases, particularly for negotiated salary contracts
and other costs driven by them (i.e. fringe benefits and
indirect costs).

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 Conclusions

•  We must seek fundamental changes within the next two fiscal

years in the way the Office of Cultural Education is funded.

•  The projected fiscal problems result from structural revenue

issues and from reliance by the State on this revenue source to
support other State funding needs.

•  The projected fiscal problems were not caused by over-

expenditure and can not be resolved by severe spending
controls.

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 Some Possible Avenues to Pursue

•  Shift support of some or all of OCE programs to another funding

source.

•  Redirect the annual sweep of revenue from this account so it

doesn’t impact OCE programs.

•  Enhance the current sources of revenue or develop new special

revenue sources.

All of these actions would require the

cooperation of stakeholders and partners in
the Executive and Legislative branches and
at the local level.

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