TAMPA — The Museum of Science & Industry, a renowned Tampa attraction that receives more than $1 million a year in taxpayer support, is in financial trouble, according to a recently released audit.
The report by Museum Management Consultants of San Francisco portrays the museum near the University of South Florida as a financially unstable organization that can’t cover its debt. In addition, the auditors found MOSI’s financial accounting systems convoluted and difficult to understand.
“MOSI’s overall financial health is in decline,” the auditors said in their report.
Most worrying, they said, is the museum’s “diminishing ability” to pay off current obligations with current assets.
“If MOSI were to pay off its current obligations, the museum would have less than one day’s worth of assets to work with,” the auditors said.
Hillsborough County financial managers first spotted MOSI’s money problems late last summer when the museum was unable to pay back $250,000 of $450,000 it borrowed from the county a year earlier.
In response, the county commission agreed to hire Museum Management Consultants to conduct a wide-ranging review of the museum’s operations.
The report was not all negative.
Auditors noted that the museum does a good job earning income from its many exhibits, educational programs and Imax theater. And expenses, though rising, are not out of line with those of similar science museums. Neither are salaries.
President and CEO Wit Ostrenko was lauded in the report for spinning off the institution from county control in 1987 and growing it into an accredited nonprofit organization. The museum is approaching 15 million in attendance since it opened in 1982.
“Ostrenko’s vision has helped build MOSI into what it is today: a 300,000-square-foot science museum dedicated to “advancing public knowledge of science, industry and technology,” the auditors said. “Over the years, Ostrenko has been considered by many board members to be the ‘big thinker that makes things happen.’ ”
But current board members, in confidential interviews with the auditors, criticized Ostrenko and the museum’s financial staff for losing their focus in recent years. Some board members complained they were reduced to a rubber stamp for management’s ideas rather than partners in a collaborative process.
They also faulted Ostrenko for lack of focus on fundraising from the private sector, finding that income from these contributions is low compared with similar institutions.
Board members expressed concerns that financial reports presented by management were difficult to understand and written to show the museum’s financial condition in the “most favorable light.”
Similar reports of unrealistic financial projections turned up repeatedly in interviews with MOSI staff. The auditors were told that program and department heads were sometimes encouraged to increase revenue projections unrealistically to cover expenses. If the inflated revenue didn’t materialize, the budget item was adjusted to bring it into line.
“MOSI’s financials are based more on hope than on strong business projections,” one of the people interviewed said. “The projections are too optimistic.”
The auditors said they had problems reconciling the museum’s financial reports with yearly outside audits and Internal Revenue Service 990 reports.
“Confusing financial reports are a concern because MOSI is a public institution, the recipient of public and private dollars,” the auditors said.
Ostrenko said Friday he hadn’t read the report but disagreed with its dire financial assessments.
MOSI has had a rough five years financially, he conceded, but much of that reflects the national recession that started in late 2008.
Adding to the financial stress was the poor performance of last year’s “Monsters of the Sea” exhibit.
The museum had a “great June,” Ostrenko said, and is on the road to stability.
“We’re having banner summer attendance,” he said.
Ostrenko agreed with some of the auditor’s findings, including the need to boost MOSI’s private sector contributions. Ostrenko said he has hired “two of the best development people in Florida.”
Robert Thomas, MOSI’s board chairman, said he didn’t consider the report a negative reflection on MOSI’s operations. Many of the report’s recommendations, such as reformatting the financial reports and reorganizing the board of directors, were in the works before the report was finished, Thomas said.
“We’re at a crossroads,” Thomas said. “The past has been astonishing, and the future is very promising. I think the report was very positive and not derogatory in any sense.”
Hillsborough County Commissioner Mark Sharpe, who sits on the MOSI board, characterized the report’s conclusions as “a glass half full.” The audit highlighted legitimate concerns, Sharpe said, but none that can’t be overcome.
Sharpe also expressed confidence in Ostrenko, Thomas and the new development directors. On a recent visit to the museum, the commissioner said he was impressed by the exuberance of MOSI employees as they worked with young visitors.
“They’re fighting through it,” Sharpe said. “There are some entities that I’m critical of, and I say they’re going down. (MOSI) is an entity that is on the rise.”
Ostrenko has announced he will retire in December 2015. He’s determined to leave his life’s work on solid financial ground.
“I may be in a pine box, but I’m going to do it.”