As Laura Allred Hurtado takes over leadership of the Utah Museum of Contemporary Art, she has more to contend with than the challenge of successfully showcasing groundbreaking art in a blood-red state.

The museum has quietly sold off “a substantial portion” of its permanent collection and spent restricted endowment money — without first seeking permission from donors — to pay off some of its debt, financial audits show.

It “has not been able to consistently produce positive results from operations” and has “a significant net deficiency in unrestricted net assets,” auditors wrote in May 2018, raising “substantial doubt about the organization’s ability to continue as a going concern.”

Yet Salt Lake County, the Utah Legislature and Salt Lake City have continued to commit taxpayer dollars to the nonprofit museum.

Hurtado — who took over in April and cited her top priorities as “stabilizing and reducing” — said she remains optimistic about the future. She most recently worked for The Church of Jesus Christ of Latter-day Saints, where she was global acquisitions art curator at the Church History Museum.

“UMOCA has been an institution for 87 years and has managed to keep its doors open over a litany of leaders and a litany of funders,” she said.

“And while it maintains a sense of scrappiness, I think that suggests its ability to persevere and to stay open, and embedded in the institution are the community values and support,” she said. “It remains important.”

In 2017, UMOCA said 98% of its programming was free of charge, including admission to the museum. That’s something Hurtado said she plans to reconsider in the next six months.

The museum’s financial hardships date back to at least the early 1980s. After moving in 1979 to its current location on West Temple, tucked between the Salt Palace and Abravanel Hall, the museum fell into deep debt. By 1983, it was preparing to close ― but was saved by emergency cash donations from the city and Utah arts patron Marcia Price, according to past reporting by The Salt Lake Tribune.

When Ric Collier became executive director in 1996, he trimmed the exhibition schedule to about 12 shows a year to save money. When he announced his resignation more than 10 years later, he listed among his accomplishments the growth of the operating budget from just over $400,000 to $1 million-plus in 2007.

The next year, the Great Recession began, diminishing the budgets of many arts organizations, said Adam Price, who served as executive director from 2010 to 2012. By June of his first year, revenue declined to barely half of what it had been three years earlier, he said. Additionally, some large donors had pulled back after Collier’s departure, Price said.

By fiscal year 2012, the museum had seen a decrease in net assets of nearly $300,000, according to financial audits obtained through an open records request by The Salt Lake Tribune.

“During my tenure the board was reluctant to cut spending substantially because of certain other mission-critical goals that we were obliged to meet during the 2010-2012 period,” Price said, the window when it changed its brand from the Salt Lake Art Center to UMOCA.

“... So we continued to fund our operations through deficit spending until my departure,” he said.

As of June 30, 2013, the museum had line of credit balances of $410,097 — without the ability to repay that money “unless it were to sell its permanent art collection or use restricted net assets.”

Both of those last-resort options were used by 2017, when the museum had “liquidated a substantial portion of the permanent collection,” auditors said. An appraisal of the value of the remaining collection showed it had been devalued by $115,260.

Kristian Anderson, who served as executive director of UMOCA from 2014 to the end of 2018, told The Tribune that the decision to sell off pieces of the permanent collection was complicated, and not just about making money.

The museum’s building, which is owned by Salt Lake County, doesn’t have climate control needed to store pieces, he said. Also, the museum had changed its mission prior to his time there and no longer considers itself a “collecting institution,” he said.

Institutions from across the state — including the Utah Museum of Fine Art and the Springville Museum of Art — were invited to purchase artwork from the collection, Anderson said, noting that those pieces of largely Utah art remain in the public trust.

“It was not a ‘have rich, private collectors come in and just buy stuff’ [process],” he said. “It was moving things to places where they could be cared for.”

Best practices generally discourage museums from selling off their collections for financial gain, but Anderson said he felt “really good” about UMOCA’s approach.

He said he wasn’t sure what percentage of the collection has been sold to date. Val Antczak, chair of UMOCA’s board of trustees, said he has never seen a complete list of the pieces that were sold.

In 2016, the museum spent $186,961 from its Art Center Endowment Fund — without consulting donors — to pay down some of its debt.

The major patron of that fund was Price, who had saved UMOCA more than 30 years before. She did not respond to multiple requests for comment.

Antczak acknowledged the funds were in a restricted account. But he said he believes the account had been mislabeled and they were not endowment dollars.

“There is no documentation for anywhere near the amount that was held in that account being in an endowment, nor was there any formal declaration that they were endowed or in some way endowed funds at any point in time from the records of UMOCA,” he said.

“And candidly, the issue became the auditors saying, ‘Prove it,’ and me saying the old legal adage about, ‘it’s hard to prove a negative.’ How do I prove that it’s not something, other than look at the documentation?”

‘Highest and best use’ of public funds?

Salt Lake County’s Zoo, Arts and Parks (ZAP) program uses a portion of sales tax dollars to fund cultural groups. The ZAP volunteer advisory board reviews applications and makes funding recommendations to the County Council.

The advisory board looks at financial records to ensure tax dollars are going to organizations with a track record of sound money management. Last year, the county declined to give money to The Leonardo museum, which had more than $2.9 million in debt and had not submitted a verified financial audit. Kathryn Smith, the organization’s chief impact officer, has said the organization has since negotiated repayment plans.

The county has continued to fund UMOCA. Earlier this year, the council approved a projected $110,175 award for the museum, which is one of seven large ZAP-funded organizations (out of 25) that is currently required to submit a financial health plan to the county.

Kirsten Darrington, ZAP’s program director, said advisory board members are “thorough,” making site visits and requesting additional information when needed. “The board also considers an organization’s overall history and track record,” she said.

Council Chairman Richard Snelgrove said he was generally aware of the museum’s financial challenges but didn’t know some details, including its sales of art, prior to a recent conversation with The Tribune.

“Their continuation as a viable entity is not certain and that’s cause for concern,” he said. “... And if the continued viability of an entity raises a red flag, then we have to ask ourselves the hard question: Is this the highest and best use for the continued use of those funds? And I can’t answer that yet.”

Snelgrove said he would like the council and the public to receive more information about individual expenditures from organizations that receive county money or operate out of county-owned buildings.

Ultimately, he said, he believes the ZAP board members are “good stewards of public tax dollars” who want “to see arts and culture thrive. ... And so they’re motivated to support those and dedicate these dollars where they feel there’s going to be the most good.”

While its largest chunk of public funding generally comes from the county, the museum has also received state and city money over the years, including a $50,000 appropriation from the Legislature in 2014.

Sen. Derek Kitchen, who sits on UMOCA’s board of trustees, requested another $50,000 chunk for the organization this year, which was not approved. He had not disclosed his relationship with UMOCA when making the request, nor did he include his service on the board on his annual conflict of interest form for 2019.

Anderson said he’s not sure at what point financial challenges should stop a government agency from providing funding.

“If you only fund the arts institutions that aren’t struggling, that’s going to be a pretty narrow band of things,” he said. “Art and especially the public funding of art should be something that is a bit more experimental and a bit more challenging and honestly a bit more likely to fail. Because if you don’t do that, you’re just going to end up with, like, Andy Warhol prints and landscapes.”

‘Lingering debt’

Until the location of a new downtown convention center hotel was settled, there was speculation that it might be built on UMOCA’s site and the museum would have to move.

“Some donors are hesitant to donate due to the uncertainty,” the organization said in a May 2016 ZAP filing.

Around the same time, the Salt Lake City mayor’s office commissioned a study to investigate moving the museum and the Utah Film Center to a proposed new building on Library Square. The study recommended the idea, estimated to cost approximately $70 million.

But the city instead prioritized an $87 million road reconstruction bond, which was approved by voters in November, according to a spokesman for the mayor’s office. In its May 2017 ZAP filing, UMOCA said it was clear the hotel would be located elsewhere and it was now focused on working with the county to make improvements to its facility.

“There have been no significant changes to the infrastructure, especially as it relates to climate control and safety, since the building was erected, and it is in desperate need of electrical and HVAC updates,” museum leaders wrote.

It could also be “reconfigured to include more rental and event space,” they added, to help UMOCA “achieve its most important goal of being debt free.”

Cami Munk, communications manager for Salt Lake County’s Center for the Arts, said maintenance at the county-owned facility has been routine and consistent with that of its other buildings.

“We are currently working with the new UMOCA executive director to update the list based on her vision for the facility and talking about larger capital projects,” she wrote in an email.

In the 2017 filing, the organization listed its most important long-term goals as eliminating debt and building up three or four months of cash reserves.

“The institution’s fiscal health continues to improve, but there is still some lingering debt that we are working diligently to eliminate,” it wrote, noting that afterward UMOCA would work to rebuild its endowment.

Contemporary art, conservative culture

In the rapidly growing state, many of Utah’s large arts organizations are shifting their focus to provide more programming for a changing demographic — and UMOCA believes it has an important role to play in accelerating that dialogue.

But it can be difficult for contemporary art, which often aims to push traditional social and cultural boundaries, to thrive financially anywhere, Anderson said. And it may be even more difficult in a conservative community like Utah.

“It’s not the most feel good, like you’re going to come in for a relaxing afternoon and just sort of look at some stuff,” said Anderson. “It challenges you and it challenges conceptions of what art is. And so I think it’s an inherently tougher medium to work from.”

Peter Everett, a professor of art at Brigham Young University whose artwork is included in one of five new exhibits that opened at UMOCA on Friday, said the museum is a vital part of the state’s arts landscape — not only for its content, but also because it provides artists a space to display their work.

“When you have venues for artists to exhibit in, you have a cultural richness,” he said. “It creates a dialogue about who are we, and how do we relate to others and what are our value systems? And what is beautiful and how do we see things that are beautiful? And how do we be intellectually engaged?”

Hurtado, the museum’s executive director, said UMOCA is “not closing any time soon” and her vision for moving forward is practical. She’s seeking to reduce the number of exhibitions the museum curates, in an effort to develop stronger programming behind the ones it does. She wants to explore implementing a mandatory admission fee in the next six months.

And she’s looking at new ways to generate revenue, including offering rental space.

She, the museum board and the staff at UMOCA believe “that the art of our times are vital, and that they have a real power in them, and that they’re critical to the community,” Hurtado said, “and that they can change minds and can make the world a better place.”