While the State Foundation on Culture and the Arts is due to receive about $1 million in federal funds from the National Endowment of the Arts, it grapples with about a $1 million shortage in state funds after the Legislature dramatically changed how the state agency can use money from its Works of Art Special Fund.
Budget adjustments and changes to the terms of the state special fund — the SFCA’s largest source of funding — were necessary to protect the state from future and unknown federal funding cuts by President Donald Trump’s administration, according to state Rep. Jeanne Kapela (D, Volcano-Hawaiian Ocean View), who chairs the House Committee on Culture and Arts.
Established in 1989, the special fund put 1% of construction and renovation costs of new state buildings and capital improvement projects toward the public’s access to state art initiatives, programs and the upkeep costs of artwork. It expanded on the 1967 Art in Public Places program that used the percentage solely for the acquisition of artwork.
SFCA Executive Director Karen Ewald said since the ’90s, the state agency has been well within its right to use the special fund toward broad costs that still meet the restrictive criteria of the fund, like those that cover the transportation, display and conservation of rotating artworks in public buildings; operations at the Hawai‘i State Art Museum (the Capitol Modern); the Scholastic Art Awards; and its Artists in the Schools program, where practicing artists hold teaching residencies in public and charter schools.
But in late May, Gov. Josh Green signed Act 131, formerly House Bill 1378, that reverted the usage of the special fund to only be used for “costs related to the acquisition, planning, design and construction of works of art.”
Now, Ewald said, the SFCA can’t use the special fund anymore for the majority of its operations, including some paid positions, and public programming.
“We want to ensure there is dedicated funding for the arts, and this just became less dedicated,” Ewald said. “It became kind of dismantled.”
‘It’s just not business as usual anymore’
The change to the special fund wasn’t taken lightly, and Green didn’t have much of a choice, according to Ewald.
Normally, the SFCA’s budget is outlined in the House budget bill, but this session, its staff positions, operations and service costs were added into HB 1378, which Kapela originally introduced to approve funding for a new performing arts grant.
As a result, Ewald said “the bill intended to make it so that if (HB 1378) was vetoed by the governor, all of the (state) funding for (the SFCA’s) paid positions would be gone.”
“It was kind of holding us hostage in a way,” Ewald said. “We wouldn’t have our staff and we also wouldn’t have the money.”
Green initially opposed the bill and submitted written testimony to the Senate Ways and Means Committee hearing in early April saying that “this proposal threatens the long-term stability of arts and culture funding, forcing it to compete with other critical state priorities such as housing, education and healthcare.”
But in a recent statement to the Honolulu Star-Advertiser, Green said, “The final version of the bill was significantly different from the one we had originally opposed. We worked very hard to amend the bill in such a way that preserved a dedicated funding stream while ensuring taxpayer money is used in a transparent and accountable way.”
Typically, the SFCA can use up to $5.6 million from the special fund toward a broad range of costs. It also receives about $700,000 from the state’s general funds, separately outlined in the House budget bill.
Now, Ewald said, the SFCA can only spend about $3.3 million in the special fund solely for purchasing or commissioning art, and received about $500,000 in general funds from the state budget to cover its other costs.
Luckily, the SFCA received notice of receiving $1,014,738 in federal funds in mid-June, but it came nearly four months overdue.
The NEA is mandated by law to allocate 40% of its funds to state art agencies, and Ewald said all SFCA chapters across the country received an overdue notice of expected payment.
But many were left on pins and needles for months after Trump proposed to cut the NEA completely in order to decrease the size of the federal government and reduce what he calls unnecessary governmental entities.
While Ewald said “it’s just not business as usual anymore” when it comes to state funding, she said the relief of receiving federal funds in the current political climate is a bit of “good positive news.”
“We’re surviving and we’re going to get our federal funding,” Ewald said. “We’ll work on putting whatever money we do have out into the community.”
Protecting the state
Kapela said from the Legislature’s perspective, adjusting the special fund criteria and shrinking the agency’s budget were moves to “(clean) up language (of the state law)” and “(bring) our state into compliance with a very hostile federal government.”
The special fund, she said, is bond protected, which means that “the main things that are funding (it) are legislative projects, whether it’s a community building, whether it’s a school, whether it’s a theater.”
“You put the bond itself, the building of that project, at risk if you’re not using the funds properly,” Kapela said.
While Ewald said the SFCA has used the funds appropriately over the years and has been able to do so because of the flexibility of the state law, Kapela said that the problem was not the SFCA, but rather that “our state law was not in compliance with federal restrictions.”
“That’s what plays in to this larger picture,” Kapela said. “When you have (Elon Musk) and the (Department of Government Efficiency) or Trump, whoever at the federal level, that’s really pinpointing if these specifically blue states are not using any type of federal fund properly, whether it’s small or big, you put the entire state at risk.”
Ewald said that the concern of using the fund “inappropriately” is not accurate.
“I do believe that the law did not need to be amended in order to address the concern of bond funds,” Ewald said. “That’s something that could’ve been done administratively.”
More than state and federal funding uncertainties that could change at any moment, Ewald said she’s concerned for the usage of the special fund, which could outlast administrations.
“It ends our dedicated source of funding for arts and culture,” Ewald said. “While I’m grateful that they did that we still need general funds to make up for the loss of what we can’t spend in the special fund, I have concerns about future funding. I want to ensure it’s maintained.”
Kapela said she believes Act 131 was “incredibly successful.”
“There’s this notion going around that the Legislature has cut the arts or cut arts funding, but we worked off of (SFCA’s Board of Commissioners’) request (for funds),” Kapela said. “There’s so much happening on the federal level, but aside from just the arts stuff, we’re also looking at it from this larger lens of ‘How do you patch budget holes when you don’t know exactly whats going to be cut, how much is going to be cut and where the biggest need is going to be?’”
There’s always next session
Funding for the SFCA is always a year-to-year game, Ewald said.
Last year, the agency was at risk of losing about 90% of its annual revenue and shuttering the Capitol Modern after state Rep. Kyle Yamashita (D, Pukalani-Kula) proposed that only 1% of original state building construction costs — not renovation costs — go toward the Art in Public Places Program.
“I’m grateful to know that the intention is to still give us the funds,” Ewald said. “I don’t believe the bill was ill-intentioned in any way, I really don’t.”
Kapela said avoiding the museum’s closure has been top of mind for her and other legislators.
“Past versions of this cut the foundation entirely,” Kapela said. “For me, I’m an artist, I teach dance. If it wasn’t for the arts, I don’t think I would be in this seat, but I want to be able to shape (the budget) so that there is long lasting stability and funding for the organization.”
Still, its trickle-down effects are real, and Ewald said the funds that they did receive don’t make them whole.
While Ewald said that their small staff will most likely be unaffected by the changes, she will be shaving off funding across the board, closing the museum earlier some days in the week, terminating grant programs or limiting the number of schools that benefit from the Artists in Schools program.
“It’s all based on what’s the community need and where can we make the cuts?” Ewald said.
Kapela said that still, $3.3 million for state-funded arts operations is “fantastic” and the act also included $300,000 for a performing arts grant program.
“Maybe it’s not the way that they wanted, but (the SFCA has) had the special fund for a lot of time, which gave them a lot of flexibility without the need to have to come to the state Legislature,” Kapela said. “We want to make sure there’s stable funding, but we also want to make sure we’re doing it correctly. With (Act 131), they’re getting $3 million annually and we’ve cleaned up the direction of how that money gets given to them.”
Kapela also said that there will likely be a special legislative session where she hopes to “push for continued arts funding to fill those federal holes.”
Despite the current changes and uncertainty, Ewald said “we’re not totally done.”
“It’ll be really tight, but we’ll still be able to serve the community,” Ewald said. “We’ll still have funds, but it will be a lot less.”
Source: The Garden Island
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