States Group Joins Fray on Arts Funding : Grants: Assembly of State Art Agencies believes congressional controls over the NEA are inevitable. It proposes shifting most of the aid to state councils.

One of the nation’s most influential arts support groups has written off as “no longer realistic” any remaining chance for the National Endowment for the Arts to escape congressional controls on the content of federally funded artworks.

And in response to this “now inevitable” alteration in the system by which the government supports art across the country, the board of the National Assembly of State Art Agencies has proposed a radical new way to carve up federal arts support that artists contend leaves them essentially disenfranchised.

The NEA’s national advisory council, meeting here over the weekend, voted unanimously to support a resolution continuing the agency’s position in the delicate congressional deliberations over its legislative reauthorization. The National Council on the Arts reasserted its support for NEA Chairman John E. Frohnmayer.

Frohnmayer, in turn, answered bluntly “no” when asked if he accepted the inevitability of the NEA’s failure to fight off its critics.

However, in an internal memorandum prepared by the national assembly board--dated last Thursday and disseminated here--the state art agency group proposes shifting as much as two thirds of all federal arts funds to state arts councils.

The national assembly memorandum concludes that the NEA’s yearlong political crisis has had what amounts to a fatal effect on the endowment.

“It is now inevitable that Congress will not allow the endowment to continue to function as the agency has in the past. Congressional support for the agency has continued to erode,” the memorandum concludes. “The alternative of reauthorization (of the NEA’s legal existence) with no restrictive language is no longer realistic.”

The national assembly report was the latest development in a political controversy that has its roots in NEA support of a handful of controversial photographs last year. The situation developed into a full-blown crisis for arts financing in the United States after conservatives in Congress, led by Sen. Jesse Helms (R-N.C.), attacked the endowment for supporting art that many Americans find provocative, sacrilegious or obscene.

Frohnmayer rejected the national assembly’s conclusions, and the group’s executive director stressed that the document is a report of his organization’s board and does not yet represent the full organization’s official position.

But emergence of the conclusions on the letterhead of an organization clearly positioned in the Arts Establishment mainstream caused obvious alarm among members of the NEA’s advisory council. It seemed to cast in even more stark terms the potentially moribund political situation of the beleaguered arts agency.

Members of the National Council on the Arts and officials of a variety of private arts support groups gathered here for a regularly scheduled council meeting that ended Saturday. Most of them appeared taken by surprise by the pessimistic tone of the memo, copies of which poured out of facsimile machines and copiers at the headquarters hotel starting Friday night and continuing through most of Saturday.

The proposal offered a radical restructuring of the NEA budget. The changes were so significant most observers who examined the document agreed it would alter virtually the entire system of public arts support in the United States. Among its provisions:

* State and local government art agencies, which currently are direct recipients of about 20% of all NEA money, would get 60% of the total and would take jurisdiction over much of the proportional funds now handed out by the endowment in the form of grants to individual artists and arts organizations.

* The NEA’s major arts program components--including offices that operate competitive and national grant-giving programs in dance, visual arts, music, museums, theater, literature and design arts--would occupy only 40% of the agency’s total budget--down from about 68% now.

* The NEA would continue to have some funds in its budget for direct grants to artists--5% of the total. But even that money might be transferred to state and local government arts agencies “if it appears Congress will not support the endowment’s desire to make grants to individual artists.”

The NEA has a total 1990 fiscal year budget of $171.3 million. In an interview here, Jonathan Katz, the national assembly’s director, insisted the plan would include attempts to increase the total sum appropriated to the NEA, but most observers believe prospects are slight for any substantive increase in funding.

Katz said the pessimistic assessment of the NEA’s political situation represents “the strong impression we get from the members of Congress. It’s not shared by all of our colleagues, including the chairman of the endowment.”

Katz said he was not deterred by withering criticism of the plan. “It’s unavoidable (for opponents) to imagine that state arts agencies have suspect motives,” he said. “But I think a clarification (that the proposal is largely an attempt to establish NEA funding priorities) shouldn’t leave them that concerned.”

Anne Murphy, executive director of the American Arts Alliance, conceded that “the situation is tough,” because the NEA political controversy has forced the arts community, which largely lacks experience in direct participation in rough-and-tumble politics, to compete “in a fight being fought by politically astute people.”

But Joy Silverman, field director for the National Campaign for Freedom of Expression, a grass-roots artists’ organization, condemned the plan as a caving in to political elements that seek to “disenfranchise” creative and politically disenfranchised social groups.

“This is very much perpetuating an elitist system,” Silverman said. “Individual artists would have no opportunity for recognition or the ability to compete on a national scale. We’re very much against it.”

In another development:

* Rep. Dana Rohrabacher (R-Lomita) released a letter to the criminal division of the Justice Department demanding an investigation of the NEA for possible illegal lobbying activities.

Rohrabacher’s complaint stemmed from what he said was an endowment-supported meeting at the NEA headquarters hotel here Friday--in a section of a ballroom that had been reserved for endowment use--at which a variety of private arts groups conducted a strategy session to plan ways to press their case for unrestricted reauthorization of the NEA to Congress.

The meeting, organized by the American Arts Alliance, was attended by six National Council on the Arts members and several senior NEA officials. However, the meeting, to which reporters were admitted, appeared to have little to do with direct lobbying and to focus, instead, on ways to better portray NEA activities to the public.