Audit Recommends Shifting L.A. Arts Funds : * City budget: No dollar amount is specified but plan suggests a ‘small portion’ of endowment funds be used to make up for cuts in general-fund programs.

In the latest step toward determining the city’s arts funding for 1992-93, a Cultural Affairs Department audit released Tuesday recommends using funds from the L.A. Endowment for the Arts to pay for cultural services which normally come under the city’s general fund.

The much heralded arts endowment, which reached $6.1 million in 1991-92, is a trust fund established in 1988 by the City Council for grants, festivals and public art projects. It has provided about $3 million annually in grants to artists and arts organizations, and has been considered a sacred cow by many within the arts community. The endowment augments other city cultural services, such as the operation of 10 community arts centers, that have had their budgets cut in recent years.

The audit stopped short of recommending that the grants program be slashed to help offset a predicted $190-million shortfall in the city’s 1992-93 budget, a move some City Council members have mentioned. Adolfo V. Nodal, the department’s general manager, seemed pleased with the audit and said he basically agreed with its recommendations.

“I think it’s realistic. It really identifies the problems we have and gives us a way to work them out. . . . (but) we won’t cut into the grant money,” said Nodal, reiterating a long-held pledge. “The endowment is not meant to take the place of general-fund money. We can justify funding community arts programs because we feel those programs are a great way to meet the goals of the city’s cultural master plan. But not at the full amount that’s been cut out--absolutely not.”

According to Nodal, money from the city’s general fund pays for the department’s staff and basic programs ($3.2 million in 1991-92). That budget has been cut by $568,706 in the last two years, with an additional 7% to 10% cut expected for 1992-93. Although the audit specifies no dollar amount, it recommends that Nodal seek mayoral and City Council approval to use a “small portion” of endowment funds to make up for cuts in programs such as art exhibitions, classes, tours and special events.

Nodal has 30 days to complete a report outlining such a plan. He said the shifted endowment dollars would most likely come from funding now allocated for festivals and other special programs.

The audit also addresses what Nodal has admitted is the department’s biggest problem: a tremendous processing backlog in which grant recipients must wait months before any money is received. In 1990-91, for instance, the audit found that by the end of the fiscal year, 39% of the grantees had received no funding.

To correct that problem, the audit recommends using as much as 18% of the total endowment funds to pay for grant review administration, a provision that Nodal says was intended, but left out, in the original endowment proposal.

Buried within the audit is a brief warning that even with shifted use of endowment funds, the department may not be able to withstand further cuts.

“Should such reductions occur . . . consideration should be given to closing certain facilities,” the report says.

And once again, Nodal concurs: “If we get cut anymore than (the 7%-10%) recommended, then we’ll have to close some arts centers. We’ve cut to the bone and there’s no where else we can cut.”