Poor Record Keeping Cited in Oxnard Arts Center Losses

The city’s Performing Arts Center has been losing money to poor record keeping and unprofitable practices such as waiving performers’ event fees, an auditor’s report released this week concludes.

The report suggests that Oxnard officials review the center’s management policies.

During the past two years, the city-owned center has posted losses of more than $1 million. City Council members called for the audit several months ago.

“I think it’s just poor business and lack of controls,” said Stan Kleinman, the city’s interim finance director. “The center has to tighten up its business practices, have a business plan.”

Auditors from the accounting firm KPMG Peat Marwick reviewed 803 events held at the center between July and March. Among the problems cited:

* Managers of the Performing Arts Center have been scheduling events without analyzing how profitable they will be. The lack of planning resulted in a negative cash flow of more than $21,000 for the 1996 Jazz Festival, the report states. In another instance, the center agreed to accept $9,000 from a ballet troupe to use the center instead of $10,000, because of poor ticket sales.

“It was communicated to us that the management’s operating philosophy is that some revenue coming in the door is better than no revenue,” the report states. “Many events held at the PAC . . . have resulted in an overall loss to the city.”

* In many instances, fees for use of the center were discounted or waived without approval from the City Council. Auditors noted that several such cases resulted in the loss of about $100,000.

According to the report, 34% of events at the center are put on at discounted or special rent rates. In addition, 39% of the events are city-related or sponsored by the center, meaning that no rent is charged.

* The center’s management has not been closely tracking concessionaires’ revenues. The city is supposed to receive 15% of gross receipts for programs, tapes, books and other items. But the center relies on an honor system because limited staffing lowers the ability to monitor concession sales. For several events, including the Channel Islands Ballet’s “Nutcracker,” auditors could not determine gross concession sales.

* Auditors also determined that the center has not been filing 1099 forms with the IRS for payments made to artists, promoters and publicists. It faces a $50 penalty for each instance.

The center’s manager, Jack Lavin, declined to discuss specifics of the report.

“This type of evaluation will help us improve our . . . overall management and supervision,” Lavin said in a prepared statement.

Mayor Manuel Lopez said the auditor’s report underscores the need for the city to change the center’s management practices.

“A lot of people should have been taking care of the store,” he said.

Councilman Tom Holden said the Performing Arts Center is subsidizing too many performances.

“We need to have an aggressive marketing program” to attract business, he said.