As published in the January 1, 2007 Toledo Business Journal
F. Michael Walsh, M.D.
COSI Toledo, chairman of the board
COSI seeks business community support
Toledo Business Journal recently interviewed F. Michael Walsh, M.D., COSI Toledo chairman of the board. He shared the following thoughts.
Toledo Business Journal: First, can you share your thoughts on the outcome of the COSI levy vote that took place in November?
F. Michael Walsh, MD: It really wasn’t a surprise that we lost. It was our first time [on the ballot], and there really wasn’t enough money or time to truly explain to the population the value of COSI. We were a little surprised the vote was as close as it was; it ended up at a 1,250-vote differential. Close to 139,000 votes were cast.
Therefore, we did reasonably well on a first-time basis. However, we still lost. I think part of [the problem was] a misunderstanding of what COSI’s real value is and what it does for the community as well as a general negativity toward any real estate-based tax. There were four levies on the ballot, and when you added them all up, they were pretty significant [in terms of tax dollars]. Our tax was $5 on a $100,000 valuation for the year. It isn’t a big number, but it is still a tax and it is a new tax. I think there are barriers you have to overcome with the electorate, and we were not successful in doing that.
TBJ: COSI has announced that it will be forced to close if new funding is not obtained. Is this still the case? What would be the timing of the closure?
FMW: Where we are this month, financially, looks to be a little better than we initially thought. Instead of having $22,000, we’re going to have $34,000 in the bank at the end of the year. This includes all sources of funds. We will close for a couple of weeks this month, which will be more symbolic than anything else.
We’ve worked closely with a group of other organizations in the city. The Toledo Zoo is willing to pick up the costs of three to four COSI employees to work on joint educational programs for a period of time. These programs will be in conjunction with the University of Toledo (UT). UT, through its UT3 grant program, feels there should be an increasingly close relationship with COSI.
We’ve been able to obtain a payment plan for the utilities. The electric bill runs $25,000 a month, a pretty significant number. The City is willing to front us the money for the insurance, which is $68,000. We will pay them back at a future date. And at some future date we will also go back to the voters. There is a lot of discussion at the board about that timing.
In the interim, we have another fundraising campaign with foundations and wealthy individuals. We are trying to raise $500,000 to $600,000. We believe, realistically, that we can raise $350,000 to $400,000. That’s our operating loss on an annual basis. So, with that amount we can at least cover another year. We also have a federal grant – $250,000 a year for two years. That should become available in the spring.
The issues we have are financial. We have evaluated multiple different scenarios. You can only survive hand to mouth for a period of time. The State, through the Ohio Arts Commission, had given us a $1.9 million capital improvement grant. We spent a million of that last year. They reimburse you, and we were able to do renovations, put in new exhibits, and make COSI much more functional.
One of the major complaints we had heard was that COSI was dirty, run down, and that some elements didn’t work. We took care of all that, and there is still $900,000 left to access for additional improvements. But the State isn’t going to free that money up until we prove that we will remain open for the long run and not be dead in the water.
There have been conversations of us relocating, which we aren’t opposed to. The problem is that there is a lot of money tied into [COSI] from the State, and we don’t know what they would do [if COSI moved]. You still have to move all the exhibits, and it is a few million dollars in costs to accomplish. It may be a nice thought, but who is coming up with the money to do that?
The commissioners (Lucas County) have been very helpful. If COSI went back for another levy campaign in May, which is the earliest it would happen, we’d have to go to the Citizen’s Tax Review Committee in January and get approved in February. And if you get approved, you’re committed. You have to go to the ballot. The issue is we don’t know how many other people would be on the ballot. The only one we’ve heard, potentially, would be Toledo Public Schools, and there are differing thoughts on whether that’s good or bad. The Teachers Federation, though, has been very supportive to COSI.
The bottom line is, we feel comfortable that, through a series of gifts and grants, we can probably make up the operating deficit. And if the State comes through with another $900,000, that would cover our anticipated annual depreciation. Our goal with the levy would be to get the “full gap financing” so we would be operational as well as able to cover the depreciation. That’s how we came up with $1.2 million.
The idea is to keep COSI vibrant. Can we exist through this year solely by charity? We will raise the admission price, but you can’t go up much higher than 50 cents more per person.
Our biggest customer base is the schools. As long as the schools are struggling financially, it’s a problem [for students to attend COSI]. Even if you are giving them discounted tickets, which we do, there’s still a cost associated with [coming to COSI]. And they have to get transportation. So, one of our potential programs with local corporations is to get them to adopt schools. Rather than going to corporations and asking for $50,000 or $100,000 for operations, which they don’t like doing, we could go and ask them to give $25,000 or $50,000 to adopt x number of schools for which they would pay the costs to visit COSI. And there could be more of a measured goal. They could see how these students performed and how they improved on proficiency tests.
When we adopted our new strategy, which is to focus more on education, the idea is to obtain improvement with measurable goals. With the new science proficiency test and the new curriculum being approved in Ohio, you have a significant focus on math and science – if you look at the national performance, particularly with minorities, about 28% pass. So you need to start early and have measurable goals if you desire substantial improvement.
Teachers will work with a COSI team member on a lesson plan so that, when students leave the field trip, it can be defined what the students came to learn, what they learned, and how they performed on a standardized test. You can set a target to say we want an x percentage increase on the mean scores for science and math and then determine whether or not COSI’s relationship with the school districts is actually functional.
That is why the educational community likes COSI. Another issue the educational community has, when you deal with our four partners – UT, Bowling Green State University (BGSU), Lourdes College, and Owens Community College – is that 34% of the incoming class at UT has to go through remediation to become ready for college. The State of Ohio, over the next few years, will start reducing funding if colleges can’t reduce the number of students in remedial classes. The problem is that you have to get the high schools to prepare students, which means you have to go back to the primary grades to get them to prepare students. So there is a clear-cut inducement to higher education to improve the science and math teaching in the primary schools and junior highs, because it’s going to work to their benefit.
Yes, we can survive for the time being. Yes, it will be tough. No, we can’t do it long term without public support. You can’t keep going back to the same charitable people for funding. The family of a former board chair has given a lot of money and they are very generous. But we still have to go back for a levy, and it’s a timing issue – May or November.
TBJ: Is the Columbus, Ohio COSI in a similar situation?
FMW: Worse. They have a huge facility and they have made dramatic cuts. There was a lot of political heat when they moved. They went rapidly to the voters a year ago April. They lost by 70% of the vote. They were going to have free admission for all residents of Franklin County. Our proposal sort of mirrored the zoo where free admission would be offered to Lucas County residents one day a week.
TBJ: Can you provide an update on assistance from the City of Toledo and Lucas County?
FMW: Lucas County can’t do anything because we lost the levy. And I totally concur with them. They are sympathetic, but if you lose the election, it’s hard for the commissioners to give you money anyway.
For the City, it’s going to be through the water and sewer departments, and working with Hylant Group, our insurance broker, to cover those costs. FirstEnergy was willing to give us a payment plan, as was Columbia Gas. We’re not asking for them write it off, because they can’t.
TBJ: Are there additional options for further reduction of costs at COSI in order to lower the funding requirement?
FMW: There are pros and cons. We haven’t had a marketing person in a while because we’re trying to conserve the cost. But, if you don’t have a marketing person you lose sales.
It is extremely difficult to recruit somebody when you can’t tell him/her you’re going to survive.
TBJ: Is there any opportunity for a loaned executive from a corporation?
FMW: We have thought about that, and I think there is some potential. We’ve used an outsider as the acting CFO. He’s on a retainer, and he comes from a turnaround-based company. There are probably retired people who we might be able to get out of Owens Corning, Owens-Illinois, Manor Care, or another company that might be willing to do it on a short-term stint.
TBJ: What role can the business community play in saving COSI? What has been organized to allow business professionals to assist?
FMW: First, businesses have to understand that COSI is not just a destination. Its focus is on making science interesting and stimulating to young people so they’re not afraid of it and they can deal with the concepts. People have opinions that maybe it shouldn’t have been downtown or maybe the building is too expensive. The issue is, however, once we became aware of the seriousness of our financial position, we made the changes to keep as cost effective as possible. The partnership we have with Owens, UT, BGSU, and Lourdes is somewhat unheard of nationally and can be a wonderful model.
The goal is to be able to obtain volunteers from those schools to fill staff reductions. So, from the business community, we need to partner with them and have them support us if they want an educated workforce. We’re not asking for a lot of money from them, but [we would be thrilled] if they had people in their companies who would become members or want to support COSI. If 69,000 people (the number of “yes” votes) gave us $5, we’d be in seventh heaven. Therefore, it’s getting people to understand that COSI’s role is to try to make the youth employable.
All we’re looking for from the business community is people to understand that we’re in the business of science and math education. It's great if they’re willing to support us financially or via a levy. It’s a relatively low cost levy. COSI will then do fine, survive, and hopefully prosper with their support.
TBJ: Are there any other issues that you would like to discuss?
FMW: I want to thank everybody who was supportive and who understood the situation. Some people voted against it on principle, just because it was a tax levy. It’s hard to explain to people how close we are to death. $35,000 doesn’t get you a whole lot of time.
KeyBank has been very supportive with their foundation giving money. But you still have to have some collateral. The banks aren’t going to loan to somebody who doesn’t have anything to pay it back. So we have to look more at gifts at that stage of the game.