EXECUTIVE SUMMARY
Sports and Music Halls of Fame September 2001

Russell W. Hinton, State Auditor

Performance Audits Operations Division Department of Audits and Accounts

254 Washington St., S.W. Atlanta, GA 30334-8400

Purpose of the Sports and Music Halls of Fame
The state operates the Georgia Sports Hall of Fame (Sports) and the Georgia Music Hall of Fame (Music) in Macon. Sports and Music are located in adjacent facilities approximately 110 yards apart. The purpose of both Sports and Music is to honor those, living or dead, who by achievement or service have made outstanding contributions to their respective fields in this state or elsewhere.

The museums operated by both Sports and Music contain exhibit areas, library/archives space, a gift shop, office space, storage areas, and rental space for individuals and groups. The exhibit areas in Sports and Music display memorabilia and exhibits that honor accomplishments by both Georgia and Georgians in their

Sports
Designated official state hall of fame in 1978
Facility opened in 1999 43,000 sq. feet with 14,000 sq.
feet of exhibit space

respective fields. A portion of both museums' exhibit space is

Music

used to display halls of fame inductee memorabilia.

Designated official state hall of

fame in 1979

Organization and Staffing

Facility opened in 1996 43,000 sq. feet with 14,400 sq.

SPORTS

feet of exhibit space

Sports is governed by the Georgia Sports Hall of Fame Authority

and is attached to the Department of Community Affairs (DCA) for administrative purposes only.

The Sports Authority is comprised of 18 members appointed by various state officials.

As of May 2001, Sports employed or was recruiting for 14 full-time and six part-time employees. In addition to its staff, Sports outsources landscaping, janitorial, payroll, and some maintenance services. The Georgia Sports Hall of Fame Foundation, staffed with Sports employees, is an additional component of the organization.

MUSIC Prior to fiscal year 1999, Music's governance structure was similar to that of Sports. Music was governed by the Georgia Music Hall of Fame Authority, which was attached to DCA for administrative purposes only. On July 1, 1998, the structure was changed, but Music retained its authority status. Music employees were transferred to DCA, and the museum now operates as a DCA division. The Music Authority consists of the same individuals who comprise the DCA Board.

As of May 2001, Music employed or was recruiting for 18 full-time and four part-time employees. In addition to its staff, Music outsources landscaping, janitorial, and some maintenance services. DCA processes payroll, most payables, and budget information. The Georgia Music Hall of Fame Foundation, staffed by Music employees, is an additional component of the organization.

Financial Information
Sports and Music have a variety of sources of revenue. Both receive state funds, gift revenue, interest income, and, through their business operations, earn admissions, rental, and gift shop revenue. The exhibit below summarizes both organizations' financial information. Neither organization is required to lapse funds to the state treasury at the end of the fiscal year. The fund balance for Sports and Music is the amount revenue has exceeded expenses over multiple years.

Sports and Music - Revenue and Expenses

Fiscal Year 2000

Revenue
State Funds Operating Revenue Fundraising Interest/Miscellaneous Total Revenue Expenses

Sports

Amount

Percentage

$908,027.00(1)

77.2%

$139,444.13

11.9%

$103,780.95

8.8%

$24,930.97

2.1%

$1,176,183.05

100.0%

$1,140,513.97

100.0%

Music

Amount

Percentage

$916,894.00

68.5%

$304,322.44

22.7%

$37,300.07

2.8%

$80,410.76

6.0%

$1,338,937.27

100.0%

$1,337,245.36

100.0%

Net Income

$35,669.08

$1,691.91

Fund Balance - June 30, 2000

$840,321.62

$1,437,644.61

(1) Does not include $100,000 for repair of the HVAC system included in fiscal year 2000 supplemental

appropriation.

Findings and Recommendations
Sports and Music agree that they should have business plans. Sports and Music indicated they would complete business plans by the summer of 2001.
Sports' Results-Based Budgeting (RBB) projected admissions were initially overestimated. Music's RBB data from prior years overstated the number of paid admissions.
Both Sports and Music have a larger staff size than other state halls of fames or museums with similar visitation levels. Within their business plans, Sports and Music should justify their current organizational structures and staffing levels.
Sports and Music should clearly state the purpose and accompanying performance measures for the gift shop and rental operations in their business plans.
Sports and Music should strengthen their internal controls over certain business operations. The Office of Planning and Budget should determine the appropriate fund balances required for
the operation of Sports and Music. The General Assembly should determine the degree to which Sports and Music should be self-
sufficient. Currently, Sports and Music receive a larger percentage of their revenue from state funds than other states' halls of fame or public sector museums. The General Assembly should consider joining Sports and Music under one governing body. This could facilitate the two organizations working together, which would increase their efficiency.

Click here for full report

PERFORMANCE AUDIT
Sports and Music Halls of Fame September 2001

Russell W. Hinton, State Auditor Performance Audit Operations Division Department of Audits and Accounts

254 Washington St. Atlanta, GA 30334

Purpose of the Sports and Music Halls of Fame
The state operates the Georgia Sports Hall of Fame (Sports) and the Georgia Music Hall of Fame (Music) in Macon. Sports and Music are located in adjacent facilities approximately 110 yards apart.
The purpose of both Sports and Music is to honor those, living or dead, who by achievement or service have made outstanding and lasting contributions to their respective fields in this state or elsewhere. The law requires each to maintain and construct a facility to house the respective hall of fame and to operate, advertise, and promote the hall. However, each has a distinct purpose stated in its enabling legislation. Sports is to select, appropriately honor, and induct future members of the hall of fame, while Music is to promote music events at its facility and around the state.

Background
Sports was initially founded in 1956 as the Georgia Prep Sports Hall of Fame. In 1963, the organization became the Georgia Sports Hall of Fame after it was expanded to include college, amateur, and professional sports. In 1994, the General Assembly authorized Sports to construct a museum facility in Macon to house exhibits related to hall inductees and Georgia athletics. The facility opened in April 1999.
The Georgia General Assembly established Music in 1979. In 1990, the Georgia Sports Hall of Fame General Assembly approved legislation calling for the construction of a museum to house acquired memorabilia. The museum opened in September 1996.

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Sports
Designated official state hall of fame in 1978
Facility opened in 1999 43,000 sq. feet with 14,000
sq. feet of exhibit space

Georgia Music Hall of Fame

Music
Designated official state hall of fame in 1979
Facility opened in 1996 43,000 sq. feet with 14,400
sq. feet of exhibit space

The museums operated by both Sports and Music contain exhibit areas, library/archives space, a gift shop, office space, storage areas, and rental space for individuals and groups. The exhibit areas in Sports and Music display a variety of memorabilia and interactive/educational exhibits that honor accomplishments by both Georgia and Georgians in their respective fields. A portion of both museums' exhibit space is used to display halls of fame inductee memorabilia.

Portion of Music exhibit area

Portion of Sports exhibit area

A hall of fame inductee is an individual or group who, in recognition of their accomplishments or achievements, has been inducted into the Sports or Music Hall of Fame.
Sports has inducted 303 sports figures and annually inducts up to seven members. Examples of past inductees include Herschel Walker, Gwen Torrence, and Hank Aaron. The Authority board members oversee the inductee selection process.
Music has inducted 83 individuals or groups since its inception. Inductees include Chet Atkins, Gladys Knight, and the Atlanta Rhythm Section. The Senate Music Industry Committee and a private organization, Friends of Georgia Music, currently are responsible for the inductee selection process.

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Exhibit 1 Organizational Charts

Sports Hall of Fame
May 2001

Sports Authority
Sports Director Full Time

Sports Foundation

Director of Operations Full Time/VACANT

Director of Retail Operations Part Time

Director of Collections and Interpretation Full Time

Director of Public Programs Full Time

Office Manager Full Time

Facilities Manager Full Time
Rentals Coordinator Part Time (Hrly.)
Rentals Contracts Part Time/
VACANT (Hrly)

Gift Shop Site Manager Full Time
Gift Shop Clerk Part Time(Hrly.)

Director of Education Full Time
Education Asst./ Tour Coord. Full Time

Archivist/ Registrar Full Time

Interactive Area Coordinator
Full Time (Hrly.)
Interactive Area Assistant
Part Time (Hrly.)
Interactive Area Assistant
Part Time (Hrly.)

Public Relations Director Full Time
Special Events Coordinator Full Time

Volunteer Coordinator Full Time/VACANT

Music Hall of Fame
May 2001

Music Authority
DCA Commissioner
DCA Executive Assistant Music Director Full Time

Music Foundation

Curator of Music & Popular Culture Full Time

Visitor Services Coordinator Full Time

Administrative Asst.
Full Time

Director of Retail Operations Part Time

Communications & Marketing Director
Full Time

Facilities Manager Full Time
Facilities Asst. Full Time (Hrly.)

Museum Educator Full Time
Research Librarian/Archivist
Full Time
Exhibits Designer/ Developer
Full Time/VACANT

Visitor Services Specialist Full Time
Visitor Services Associate
Full Time (Hrly.)
Visitor Services Associate
Part Time (Hrly.)
Visitor Services Associate
Part Time (Hrly.)

Special Asst./ Development Full Time/VACANT
Volunteer Coord. Full Time (Hrly.)

Store Manager Full Time/ VACANT
Gift Shop Sales Associate Full Time
Gift Shop Sales Associate
Part Time (Hrly.)

PR & Special Events Specialist
Full Time
Marketing Assistant Full Time

Note: Director of Retail Operations is an employee of Sports that will work for both organizations. The position's salary will be paid equally by the two organizations. Note: Music Authority consists of same individuals who comprise the DCA Board.

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Organization & Staffing
SPORTS Sports is governed by the Georgia Sports Hall of Fame Authority (Sports Authority) and is attached to the Department of Community Affairs (DCA) for administrative purposes only. The Sports Authority is comprised of 18 members appointed by various state officials.
As of May 2001, Sports employed or was recruiting for 14 full-time and six part-time employees (Exhibit 1 on page 3). In addition to its staff, Sports outsources landscaping, janitorial, payroll, and some maintenance services.
The Georgia Sports Hall of Fame Foundation (Sports Foundation) is an additional component of the organization. Though the Sports Foundation is a separate entity created for the primary purpose of fundraising, it is staffed by Sports employees. Donations made to the Sports Foundation, which has been designated a 501(c)3 by the U.S. Internal Revenue Service, are tax deductible.
MUSIC Prior to fiscal year 1999, Music's governance structure was similar to that of Sports. Music was governed by the Georgia Music Hall of Fame Authority, which was attached to DCA for administrative purposes only. On July 1, 1998, the structure was changed, but Music retained authority status. Music employees were transferred to DCA, with the museum operating as a DCA division. The Music Authority now consists of the same individuals who comprise the DCA Board.
As of May 2001, Music employed or was recruiting for 18 full-time and four part-time employees (see Exhibit 1). In addition to its staff, Music outsources landscaping, janitorial, and some maintenance services. The DCA Finance Division processes payroll, most payables, and budget information.
The Georgia Music Hall of Fame Foundation (Music Foundation) is an additional component of the organization. Though the Music Foundation is a separate entity created for the primary purpose of fundraising, it is staffed by Music employees. Donations made to the Music Foundation, which has been designated a 501(c)3 by the U.S. Internal Revenue Service, are tax deductible.
Business Operations
Both Sports and Music earn revenue through business operations in three distinct areas admissions, rentals, and gift shop sales. Each business operation is discussed in more detail below and in Exhibit 2.
Admissions Both Sports and Music charge a fee for entrance into the exhibit area. Ticket prices may depend on a visitor's age or whether or not the visitor is part of a group.
Rentals At both Sports and Music, an individual or group may rent space at the facility for a fee. Both museums have rooms specifically designated for rental functions, though

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individuals/groups may also rent the exhibit area. Rental functions may occur during or after normal operating hours.
Gift Shop Both Sports and Music operate a gift shop within their respective facility. Visitors may purchase items in the gift shop without purchasing an admission ticket to the exhibit area.

Exhibit 2

Halls of Fame Business Operations, FY 2000

Sports

Music

Admissions Cost of Admission(1)

$3.50 - $6.00

$3.50 - $8.00

Number of Paid Admissions

18,310

37,633

Admissions Revenue

$60,870.63

$159,923.87

Rentals

Number of Rentals

216

357

Rentals Revenue

$66,463.50

$82,492.50

Examples of Rental Groups

Birthday parties, business seminars

Gift Shop

Gross Gift Shop Sales

$41,519.76

$154,983.23

Examples of Items

T-shirts, sports videos CDs, T-shirts

Source: Sports/Music Halls of Fame

(1) Admission is free to children under 4 at Music and under 5 at Sports.

Financial Information
Sports and Music have a variety of sources of revenue. Both receive state funds, gift revenue, interest income, and, through their business operations, earn admissions, rental, and gift shop revenue. The majority of gift revenue for Sports and Music is received through each organization's foundation. While the Sports Foundation and Music Foundation are legally separate from Sports and Music, for accounting purposes the foundations are considered units of their respective hall. Therefore, the financial information from the foundations is combined with the respective museum.
Exhibits 3 and 4 present Sports' and Music's revenue, expenses, net income, and fund balance. Neither organization is required to lapse funds to the state treasury at the end of each fiscal year. The fund balance for Sports and Music is the amount that revenue has exceeded expenses over multiple years.

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Exhibit 3

Sports FY2000 Revenue and Expenses

Revenue
State Funds(1) Operating Revenue
Admissions Rentals Gross Gift Shop Sales Less Cost of Goods Sold

% of

Fiscal Year 2000 Revenue/

Actual

Expense

$908,027.00 77.2%

$60,870.63 $66,463.50 $41,519.76 ($29,409.76)

5.2% 5.7%

Net Gift Shop Revenue Total Operating Revenue Fundraising(2)
Interest/Miscellaneous
Total Revenue

$12,110.00 $139,444.13 $103,780.95

1.0% 8.8%

$24,930.97 2.1%

$1,176,183.05 100.0%

Expenses
Personal Services Regular Operating Expenses
Supplies and Materials Repairs and Maintenance Utilities Printing and Publications Marketing and Promotion Other Operating Expenses Total Regular Operating Expenses Travel Equipment Per Diem, Fees and Contracts Computer Charges Telecommunications
Capital Outlay
Total Expenses

$592,005.72 51.9%

$39,027.10

3.4%

$71,198.10 $66,496.14

6.3% 5.8%

$20,080.40 $94,509.68 $138,269.15

1.8% 8.3% 12.1%

$429,580.57

$5,235.47 <1% $19,852.37 1.7%

$63,325.98 5.6% $2,752.00 <1%

$8,100.86 <1%

$19,661.00 1.7%

$1,140,513.97 100.0%

Net Income

$35,669.08

Fund Balance - June 30, 2000

$840,321.62

Source: Sports financial records

Note: Percentages may not add to 100 due to rounding.

(1) Does not include $100,000 for the repair of the HVAC system included in the

fiscal year 2000 supplemental appropriation.

(2) Fundraising amount includes museum membership dues.

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Exhibit 4

Music FY2000 Revenue and Expenses

Revenue
State Funds Operating Revenue
Admissions Rentals Gross Gift Shop Sales Less Cost of Goods Sold
Net Gift Shop Revenue Total Operating Revenue Fundraising(1)
Interest/Miscellaneous
Total Revenue

Fiscal Year 2000 Actual

% of Revenue/ Expense

$916,894.00 68.5%

$159,923.87 $82,492.50 $154,983.23 ($93,067.16)
$61,916.07 $304,332.44 $37,300.07
$80,410.76
$1,338,937.27

11.9% 6.2%
4.6%
2.8% 6.0% 100.0%

Expenses
Personal Services Regular Operating Expenses
Supplies and Materials Repairs and Maintenance Utilities Printing and Publications Marketing and Promotion Rents Except Real Estate Insurance and Bonding Other Operating Expenses Equipment Under $1000 Freight Total Regular Operating Expenses Travel Equipment Per Diem, Fees and Contracts Computer Charges Telecommunications
Total Expenses

$641,090.90 47.9%

$51,726.51 $133,808.53 $91,728.35 $25,788.57 $30,718.58 $11,588.75 $7,100.00 $192,334.20 $5,409.53 $3,135.55
$553,338.57 $15,120.96 $19,050.44 $34,326.63 $37,722.87 $36,594.99
$1,337,245.36

3.9% 10.0% 6.9% 1.9% 2.3% <1% <1% 14.4% <1% <1%
1.1% 1.4% 2.6% 2.8% 2.7% 100.0%

Net Income

$1,691.91

Fund Balance - June 30, 2000

$1,437,644.61

Source: Music financial records

Note: Percentages may not add to 100 due to rounding.

(1) Fundraising amount includes museum membership dues.

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Similar Operations in Other States
We noted that in addition to missions comparable to those of Sports and Music, halls of fame in other states had similar basic operations such as charging admission for the viewing of exhibits, operating a gift shop, and renting facility space to groups. Also, in most cases, the respective state government has recognized the hall of fame as the official sports or music hall of fame for the state.
While we recognize that there are differences in aspects of the operation of Sports and Music when compared to the operation of other states' halls of fame, there are sufficient similarities to consider those halls as a benchmark for visitation, facility information, level of state support, and staffing as a function of visitation. See Appendix A on page 33 for detailed information on each hall of fame surveyed.
Audit Objectives, Scope and Methodology
The objectives of this audit were to:
Determine if there are proper management and financial controls in place at the Georgia Sports Hall of Fame and Georgia Music Hall of Fame;
Compare the organizational structure and staffing patterns of the Georgia Sports Hall of Fame and the Georgia Music Hall of Fame to other states' halls of fame and other publicsector museums; and
Determine if the Georgia Sports Hall of Fame and Georgia Music Hall of Fame should be governed by a single authority.
The audit was conducted in accordance with generally accepted government auditing standards for performance audits. The audit methodology included reviews of Music and Sports records, interviews with Music and Sports staff, interviews with staff and visits to similar museums in other states.
The report has been discussed with appropriate personnel representing the Department of Community Affairs, the Georgia Music Hall of Fame and the Georgia Sports Hall of Fame. A draft copy was also provided for their review and comment. Responses from the Department of Community Affairs and the Georgia Sports Hall of Fame have been included in the report.

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Sports and Music agree that they should have business plans. Sports and Music indicated they would complete business plans by the summer of 2001.

While a business plan is a key component to the success of any business operation, neither Sports nor Music has one. Without a business plan, an organization could undertake projects that do not necessarily fulfill its purpose. In addition, without a business plan that includes performance measures, an organization may have difficulty in assessing the results of current activities.

A business plan should define an entity's mission, goals, and specific strategies that will be implemented to meet those goals. The business plan should delineate the following:
products or services the entity offers or plans to offer (e.g., rental program, etc.); markets in which it plans to compete (e.g., tour groups, school children, etc.); distribution channels it will use to reach those markets (e.g., gift shop, e-commerce, etc); profit objectives (e.g., gift shop net income of $100,000; rental program net income of
$50,000, etc.); method of financing that the entity plans to use to attain its goals (e.g., amount of total
revenue and percentage by source); and, entity's organizational design.

A business plan should also include performance measures. The performance measures indicate

the entity's progress in achieving its goals. The following are examples of potential performance

measures for Sports and Music:

increasing level of financial self-

number of contributing museum

sufficiency;

members;

level of visitation;

staff to visitor ratio;

customer satisfaction;

net income for rentals; and,

number of special exhibits/programs;

net income for gift shop.

gross donations to foundations;

Both Sports and Music acknowledge the importance of business plans and have initiated plan development. The business plans should incorporate the characteristics stated above. Additionally, the information gathered in order to measure the organizations' progress towards their stated goals must be accurate.

Sports' Response We agree with this finding and recommendation and currently are working to complete our business plan.
Music's Response We concur with the finding and recommendation.

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Sports' Results-Based Budgeting (RBB) projected admissions were initially overestimated. Music's RBB data from prior years overstated the number of paid admissions.

The Budget Accountability and Planning Act of 1993 requires that programs provide data in their Results-Based Budget (RBB) to indicate how well they are meeting the mission they were created and funded to address. The intent for capturing and reporting such data is to reflect the progress the program has made towards achieving its purpose.

Prior to fiscal year 2002, Sports and Music reported annual visitation and customer satisfaction data as their measures of performance for RBB. In fiscal year 2002, OPB decided not to include either organization's data in the annual budget document. Music was not included because its incorporation into DCA three years earlier resulted in it no longer meeting the criteria for an RBB program. Sports information was not included because OPB determined that "Sports' impact on the citizens of Georgia was not significant enough to warrant including them in the Budget Report." As shown in Exhibit 5, Sports and Music each had one goal and two measures of desired results.

Exhibit 5 Sports/Music RBB Goals and Desired Results
Fiscal Year 2001

Sports Hall of Fame

Goal 1: Visitors will enjoy an informative and enlightening visit to the Sports Hall of Fame.

FY98 FY99 FY99 FY00 Actual Desired Actual(1) Desired

- 83% of visitors in FY 2001 will rate the Sports Hall of Fame as informative and enlightening.

No Data No Data No Data 80%

FY01 Desired
83%

- The number of visitors to the Sports Hall of Fame will increase 7.5% from 75,000 in FY No Data No Data 14,089 2000 to 80,625 in FY 2001.

75,000

80,625

Music Hall of Fame

Goal 1: Visitors will enjoy an informative and enlightening visit to the Music Hall of Fame. - 86% of visitors in FY 2001 will rate the
Music Hall of Fame as informative and enlightening, the same level as FY 2000. - The number of visitors to the Music Hall of Fame will remain at 93,000 in FY 2001, the same level as FY 2000. (The number of visits is a proxy for admission receipts.)

FY98 Actual 80%
90,000

FY99 Desired
83%
90,000

FY99 Actual 85%
86,000

FY00 FY01 Desired Desired

86%

86%

93,000 93,000

Source: The Governor's Budget Report, Fiscal Year 2001

(1) The Sports Hall of Fame opened its doors on April 23, 1999. For this reason, no customer satisfaction data was gathered in FY99. Also, the number of visitors was based on the April 23, 1999 to June 30, 1999 time period.

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SPORTS The number of visitors estimated for fiscal year 2000 was initially overstated. While 75,000 visitors were projected, actual paid admissions totaled 18,310 with total visitation at 42,744. Like Music, Sports has categories of visitors that do not purchase tickets for admission. The fiscal year 2002 RBB information submitted to OPB, which was not included in the Fiscal Year 2002 Governor's Budget Report, acknowledged the unrealistic desired results and lowered estimates for fiscal years 2001 and 2002 to approximately 50,000 visitors.

Exhibit 6

Breakdown of Sports and Music Visitors

Fiscal Year 2000

Sports

Music

Visitor Type Paid Admissions(1)

Number

%

18,310 42.8%

Number 37,633

% 47.8%

Complimentary Admissions(2)

6,610 15.5%

N/A

Rental Event Visitors(3)

17,824 41.7% 19,125 24.3%

Special Program Visitors(4)

N/A

21,992 27.9%

TOTAL

42,744 100.0% 78,750 100.0%

Source: Sports/Music records

(1) Paid Admissions - Pay admission to tour museum.

(2) Complimentary Admissions - Tour museum as part of special program.

(3) Rental Event Visitors - Attend paid or complimentary rental event; may or may not tour

exhibit area.

(4) Special Program Visitors - Attend program sponsored by the museum, which may be

free to the public; may not tour the exhibit area.

MUSIC The number of visitors reported is overstated. The number of visitors reported for RBB purposes is supposed to be a proxy for paid admissions. However, as shown in Exhibit 6, many visitors counted by Music attend functions that do not require the purchase of an admission ticket. Exhibit 7 below shows the actual number of visitors required to purchase admission tickets.

Exhibit 7

Comparison of Music's Reported Actual vs. Correct Actual

Reported Actual FY98

Correct Actual FY98

Reported Actual FY99

Correct Actual FY99

Desired FY00

Correct Actual FY00

Paid Visitors 90,000

33,025

86,000

30,204

93,000

37,633

All Visitors

N/A

57,540

N/A

56,893

N/A

Source: Fiscal Year 2001 Governor's Budget Report; Music records

78,750

Sports and Music should continue to collect the information related to the type of visitors that they already collect. However, when reporting these figures to decision-makers, the number of visitors should be further explained and accurately reported, so decision-makers have credible management information on which to base decisions. Given the level of support the state provides to these operations, decision-makers may find the performance data useful in determining the success of these organizations and in future decisions.

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Sports' Response We agree with this finding and, as noted in the report, have corrected the overestimates. Until reading the performance audit, we were not aware that Sports had been dropped from the Budget Report in FY02 because its "...impact on the citizens of Georgia was not significant enough to warrant including them in the Budget Report." We agree with the audit statement that "...decision-makers may find RBB data useful in determining the success of these organizations and in future decisions." Therefore, we will work with our budget analyst in the Office of Planning and Budget to determine if this is a situation that can be corrected by identifying new goals and performance measures. Whether or not Sports is reinstated in the Budget Report, GSHF will continue to collect accurate and complete data on attendance and to survey visitors to gauge visitor satisfaction.
Music's Response Although Music is no longer required to submit admissions information as part of the Department's overall RBB report, we will continue to collect admissions data that accurately reflect attendance from all sources including rentals, special events and paid admissions. Further, we have continued the practice of conducting satisfaction surveys with museum visitors as a means of evaluating their museum experience.

Both Sports and Music have a larger staff size than other state halls of fames or museums with similar visitation levels. Within their business plans, Sports and Music should justify their current organizational structures and staffing levels.
The level of visitation is a significant factor in determining the appropriate staffing level for a museum. Generally, museums with a larger number of visitors will require more staff than similar museums with fewer visitors. Sports and Music officials also cited museum size, hours of operation, educational programming, and special events as other factors that also impact staffing. Those factors do impact the number of staff required for museum activities, but the factors also impact visitation levels. For example, higher visitation levels should accompany longer hours of operation. Also, Sports and Music officials indicated that programming and special events are related to visitation.
Museums may undertake certain activities that do not result in an increase in visitors, such as visits to schools or broadcasting of museum programming. However, the audit team assessed Sports' and Music's activities and believe that neither organization substantially participated in these types of activities during the time period reviewed.
The audit team used three different comparisons to benchmark Sports' and Music's staffing levels. The comparisons include multiple museums with a range of museum sizes, operating hours, special events, and educational programming. By using multiple museums and a feasibility study created specifically for Music, the comparisons provide a general benchmark for the staffing levels of Sports and Music. The comparisons include the following:
Music Hall of Fame Feasibility Study Contains the expected visitors per staff member ratio at various visitation levels;
American Association of Museums (AAM) 1999 Financial Survey Contains the median number of staff based on visitation level and type of museum; and

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Survey of other states' halls of fame Includes number of visitors per staff member.

Music Feasibility Study Prior to Music's construction, Davidson-Peterson Associates, Inc. conducted a feasibility study at the request of the Georgia Music Hall of Fame Authority. The feasibility study included a staffing model for 150,000, 200,000, and 250,000 annual visitors. The model includes recommended positions and number of staff for each position. At each visitation level, the feasibility study's staffing model resulted in at least 10,000 visitors per staff member. As shown in Exhibit 8, Music has 18 full-time and four part-time employees, which approximate the number of staff for 200,000 visitors. However, in fiscal year 2000 Music reported 78,750 visitors, or about 3,938 visitors per staff member.

Music officials are unaware if the feasibility study was the basis for their staffing level.

According to Sports officials, Sports' staffing was initially modeled after that of Music. As shown in Exhibit 8, Sports has 14 full-time and six part-time positions, which approximate the number of staff for more than 150,000 visitors. However, in fiscal year 2000 Sports reported 42,744 visitors, or about 2,514 visitors per current staff position.

Exhibit 8

Music Feasibility Study Staffing

Study/Facility

Full-Time Part-Time Visitors/Staff

Visitors Staff

Staff

Member(1)

Georgia Sports Hall of Fame

42,744 14

6

2,514

Georgia Music Hall of Fame

78,750 18

4

3,938

150,000 12

6

10,000

Music Feasibility Study

200,000 16

8

10,000

250,000 20

8

10,417

Source: Program records and Music Feasibility Study

(1) Each part-time position was counted as .5 staff member when performing the visitors/

staff member ratio.

American Association of Museums In 1999, the American Association of Museums surveyed more than 1,000 museums about their finances, staffing, visitation, and other issues. The museums were placed into categories, such as general museum, art museum, history museum, specialized museum, zoo, aquarium, and others. The firm conducting the study stated that a Sports or Music Hall of Fame would likely be categorized as a specialized museum. The number of responding museums increases as the museum category is broadened. Since the number of responding museums categorized as specialized is limited, we compared Sports and Music to three different categories, including the following:
Specialized museums; Specialized, history, and general museums; and All museums.

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As shown in Exhibit 9, Sports appears to have a larger staff (14 full time/6 part time) than most museums with 42,744 visitors. No category of museums has as many staff until the range of 75,000 to 100,000 visitors is reached. That category includes all museums, including those that are more labor-intensive, such as zoos. Even with Music's fiscal year 2000 visitation of 78,750 (lower end of visitation range), its staff of 18 full-time and four part-time employees is larger than the median number for specialized and specialized, general, and history museums. Only when including all museum types was Music's staff size similar to that found in the AAM survey.

Exhibit 9

American Association of Museums Survey

Type of Museum

Full-Time Part-Time Visitors Per Staff

Visitation Range

Staff(1)

Staff(1)

Member

All Museums

50,000 - 74,999

11

75,000 - 100,000

18

8

3,333 - 5,000

7

3,488 - 4,651

Specialized, General, History 50,000 - 74,999

11

7

3,448 - 5,172

Museums

75,000 - 100,000

10

5

6,000 - 8,000

Specialized Museums Only

50,000 - 74,999 75,000 - 100,000

7 5

6.5

4,878 - 7,317

2

12,500 - 16,667

Sports

42,744

14

6

2,514

Music

78,750

18

4

3,938

Source: American Association of Museums 1999 Survey; Music/Sports records

(1) Number of staff reported by AAM is the median number of staff for the range.

Other State Halls of Fame While no two halls of fame are precisely like one another, all primarily focus on preserving and promoting either sports or music history in its state. Also, each hall of fame reported a comparable amount of exhibit space to Sports and Music.

As shown in Exhibit 10, Sports and Music have at least twice as many full-time staff members as the organizations in Alabama, Florida, Mississippi, and Texas. The other organizations indicated that they do not count guests to rental functions in their museum visitation numbers;

Exhibit 10

Hall of Fame Staffing (Excluding Rental Staff/Visitors)

Facility Georgia Sports Hall of Fame Georgia Music Hall of Fame Alabama Music Hall of Fame Alabama Sports Hall of Fame Florida Sports Hall of Fame Mississippi Sports Hall of Fame Texas Sports Hall of Fame

Visitors 24,920 59,625 35,000 30,000 17,500 40,000 25,000

Full-Time Staff 14 17 7 4 3 4 3

Part-Time Staff 4 4 5 4 1 0 5

Visitors/ Staff(1) 1,558 3,138 3,684 5,000 5,000 10,000 4,545

Source: Facility records and museum staff

(1) Other states in the table do not include rental guests in their visitation; therefore, guests that

only attended a rental function were not counted as visitors at Georgia Sports and Music.

(2) For the ratio calculation, part-time staff were counted as .5, and rental staff at Georgia Sports

and Music were not counted because rental guests were not included in visitation numbers.

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therefore, in this comparison, Sports and Music's rental visitors were removed from their visitation figure. Based on current staffing levels and fiscal year 2000 visitation levels, Sports and Music attracted fewer visitors per staff member than the other halls of fame.
Given their staffing levels in relation to the benchmarks, both Sports and Music should include justifications for their current staff levels and any future additions in their business plans. Sports and Music officials indicated that they did not agree with any of these comparisons and indicated that the benchmarks were inappropriate. Sports and Music officials stated that their staffing levels were appropriate based on "experience." In addition, they indicated that current staffing levels were not necessarily reflective of current needs but of future needs. The future needs are based on Sports' and Music's visions of the type of programming that they want to offer.
Sports' Response We agree the Georgia Sports Hall of Fame should justify its current organizational structures and staffing levels in its business plans and budget requests, as should any other state agency or private sector business. However, we think the audit team has placed too much emphasis on visitation levels in determining appropriate staffing levels for a museum. Indeed, in the initial draft of the audit, visitation was cited as "the most significant" factor in determining staffing level.
This is an assumption the auditors made in an attempt to arrive at some objective measure by which to compare staff sizes between museums. While we understand the desire to identify a single objective criterion, we do not know any museum organization that would support this statement. While visitation certainly can affect the number of staff required to deal with the public, other factors such as the variety of programs, the size of the facility, the kind, variety, and schedule of exhibits, hours of operation, and the scope of administrative and operational responsibilities are as, if not more, important in determining the size of the staff. In addition, organization design is generally unique to each institution. There is not a model or template for museum staff organization.
It is extremely important to note that the GSHF has never operated with its full allocation of 14 full-time staff. During the fiscal year under consideration, full-time staffing fluctuated between 9 and 12. The highest full-time staffing level ever achieved by the GSHF is 12, the level at which we are now operating due to the current hiring freeze. In addition, the number of hours the six hourly employees work varies from 40 to 5 hours a week, with most working between 12 and 20 hours a week. To measure staff/visitor ratio based on the equivalent of 17 full-time staff is simply inaccurate.
Audit Team's Response In determining staff size, the audit team considered salaried employees and hourly employees that worked more than 30 hours per week as full time. Positions that Sports was in the process of hiring were also counted, with Sports' officials making the determination if the position is full or part time.
The audit team recognizes that the staff/visitor ratio is a continually changing number, because both staff size and visitation levels are subject to change. If the

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number of employees cited in Sports' response had been used in Exhibit 8, 9, and 10, the ratio would not significantly change. In Exhibits 8 and 9, the figures provided in Sports' response would result in a ratio of 2,849 visitors per staff member versus 2,514 stated in the report. In Exhibit 10, the figures cited in Sports' response would result in a visitor/staff ratio of 1,780 versus 1,558 stated in the report. Also, the visitor/staff ratio would change if the fiscal year 2001 visitation of 35,467 had been used (instead of fiscal year 2000 visitation). Using fiscal year 2001 visitation and the staff figures provided in Sports' response, the visitor/staff ratio in Exhibits 8 and 9 would be 2,364 versus the 2,514 stated in the report.
Sports' Response Continued It also is important to look closely at Appendix A of the performance audit since some of this information is not included in the narrative. The other sports museums chosen for comparison with the GSHF differ dramatically from the GSHF in a number of ways:
The size of the facilities ranges from less than 10,000 to 30,000 sq. ft.--from 23% to 70% the size of the GSHF. Generally, the larger the facility the more that is required for maintenance and staffing of public areas to ensure safety and security. The GSHF is the largest state sports hall of fame, much more comparable in size and programming to the football, baseball, and basketball halls of fame.
The Florida museum is open 34 hours a week, and Mississippi is open 39 hours a week. The GSHF is open to the public 52 hours a week and staffed an additional 7 hours a week.
The Alabama and Texas halls of fame are housed in larger facilities, which significantly affects their maintenance programs. For example, the Alabama Sports Hall of Fame is responsible for its janitorial service, but HVAC, plumbing, and other facility maintenance is provided by the Civic Center staff.
A more accurate comparison of staffing levels would consider the kind and variety of programs and exhibits offered by each institution:
Museums with stand-alone retail stores require a different level of staffing than a single merchandise case operated by the receptionist.
Museums with a number of interactive exhibits, such as the basketball, football, Paralympic, and NASCAR exhibits at the GSHF, require constant supervision to ensure visitor safety and the effective operation, security and longevity of the exhibits.
A regular schedule of changing and temporary exhibits requires a different level of curatorial and exhibit staff than do essentially permanent exhibits.
Providing curriculum-based guided tours to all school children requires a different level of staffing than self-guided tours.
Offering a schedule of special events and public programs designed to increase visitation and visibility requires more staffing than a museum that focuses solely or primarily on exhibits.
Audit Team's Response The audit team recognizes that there are no two museums that are identical, meaning that there is no perfect comparison. For that reason, the finding included three comparisons. The staff size and visitation levels

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were compared to the Music Feasibility Study, a cross-section of museums around the country, and other states' halls of fame. The audit team considered additional facilities for the comparison with Sports and Music, but the five state halls of fame used in the comparison were deemed to be the most similar. The halls had a similar mission, exhibit space, and business operations (ticket sales, gift shops, rental program) as Sports and Music. The audit team also visited three of the halls and found the operations and facilities to be comparable. Other museums were not included in the comparison because they were deemed to be dissimilar. Examples include the Kansas Sports Hall of Fame and the National Museum of Naval Aviation. The Kansas Sports Hall of Fame was excluded due to a much smaller exhibit area of approximately 2,000 square feet and visitation of 7,000 a year. The National Museum of Naval Aviation was excluded since it charges no admission, benefits from a significant local base from which to draw financial and volunteer support, receives substantial federal funding, is considerably larger (295,000 square feet), and draws approximately 900,000 visitors per year.

Sports' Response Continued In our opinion, the standard the auditors adopted to measure

staff size is artificial, not an accepted professional museum standard. The theory being applied

is that visitation dictates level of staffing. It does not consider the converse--that staffing levels

can drive attendance, i.e. the more a museum can program and market, the more likely it is to

see higher visitation levels. It is interesting to note some other sports museums with quite varied

facility size, visitation, and staff size:

College Football Hall of Fame

58,000 sq. ft. 65,000 visitors 11 FTE; 7 PTE

NCAA Hall of Champions

25,000 sq. ft. 100,000 visitors 11 FTE; 12 PTE

International Bowling Museum and HOF 50,000 sq. ft. 45,000 visitors 5 FTE; 12-20 PTE

National Baseball Hall of Fame

60,000 sq. ft 384,000 visitors 79 FTE; 113 PTE

US Golf Association Museum

12,000 sq. ft. 25,000 visitors 14 FTE; 12 PTE

Of course, any theory can be taken to absurd levels, but, within reason, the size of staff directly affects what a museum can offer its various constituencies and the level of visitation. We must again point out that the year under review was the first full year of operation for the GSHF, a year devoted to establishing baseline programs and launching a marketing effort. We feel very proud of what was accomplished in that first year and see it as a good starting point for future growth, but not as a benchmark by which to determine the appropriate staff level.

Audit Team's Response It is true that a larger staff should be able to offer additional programs, which could result in more visitors. However, visitation is also a factor of the population that the museum is likely to serve and that population's interest in the museum's subject. As the chart above shows, the National Baseball Hall of Fame (professional baseball hall in Cooperstown, NY) has 79 full-time employees and 384,000 visitors. However, the facility has a natural (national) constituency that is likely to be larger than a state hall of fame. It is also likely that the larger number of visitors requires the hall to employ more staff. Also, it should be noted that while fiscal year 2000 was Sports' first full year of operation, fiscal year 2001 visitation level decreased by 17%, with an increase in staff.

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Sports' Response Continued As noted on page 15, "...Sports and Music officials indicated that current staffing levels were not necessarily reflective of current needs but of future needs. The future needs are based on Sports' and Music's visions of the type of organization and programming that they want to offer." This is an extremely important point. Sports has long recognized that it needs a very active special events, public programs, and marketing agenda, an active changing exhibit schedule, and a sustained fund-raising, development, and membership program to encourage repeat visitation and community and statewide support. We have not, and still do not have, the level of staffing to initiate and maintain such labor-intensive agendas. Although 14 full-time staff is not a large staff for a museum the size and with the vision of the GSHF, we feel confident that achieving full staffing will have a dramatic impact on what we are able to accomplish as an institution, including increased visitation and higher levels of earned income and grant and corporate funding. The GSHF is fully committed to on-going efforts to increase visitation and earned income.
Music's Response We do concur that visitation is an important determinant to the number of staff just as is the size of the facility, its hours of operation, and the scope of special events and educational programming that are undertaken by the museum. Indeed, basing staffing solely upon visitor counts as suggested by the report can be quite misleading. For example, in November 2001 the museum, in partnership with the Sports Hall of Fame, will open a museum annex at the Discover Mills Mall in Gwinnett County. The annex will incorporate both fixed and changeable displays of artifacts and memorabilia, be staffed by full-time museum employees, offer on-site special programming and educational events, operate a gift shop, interact with visitors and physically occupy approximately 20% of the common area floor space in the mall. Mall officials estimate that 15 million people will visit the mall annually. Based upon the methodology employed in the audit report, those 15 million mall visitors should be counted as museum visitors, and, as such, the museum would need to add 1,875 additional staff according to average staff per visitor numbers cited in the report. Obviously a flawed methodology like the one in the audit report can produce a flawed conclusion.
As the report notes, museums may undertake programming that does not result in additional visitors. While the Georgia Music Hall of Fame did not substantially participate in these types of programs during the time period reviewed by the audit team, future plans call for increased outreach activities, such as visits to schools, broadcasting of educational programs through the GSMAS network, and the opening of the annex at Discover Mills Mall. The comparisons used in the report imply that there should be a direct linear relationship between programming and visitation. This is not factually accurate nor should it be as a matter of policy. What we do agree with is that museum visitation is very important and that we should strive to increase the number of people who visit the museum each year and buy a ticket.
As a final comment, despite the flawed methodology assumed in the review, the audit report indicates that the staffing levels for the Georgia Music Hall of Fame are lower than the median staffing levels for all museums in the visitation range similar to that of the Georgia Music Hall of Fame.

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Sports and Music should clearly state the purpose and accompanying performance measures for the gift shop and rental operations in their business plans.
Sports and Music each operate a gift shop and rental program. These operations are intended to generate revenue to cover a portion of the operating costs of each facility. In addition, these operations may provide intangible benefits such as increased visibility through the sale of items with the halls' logos, increased visibility by individuals who attend rental events and may not otherwise visit the facility, an enhanced visitor experience, and increased visitation by those who initially visit as part of a rental group.
Exhibit 11 shows the profit or loss for Sports' and Music's gift shop and rental operations. The profit or loss analysis takes into account the revenue, staffing costs, and cost of items sold in the gift shop. The analysis does not consider overhead costs associated with the operations, such as additional electricity or wear on the facility. It should also be noted that Sports' gift shop staff sell admission tickets, while Music has a separate ticket counter and employee for that purpose.

Exhibit 11

Sports/Music Gift Shops and Rental Programs

Fiscal Year 2000

Gift Shop Gift Shop Sales

Sports $41,519.76

Music $154,983.23

Cost of Goods Sold
Gross Profit Salaries and Benefits(1)

-$29,409.76 $12,110.00 -$64,755.98

-$93,067.16 $61,916.07 -$71,274.61

Net Income (Loss)

-$52,645.98

-$9,358.54

Rental Program

Sports

Music

Rental Income

$66,463.50

$82,492.50

Salaries and Benefits

-$51,008.21 -$47,142.84

Net Income

$15,455.29

$35,349.66

Number of Rentals(2)

216

357

Source: Sports/Music records

(1) At Sports, gift shop personnel also sell museum admission tickets. For this

reason, the annual cost of an hourly visitor's assistant was deducted from its

reported salaries and benefits.

(2) Number includes both complimentary and paid rentals.

SPORTS As shown in Exhibit 11, the Sports gift shop had sales of $41,519.76 and staffing costs of $64,755.98 (156% of sales). The staffing cost in relation to sales is largely the result of two or more employees being scheduled to work in the gift shop in a day. A review of gift shop staffing for three months during calendar year 2000 showed that two or more employees worked 61 of 92 days (66.3%). Daily sales figures and employee schedules revealed the following:
Two or more employees were scheduled for 25 of 43 days with sales of less than $250.

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Two or more employees were scheduled for 18 of 27 days with sales between $251 and $500.
A gift shop employee said that much of each day is spent simply waiting for customers. The Sports director stated that there are times when two employees are necessary in order to fulfill all of the gift shop staff duties (admission ticket sales, gift shop sales, inventory) but added that the organization must be more "flexible" in the scheduling of gift shop employees.
MUSIC As shown in Exhibit 11, the Music gift shop had sales of $154,983.23 and staffing costs of $71,274.61 (46% of sales). The staffing cost in relation to sales is largely the result of two or more employees being scheduled to work in the gift shop in a day. A review of gift shop staffing for three months in calendar year 2000 showed that two or more employees worked 29 of 92 days (31.5%). Daily sales figures and employee schedules revealed the following:
Two or more employees were scheduled for 12 of 24 days with sales of less than $250. Two or more employees were scheduled for 10 of 35 days with sales between $251 and
$500.
A full-time Music gift shop employee stated that much of employees' days are spent "waiting for people to come in." The new director has indicated that there are times when two employees are not required to staff the gift shop and Music is working to improve gift shop employee scheduling.
Sports and Music should clearly state the purpose and accompanying performance measures for the gift shop and rental operations in their business plans. The purpose should indicate each operation's expected profitability level. Sports and Music officials should monitor the operations (at least on a monthly basis) to determine if they are meeting the desired performance measures. The two organizations should also evaluate the operations and streamline where possible to maximize their profitability.
Sports' Response We agree with the finding and recommendation and have continued a reevaluation of both shop and rental staffing already underway during the audit. For several months now, it has been the standard for The Locker Room to be staffed by only one employee the preponderance of the time. A second employee is used when necessary to assist with back of the shop work, such as receiving merchandise and entering inventory. In addition, we continue to refine the administration of our rental program to maximize income and minimize the operational burden. The recent hiring of the Director of Retail Operations will have significant impact on all areas of the operation, efficiency, and profitability of The Locker Room, as well as on our retail operation at Discover Mills in Gwinnett County.
Music's Response We concur with the finding and recommendation. We note that since the initiation of the audit review, Sports and Music have established a joint Director of Retail Operations position with shared costs between the two institutions. The Director of Retail Operations, hired in May, will be responsible for store operations at both halls of fame as well

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as the retail store at the Discover Mills Mall. A significant part of these responsibilities will be on goal setting, profitability and operational efficiency.
Sports and Music should strengthen their internal controls over certain business operations.
Internal controls are a system of policies and procedures that are intended to safeguard an entity's assets and produce reliable financial and management information. We noted the following areas at Sports and Music where internal controls should be improved:
SPORTS Gift Shop Gift shop employees can void cash register transactions and issue merchandise returns without documentation or supervisory approval. A primary internal control in a cash register environment is for the cash register's transaction total to equal the cash receipts. A void allows for the correction of errors but could also allow employees to void valid cash register transactions and personally retain the cash receipts. In this situation, the cash register total would equal the cash receipts of the gift shop. Also, by allowing undocumented refunds for returned merchandise, employees could take money from the cash register and create a false cash register transaction showing a merchandise return. This would result in the cash register transaction total equaling the gift shop's cash receipts. Therefore, it is necessary to have additional internal controls in place to decrease the potential for theft. Sports management should require proper documentation of voided transactions such as merchandise return forms or void forms signed by the customer or a supervisor.
Deposits Cash is not consistently deposited in a timely manner. A sample of eight deposits made in calendar year 2000 revealed four that contained cash receipts received between 20 and 23 days prior to the deposit date. In addition, cash receipts received each day are not placed into Sports' safe but in a locking file cabinet drawer. Sports should improve its safeguarding of cash receipts by depositing cash in a timely manner and storing cash in the safe.
It should be noted that the untimely depositing of cash is not only an internal control weakness, but Sports is not earning interest revenue on these funds.
Collections Sports curatorial staff was unable to locate specific items contained in the Sports collection in a timely manner, based on information in their collections database. Only 13 of 25 sampled items had a physical location listed in the database. Thirteen items were found only after two staff members spent considerable time looking through multiple boxes, files, or displays. The final item was found one week later. The inaccurate or incomplete recording of items' locations could result in items being lost or stolen without the museum being aware. Accurate listings of items allow for a periodic inventory to ensure that all museum collections are secure.
It should be noted that access to the collections storage area is restricted, which is a good internal control.

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MUSIC Gift Shop Gift shop employees can void cash register transactions and issue merchandise returns without documentation or supervisory approval. A primary internal control in a cash register environment is for the cash register's transaction total to equal the cash receipts. A void allows for the correction of errors but could also allow employees to void valid cash register transactions and personally retain the cash receipts. In this situation, the cash register total would equal the cash receipts of the gift shop. Also, by allowing undocumented refunds for returned merchandise, employees could take money from the cash register and create a false cash register transaction showing a merchandise return. This would result in the cash register transaction total equaling the gift shop's cash receipts. Therefore, it is necessary to have additional internal controls in place to decrease the potential for theft. Music management should require proper documentation of voided transactions such as merchandise return forms or void forms signed by the customer or a supervisor.
Rental Program Music has not consistently required a rental contract for each rental transaction. The rental contract details the liability the renter assumes for damages to the facility and the renter's responsibilities in using the facility. The rental contract also states the dollar value of the agreement, without which the accounting staff is unable to verify that the amount received from the renter is equal to the amount owed.
There are insufficient controls related to the payments made by rental parties. Both the rental coordinator and admission ticket personnel receive rental payments, but only the rental coordinator has a list of all rentals. Music staff does not reconcile the total list of rentals to all rental payments received.
Additionally, Music has not consistently followed its policy regarding complimentary rentals. Before July 2000, Music adopted a policy requiring supervisory approval of all complimentary rentals. However, there were 25 complimentary rentals from July to September 2000, though the interim director stated that he was aware of none.
Music should require a rental contract for all rental transactions, including those designated complimentary, and reconcile the amount owed by rental parties to the amount received. Music should also segregate the duties of reserving the rentals and collecting the rental payments. Finally, Music should follow its policy of requiring supervisory approval for complimentary rentals.
Petty Cash One individual is allowed to approve payments, write checks, and reconcile the petty cash bank statement. Music should segregate the duties related to petty cash to improve internal controls. The individual who writes checks and reconciles the bank statements should not be able to approve payments. Also, a second person should review the monthly reconciliation.
Contracts Music does not have a contract with its landscaping service. Written contracts for outsourced services provide a measure of protection to both parties by specifically detailing the contracted services and required level of performance. Music staff should require written

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contracts for regularly outsourced services that are competitively bid and provide performances measures to enable Music to assess the effectiveness of the service.
Sports' Response We agree with the specific recommendations to establish procedures for voiding cash register transactions and issue merchandise returns, and these procedures are already in place. We also agree that cash deposits need to be made in a more timely manner, and procedures are in place to assure this is the case. We would like to point out that this was a deficiency we recognized and were working to correct during the time of the audit. In addition, we have initiated new procedures for handling daily cash receipts. This procedural change was already in place prior to receipt of the verbal or written findings of the Performance Audit. For well over a year, we have been working with an independent CPA well versed in retail operations and government operations and will continue to refine our internal controls as necessary.
We also agree that location needs to be included in our collections database. This is an on-going process. We are continuously working to house our collections in museum quality storage cabinets, enhance the level of cataloging, and provide adequate finding aids. Complete and adequate intellectual and physical control over all our collections is a high priority for the GSHF. We should emphasize that 100% of our collection is entered in a museum collections database so that there is thorough documentation of all gifts and loans. In addition, access to the collections storage area is strictly limited to only collections staff. The latest upgrade to our museum software, which has just been released, allows for more effective location control. We have ordered this upgrade to further refine our collections management.
Music's Response We are in specific agreement that internal controls should be adequate to insure the protection of museum property and assets. We are also in specific agreement with respect to the particular examples cited in the report. However, we also wish to note that over the eleven months consumed by the audit reviewers in the production of this draft twenty-three page report, that museum staff identified and implemented most of changes recommended in the review.

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The Office of Planning and Budget should determine the appropriate fund balances required for the operation of Sports and Music.

As shown in Exhibit 12, Sports and Music have accumulated a significant fund balance (reserve of funds). The fund balance consists of funds received in the form of state funds, operating income, or private fundraising. Sports and Music maintain fund balances to offset possible decreases in operating revenue, to fund capital expenditures, or to fund possible unplanned or emergency expenditures, such as repairs to HVAC systems.

Exhibit 12

Sports/Music Fund Balances - June 30, 2000

Total Fund Balance(1)

Restricted Funds(2)

Unrestricted (Available) Funds

FY00 Annual Operating Expenses

Unrestricted Funds as % of Operating
Expenses

Sports

$840,322

$100,000

$740,322

$1,140,514

64.9%

Music

$1,437,645

$243,127

$1,194,518

$1,337,245

89.3%

Source: Sports/Music records

(1) Total Fund Balance - Funds include money held by government entity or associated foundation.

(2) Restricted Funds - Funds either raised from private sources or appropriated by the General Assembly for a

specific capital purpose (i.e., library equipment, HVAC repair).

SPORTS Sports' unrestricted fund balance experienced substantial growth in fiscal year 1998, when the balance increased from approximately $57,000 to more than $924,000. This was due to a $740,000 supplemental appropriation for the museum's grand opening and a $200,000 transfer of funds from the previous governing body. However, Sports did not open until April 1999 (near the end of fiscal year 1999), resulting in fiscal year 1998 expenditures that were significantly lower than expected.
Even with a fund balance of $678,000 at the end of fiscal year 1999, during fiscal year 2000 Sports requested $125,000 and received a $100,000 in a supplemental appropriation for HVAC upgrades. In fiscal year 2001, Sports requested another $100,000 for the same purpose, but OPB did not recommend the appropriation due to the fact that Sports had not spent the previous supplemental appropriation.
Sports' unrestricted fund balance was $740,000 at the end of fiscal year 2000 ($100,000 supplemental appropriation are the only funds for a capital purpose). However, Sports officials classified most of the remaining fund balance into separate categories including Building Fund, Capital Improvement Fund, and Exhibits Fund. According to those officials, the funds had neither been acquired for these reasons nor will they necessarily be spent for those purposes. The main reason for categorizing the fund balance was to minimize the appearance of the fund balance.

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MUSIC Music's unrestricted fund balance experienced substantial growth between fiscal years 1996 and 1998, when it increased from $580,000 to more than $1.2 million ($650,000 increase). It should be noted that in fiscal year 1997 Music received a $200,000 supplemental appropriation from the General Assembly "to provide funds to offset projected losses in revenues due to a three-month delay in opening."
The unreserved fund balance has remained relatively constant from fiscal year 1997 to fiscal year 2000. Music has approximately $1.2 million that could be used to cover operating expenses. Of the $1.2 million, $821,000 of that amount was provided by the state or earned through business operations.
Music officials stated that the fund balance would be reduced through expenditures for capital repairs to the building, exhibit improvement, the upgrading of museum library equipment, and to offset expenditures in excess of current revenue.
OPB should determine the appropriate fund balance required for the operation of Music and Sports. Music officials indicated that they believe an appropriate fund balance was approximately $250,000. Once appropriate levels are determined, OPB should work with Sports and Music to adjust the fund balance to the appropriate amount. OPB should then monitor the fund balance to ensure the balance remains at an appropriate level.
Sports' Response We have reservations about this finding and recommendation. We must clarify the comments made about the supplemental appropriation requests for the HVAC. The building that houses this sports museum was not designed to museum specifications in terms of humidity and temperature control. Months have been spent wrangling over whether this was the fault of the then Authority, the architect, the engineers, and/or GSFIC. Ultimately, the GSHF building and collection suffered serious problems from severe humidity and temperature fluctuations. The Authority determined it was appropriate to request a supplemental appropriation to correct this problem inherent in the new building. They did so, and OPB, the Governor, and the General Assembly agreed with this request. We were not told the reason the second request was not recommended was because the previous supplemental appropriation had not been spent. Our budget analyst informed us the request was not recommended because we had sufficient funds in the fund balance for this work. The statement that the allocation had not been spent is misleading. The fact is that prior to the second request, we used part of the supplemental appropriation to contract with a nationally regarded museum, library, and archives HVAC consultant who visited the GSHF in September 2000 and, thereafter, presented his report on what would be required to bring the building to museum standards. The consultant could not visit GSHF earlier than September 2000 because of on-going attempts at negotiating a resolution with the architect, contractor, and engineers. The second supplemental request was based on the consultant's report, and the balance of the supplemental funds are in reserve for a major retrofitting and modification of the HVAC system. Work on this is ongoing, with the most recent visit by the consultant taking place only last month. The second supplemental

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appropriation request was based on the consultant's report and the legislative support received for the first request.
We do not agree with the statement "The main reason for categorizing the fund balance was to minimize the appearance of the fund balance." Our accountant recommended that the Finance Committee of the GSHF Authority categorize the fund balance so that the Authority, and anyone else reviewing our financial statements, would understand that these funds are available for such purposes as capital improvement, exhibits, and the building and not see it simply as a nest egg. The majority of the fund balance came from state appropriations and was initially allocated for expenditures such as those identified. These funds will be used for the designated purposes although the specific amounts are not earmarked. As a very new operational entity, neither the committee nor the staff were in a position to specify amounts. To date, the exhibits fund balance had been used to design, fabricate, and install new temporary exhibit cases and fund the necessary graphic design and purchase of exhibit mounts and build-ups for these displays, expenses entirely in keeping with the intent of the fund balance. As a matter of policy, all expenditures from the fund balance must be approved by the Executive Committee of the Authority.
Audit Team's Response Sports' officials stated to the audit team on at least two separate occasions that the fund balance was separated into the building fund, capital improvement fund, and exhibit fund to avoid giving the state or the General Assembly the impression that the funds were not needed. They also stated that there were no specific plans for the funds.
As a final comment, the GSHF Authority and staff do not agree that $250,000 is a sufficient fund balance for an entity responsible not only for the operation of a state museum but also for the on-going and cyclical maintenance of the facility and for maintaining, replacing, and upgrading an extensive array of interactive exhibits.
Music's Response We concur with the finding and recommendation and note that this issue was presented to both the audit reviewers and to the Office of Planning and Budget in August 2000.
Audit Team's Response While Music officials did present the issue to the audit team in August 2000, it was part of a plan to decrease the fund balance while increasing Music's state appropriation. Music officials stated that their intention was to use a portion of their fund balance over the next few years to cover increased operating expenses and to simultaneously request increases in state appropriations. Eventually, state appropriations were expected to increase to the level required to completely cover the higher operating expenses. As part of this plan, Music requested a $125,000 enhancement in their fiscal year 2002 budget request. However, the Office of Planning and Budget declined to recommend this increase due to Music's large fund balance and lack of fundraising.

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The General Assembly should determine the degree to which Sports and Music should be self-sufficient. Currently, Sports and Music receive a larger percentage of their revenue from state funds than other states' halls of fame or public sector museums.
Sports and Music receive revenue from a variety of sources, including state funds, operating revenue (admissions, room rentals, gift shop sales), fundraising, and interest earned on investments. While these revenue sources are similar to those at other halls of fame and museums, Georgia provides a higher level of subsidization than other governments, when compared to other halls of fame surveyed and information received from the American Association of Museums (AAM) (see Exhibits 13 and 14).

Exhibit 13

Income Sources of Halls of Fame

Foundation/

Govt./

Operating Fundraising Interest

Total

501c3 State Funds Revenue

Revenue

Revenue Revenue

Georgia Sports Hall of Fame Govt. $908,027 77.2% $139,444 11.9% $103,781 8.8% $24,931 2.1% $1,176,183

Georgia Music Hall of Fame Govt. $916,894 68.5% $304,332 22.7% $37,300 2.8% $80,411 6.0% $1,338,937

Alabama Sports Hall of Fame

Govt. $275,000 30.4% $60,000 6.6% $568,700 62.9%

$0 0.0% $903,700

Alabama Music Hall of Fame

Govt. $371,000 65.8% $149,000 26.4% $44,000 7.8%

$0 0.0% $564,000

Mississippi Sports Hall of Fame 501c3

$0 0.0% $112,381 28.9% $276,269 71.1%

$0 0.0% $388,650

Texas Sports Hall of Fame

501c3

$0 0.0% $101,500 29.0% $241,500 69.0% $7,000 2.0% $350,000

Florida Sports Hall of Fame

501c3 $25,000 10.0% $15,000 6.0% $210,000 84.0%

$0 0.0% $250,000

Source: Georgia records and interviews of officials in other states

Note: Fiscal year 2000 numbers used for Georgia Music and Georgia Sports, while last available year used for other states.

Sports' appropriation amount does not include $100,000 supplemental appropriation for HVAC repair (capital improvement).

Note: Percentages may not add to 100 due to rounding.

With such large percentages of Sports' and Music's income covered by state funds, neither organization has been required to maximize operating revenue, minimize expenses, or maintain an appropriate fund balance. Should the General Assembly decide that Sports and Music increase their level of self-sufficiency, the following are steps that the two organizations could take.
Sports and Music could maximize the net income from their gift shops as discussed in the finding on page 19.
Sports and Music could increase their levels of private fundraising. Officials at both museums acknowledge the need to increase private fundraising. The executive director of Sports and the director of Music both stated that they personally plan to increase the amount of time spent on private fundraising activities.
Sports and Music could review their expenditures to determine if there are costs that can be decreased. The largest area of expenditures for both organizations is personnel.
Sports and Music could stop adding to their unrestricted fund balances. Both organizations could use 100% of their operating revenue, fundraising, and interest revenue to offset expenses. They could also decrease their current fund balance as discussed in the finding on page 24. The expenditure of the fund balance is a short-term option, since it is a limited funding source.

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100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

Exhibit 14 Sources of Museum Income

21 8.888 %

2.1%

60

6%

4.411%

28

2.8%

11.9% 119

222.727%

262.677%

414.188%

77.2% 772

686.585%

161.655% 525.299%

141.422%

Interest Revenue

Fundraising

4444%0

Operating

Revenue

State Funds

Sports

Music

AAM Survey - Alabama Public Sector Halls of Fame
Museums

Source: AAM Survey; Halls Survey; Sports & Music Records
Sports' Response We agree with the alternative to this recommendation provided by Music. (Music stated in their response, as seen below, that the recommendation should state that "The Sports and Music Halls of Fame should seek to provide for a greater portion of their operating expenses through self-generated revenues.") The focus should be on the halls of fame working to increase earned income and other self-generated revenues, not on the General Assembly limiting its support.
We agree with the specific findings that Sports should: maximize the net income from the gift shop; increase private fundraising; and review expenditures for possible cost savings, and we are working to accomplish all of this. We do not necessarily agree that the GSHF should stop adding to its fund balance. Spending down the fund balance would put the GSHF in the position

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of having to turn to the General Assembly for any major expenditure outside of routine operations, i.e., major building repairs such as re-roofing or major exhibit upgrades or reinstallations. We contend that the GSHF should be responsible for maintaining a fund balance sufficient to cover such anticipated future expenses.
We disagree strongly with the statement "With such large percentages of Sports' and Music's income covered by state funds, neither organization has been required to maximize operating revenue, minimize expenses, or maintain an appropriate fund balance." As a new institution, the GSHF did not have a track record for the cost of operating the new facility. The GSHF was able to realize a modest net income at the end of each of our first two years of operation only through very careful budgeting and review of monthly financial statements. We see this as a positive reflection on the work of our staff and Authority and are pleased that we did not have to dip into the fund balance to sustain the daily operation of the institution.
We also think it is important to note that most museums, like most businesses, become more successful over time. It would be interesting to see how the percentages of funding sources for other museums changed as the museums matured.
One final note, as executive director of the GSHF, the time I can devote to fund-raising will be severely limited until we receive permission from OPB to fill the position of director of operations. At the very time that the staff and I had planned and are expected to take on an increasingly active role in and responsibility for fundraising--and we have far more activities to fund, I am also covering the work of director of operations. It should be noted that in January 2001, DCA discontinued handling GSHF's payroll. We are now responsible for all aspects of payroll, as well as for all of our financial reports.
Music's Response Although this recommendation is directed to the General Assembly, we believe that the recommendation as written is misdirected. Rather, we suggest that the finding and recommendation be amended to state: The Sports and Music Halls of Fame should seek to provide for a greater portion of their operating expenses through self-generated revenues.
If you review Exhibit 14 of the report, you will note that the most significant difference between the Georgia Music Hall of Fame and the American Association of Museums (AAM) Survey Public Sector Museums with respect to the sources of operating funds is the differences in the level of fundraising support. For example, the current difference between Music and AAM institutions, on average, is State funding levels is about 30% more for Music. In a similar vein, however, the Georgia Music Hall of Fame generates operating revenues that are about 30% higher than the average for other AAM institutions. If we increase our fundraising success to the average level of public sector museums included in the AAM Survey, the contribution of state funds to the overall revenues of the Georgia Music Hall of Fame will actually be lower than the AAM Survey average for other public sector museums.
As correctly noted in the audit, the idea for expanded fundraising by Music was conceived by museum staff. To this end, we have received permission from the Office of Planning and Budget to hire a full-time Development Officer (fundraiser) for the museum. This is an existing position.

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Further, in fairness, it should also be pointed out that perhaps the Department of Audits should recommend that the General Assembly should determine the degree to which all state agencies should generate their own operating income. After all, as enacted by the General Assembly (see 12-3-523), none of the corporate purposes and general nature of business for the Music Hall of Fame includes any reference to income generation.
Audit Team's Response While the OCGA does not specifically state that Sports and Music should generate revenue, both the facilities and the operations are designed to generate revenue. For example, Sports and Music both charge for admission, operate a gift shop, and rent space at the facilities to individuals or groups for a fee. Also, Sports and Music generate revenue from fundraising. Sports and Music's ability to generate revenue substantially differentiate their operations from typical government activities.
It should be noted the Music Feasibility Study discussed the potential for Music to produce revenue and suggested that Music could generate sufficient revenue to at least equal the cost of operation. In addition, the audit team spoke to staff of the General Assembly to inquire if they were aware of any legislative concerns regarding either Sports or Music. The legislative staff stated the one concern they were aware of was that legislators did not understand why the Halls of Fame would not be self-supporting.
The General Assembly should consider joining Sports and Music under one governing body. This could facilitate the two organizations working together, which would increase their efficiency.
Sports and Music share common missions and business operations. While there are a few positions at each museum that require a certain level of knowledge in either sports or music, there are a number of areas where the two organizations have overlapping duties. In order to take advantage of the efficiencies that can be gained by the two organizations working more closely, consideration should be given to bringing Sports and Music under the same governing body.
Prior to fiscal year 1999, Music and Sports were both governed by authority boards attached to DCA. On July 1, 1998, Music became a division of DCA "allowing for increased efficiencies in management," according to the Fiscal Year 2000 Governor's Budget Report. Despite the similarities between the two organizations, Sports was not also brought under DCA.
Additionally, the similarities and proximity between Sports and Music offer an opportunity to increase efficiency in staffing requirements. As seen in Exhibit 15 on the following page, the two organizations are engaged in very similar daily activities. However, the number of staff employed to fulfill the requirements of a function may vary between Sports and Music. There are a number of common areas that have daily tasks not specific to sports or music. These include gift shop management, accounting, rental coordination, contracting, and facility maintenance. Additionally, in the areas of marketing and volunteer coordination, the two organizations could

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support one another during their respective peak periods (i.e., Georgia Music Week, Georgia Speed Week, Georgia Sports Hall of Fame induction banquet, etc.).
It should be noted that Sports and Music have discussed working together on various projects. Bringing the two organizations under one governing body would eliminate current barriers to Sports and Music working together. This would allow a discussion of unique opportunities such as sharing staff, combining administrative functions, and purchasing goods and services under single contracts.

Exhibit 15 Sports/Music Staff Positions

Staff Category

Sports Music Total

Administrative

Director

1

1

2

Administrative Support

1

1

2

Development

0

1

1

Operations

Accounting Director of Retail Operations(2)

1(1)

0

1

.5

.5

1

Facility Maintenance Rental Program

1

2

3

1(3)

1

2

Gift Shop Manager

1

1

2

Gift Shop Employees

.5

1.5

2

Curatorial

Senior Curator

1

1

2

Assistant Curator/Archivist

1

1

2

Interactive Area Coordinator

1

0

1

Interactive Area Assistant/Visitor Services Assoc.

1(4)

2(5)

3

Director of Education

1

1

2

Education Assistant/Scheduling Coordinator

1

1

2

Exhibit Technician

0

1

1

Volunteer Coordinator

1

1

2

Marketing

Marketing/Public Programs Director

1

1

2

Public Relations/Special Events

2

2

4

TOTAL POSITIONS

17

20 37

Source: Sports/Music records Note: Table includes vacant positions for which Sports and Music management have approved
recruitment.

(1) Sports Director of Operations handles accounting functions and management of most programs within operations category.

(2) Director of Retail Operations will be a full-time position at Sports. However, the salary and job duties will be split 50/50 between Sports and Music.

(3) Sports rental program position consists of two part-time staff.

(4) Sports Interactive Area Assistant position consists of two part-time staffers.

(5) Music Visitors Services Association positions consists of two part-time staffers and

one full-time staff member.

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Sports' Response Although this recommendation is not to the GSHF, we think this recommendation has merit and should be explored. Over the past several months, Sports and Music have joined together on a number of formal and informal joint endeavors, from occasional joint staff meetings to sharing a full-time position to working together on the complex and exciting Discover Mills project. We recognize the benefits of this cooperation and sharing of resources and support efforts to increase our efficiency and effectiveness in serving the citizens of Georgia and the visitors to our state.
Music's Response Although this finding and recommendation is also directed to the General Assembly, we believe that the idea of joining Sports and Music under one governing body has potential merit and should be evaluated for possible implementation.

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Appendix A

Background Information on Other States' Halls of Fame

Staff

Non-

Operating Total Square Exhibit

Facility

Operated by Facility Full- Part- Rental

Adult Hours Per

Government Opened Time Time Visitors (1) Admission Week

Feet of Building

Square Operating Total State Feet Revenue Appropriation

Georgia Music

Hall of Fame

Yes

1996 18 4

59,625

$8.00

52

43,000 14,400 $304,332.44 $916,894.00

Georgia Sports

Hall of Fame

Yes

1999 14 6

24,920

$6.00

52

43,000 14,000 $139,444.13 $908,027.00

Alabama Music Hall

of Fame

Yes

1990 7

5

35,000

$6.00

52

15,000 11,000 $149,000.00 $371,000.00

Alabama Sports

Hall of Fame

Yes

1992 4

4

30,000

$5.00

52

33,300 25,000 $60,000.00 $275,000.00

Florida Sports Hall

of Fame

No

1990 3

1

17,500

$3.00

34

10,000

8,500 $15,000.00 $25,000.00

Mississippi Sports

Hall of Fame

No

1996 4

0

40,000

$5.00

39

21,000 12,000 $112,380.78

$0.00

Texas Sports Hall

of Fame

No

1993 3

5

25,000

$4.00

53

15,500 14,700 $101,500.00

$0.00

Source: Facility records and museum staff

(1) Other states in the table do not include rental guests in their visitation; therefore, guests that only attended a rental function were not counted as visitors at Georgia

Music and Sports.

For additional information, please contact Paul E. Bernard, Director, Performance Audit Operations Division, at 404.657.5220.