Baltimore's Peabody Institute; Money woe for famed conservatory
Add to the list of private colleges in financial trouble: the Peabody Institute of the City of Baltimore. Founded in 1857, it is the oldest institution for the training of professional musicians in the United States.
GEorge Foster Peabody, Massachusetts- born businessman and financier, donated "may become useful . . . towards the enlargement and diffusion of a taste for the Fine Arts."
The Peabody evolved into a conservatory of music respected the world over. Its graduates include internationally recognized composers, conductors, and performers. Among them: concert pianist Andre Watts; composer Hugo Weisgall, a winner of the Prix de Rome and now a professor at the Peabody; soprana Veronica Tyler, formerly of the New York City Opera; and Murry Sidlin, conductor of the New Haven Symphony Orchestra.
The 500-student music conservatory, which as high operating costs because of its low student-faculty ratio and insistence on maintaining a distinquished faculty, has had an annual deficit since 1940, Richard W. Case, chairman of the board of trustees, says in a recent interview.
The original Peabody endowment was supplemented through the years, standing now at $6 million. Income generated from the endowment has been adequate until recent years to make up the deficit. But because of inflation, Mr. Case says, the Peabody has had to dip into its unrestricted endowment in the last few years to make up the difference between income and operating costs. There is "no longer any unrestricted endowment left," he says.
Two years ago the Peabody affiliated with Johns Hopkins University in an attempt to streamline its management and bolster its fund-raising capability. But the deficits continued to mount.
School officials said recently that operating costs run about $8,000 per student per year -- nearly twice the $4,150 tuition. Even with donations of more than $200,000 a year, the annual budget deficit is running well over $1 million.
Now the school has turned to the State of Maryland for help, and Gov. Harry Hughes has responded. On dec. 26 the governor announced his support for a plan to provide an interest-free, $7.5 million state loan to the Peabody. Under the plan, which must have legislative approval, the loan would be for an initial period of three years; it would be renewed if the school appeared to be making progress toward financial recovery.
At current interest rates, the loan could be expected to generate income of about $850,000 a year -- $150,000 short of what the Peabody sought. However, officials of the school say they are optimistic they can make up the difference through a stepped-up annual giving campaign.
Mr. Case says the Peabody, if it gets the state aid, will embark on a drive designed to produce an endowment of $25.5 million by 1992, with "the bulk of the money" coming from "concerned foundations and major corporate gifts." An endowment of that size would generate enough annual income to enable the school to meet its operating costs, he says.
The Legislature is expected to take up the Peabody loan proposal early in the 1980 session. Reservations center on concern that the loan could set a precedent for other private institutions in the state and misgivings about Peabody's lateness in starting a major fund- raising campaign. Also, some critics have questioned whether there has been mismanagment of the endowment fund.
Mr. Case concedes that criticism of the Peabody for not starting a fund-raising drive sooner is "legitimate." But he says suggestions that the endowment was not managed properly are "erroneous."
He adds that in recent months the Peabody has received matching grants from the National Endowment for the Arts and the Mellon Foundation totaling $1.5 million, and that one prominent graduate has offered to stage a benefit concert.