The headline in a recent article from the Chicago Tribune caught my eye. It read "Strong Cash Reserves, Vigorous Fundraising, Keep Wolf from Lyric Opera's Doors."
Note that Lyric's reserves represent only 8 percent of its operating expenses, whereas, I seem to recall the Highland Park City's reserves are over 30 percent of revenues.
Nancy Rotering, Highland Park's newly elected mayor ran on a platform of fiscal responsibility, where the city's reserves should not be used to offset revenue losses. She is a proponent of managing and cutting expenses to balance the city's budget.
If a not-for-profit organization like Lyric can use its reserves and raise more money in tough economic times, what's wrong with Highland Park's position? Lyric's board is made up of some of Chicago's top business leaders. They certainly understand the economy and what it takes to successfully run an operation over an extended period of time. In our city's situation, the revenue increases can come from taxes obtained through attracting new businesses and the resulting new jobs based on the city's agressive business development efforts.
As a business consultant, I've seen too many operations fail when management tries cutting expenses continually and does little to increase revenues. That's not the way to do it. The Lyric Board recognizes that increasing revenues while maintaining expenses is key to running a viable operation.
Highland Park's new mayor and City Council members need to recognize this fundemental prinicple and take appropriate action.