Measure P and The Future of Art Funding in Fresno

[music] Welcome to Fresno-Landia. I'm Jordan Maddox. I'm Donnie Berksdrum. On today's episode of Fresno-Landia, we are joined by Fresno City Council member Miguel Arias. Welcome to the podcast. Nice to be here. And we're going to be diving into everyone in Fresno's favorite topic to talk about at the moment, which is the Measure P. Arts, Grants, and Bezelman's Kindle. Miguel, maybe we'll start with just the timeline of events. And how did you get involved in hear about what was happening at the Arts Council? Well, let me backtrack a couple weeks now on a Friday evening. We received an email communication from the city manager informing us of the potential investment of city funds that were held by the Arts Council. Unfortunately, I didn't receive the email because my city password has been outdated for two weeks. And I have been inside the building to update it on a city computer, which is required. Cybersecurity is very important. I did not hear directly from her the first time around. I actually heard it from the media. So, media called asking for confirmation that the FBI was investigating the Arts Council and the city for potential investment of public funds. And, sure enough, after that phone call from the media, my phone kept on ringing all evening. From other city folks outside the building and inside the building about who was potentially going to take place in what had taken place. So, that's how I heard about it from the media and from outside the building folks. And then formally on Friday night from the city manager. And so, what we know so far is there's about a million and a half of measure PFUNs explicitly that have been allegedly embezzled out of the Fresno Arts Council, but no arrests have been made. Is that weird? It is. I think this is one of those instances where the public got way to big before the law enforcement was able to do their jobs. And this is why so many institutions tend to advocate for top secret whenever they're victims of financial fraud, especially wire fraud that occurs. If you recall, the city of Fresno in 2020 was also a victim of $900,000 by an African prince, Pushing scheme. And in 2024, this Fresno Vice-Quida Strait caused more than $2 million to a similar scheme of wire fraud. And those institutions for years did not make a public under this notion that it was being investigated by the FBI and there was always a possibility that the institutions were going to recover their funds. That's usually how institutions are asked not to engage publicly. There's been a dozen other public agencies in the Central Valley. They've also been victims of last few years, but you haven't heard a peat from them. They simply say, "Quiet, submit a insurance, reimbursement request to their insurance provider, change their financial mechanisms internally, and then hope it doesn't happen again." I was surprised at how early we learned about when this was happening on that Friday night that you referenced, "Why do you think it went public so quickly?" I think there's a couple of drivers. One is no secret that the city folks have always wanted to keep the distribution of funds in house versus doing it through the Arts Council. It was the arts and culture community who actually and the public who insisted that the city of Fresno use the arts council as a fiscal agent to distribute the funds and award the funds. And Fresno City stakeholders have always wanted to do it in house. I think any public institution would rather have control and management of funds that ultimately were responsible for answering for versus relying on an outside entity that may not have 100 fiscal and finance experts and budget directors and staff in house. And so I think for some folks, it was I told you so to the public and to the Arts and Culture community. You guys insisted on using an outside group we did and look what happened. And for the Arts and Culture folks, it went so fast because they had been struggling to get their second tech of the final installment around two. So I'm being honest to us as the newspapers, we did not know that artists had not been, had not received their second and last 10% allocation, the second round of awards. And so it was going to be very difficult to keep this not from not going public because you're looking at hundreds of vendors, not receiving their second payment. And whenever nonprofits don't receive a second payment or a schedule payment, they're pretty loud and they're pretty engaged with city officials. Now this came on suddenly, but there were smoke leading up to this reporting issues and the light from the Arts Council. How was that viewed at the city? I would say there wasn't smoke when it comes to, we had an idea that that was, had occurred. What there was two things. One for about a year and a half, there's been complaints from the Arts and Culture community about the process that the Arts Council was undertaking for scoring the applications, making those sessions public and their results public, as well as them not receiving the full funding that they thought they were entitled to based on their application. So it was a round transparency of the Arts Council to act more like a public government agency for the purpose of awarding funds versus a private nonprofit. Secondarily, which this is very routine, the city of Fresno is very good about not releasing funds until it receives how the expected information out front. So Arts Council was scheduled to get their third round of funding for the round that's supposed to be making next month in the city of Fresno, and there was supposed to get that last October. But prior to its releasing, we require audit of financials, bank statements, reimbursement, confirmations, everything that's required, and they had delayed getting this data provision to us. So the city, which is our standard protocol, is that we don't release funds, until we get every single document that we're expecting from the vendor. In this case, Arts Council is critical to release that to us, and we continue to insist on more information. And I think in that transaction, that's when we discovered that they had some staffing issues, they had some reporting issues, and luckily for us, our safeguards are not releasing that they're running the funding, which was approximately $7 million, did it go forward? Okay, do you think there's a, because we've talked about capacity issues, do you think the Fresno Arts Council has the capacity to do what they were tasked with? So tell you this, they demonstrate that they did. In the first round of funding, we provide them more than $11 million. Almost $1 million, because we collected, it took us a year of collective money before we had initiated the process for awarding grants. So we ended up having two fiscal years, up to $12 million for the first round. They awarded that first round with not one hiccup, not one vendor artist complaint that they had not received the funding that they were awarded. The city had no problems with the documentation and transaction with the audit of those funds and the confirmation that they had been distributed as it was expected in the awards process. The second round, that occurred, that was approximately five and a half million. That distribution, the first payment of 90% also went out without a hiccup. They were about 33 organizations that didn't get a first round payment, but that was because they had not done their part and given the arts council, the basic documentation that they require for our agreement, which is insurance. So if you don't have insurance, the arts council is not allowed to release any funding to you, and if you don't have all your paper, we're going to sign contract. So about a third of the organizations didn't receive an initial payment from the second round for lack of documentation and having submitted to the arts council that the city required, and the others received all their first round payments. A lot of the, there's been a lot of side conversations that have come out of this one of them being this conversation that Jordan alluded to around our capacity and a lack of internal controls. What do those sort of safeguards look like, both on the nonprofit level and on the city level, and what do you think if anything was missing in the process? So what I'll tell you in reflecting this process, the one thing that we knew of friend that the arts council needed was more money for administrative overhead. However, the measure as written only allocated 2% of the total award money to the Arts Council for administration. The standard administration overhead paid to 10% for any nonprofit, including a public government agency. And in this case, we did award them some additional one-time money in return for them doing additional workshops, training applicants to fulfill the requirements to graduate guidelines. And so we did give them additional one-time money for some return of Mr. Money. Now to their credit, they were able to pull off the first round and the first half of the second round without the additional administrator funding, but going forward, whether it's a city or a Fresno, that does it, I can assure you the city of Fresno is going to take their full 10%. Because our staff is far more expensive than a nonprofit staff is, and we're not even a penny-pinch to not be able to do oversight. The unfortunate part of that is that it would mean less money for it to be available for warning. Yeah. But it would make it more sustainable because you have those safeguards and go out to capacity. But what did the safeguards look like in practice that were not observed here? All those safeguards that we have in our agreement were observed from the perspective of they release a first round. We confirmed that all the money was awarded, that it was a second round. audited to visualize the way we expected it. They released this first payment of the second round without a hiccup and the third round of payment that was due to them in October was not released because the lack of documentation and paperwork that the city required. So from our perspective of the city, our safe parts triggered this discovery of potential theft and that the, if for all we know now at this point is the art council like Fresno Unified and City Fresno numerous other organizations city has been a victim. I also want to caution us with overwhelming any institutions with safeguards that makes it impossible for anyone to actually receive money and operationalize those funds. Any system of financial checks and balances still depends on the human beings and the employees following those checks and balances and where they don't. The ultimate question for accountability is if it's criminal nature then you can do time and we saw that in Bitwise. We had a similar situation in Bitwise where we awarded a million dollars but in all our agreements with nonprofits it's on a reimbursement basis after we confirmed that the work's been done and that's the ultimate safeguard for the city. In this case we followed our process we withheld the third round of payments and that helped us discover that there was something going on that not even the arts council leadership was aware of. So you and I were both around when measure P was being written and built and there was I remember in those conversations there was a lot of intentionality in writing in the arts council specifically to administer the arts portion of measure P in part because that's partially the function of arts councils not just in Fresno but across California but also because there was this fear that the city shouldn't have a role to play in deciding what art is. How do you think that this controversy changes that conversation? I think that has a potential to open that door and that door is a penthouse box. There's people inside City Hall that would love to be able to have veto authority over any potential awards of programming that is funded by measure P and if you look at our parks funds that we've distributed it's been a very public conflict at times over what parks give picks first. So what my fear personally is that the city of Fresno over reacts and allows politicians like myself to decide what art and culture is for cities that possess we are. If it does I think the overwhelming presence of religious organizations that also operate nonprofits would result in the city of Fresno only funding Christmas programs. How do you prevent all pet projects? How do you prevent that if the city were to administer? You prevent that by making sure that we don't have a role and deciding awarding or scoring the process. Outside of the arts council, who has the knowledge, the awareness of the arts landscape, the capacity to think about equity in these kinds of countries? Who other than the arts council has the background to do that? In recent days we've had conversations with some of the original authors of measure P and what they outlined was the arts council's never intended to be the permit distributor of those funds because they are also recipient of funds. They also do art programming themselves in culture programming. It was envisioned that the community would established a organization locally that would play that role of convener, of reviewer, assessor of how they support these funds and what art and culture looks like in the city. I think what's happened in retrospect, there was so much pressure from the arts and culture community get the money out because there was technically two years late that they asked us to use a current art and culture provider as well and recipient as a vehicle for a being a fiscal agent. And remember to in retrospect measure P was litigated. To this day, we as a city old, the advocates and the authors of measure P more than million dollars in legal fees that we have yet to pay because we continue to appeal to every level of court system that we continue to lose. Measure P wasn't one of those things that was just approved on Monday, affect on Tuesday. It was litigated for more than two years and so the collection of the money and the momentum that was built after passage I think slowed the arts and culture community for a bit and I think this has become a wake up call that they have to be fully engaged. So when you describe this future organization, it sounds similar to an arts council. I would say it's to be an organization that's not in the job of programming. I tell folks a lot that in one of my many lessons is you can't be an advocate and a service provider at the same time it's really hard to manage that balance. If you're going to be the facilitator in the lead boys on art and culture, then you need to step aside and not be the one applying. I'll give you one of the practical challenges that we've had since launching Measure P's Arts and Culture Funds, we have dealt with this short fall of people available to scoring. Who is available for hundreds of hours for free to read applications to score them knowing that everybody knows what score you're getting and who gave you that score, especially when everyone in town is an applicant for the funds. And so the conversation we've had early on was do we go with the Naltite group to come and score these applications? We got a huge pushback from the local arts and culture community and they were very clear don't bring an Naltite group tell us what's art and culture. I don't want a bunch of people from LA tell me what art is. No, thank you. Then the tension is they don't apply for money and become a score. We are in the infancy still of the development of this art and culture muscle that for now the same folks who are the applicants are technically the only ones available to actually potentially review and score these applications. And it's what I asked the arts and culture community for grace because they made a big deal about wanting the score sheets and the notes that each of these reviewers took and the comments that they've made and not everybody and even elected officials very few of us have the stomach to be attacked online on a daily basis over the long two work. Yeah, I'm less familiar because I was involved like both of you with measure P in the past. Are there other cities that have independent institutions? How do they do both know successful examples of third parties that help administer funds? I know in San Francisco they also have an arts commission that oversees their public art grant making but it's inherently controversial because it's just a controversial and to your point when you're in this making subjective. How do you do to get to it? Exactly. And what is culture and who gets to represent people? These are deeply personal things and so I think it's fraught but I guess to that end even before all of this happened with the arts council they were under quite a bit of scrutiny from the arts community over the lack of transparency in the arts grant making process. Do you see an opportunity with this to reset the way that it's done to provide more transparency in the people? I do. Well, when we were in the process of withholding the third run of payments from the arts council we were also renegotiating and revising their agreement to require their scoring process to be a public meeting and to be required to be a brown act meeting and to require the information to be public by law by state law they're not required to follow the brown act. We were going to require the most part of our agreement to do that. Now that the city is going to bring it back in house we actually are all as a matter of time. Is the city going to follow the brown act? We are as a matter of fact being litigated over the brown act. No. Yes. And one of the proposals is to have the measure P subcommittee that actually recommended approval of the last two rounds of awardees for it to be a public meeting. Unfortunately just two weeks ago prior to this becoming a public conversation on the potential theft they had voted to not have the subcommittee be a brown act committee. Who had voted? The measure P commission did and their rationale was let's just make it ad hoc. It'll be temporarily here the year and therefore didn't have to follow the brown act. Literally two days before this news broke the measure P commission said we got the request from the city of Fresno which was to follow the brown act. Have your subcommittee be a standing committee and have it follow the brown act and measure P commission said thanks but no thanks. We're going to go ahead and keep this as an ad hoc committee and let those members make these decisions without they had agreed to make them these public but not the documents public which is I think what most of the artists wanted to see they wanted to see what score they'd get and I do think I think we as an art and culture community in the city have to be very thoughtful of how we engage in this public discourse because the next round of reviewers and scores are not going to sign up to do it over again if they get tarnished and blasted and counseled online for giving their independent assessment of you need 70,000 instead of the 150,000 you requested. Yeah it feels like the tension between efficiency and transparency. The city is not a stranger to public scoring processes and correct me if I'm wrong the city applies for grants from Fresno Council of Governments. Those conversations are public there's a scoring committee you get decided in public but it's less it's less public. It's less subjective. What we're used to as a city is bidding a sidewalk improvement and giving us a lowest bidder and everybody gets to see what everybody bidded but art and culture is so subjective. Yeah. That for me your sculpture might be important and for you might be art and that's one of the things that in my tenure I've tried to keep us out of it because having this debate especially in the environment that we exist with the presidential leadership that we have. We would be engaging in a culture war every other week and public and at the expense of what? - Yeah, that's a perfect opportunity. We go, what is art? - Yeah. - When I could tell you that I told everyone, I struggle just to match my attire on daily basis. I'm the least qualified person to dictate any term or art is, 'cause I couldn't see it if I saw it. I do understand and I've told people with whatever your friends might cause. - He's a board member, yes. - And one of my attention points and friends now me, I think I'm very well equipped to determine that for myself. And I think that's the crux of this, right? Is we all have a different experience. We are the ninth most diverse city in the country. And art and culture is different for everyone. And we have to create that space, but it is gonna be a very delicate balance. It's gonna be a extremely delicate balance for those who ask for transparency and existed. It also requires public accountability. That's gonna be the next conversation for all of us as a collective. - Do you think what's gonna happen in the interim? I know that round three of grants is going to have to start soon and there's gonna be a new set of guidelines. - I think in the interim is gonna be pretty simple. We're probably gonna keep the same scope of guidelines. We're, let me back up. First, we're probably going to accommodate the current recipients in given my additional six months to finish a work. - So that's the final 10%? - The final 10%. And most of them got their money in January. And the work should have begun last June. So make sure that the work is complete. Give them an extension at a time. Secondly, release their second 10% payment. Third, for those who finally do complete their paperwork to sit here for as now, make sure that they get their first and second round award. And then initiate the awards of the third round process as close to the original timeline, which was early March. So we would initiate that process. We'd have to come up with the process for outside city officials to be involved in the scoring review review. And the city would simply be responsible for cutting the checks and making sure the money is used to what we expect it to use. I will share with you what I've shared with my colleagues in the city officials. We have to be careful on a couple of fronts. One is as a city, because of a record amount of losses that we've settled related to police, we are now so open sure for the first five million. So as a result of that, we have increased the standard for insurance requirements for anyone that does business with us. If we were to apply that same high standard to nonprofit organizations, especially these developing artists, they probably wouldn't be eligible to receive the money. So I think we have to find a way to honor the insurance requirement that arts council had for them. Secondly, we have to be thoughtful about what other additional requirements we've imposed on them to be able to release the next round of payments to them. And also be very clear that if there's right to be made up, the decision point for the city will be to fully fund the second round. Do we take money from the upcoming third round? Or do we find money from other to stop gap, the 1.5? Stop gap the money. I think that the latter will be very difficult. We're in a very difficult, tight financial year. We don't have the money that we had two years ago. So there isn't 1.5 million dollars laying around it. City Hall hasn't been called for. And the last thing we would want to do is not fix a playground that was scheduled and has been bit it out to be able to do a stop gap. And those are going to be the top conversations for the city council. Is there a sense that 1.5 could come back? There's three possibilities. One is that we simply lose the money and not recover it. That happened when the city lost 700,000 and the school district lost more than $2 million. You simply ride it off as a loss. Second, possibilities that we recover some money by catching a person who allegedly with the fiscal age in this case, the arts council. And there's a payout. We do require them to have active insurance and they did. And that's always the best possibility for them to file a claim and for us to file a claim to get reimbursed. Do you feel like are you worried that this is going to cast a bigger shadow on the arts grant making going forward and public trust in that process? I think what I'm genuinely worried about is that we allow City Hall to declare that this is a reason why we should have 100% control of our grant making its going process for all grants and that we shut that door to nonprofits. We pass that bridge during the pandemic. When we intentionally ask for the help of dozens of non-profit organizations to do vaccine deliveries, COVID testing that our city staff could not do based on restrictions availability or union contracts and the community produced not one of those dollars of more than $300 million that we distributed was ever misspent. And my concern is that this hiccup just the way the bitwise hiccup occurred would be a stain and justification for a sum in the building. We don't want to do any business without tight groups and simply want to keep it to build up the largest city bureaucracy we've had in our history. [MUSIC PLAYING] [MUSIC PLAYING] We conclude these podcasts each week with what we're loving this week. I'm going to start. Are you both familiar with the Lebanese garlic sauce? Yeah. Oh, wait. T-O-U-M. I don't know if I'm pronouncing it correctly, but-- Like Mediterranean. It's almost like a garlic mayonnaise. Yeah. And I've always been-- I go to the shops and they'll charge you like $0.50 for the little plastic container of it. And there's never enough. I inhale the stuff. It's basically garlic mayonnaise. And so today, I tried to make it at home. And four hours later, I was able to make an afkup, but I finally did it. And I-- Is it just like a garlic aioli? It gets like a garlic aioli. So what you do is you blitz garlic. And then you slowly pour like a neutral oil and some lemon juice in there until it mulsifies into kind of a quasi-manage. OK. It is incredible. I will give you some. You will love it. I can make it from home now. Therefore, I'm going to have a health issue. So if that is what I'm loving this week, let me go. What are you loving, Swiffy? I am loving that I'm hopefully 10 days away from having a kitchen again. We've been without appliances in a kitchen for going out in the seventh week with some repairs that were necessary in our 100-year-old home. And the appliances arrive today. And I'm hoping that they're connected over the next couple of days. And we can actually get back to cooking meals. Because as much as I love to eat out, two months of it is way too much. What is your high rotation takeout? And since your kitchen's being worked on. Ooh, simple, cheap, easy, accessible. It's Samores. What's your order? Cajunita's plate. So they're known for the best carnitas in the valley. So right off Balmont, across from Roading Park, the best part of their meal is there's the only ones in town that make homemade far tortillas, which is a killer. What about aliens? They make their own far tortillas. Not that the same. You get to go-- The highest quality of the homemade. OK, I'm a sucker for homemade far tortillas. Oh, yes. Some people still make it homemade, but then they have a machine. You can tell by a perfect circle that. A easy machine versus-- You want those all belong? Yeah, yeah, yeah. Absolutely. Cool. OK, so I was sick for three weeks with bronchitis, and I'm a big baby about it. In a moment of desperation went to get a massage on Friday, and I told the guy to just beat the bronchitis out of me. And I think he did. Is that the technical term for the procedure beat it out of you? I think I literally motions. This is what I want you to do. And it was so painful. I was just on the table like-- I know. But-- and I think I was pretty bruised up over the weekend. I am not happy. But you're feeling better now. Yeah. So it works. Yeah. It causes, in fact, clearly. Yeah. The correlation is not causation here. Shout out to a man of these. The garden. You're sick, but don't get them sick. Go in your out of sight of the case. Yeah, it's true, but you're not contagious. Absolutely. [MUSIC PLAYING] This has been Fresno. Lendee, I'm Jordan Maddox. I'm Donnie Berkschum. And this podcast was recorded at Sunstereo Warehouse in downtown Fresno. Audio editing and mixing was done by Jordan Maddox. Our lead image comes from Vaughan Ballanan. And our song comes from "Stateless Ratt."