Five days after Congress passed and President Trump signed into law a $2.2-trillion bill to ease the economic devastation caused by the escalating novel coronavirus outbreak, the crisis-shuttered Museum of Contemporary Art in downtown Los Angeles announced that virtually its entire staff would be furloughed in mid-April.
Only one question lingered: Why?
The federal CARES Act provides $350 billion in relief funds for small businesses in an effort to keep workers fully employed. So why are museum workers being expected to take the financial brunt of a crisis they had no hand in making?
MOCA is in fact exactly the kind of small business the unprecedented bill was designed to help. A museum spokeswoman said the possibility of using the relief funds has been discussed, but no action has been taken.
The CARES Act — the acronym stands for Coronavirus Aid, Relief and Economic Security Act — takes a variety of critical steps. They include direct subsidies to hospitals battered by patient overload and coverage of the costs associated with testing for COVID-19.
However, in the 335-page bill, the very first item on the lengthy list of programs is the Paycheck Protection Program. If workers remain on the payroll, a small business loan made during the crisis can be turned into the functional equivalent of an outright grant.
The goal: Keep full employment of existing workers as much as possible, in order to prevent the nation’s economic gears from being stripped.
The Small Business Assn. uses one of two criteria to determine whether a company — including a charitable nonprofit like MOCA — qualifies for assistance. What counts as a small business? An official Table of Small Business Size Standards lists the rules.
The size standards are mostly expressed in either millions of dollars or number of employees. A logging operation with fewer than 500 employees qualifies, for example, while a copper mining company with fewer than 1,500 also does.
Museums use a financial standard. An eligible museum cannot have an annual operating budget in excess of $27.5 million. MOCA’s budget is about $20 million. It’s classic small business.
For the Payment Protection Program, a forgivable loan equal to 2½ times the monthly payroll, up to a maximum of $10 million, is available. Information on MOCA’s pre-pandemic monthly payroll was not immediately available from the museum. But a business that maintains its payroll for two months, while spending 75% of the loan on payroll costs, will have the loan forgiven.
More than 70 MOCA staffers are being fully or partially furloughed, with health insurance maintained but with substantial salary cuts. (For purposes of the loan program, an eligible employee’s compensation cannot exceed $100,000.) All 97 part-time workers — including gallery attendants, exhibition installers, retail staff, education team members and AV crew — were laid off at the end of March.
To be sure, the process for getting the PPP loan isn’t easy, a sad reality of the incompetence that characterizes so many aspects of the Trump administration’s handling of the pandemic crisis. The rollout of the program, which began last Friday, has been a fiasco.
The SBA is underfunded and understaffed to handle the enormous demand. So these emergency loans are instead being directly administered through qualifying banks.
A lender receives a fee of between 1% and 5% of the loan in order to have a financial incentive to do the right thing. Plus, 1% interest can be charged on top of the fee.
This week, Treasury Secretary Steven Mnuchin — ironically, a MOCA trustee before joining the Trump administration — acknowledged that the CARES Act's PPP allocation was too small. America claims 30 million small businesses, and the PPP will quickly run out of funds. On Tuesday, Mnuchin tweeted his intention to seek an additional $250 billion from Congress.
Many believe that won’t be enough either. Rather than a $600-billion guarantee, a trillion dollars might be needed. Sen. Elizabeth Warren even proposed removing any cap at all on available PPP funds. The House is reconvening Thursday to take up its fourth coronavirus rescue plan, although final work on determining the sum must await the return of the Senate, which is on vacation until April 20.
The Hammer Museum, the Institute of Contemporary Art, Los Angeles — plenty of art organizations in the city surely qualify as small businesses. They, like MOCA, should be going after PPP bailout funds to keep the full-time staff secure and in place. Staffers need it, the art institutions need it, and the American economy needs it. There’s no good excuse not to.