The U.S.S. Kidd lost nearly $90,000 last year — and that’s before accounting for more than $300,000 in debt its operating agency owes the state for unpaid insurance premiums.
A new audit released Monday by the Louisiana Legislative Auditor gives an overview of the historic Baton Rouge destroyer’s financial problems and the challenges its new director, Alex Juan, stepped into when she took the job last December. Juan said her organization is making good progress in attracting new visitors and resolving the agency’s financial management problems, though it will still be tough for it to break even this year.
The ship’s 2013 finances were in such disarray that the auditors couldn’t do their usual analysis. The inspector general’s office is currently conducting an investigation into questionable spending and financial management under former executive director Maury Drummond, who retired late last year.
Juan said she was already aware of and working on the issues cited in the newest report, and the audit findings were not surprising.
“It was another viewpoint to say, ‘Hey, these are some of the things you guys could be doing,'” she said.
Though the legislative auditor just released the report Monday, it was also distributed at a public meeting of the Louisiana Naval War Memorial Commission, which operates the Kidd, a couple of weeks ago, Juan said. The commission is under the state’s department of culture, recreation and tourism, and its sole responsibility is maintaining and exhibiting the destroyer.
According to the audit, the Kidd brought in about $515,000 in operating revenue from admissions, sales, programs and other sources. In addition, it received about $230,000 in grants. But its operating expenses totaled about $833,500, leaving the ship’s budget about $89,000 in the hole last year.
In addition, as of December the commission owed the state about $334,400 in unpaid insurance premiums. Juan said she’s worked out a payment plan with the state and is slowly paying that money back, though it will take years. Right now, the commission is paying about $5,000 per month toward the debt. The cost of the premiums skyrocketed from about $38,000 annually to $92,000 annually after Hurricanes Katrina and Rita, and the ship’s revenues haven’t been able to keep up — a surprise to Juan, since the financial documents she got when she first took over didn’t list that debt anywhere.
“All (the state) wanted was open communication,” Juan said. “We’re absolutely committed to making sure we make these timely payments… They understand it’s going to take us a long time.”
The new audit also lists several specific problems with the commission’s accounting practices in 2013. Among them, auditors looked at 145 expenses submitted by employees, and found that 74 of them lacked the “proper support” to justify that they were business expenses. That included a gift card purchase, and a personal expense, the audit says.
In addition, one employee was being given a stipend in exchange for drawing down some accrued vacation time, but Juan said that the vacation time was never actually reduced.
The destroyer also didn’t have an inventory of all of its assets, or a process for tracking its materials. The ship is now closed on Mondays so employees can work on that inventory, Juan said.
All of the problems cited in the report are attributed to “prior management oversight.” Drummond apparently had sole control over the commission’s approval and recording of cash payments. Now, those duties are segregated so there are more checks and balances, Juan said.
Drummond did not have a listed phone number to be reached for comment.
About 50,000 to 60,000 people came to visit the Kidd last year. While Juan said the destroyer is seeing as many as triple or quadruple the number of visitors, she won’t know for sure how the numbers will turn out until the end of the year.
The commission has been putting a major focus on outreach and education events. For example, it’s been promoting a “First Free Sunday” program where families can get in free on the first Sunday of every month. Juan said the destroyer is now getting 800 visitors for those events, while it might have had 20 people come by on a Sunday previously. The hope is that those free visitors spread the word, or come back for a future paid trip.
In addition, the commission has been reaching out to more businesses and other community organizations for partnerships, hoping to attract more people by opening those lines of communication.
Juan said the ship’s “kind of been in a time warp,” standing on its own as a historic relic. She’s looking to make the museum and activities surrounding the destroyer more educational and engaging, as well as actively honor veterans.
Still, based on the ship’s looming debt and the financial numbers she’s looking at for the year-to-date, she’s concerned.
Employee layoffs and closing the ship more days of the week are possibilities in a worst-case scenario, she said. On the other hand, a TV show, which she couldn’t name, is scouting the ship as a potential filming location, which could bring in more revenue.
But without something like that “golden egg,” she said, “I think it’s just going to be tough all the way around,” she said.
Click here to read the full audit. Below is a copy of the Kidd’s corrective action plan, or strategy for resolving the issues raised by the state.
USS Kidd Comprehensive Corrective Action Plan