The John F. Kennedy Center for the Performing Arts Is Financially Troubled

The John F. Kennedy Center for the Performing Arts faces serious financial problems for which there are no simple solutions. It is heavily in debt to the Federal Government and others and probably cannot meet all of its obligations. Independent action by either the Secretary of the Treasury to collect the bond interest due or by the Secretary of the Interior to collect more of the building maintenance costs would affect the Center's ability to conduct its performing arts activities. Only the Congress can make both the value judgments and the tradeoffs required to resolve the situation.

The Kennedy Center has not made provisions to pay $10.5 million in interest owed on bonds held by the U.S. Treasury; has not paid its full share of building maintenance costs; and has not been able to pay all of its operating expenses when due. The formula developed to allocate maintenance costs needs to be updated because of changes in the Center's operations. The present formula, developed before the Center opened, calls for the National Park Service to pay 76.2 percent of these costs for memorial functions and for the Center to pay 23.8 percent of the costs for performing functions. While changes have occurred in the operation of the Center since the development of the formula, no changes have been made in the cost-sharing formula, and the Center is not paying its full share of the maintenance cost. The Center does not believe that additional private contributions could be raised to pay its debt or that significant savings could be derived from more efficient operation. It believes that remedial legislation is needed to achieve an appropriate long-term settlement of its financial dilemma.