San Antonio Turns Down A Dark Path

The San Antonio Symphony (SAS) negotiations took an ugly turn late Wednesday evening with the revelation that not only is a new collective bargaining agreement (CBA) becoming less likely, but the successorship deal that would ultimately transfer governance to a new nonprofit is falling apart as well.

In order to prevent these discussions from devolving into a hopelessly confusing mess of acronyms, we’re going to clarify who’s who by using some reader-friendly terminology.

The Phantom Menace

On the evening of Wednesday, 12/27/2017, several news outlets began reporting New SAS was walking away from the successorship process with Old SAS.

At the heart of the matter was what New SAS representatives defined as a surprise liability via the orchestra’s pension, a multi-employer plan managed by the American Federation of Musicians & Employers’ Pension Fund (AMF-EPF).

“We thought we had gotten to the finish line. Then they said there might be an unfunded portion of their pension plan,” said Bruce Bugg Jr., chairman of [New SAS]…“We were hoping to have the transition completed by now. We felt like we were pretty far along. Everything ground to a halt at that point.”

A 12/27/2017 New SAS press release doubled-down on their liability angle with even more detail.

Prior to the November 21 letter, neither [New SAS], nor the other donors, nor the current [Old SAS] Board leadership knew of this liability, which was not disclosed in [Old SAS’s] audited financials for the 12- month period ending August 31, 2016. Faced with this revelation nearly five months after we first began this effort, [Old SAS] repeats that it had made clear, from the beginning, that [New SAS] would never assume any liabilities of [Old SAS], and will not do so now.

It’s easy to see where someone may walk away from that statement thinking the Old SAS has some sort of unpaid pension contribution (think: overdue bills).

As it turns out, that’s not the case; a point the SAS Musicians highlighted in a 12/28/2017 press release.

“[Old SAS] has $0.00 (zero) debt to the AFM-EPF. The Symphony’s auditors and [the Old SAS] board were 100% correct in reporting no debts payable to the Pension Fund for withdrawal liability.”

For all intents and purposes, it appears that New SAS is somehow classifying Old SAS’s participation in the AFM-EPF as a liability but that’s not accurate.

As it stands, a successorship agreement isn’t a smorgasbord where a new employer can pick and choose which elements to accept or reject.

I contacted New SAS President and CEO, Tom Stephenson, to verify if his organization expected to absorb Old SAS’s employer contribution obligations to the AMF-EPF; and if not, were they aware they would be responsible for any assessment of withdrawal liability payments if they existed the AMF-EMP?

At the time this article was published, Stephenson acknowledged receipt of the questions but has yet to provide a response.

Past The Point Of No Return

As of now, participating in the pension plan as reason for not only breaking off negotiations but scuttling the entire successorship agreement is, at best, an overaction and at worst, malicious.

Certainly, during the collective bargaining process, New SAS can insist on terms that include exiting the pension plan.

If the musician employees agree, the extraction process is clearly defined by a host of well-known federal regulations, one of which is a withdrawal penalty. The conditions that ultimately determine the exact amount are not quite as clear-cut, and you can rest assured employers and pension plan managers will have a spirited debate over it. In many cases, final amounts are ultimately settled via legal action.

But here’s where things get particularly ugly: the successorship agreement process has been unfolding since July 2017 and during that time, Old SAS has shed all of the necessary infrastructure to support regular operations.

As part of the process, New SAS instituted a new administrative executive, Tom Stephenson, to run SAS’s day to day operations, such as finance, payroll, development, and marketing.

Stephenson reported exclusively to the New SAS board. Most of the Old SAS administrative staff were let go while their duties and responsibilities were outsourced. Lastly, several Old SAS board members resigned.

Throughout the process, New SAS has provided nearly $2 million to help pay bills since the onset of the successorship agreement.

Have no doubt, if the New SAS follows through with pulling out of the successorship agreement at such an advanced stage, it would all but assure the institution will collapse in a matter of weeks and be forced into liquidation bankruptcy.

We’re Better Than This, Aren’t We?

Throughout all of this eleventh hour drama, the part which seems most puzzling is that News SAS’s founding members would be surprised to learn about the pension plan.

Each of those members, J. Bruce Bugg Jr., Dya Campos, and J. Tullos Wells, are well established and successful business people.

It is difficult to believe that this group would be unaware that the SAS participated in the AFM-EPF and would not already be well aware that exiting such a plan would incur withdrawal fees.

Their 12/27/2017 statement makes it seem as though New SAS’s executive committee simply expected to shed all pension obligations.

A “fresh start” means exactly that – and we, as stewards for our donors, using our business judgment, cannot be saddled with a liability which is greater than a typical operating cost for an entire symphony season.

Hopefully, New SAS’s executive committee isn’t under the impression that they can shed the pension plan and/or start a new ensemble all while picking up Old SAS’s assets for pennies on the dollar. It wouldn’t be the first time those thoughts have crossed the minds of large donors but there’s a reason why you don’t see it as common practice.

The existing CBA expires Sunday, 12/31/2017 and unless things change course, the organization is headed down a very dark path.