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– The relocation of the Rochester Art Center 13 years ago to a new $8 million home overlooking the South Fork Zumbro River seemed to signal a fresh start, with its staff busily curating a reputation that registered far beyond city boundaries.

But recent financial troubles, compounded by staff turmoil over the past 18 months, have put the future of the once-promising institution in doubt, setting off alarms in the local arts community and calling into question the management of the publicly supported organization.

The most recent tax return, filed seven months late, showed an operating deficit of $279,000 for 2015. Since then, all but one of the center’s 11 full-time employees quit or was fired, a result of an allegedly toxic work environment that many former employees say was created by director Megan Johnston.

Johnston resigned in January, just days before the art center filed an overdue 2015 audit that raises questions about its ability to survive. She said in a recent interview that she was unaware of the size of the center’s debt when she took over and called the pressure of the finances “overwhelming.”

The art center’s problems come as Rochester makes a citywide push for excellence under a 20-year Destination Medical Center plan crafted by the Mayo Clinic. The vision sees Mayo and Rochester growing side by side as the clinic expands its campus while burnishing its reputation as a global leader in health care, medicine and research. Endorsed by the Legislature with $585 million of taxpayer funds, the plan will get its first outlay of public money this fall. The funds must be spent on city infrastructure, and do not go directly to Mayo.

Though the art center is not central to the expansion, it has figured prominently in the city’s plans for cultural growth and riverfront development, with its distinctive building drawing visitors to the banks of the Zumbro and serving as a hub for programming, shows and discussions that rival arts organizations in bigger cities.

“I think it’s absolutely critical to the whole state of Minnesota,” said former director Shannon Fitzgerald, who left in 2015 for a similar job in Florida. “I’ve always thought it was worthy of more support.”

How it got into financial trouble isn’t clear. The center typically runs a deficit, but in 2015 it was larger than the average deficit reported since 2009, the earliest year that tax returns were available. The center’s board and management have yet to provide details beyond the basic tax return, including how it spent some $570,000 in public dollars in 2014 and 2015. City funding accounts for roughly a third of the center’s annual revenue.

Interim Director Lee Koch said that a decision about the art center’s future won’t be made until a full review of its finances is complete. Koch said those details should be released at the center’s annual meeting in May.

“Clearly it’s something we don’t want to ignore,” said City Council President Randy Staver. “What do we have to do to resolve whatever situation might be happening?”

Internal turmoil

Johnston, a native Minnesotan who had been directing an arts center in Sligo, Ireland, was hired in October 2015 to replace Fitzgerald. From the start, she said, she was facing a debt, adding that “there was a dozen or more initiatives in 2016” alone to try and turn things around.

She also was working with several new employees, which presented staffing challenges, she said.

In Johnston’s first year on the job, 10 people were fired or resigned. By the time she left, all but one person had been replaced.

Several former employees blame Johnston, saying she was controlling, divisive and sometimes belittled employees in front of their colleagues. She also lacked the knowledge staffers expected from someone in her position, they said.

Several said Johnston wanted to be copied on all employee e-mails, and would not allow staff members to have closed-door meetings. Some of the most serious complaints were leveled by three women of color — one was fired in late 2015, two resigned — who said they faced a hostile work environment. One said she believed her private e-mail was accessed.

As people quit or got fired, positions largely went unfilled, and duties were pushed on to remaining staff. Nicole Nfonoyim-Hara, a former program and development associate, said she was eventually tasked with marketing, despite having no experience at it.

“There were too many positions and programs in flux,” said Courtney Bergey, who lasted just a month before quitting to find more stable work.

The turnover hurt productivity, morale, trust and funding, according to a letter signed by 28 Rochester artists and recently filed with the art center’s board.

Johnston disputes the negative characterizations of her tenure. She said she wanted to be copied on e-mails and discouraged closed-door meetings in order to help her quickly learn her new job. She denied looking at anyone’s private e-mail. When asked whether she treated some employees differently because of their race, she pointed to her career and history of working on social justice issues.

“I tried to be as open and transparent as possible,” Johnston said.

Slow to act

The turnover fueled a contentious atmosphere within the local arts community that put blame on the leadership of the art center’s board. Most of the board members are not artists, but represent the city’s business community, the Mayo Clinic, or have connections to potentially deep-pocketed supporters, a necessary relationship for an organization that relies on private donations for a sizable fraction of its budget.

Johnston’s hiring was largely the work of the board’s executive committee, which includes Brad Nuss, a trucking company executive; Larry Guse, a local bank vice president, and Stephen Troutman, a retired IBM employee. Troutman said recently that Johnston was their top candidate.

“Megan did a tremendous job boosting the organization, the standing in the community,” said Nuss, the board’s head. “She has very good relations with city leaders and institutional granters, and the artistic community in general.”

When asked about complaints by former art center employees, Nuss said, “There’s always two sides to every story.”

But Nfonoyim-Hara, in her exit statement last April, wondered why nothing had been done earlier to address complaints.

“I feel the organization was a bit negligent about what’s been going on,” she wrote. “Things were quickly damage-controlled or even ignored until very recently.”

Mary Beth Magyar, a local artist, said the board’s leadership should have realized something was wrong and made a more concerted effort to share information with colleagues or the public. Now hoping to land a seat on the board, Magyar is pushing for more transparency.

That message has resonated with City Council Member Michael Wojcik, a former art center board member. Wojcik said he wasn’t told of some of the things that happened during Johnston’s tenure and blamed the board’s executive committee for the lack of communication.

“There’s a board structure that needs to be fixed there,” he said. Wojcik said he’d prefer that the executive committee disband, but supports the idea of adding more artists to it. In their recent letter to the board, the 28 local artists urged it to hire “trained artists and professionals” to run the center.

“In hindsight, they did not do a good job,” Wojcik said of the board.

Wojcik is now pushing for a board to track city dollars to other private organizations that may also lack strong oversight.

“That is Rochester’s history,” he said. “People have their fiefdoms down here and they want to collaborate with their small, closed-in network and no one else. And they don’t like outsiders coming in.”

Matt McKinney • 612-217-1747