The Palm Springs Art Museum is grappling with a severe financial and governance crisis following the abrupt departure of its executive director and a mass exodus of board members. According to a recent Los Angeles Times investigation, the museum has been struggling with significant financial difficulties for at least six years, including accounting irregularities and heavy dependence on its endowment funds.
The crisis began in April when Executive Director and CEO Adam Lerner announced his resignation after four years of leadership, reportedly while negotiating a three-year contract renewal. His departure triggered a wave of trustee resignations, with one-third of the institution's board members stepping down. The board has now fallen below the minimum number legally required to operate, creating a governance deadlock with only 19 trustees remaining.
On November 18, the Los Angeles Times reported that the museum's accounting firm, Eide Bailly, issued a warning letter concerning serious financial reporting issues. The audit revealed problems including the misreporting of endowment spending, improper valuation of donated and deaccessioned artwork, and incorrect recording of admission revenue. Internal audit documents examined by the newspaper show the museum has been experiencing financial difficulties for at least six years, with discrepancies in its endowment management and questionable reclassifications of funds.
The museum's current financial situation is precarious, with a $17 million endowment that must support a $10.5 million annual budget. This heavy dependence on endowment withdrawals has created an unsustainable financial model for an institution of its size. While the audit notes indicate it is "highly unlikely" that funds were stolen, they highlight poor and confusing accounting practices that created the illusion of healthier finances than actually existed. The situation became so concerning that the museum's longtime external auditors resigned in 2021.
Following Lerner's departure, Chief Curator Christine Vendredi was initially named Interim CEO, with the Board of Trustees tasked with conducting a national search for a permanent replacement. In September, Vendredi was appointed as the new CEO. However, former trustee Patsy Marino told the Los Angeles Times that she resigned due to inappropriate interference and attempts to influence the selection process by the museum's executive committee, individual trustees, and unidentified museum staff and donors.
The governance crisis deepened in early November when Kevin Comer, another former trustee, resigned on November 6 following his lawyer's advice. In his resignation letter to fellow trustees, Comer urged them to hire a law firm and forensic accounting firm to conduct a thorough review of the museum's finances. With the reduced number of trustees, the museum is now unable to legally vote on adding new board members or make other essential decisions.
Board Chair Craig Hartzman has defended the museum's financial oversight in a statement, asserting that reviews have been "thorough and deliberate and guided by independent experts." He indicated that the board has been consistently briefed on financial matters and is close to completing the final item from a 2021 review. However, Hartzman did not directly address the recent audit findings or explain the wave of trustee resignations that have left the board below its legal minimum.
"As is typical for a nonprofit board of this size, trustees leave for a range of reasons, including the end of their term prescribed in our bylaws (three years), personal and professional commitments, relocation, and, in some cases, differences of view on governance. And sometimes they simply develop personal grievances based on differences of opinion and other factors," Hartzman stated.
Despite the ongoing turmoil, Hartzman insists the museum remains committed to transparency and its cultural mission. The institution continues to publish its financial statements and tax returns on its website and maintains its exhibition schedule. "Above all, the museum remains focused on advancing its mission through inspiring exhibitions, education programs, and community engagement. This season's slate is shaping up to be our best ever. We are grateful to our staff, volunteers, donors, members, the City of Palm Springs and community partners who support the museum and help ensure that Palm Springs Art Museum remains a vital and trusted cultural resource for the region," he said in his statement.
