The Ministry of Culture should improve the management of its capital companies in the field of theater and music arts / Article

The Supreme Court pointed out that for the implementation of Latvia’s cultural policy, KM has an instrument at its disposal – 14 capital companies in which KM is the holder of 100% capital shares and which operate in the field of professional theater and music arts. The amount of the state budget subsidy granted to KM capital companies is increasing every year, and in 2023 it was 40 million euros, which is 63% of their total revenues.

Updating the issue of the management of KM’s capital companies, the SC conducted a follow-up – how KM has done with the implementation of the recommendations made in the audit completed in 2018.

The SC has concluded that no significant changes and improvements have been achieved in the operation of KM in the management of capital companies.

In order to justify that society gets the best possible product from the implemented cultural policy and the correspondingly allocated state funding, KM should have comprehensive, transparent and comparable information and data not only about its 14 capital companies, but also about other non-governmental sector organizations in the field of professional music and art. The fact that the services of this field are the best for state-owned capital companies cannot be taken for granted, the auditors pointed out.

“KM activity is necessary not only to justify the existence of state capital companies, but also to determine, evaluate and inform the public about the results of the activities of capital companies, especially because in the last two years, on average, 70% of the total revenue of KM capital companies is public financing. At the same time, the population of Latvia , including the number of cultural consumers tends to decrease, and

the state administration has already been invited to evaluate the possibility of merging capital companies that have similar goals and tasks,” said VK Council member Inga Vilka.

After the 2018 audit, the SC recommended to the CM to improve the process for obtaining and compiling data, so that the planning and implementation of the cultural policy is based on complete data on the actual situation in the market. Also in 2020, similar problems have been identified in the study commissioned to investigate the situation of the Ministry of Education.

“After looking at the last assessment of the Ministry of Internal Affairs on the preservation of the state’s participation in its capital companies, we can conclude that the problems with the data are still relevant and that the ministry has not fully used the research to describe the market situation,” emphasized Vilka.

She also added that the regulations of the Cabinet of Ministers of 2017 on the collection of statistics in the field of culture are still valid, the implementation of which is supervised by the Ministry of Culture.

If these rules were followed, the Ministry of Education would also have data on the field of professional theater and music arts.

In 2022, the evaluation of the Ministry of Internal Affairs on the preservation of state participation in its 14 capital companies allows us to conclude: the ministry has tried to use the principles of good management practices of state capital companies in the evaluation of state participation, however, it does not consider all the conditions in order to give the public confidence that the participation of a public person in a capital company is the most effective way , how to ensure the availability of cultural offerings for every resident of Latvia.

Every year, KM concludes contracts with its capital companies, allocating funding from the state budget to perform certain tasks and achieve specific results. In the opinion of the SC, the ministry sets contradictory requirements for capital companies – to achieve a certain amount of revenue from ticket sales and to ensure accessibility to the public. An increase in the amount of own revenues means higher ticket prices, while accessibility means a ticket price that can be paid by target groups of society with different incomes. At the same time, KM capital companies have different approaches to selling tickets at reduced prices.

For example, there is a capital company that almost does not grant discounts to various target groups of society. It does not contribute to the availability of the services provided.

The Ministry of Interior noted that the free ticket policy set for capital companies is ill-conceived: they may issue more tickets for representation purposes than for charity. As a result, most capital companies in 2022 devoted more resources to the promotion of services than to charitable purposes (accessible cultural events for people who cannot afford them).

The art of theater, opera, ballet and circus is concentrated in Riga – KM Riga theaters, VSIA “Rīgas cirks” and VSIA “Latvian National Opera and Ballet” set a low indicator – the number of performances outside the permanent premises, although one of the tasks of cultural policy is to ensure the availability of culture in the regions . For example, in 2022, Riga theaters provided 4% of the total number of performances outside the permanent premises.

Every second administrative employee of KM capital companies works in several jobs.

Data from the State Revenue Service (SRS) on employment show that 56% of the administrative staff have from one to seven additional jobs.

Perhaps the administrative capacity and workload in capital companies should be reassessed.

The auditors reminded that the recommendation given in the 2018 audit regarding the optimization of the administrative functions of two capital companies is still relevant and the optimization of administrative activities should be evaluated more broadly in other capital companies as well.

Seven recommendations were made in the 2018 audit of KM capital companies. Of them, three were already recognized as implemented, one was closed as not implemented. None of the other three can be recognized as implemented in the SC after these tests. These recommendations are closed, and four new recommendations have been made to the MoC, including an updated recommendation that was closed as not implemented.

The new recommendations are aimed at obtaining and compiling data on the field of professional theater and music art in Latvia, the availability of transparent and comparable financial and non-financial information about KM capital companies, the availability of KM capital companies’ services to various target groups of society and the assessment of the capacity of KM capital companies’ administrative resources, added VK.