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From The New York Times

August 10, 2006

Paul L. Winters, head of the National Theater of the Deaf, sweeps the troupe's office himself to cut costs
photo by Jennifer S. Altman for The New York Times

By ALISON LEIGH COWAN

For nearly four decades it has provided a cultural bridge between the hearing and the hearing-impaired, but unless federal and state agencies come to some agreement about its financing, the National Theater of the Deaf may be unable to carry on much longer.

If the touring company's tribulations were a play, Act I would show the financially strapped company's executive director being told in late 2004 by the federal Education Department that Congress is eliminating a grant program that has been contributing $687,000 a year to the theater's coffers, roughly two-thirds of the previous year's budget. Dr. Paul L. Winters, the executive director, furloughs his five-member staff for five months to cut costs.

In Act II Connecticut lawmakers this past June authorize $200,000 in emergency funds aimed at helping to keep the theater, in West Hartford, going another season or two. Though the amount is large by state standards, the governor signs the bill.

In Act III disaster strikes anew. Daniel L. Shaw, the inspector general of the National Endowment for the Arts in Washington, contacts the theater within days of a news report about the state's promised bailout. Citing the new "$200,000 grant from the state" in a July 12 e-mail message, Mr. Shaw reminds the theater that it still owes the agency $75,000 from a deal it entered into more than 15 years before, and mentions that his agency is "getting ready to turn over" the account to the Treasury Department for collection if the balance is not repaid.

Dr. Winters shoots back an e-mail message stating that he is already working without pay much of the time because he wants "to see this national treasure survive." He acknowledges that the company owes the money but warns that it will have to close down if federal officials press their case too hard. "It would be very disappointing to me personally and professionally," he writes, "if the N.E.A. was the one that drove the final nail in the N.T.D. coffin."

Act IV is currently developing. But in the meantime Kevin B. Sullivan, the lieutenant governor of Connecticut and the prime mover behind the state bailout, is aghast at the latest plot twist. "This is a mess," he said bluntly this week. It was never his intention, he said, to pledge Connecticut tax dollars so that the federal government could collect on an old debt. Nor, he said, should a government agency devoted to the arts pursue a plan likely to hasten the demise of a respected arts group. "I can't see what public purpose is being served here," said Mr. Sullivan, a Democrat.

Felicia K. Knight, a spokeswoman for the National Endowment for the Arts in Washington, returned phone messages left for Mr. Shaw. She said the agency had been patient with the theater but must follow procedures when grant recipients fail to hold up their end of the bargain. "The N.E.A. has great respect for the National Theater of the Deaf, and we have worked very closely with them for many years to try to arrive at mutually agreeable and beneficial repayment plans," she said. "Each plan has been agreed upon by the National Theater of the Deaf, and each time they've been unable to meet the requirements. It's unfortunate, but we've come to a point where this has to be resolved."

Michael P. Hammond, a lawyer who was the chairman of the theater's board from late 2000 to early 2003, said he was representing the organization pro bono in connection with the National Endowment matter. He said he hoped to persuade officials in Washington to forgive the loan, stretch out payments or come up with another solution that will allow the theater company to stay in business. "I'm certainly hopeful," Mr. Hammond said. He added that he was doubtful that the board had sufficiently deep pockets to rescue the theater financially.

Established in 1967 by David Hays, the National Theater of the Deaf was a pioneer in incorporating American Sign Language into theatrical fare. It is widely credited with helping to create employment opportunities for deaf and hearing-impaired actors and for providing the training ground that has spawned several offshoots, like Deaf West Theater Company, the West Coast troupe founded in 1991 that made a splash on Broadway in 2003 with its innovative revival of the musical Big River. (A Deaf West alumna, Alexandria Wailes, will be appearing in the revival of Mother Courage and Her Children at the Delacorte Theater in Central Park.) Both companies are lean organizations that hire actors on an as-needed basis.

By all accounts the Connecticut theater's problems stem largely from the 19 months that Charles M. Roper was its executive director. Fired in 1994 after an audit discovered irregularities, Mr. Roper pleaded guilty three years later to having embezzled $105,000 of the organization's money to cover vacation expenses and to buy clothes, antiques and other items. He was sentenced to a year and a day in federal prison. Besides leaving the organization with disorganized finances and debts, Mr. Roper also saddled his successors with a spotty financial record in Washington's eyes, because of liberties taken on his watch with federal grant money.

Dr. Winters, who joined the board in 2001 and became the theater's executive director in early 2003, inherited an organization that still had problems. While his predecessors had budgets of $1 million and $2 million a year, he has kept annual spending to about $300,000, according to the organization's audited financial statements. That has meant closing a well-regarded summer training academy for deaf and hard-of-hearing actors and shelving productions for adults, leaving the company tightly focused on a children's theater group that performed at 114 schools and other sites last year.

Still, the budget tightening did not eliminate the threat posed by the deal the theater entered into in 1988 under a program that the National Endowment has since discontinued. At the time the endowment offered the theater one matching dollar, up to $150,000, for every $3 it raised. The theater met the challenge and used the combined $600,000 to create an endowment and a working capital fund in 1991, its financial statements show. Under the terms of the grant, the theater was forbidden to touch the $247,000 in principal that it set aside from those funds as a permanent endowment.

But eventually financial obligations, made worse by mismanagement under Mr. Roper, led the theater to spend down the entire endowment, its financial statements note. Subsequently the National Endowment demanded repayment of the $150,000 grant. Four amendments to the repayment schedule were recorded between February 1998 and June 2004, with the latest revision giving the theater until early 2007 to make its final repayment.

Correspondence shows that the theater had paid half of what it owed before it stopped making payments altogether in April 2005, about the same time that the federal money it was receiving from the education department also halted, in a shift of governmental priorities. Technically the theater has missed five payments totaling $41,250. Yet the endowment has exercised its right under the agreement to call for immediate repayment of the entire $75,000 balance as well as interest.

Connecticut sent the first of four $50,000 checks to the theater in mid-July, but because it used an outdated address, the check never arrived. Now, Mr. Sullivan said, he has little choice but to ask the state to do something it does rather well: drag its feet on reissuing the check.

"We will ask the state to sit on the funds until this can be sorted out because clearly we do not want to be writing the check to the N.E.A.," he said. "We already send a lot more money to Washington than we get back in Connecticut."

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