Photo by Bruce Kratofil, courtesy Flickr

The Cleveland Museum of Art

Andy Warhol Pablo Picasso Henri Matisse Jackson Pollock Salvador Dali Claude Monet Paul Gauguin Investors Indulge Appetite for Luxury

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So far, layoffs and service reductions are not planned, and the museum’s expansion will suffer no more than a temporary delay — but salaries will bear the brunt of the cost cuts. Highly paid workers will lose the most: Those earning $300,000 or more will see 15 percent decreases, scaling down to 10 percent for those who make above $200,000, 5 percent for $100,000 or better, and 2.5 percent for those above $75,000. Additionally, the museum won’t give merit raises in the coming year and will maintain a hiring freeze.

The biggest problem was a 31 percent hit to the museum’s endowment in the nine months through March 31, coinciding with a 38 percent decline in the stock market, as measured by the Standard & Poor’s 500 index. That brought the endowment down to $510 million from $737 million at the end of June 2008 and $821 million a year before that.

Almost 60 percent of the museum’s operating expenses are financed by the endowment, and the other main sources of income — exhibitions, programs, retail sales, and philanthropic giving — have also declined as consumers and donors cut back.

The museum is budgeting for its sales to fall $2.6 million in the coming fiscal year and does not expect revenue growth for at least a few years. Sales were $59.4 million last year.

The timing of the economic downturn is problematic because the Cleveland Museum is in the middle of a $350 million expansion and renovation plan that, when complete in 2012, will increase its physical size by 50 percent and thus raise its operating costs.

The museum currently holds more than 40,000 objects, including works by Dali, Gauguin, Matisse, Monet, Picasso, Pollock, and Warhol.