LINCOLN — Since it was renovated and reopened in 1997, the 729-seat Midwest Theater in Scottsbluff has served as a cultural beacon in the state’s Panhandle.

The 79-year-old Art Deco theater hosts Grammy-winning musicians, classic movies and films nominated for Academy Awards, as well as local theater performances and weddings.

Thanks to a little-known state endowment fund, the Midwest also has been able to send visiting artists into local schools, bring in an interactive Beatles show by Omaha’s McGuigan brothers and put on educational programs at the theater for local students.

“It’s huge here,” said the theater’s executive director, Krista Baird, of the roughly $20,000-a-year that the organization gets from the Nebraska Cultural Preservation Endowment Fund. “A lot of our kids are in rural Nebraska. This is their only opportunity to experience the arts.”

But Baird and others with arts and cultural organizations across Nebraska say such outreach programs, as well as grants to a who’s who of state symphonies, museums and art galleries, are in danger due to budget changes proposed by Gov. Jim Pillen.

The governor, to help close a $471 million state budget shortfall, proposes to drain and use a $15 million state arts and humanities fund that helps provide about $550,000 a year for such programming via investment earnings.

The endowment was established in 1998 at a time when federal funding was in peril for arts and humanities programs. It’s a similar situation to today after the Trump administration, via the U.S. Department of Government Efficiency, reduced federal support for the humanities, a cut that is being challenged in court.

The Nebraska Cultural Preservation Endowment is a unique, public-private partnership in which the state pledges to match private donations, dollar-for-dollar. It has created nearly $37 million in two funds – one consisting of state allocations and the other from private donations – from which investment income is generated, and then granted out, for arts and cultural programs.

The Pillen administration seeks to eliminate the public portion of the fund, about $15 million, and then capture that money for budget and tax-relief purposes.

State budget officials argue that the proposal will create a “more stable” source of state support for the arts and humanities. That, the administration maintains, is because Pillen proposes a $600,000-a-year allocation from taxpayer funds to replace investment earnings from the endowment.

“Currently the cash available for awards varies depending on investment returns,” the administration said in an email from the governor’s budget office. “[Our] recommendation would provide a steady $600,000 general fund appropriation, which is more than they usually have for awards each year.”

While $600,000 is more than $550,000, and investment income varies depending on the performance of the stock market, an official with the State Cultural Endowment said that using income from the current, $15-million state endowment is still a more stable and reliable way to finance cultural programs than having to lobby every year for a state appropriation.

Plus, said Maggie Smith, the executive director of the Nebraska Cultural Endowment, the Pillen proposal reneges on a decades-long promise by the State of Nebraska to major philanthropic groups — that if you donate to the arts and humanities, the state will match those contributions, dollar-for-dollar.

“That’s been our No. 1 fundraising tool,” Smith said, of the match. “We’ve got major donors who have given multiple millions of dollars who are very concerned.”

The fund has attracted about $21.5 million in private donations over the years. The state has provided $15 million in matching funds over that time [a couple of years of matching funds were skipped due to past budgetary problems]. The two pots of money, the public and private funds, are managed and invested separately. But together, they provided about $1.4 million in grants last year, Smith said.

The state, under a bill passed in 2020, pledged to add another $10 million to the fund, via $1 million-a-year allocations over the next 10 years. But those donations were paused last year to help with the state’s current budget woes.

Chris Sommerich, executive director of Humanities Nebraska, a nonprofit that distributes about half of the money derived from the two funds, said his organization, as well as the Nebraska Arts Council, understand that they have to play a role when the state is short of funds.

But sweeping away the entire $15 million that the state has contributed since 1998 and leaving arts and humanities groups to beg for state funding every two years goes too far.

“We’ve been raising money for years with the trust and agreement that, ‘Hey, the state will match your donation,’” Sommerich said. “This is undercutting that trust.”

“Will people want their money back? Will they take us out of their wills? I don’t know,” he added.

The cultural endowment, which then State Sen. LaVon Crosby of Lincoln called her “most precious bill,” has been called a unique success story that has provided a steady stream of funding for a long list of arts organizations. They include the Omaha Symphony to the Museum of Nebraska Art in Kearney and libraries and historical societies from Alliance to Norfolk, Clarkson to Geneva and Eustis to Verdigre.

About 60 topics are available through Humanities Nebraska’s speakers bureau. Small grants between $180 and $800 finance expenses of speakers to travel to far-flung corners of the state to speak on topics such as Nebraska’s Czech and Irish immigrants, the Indian Wars and the state’s most famous authors and poets, as well as the state’s cattle industry and music heritage.

Former State Sen. Scott Moore, who was secretary of state when the endowment fund was created and now serves on the endowment’s board, said the goal was to “insulate arts and humanities from dependence on general fund [taxpayer] dollars.”

“In hard times, funding the arts is tough to defend when cutting programs for children and the elderly,” said Moore, who used to serve as head of the Legislature’s budget-writing committee.

To be clear, the privately funded portion of the endowment fund, the $21.5 million in donations, would still exist and would generate investment income for humanities and arts programs.

But the state-funded side of the fund, the $15 million, would go away and no longer produce investment income. It would be replaced, the Pillen administration says, by the general fund appropriation.

The problem is there’s no guarantee that $600,000 would be available each year, said Smith of the state endowment fund.

The Pillen proposal, which will be the subject of a Feb. 11 hearing before the Legislature’s Appropriations Committee, will hurt rural programs and smaller institutions the most, say advocates of the arts and humanities endowment program.

Unlike urban organizations and big-city museums, which have robust philanthropic communities from which to seek donations, small towns and rural cities often lack those kinds of donors.

“It’s the smaller organizations, the Midwest Theatre in Scottsbluff, or the library up in Norfolk, that don’t have that same corporate or foundation base,” said Mike Markey, executive director of the Nebraska Arts Council.

Smith said there’s plenty of success stories that grow out of the use of this money. She cited a literacy program in Lexington, which is now run by a woman who learned English by accompanying her child to the program.

In Norfolk, Smith said, a “Creative Aging in the Arts” program attracted senior citizens who drew and painted. Eventually, the would-be artists started socializing over wine after class.

“Pretty soon, they’re a community,” Smith said, “with a place to go and interesting things to do.”

Back when the program was launched, Crosby argued that without the arts, “our lives would be bleak and dull.”

Smith said the state arts and humanities endowment program has enjoyed bipartisan support for decades but now finds itself among the cultural programs nationally that are threatened.

Smith and others hope the Legislature reconsiders.

“We’ve never had this kind of pushback,” Smith said. “It’s shocking to anyone who has put money into this fund.”

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How The Endowment Works

Last year, investment earnings from the state portion of the Nebraska Cultural Preservation Endowment totaled $822,888, which Smith described as “a very good year” in the stock market.

Humanities Nebraska distributed 127 grants, most in the $180 to 800 range, for humanities speakers to appear at libraries, museums and churches across the state.

Other, larger grants helped arts, theater and history groups, and aided festivals such Fur Trade Days in Chadron, Gold Rush Days in Sydney and the National History Day.

The Nebraska Arts Council distributed grants to 24 entities.

Recipients included Omaha’s Joslyn Art Museum, Opera Omaha, the Crane River Theater in Kearney, the Nebraska State Poet program, the Lincoln Community Playhouse and the Carnegie Arts Center in Alliance.

Investment income from the state portion of the Nebraska Cultural Preservation Endowment is split 70% for the Arts Council, which is a state agency, and 30% for Humanities Nebraska, a private nonprofit.

Income from the private donation portion of the fund is split 50-50 between the groups.

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This story was published by Nebraska Examiner, an editorially independent newsroom providing a hard-hitting, daily flow of news. Read the original article: https://nebraskaexaminer.com/2026/02/02/unique-state-endowment-supporting-arts-and-humanities-programs-on-chopping-block/