It was just a few years ago that the Children's Theatre Company of Minneapolis was reeling under the weight of multimillion-dollar budget deficits. The nation's largest theater for families recorded a $3.8 million shortfall in 2009 followed by a deficit of $2.2 million in 2010.

In response to its record levels of red ink, it cut its workforce by 9 percent (20 employees), suspended programming in its Cargill second stage and reduced its budget. The company also borrowed $2.4 million to cover its budget holes.

Now things have changed. The Children's Theatre has recorded operating surpluses of more than $270,000 for each of the past three years, even as it has been paying down its debt to the tune of about $145,000 a year. The theater intends to make a balloon payment in 2015 that will retire the debt in its entirety.

The company's budget has grown again, to $11 million, and it has launched a capital campaign to boost its endowment, now at $7.7 million, to $20 million by its 50th anniversary in 2015. And after being dark for the 2011-2012 season, the Cargill Stage is back in action, hosting a winning premiere of Lloyd Suh's "The Wong Kids in the Secret of the Space Chupacabra Go!"

In other words, the Children's Theatre, which won the regional Tony Award in 2003, has come into a happy patch.

"Every arts organization suffered in the recession," said Tim Jennings, managing director since 2011. "It happened in Seattle, where we lost a theater [Intiman], and it happened across the country." Instead of cutting as the economy tanked in 2008, CTC aggressively sought to build audiences, he said. It was a noble goal that contributed to losses.

Jennings and longtime artistic director Peter Brosius are credited with leading the turnaround. Former Board Chair Peter Carter, a partner at Dorsey & Whitney, and former Finance Chair Lynn Abbott, a vice president at Ameriprise Financial, also are recognized for leading the recovery effort.

"We asked a lot of questions that helped us to focus," said Abbott, who has been on the board for six years. "But this good news is a testament to the skill of the staff and management team at the theater. They are the ones who executed the vision and they are the ones who made sacrifices."

Ticket sales have helped. The Children's Theatre earns 60 percent of its income through receipts from the box office, costume rentals, royalties and other sources. Its holiday show last year, "Dr. Seuss' How the Grinch Stole Christmas," brought in $1.7 million and became the highest earner in the company's history. The previous season's holiday offering, "The Wizard of Oz," is the second-highest in its history, earning $1.6 million. The company has high hopes for "Cinderella," which previews Nov. 12.

The theater's success has helped position it for future growth. It has raised about $1.5 million this year to boost its endowment. That includes a portion of a multiyear $750,000 gift from the Pohlad Family Foundation.

"They've come a very long way in a short period of time," said Marina Muñoz Lyon, vice president of the Pohlad foundation. "They're pursuing diversified income streams in order to weather future storms. The art is strong, with shows that respect the ability of children to think deeply. And Peter's theatrical savvy is matched by Tim's abilities. That's a truly winning combination."