|Financial Audit Division Report 13-10||Released June 13, 2013|
In response to a request from legislators, the Office of the Legislative Auditor (OLA) conducted a special review of money the State of Minnesota provided the Minnesota Orchestral Association in fiscal years 2010 through 2013. The state money included grants from the Minnesota State Arts Board for the association’s general operations (as well as other targeted purposes) and bond proceeds for costs related to the renovation of Orchestra Hall. Legislators expressed concern that this investment of public money is threatened by a protracted contract dispute between the association and the orchestra musicians. The association instituted a “lockout” of the musicians in October 2012, and the contract disputes remains unresolved.
Based on the scope and objectives of our review, we reached the following conclusions:
The Minnesota Orchestral Association complied with applicable legal requirements related to the grant money it received from fiscal year 2010 through fiscal year 2012 from the Minnesota State Arts Board.
It is uncertain how much money the Minnesota Orchestral Association will be allowed to use from its 2013 Minnesota State Arts Board grant. It is also uncertain which costs may be paid with 2013 grant money. The terms of the grant agreement may allow the association to use money for costs it incurred during the time the Minnesota Orchestra did not perform due to the association’s “lockout” of the orchestra musicians. The association and the Minnesota State Arts Board have different interpretations of which costs are eligible for reimbursement under the 2013 grant agreement.
The payment process for the costs related to the Orchestra Hall renovation project included adequate internal controls to ensure that money appropriated from the Bond Proceeds Fund was used in accordance with applicable finance-related legal requirements. We did not identify any payments for costs that did not comply with applicable legal requirements.
In his testimony to legislative committees in 2010, the president of the Minnesota Orchestral Association made brief and generally positive remarks about the association’s financial condition, and legislators did not ask for additional information. While there are indications that the president and some board members had significant concerns about the association’s financial condition, it is not clear that a presentation of those concerns to legislative committees would have affected the Legislature’s decision to support the Orchestra Hall renovation project.