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Legislative auditor: Not clear how much 2013 Arts Board money Minnesota Orchestra can use

The review says the Orchestra, complied with the law for Arts Board money received from 2010 to 2012 but says its unclear whether this year’s grant will have to be returned.

A review by the Legislative Auditor’s Office (PDF) of the Minnesota Orchestral Association’s use of state money finds that the orchestra followed the law for grant payments in 2010 to 2012 but notes that it’s uncertain how much of the 2013 grant, worth $961,888, can be used.

The Minnesota Orchestra locked out its musicians last fall in a labor dispute, and 100 state legislators in March asked for the Legislative Auditor’s review of state funds used by the orchestra.

The LAO review had four conclusions:

1. 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.

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2. 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.

3. 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.

4. 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.