Legislative Auditor says Minnesota Orchestra acted properly in securing tax dollars

The state Legislative Auditor's Office has found no improprieties in how the Minnesota Orchestra Association used state money – both general operating funds and a $14 million bonding grant to help complete a renovation of Orchestra Hall.

The report, issued Thursday, said the orchestra complied with legal requirements concerning grant money received from the State Arts Board from 2010 through fiscal 2012.

The Arts Board and the orchestra will need to determine what expenses can be paid in 2013, in compliance with the requirements of the grant. This year, the orchestra received $960,000 from the Arts Board.

Concerning the remodeling of Orchestra Hall, the auditor said, "We did not identify any payments for costs that did not comply with applicable legal requirements." The organization received $14 million toward the $52 million project, which is scheduled to be finished in August.

The report, instigated at the request of 100 DFL legislators, also studied the testimony of orchestra president Michael Henson in 2010, as he sought the bonding money for the project. Legislators had expressed concerns that Henson gave too rosy a picture of the organization's finances. At the time, Henson said the orchestra had balanced its budgets for the three previous fiscal years and was facing the economic downturn with stability. Financial reports showed that the orchestra had made $5 million in cuts and was drawing higher-than-normal funds from its endowment to balance those budgets.

"While noting his testimony about the association's financial condition was limited and generally positive, we do not offer a judgment about what Mr. Henson should have said or what legislators should have asked," the report said. "Furthermore, it is not clear how a more complete – and less positive – presentation about the association's financial challenges would have affected the association's request."

In an interview, Legislative Auditor James Nobles said organizations seeking state money have varied approaches – sometimes pleading poverty, sometimes arguing that finances are robust.

Musicians, who are locked out in an ongoing labor dispute, focused on the Henson angle in their response.

The report concludes that "Mr. Henson and management have not been forthcoming about their alleged financial situation with the public, just as they have not been honest with the musicians," said Tim Zavadil, chair of the musicians' negotiating team, in a statement.

Management was pleased with the report.

"We are very pleased the Legislative Auditor's review has confirmed that the Orchestra has used its public funding in compliance with the state's expectations," said board chair Jon Campbell, in a statement.

Board member Doug Kelley said he hoped the auditor's report would "remove one of the musicians' impediments to negotiations.