Vandalia consults with Ohio Auditor of State on arts funds question

     The City of Vandalia has turned to the Ohio Auditor of State’s Office for assistance in creating a process to better administer revenues and expenditures in its Cultural Arts and Public Art in Vandalia funds. Earlier this year City staff became aware that its current policies regarding the arts funds might not conform to State regulations, and proactively contacted the Auditor of State’s office for advice.

     “The City currently has two arts funds being held by the Vandalia-Butler Foundation—a fund of the Dayton Foundation,” said Jon Crusey, Vandalia city manager. “We’re looking at how we classify and process expenses and donations related to the Cultural Arts Fund and the Public Art in Vandalia Fund.”

     Both funds were created by Vandalia City Council, and have been the recipients of annual donations by the City, as well as outside contributors. The Vandalia Cultural Arts Endowment Fund was put in place in 2001; the Public Art in Vandalia Program Endowment Fund was created in 2008.

     “The bottom line is that it appears that we may not have been reporting these expenses in a manner that conforms with the State’s strict standards for public funds,” Crusey said. “Our desire to identify and correct any possible errors in our process is why we’ve initiated this review.”

     Based upon a review of the Cultural Arts Fund and Public Art in Vandalia Fund agreements by the City’s Law Director, and upon concurrence from the State Auditor’s Office, it was determined that Cultural Arts Funds are classified as “public funds” held for a public purpose and as such are subject to the strict municipal accounting regulations. The Public Art In Vandalia funds, on the other hand are classified as “private funds” to be used for a public purpose and therefore not subject to the stricter municipal accounting laws and regulations. The distinction between private and public funds lies with the ability of the City to have the fund balance returned to it, and the degree of control over the use of the funds.

     The Vandalia Cultural Arts Program (VCAP) Fund was established to exclusively benefit the City of Vandalia and its residents by providing revenue to support artistic and cultural activities, programs, performances and organizations.  Funds have been used to support organizations and projects such as the Vandalia Youth Theatre; performances in our schools by the Dayton Philharmonic Orchestra, Towne Hall Theatre and the Dayton Opera and the Vandalia Senior Citizens. The fund’s advisory committee, comprised of members who either live or work in Vandalia, considers grant requests and cultural arts projects to support. This fund can be revoked by the City at any time.

     The Public Art in Vandalia (PAIV) Fund was created in 2008 to enhance neighborhoods and urban environments in the City of Vandalia through the installation and maintenance of permanent works of art.  Funds have been used to bring about Chiseled: A Stone Sculpture Symposium, which celebrated Vandalia’s fiftieth anniversary in 2010; Heavy Metal Remix metal sculpture symposium, and various other efforts at Vandalia Art Park. This fund was set up in a manner to assure funding for the program and while the uses of the funds are restricted and limited to the City’s public arts, the principal balance of the fund is not revocable at any time by the City.

     Both funds are held by the Vandalia-Butler Foundation—a fund of the Dayton Foundation, calling into question the classification of the funds, and Vandalia’s obligations regarding the level of its control of the accounts, auditing of the funds and investment of the monies.

     Crusey noted that the Cultural Arts Fund is the only municipally-owned fund on deposit with the Foundation.

     “Once City staff recognized that there might be an issue in the administration of these funds, we reached out to the Auditor of State’s office for assistance,” Crusey explained. “We’re currently working with the auditor to create a process that conforms to the State’s reporting standards.”

     Crusey said that the City of Vandalia took the initiative to resolve this issue because transparency and accountability are of utmost importance.

     “Our Finance Department has received the Ohio Auditor of State Award with Distinction in financial reporting for 26 consecutive years,” Crusey said. “We take our obligation as a steward of public monies very seriously, and want to be sure our policies and procedures follow State guidelines.”