The No Beast Feast Art of Photography
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Middleburg’s Only Locally Owned and Operated Newspaper
Volume 3 Issue 8
www.mbecc.com
Mo Dana’s Legacy
Page 3
November 23, 2006 ~ December 13, 2006
Middleburg Sees Red Preliminary Audit Warns of Deficits, Misspent Funds, Inadequate Budget Oversight & Control
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Daniel Morrow
What’s Happening in Willisville? Page 7 Senator John Warner Honored Page
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t the Thursday, November 9, Middleburg Town Council meeting, Town Auditor and Leesburg CPA Jeff Mitchell delivered what he termed “a little bit sobering” preview of his forthcoming audit of the town’s financial records for the fiscal year that ended June 30, 2006. There was no evidence of fraud or embezzlement, he noted, but, on the other hand, in one year, the Town had spent itself deeply into the red and spent proceeds from bonds issued by the Virginia Municipal League for “operations” rather than for capital investment, “the purpose of the borrowing.” Both missteps, Mitchell suggested, could have serious legal as well as financial consequences. Mitchell also called on Town Council to take immediate steps to establish more effective budget oversight and control. “We simply weren’t monitoring our spending to the budget that had passed,” he warned Council. “I would just like to emphasize that that is SUCH an important function for local governments . . . to review your budget in relationship to what you’re spending.” The Good News
Mitchell began his “preliminary” audit report by noting, “We found, generally speaking, your books and records to be in order; funds accounted for.” “If there were issues we felt were irregular, or some sort of defalcation [embezzlement, theft or misappropriation of funds] we would immediately communicate to your Mayor,” he continued. “There were no instances; there were no issues.” On the other hand, Mitchell’s audit brought to light other significant “issues,” he described as “not easy” and requiring immediate action by the Council. Issue I: Middleburg’s General Fund Deep in the Red The Town Auditor’s first concern was Middleburg’s “negative general fund balance.” Mitchell made clear that the Council should focus on both the legal and financial implications of such a
deficit. “Ms. Whiting is here, your legal council, is here,” he noted, “and she will advise you at the appropriate time what the issues are with that. But that’s a HUGE issue . . . to have your general fund have absolutely no surplus and be in a deficit position.” A cash shortage had already forced the Town to float and emergency loan from Middleburg Bank to pay its bills. A balanced town budget is required by law in Virginia. A Budget Primer - The Three Funds Generally speaking, Middleburg’s Town Government pays its bills from three different “pools” of money, three “funds,” each roughly similar to a checking account. They are: 1. The “General Revenue Fund” (where tax money is deposited and most operating expenses are paid.) 2. The Health and Special Revenue Fund (a restricted, mostly charitable-use fund, which receives revenues from the Town-owned “Health Center Building” (which houses, among other things, police headquarters), and from “Pink Box” proceeds (funds raised by and for the town’s visitor center) 3.) The Water/Sewer fund (where proceeds from water and sewer bills are deposited, and related operating expenses are paid.) The Cash “Issue” On June 30, 2005, the Town of Middleburg had $624,000 “in the bank” in fund number 1, its taxbased “General Revenue Fund.” By June 30, 2006, that fund was $94,000 in the red, a negative change, in the course of one year, of some $718,000. Fund 2, the “Health and Special Revenue Fund” (with a surplus of just under $20,000) and Fund 3, the “Water/Sewer Fund” fund (showing a surplus of just over $76, 000) helped offset the “General Fund” shortfall . . . but only a little. Bottom line: The Town’s cash and readily accessible investment assets, in total, declined more than $623,000 in the course of a year.. Mitchell described the problem, with an accountant’s understated precision, as “a substantial drop in your cash position.” The Equity “Issue” Similarly, the Town’s total “equity” (that is, what’s left over after subtracting debts owed by the Town from the total value of its cash and other assets)
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Stradivarius Takes Flight With Sheila Johnson and Smithsonian
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ntonio Stradivari could not have imagined that the decorated and matched string instruments he crafted so carefully would require a private jet to be moved to a leading university for an exhibition and a concert in the early 21st Century. Stradivari, who lived from 1644 to 1737, created his string instruments in Cremona, Italy. Of the 1,000 instruments he created in his lifetime, the Smithsonian Institution owns what are believed to be the only surviving set of his decorated string instruments. The Smithsonian was pleased to lend the instruments to the University
of Illinois at Champaign/Urbana for an important musical celebration. The curators were not, however, pleased to entrust the instruments to a commercial airline for the trip. When Sheila Johnson, co-founder of Black Entertainment Television (BET), and an accomplished violinist who studied at the University of Illinois as a music education major volunteered her private jet for the trip to and from Illinois, the Smithsonian, the University of Illinois and the music curators whoa responsible for the well-being of the collection were all delighted. Johnson, who taught violin to hundreds of children in the Washington, D.C. area, invited Susan Starrett, her music teacher, to accompany her and the Strad collection on the trip.
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