What's really happening with KPFA's finances?

newsflash: Arlene Engelhardt [Pacifica Executive Director] and LaVarn Williams [Chief Financial Officer] will be on the Morning Show next Tuesday shortly after 7:15. They will talk more about this budget.
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Many have asked for a report on what went on at the LSB mtg on 10/16/10.
There are audios of the meeting at http://www.kpftx.org/archive.php#kpfa101016
Scroll down that page to
Pacifica National Board
KPFA Local Station Board
Saturday, October 16, 2010

The significant discussion at that meeting was about the budget. Below is a summary of this discussion, including the budget motions that the LSB passed and an explanation of all of this as well as the motions that were then submitted to the National Board's National Finance Committee.]

At the October 16th KPFA LSB meeting the LSB members were presented with 3 different budgets: one was prepared by the board treasurer, Simon Pius, one by Maria, the KPFA business manager, and one prepared by Brian Edwards Tiekert (BET), along with some of the unionized staff at KPFA. The most sustainable of the 3 budgets was the one presented by Simon but the “Concerned” Listeners (CL) were in the majority at the meeting so the one that was approved was the one sponsored by BET & Co.

Along with approving the budget the CL majority at the meeting passed four motions, also introduced by BET, that were then presented to the Pacifica National Board's National Finance Committee (NFC) which, thankfully, voted against all four of them.
The backlash of this at KPFA resulted in the misleading KPFA “news” broadcast that was aired on last night's 6pm news hour [10/21?] and again today during the noon news highlights [10/22?]. (Please note that no one from the NFC was interviewed on by KPFA news to explain why they voted against the 4 motions below. And this is considered fair and balanced reporting?):

But, first some history and some explanations:
KPFA should have 2 million dollars in the bank. It doesn't. Here are the reasons:
KPFA lost the first million due to a 15-20% drop in listener donations in the last 3 years. Bad economy. And maybe also poor-mediocre outreach, no development director and flat, uninspiring programming. Expenses didn't decline and left KPFA with a 1 million dollar deficit. This also resulted in the depletion of KPFA's reserves of $780,000.

The second million left KPFA some time ago, under the auspices of some of the CL leaders, including Sherry Gendelman, Dan Siegel, Bonnie Simmons and, of course, Brian Edwards Tiekert, who was the LSB treasurer for the years 2007-2009, working in collusion with the former Chief Financial Officer (CFO) Lonnie Hicks. (This was during a time when the PNB mandated that all 5 stations cut their budgets by at least 20% to keep the stations and the Network sustainable.) Four of the five stations made the budget cuts but KPFA did not. Instead, KPFA continued to maintain a paid staff of over 32 full time equivalent (FTE) positions, now reduced to 28 FTEs within the past year, while the two other large stations (WBAI and KPFK) reduced their staff to about 23 FTE's, and the two smaller stations (WPFW and KPFT) made substantial staff reductions as well.)

This second million was transferred to prop up WBAI, through a series of transfers facilitated by then CFO Hicks, at a time when Bernard White was running the show at BAI, until he was finally forced out in 2009 by former interim Executive Director, Grace Aaron. WBAI is still struggling but, after a big round of layoffs, it is getting closer to at least breaking even.

The above-referenced KPFA revenue and reserves were depleted in the years when the "Concerned" Listeners had majority control of the KPFA LSB. This is the same group that now expresses so much “concern” for the jobs of KPFA staff members; jobs that could be preserved had CL not taken the actions they did. BAI can't afford to pay back KPFA, nor can KPFA continue to pay for all of the staff still on payroll. Staff cuts must be made in order to balance KPFA's budget and to make it sustainable.

So, it was in this climate that the LSB passed BET & Co.'s four motions below at it's meeting on October 16th, when the CL faction was in the majority. The below four motions were then presented to the NFC by Tracy Rosenberg, on behalf of the [majority vote of the] KPFA LSB, and they were all defeated.

BET & Co. motions:

Resolution #1: Pacifica Rent
WHEREAS, the Pacifica National Office is housed in a building (1925 Martin
Luther King Jr. Way) which KPFA purchased, paid off, and renovated with its
own money; and
WHEREAS, the Fair Market Value of finished office space in downtown Berkeley
exceeds $3/square foot/month, but Pacifica National pays no rent for its use
of KPFA’s building; and
WHEREAS, KPFK has had its Central Services reduced from 19.5% to 18.5% for housing another national unit, the Pacifica Radio Archive, in its building; and
WHEREAS, KPFA now finds itself in economic difficulties and can no longer
afford to subsidize the operations of the Pacifica National Office more than other stations; therefore
BE IT RESOLVED that KPFA’s Local Station Board calls for KPFA’s Central
Service Assessment to be reduced to 18.5%; and
BE IT FURTHER RESOLVED that KPFA’s Local Station Board calls on its
representatives on the Pacifica National Board to propose, and vote in favor
of, such a reduction in KPFA’s Central Services

Resolution #2: Repayment of KPFA Debt to Pacifica National
WHEREAS, as of September 30th, 2010, KPFA owed approximately $255,000 to the
Pacifica National Office; and
WHEREAS, as of the same date, the Pacifica National Office was holding
roughly $150,000 of KPFA’s funds as collateral for a Line of Credit used by
the National Office, and
WHEREAS, KPFA’s audited balance sheets show the rest of the network has owed KPFA at least $1.4 million since at least 2004; and
WHEREAS, making $255,000 of permanent staff cuts in order to make a one-time payment to the Pacifica National Office could destabilize KPFA, and undermine its ability to fund raise on an ongoing basis; therefore
BE IT RESOLVED that the KPFA Local Station Board asks that the $150,000 of
its funds currently being held by Pacifica National be credited against its
debt to Pacifica, and
BE IT FURTHER RESOLVED that the KPFA Local Station Board resolves to repay KPFA’s remaining debt to Pacifica National evenly over the course of three fiscal years, such that the payment in any one year shall be roughly $35,000
BE IT FURTHER RESOLVED that KPFA’s Local Station Board calls on its
representatives on the Pacifica National Board to vote in support of these
repayment plans during budget discussions at the Pacifica National Board.

Resolution #3: Pacifica National Board Meeting Expenses
WHEREAS, as of August 2010, income statements from the Pacifica Foundation
indicate it had spent more than $80,000 on expenses associated with the meetings of the Pacifica National Board
AND WHEREAS, it is reported that the final meeting of the Pacifica National
Board in Fiscal Year 2010 cost an additional $34,000
AND WHEREAS, KPFA and Pacifica are both facing fiscal crises; with Pacifica
hundreds of thousands of dollars behind on bills from national program
providers like Democracy Now!, and with KPFA considering drastic staffing
reductions that would impact on-air programming;
BE IT RESOLVED, that the KPFA LSB calls on the Pacifica National Board to suspend all in-person meetings until the present financial crisis has passed, and to return whatever portion of the savings it can to the five Pacifica Radio Stations.

BE IT FURTHER RESOLVED that the KPFA LSB calls on its representatives on the Pacifica National Board to propose, and vote for, a suspension of all in-person PNB meetings until the present financial crisis has passed.

Motions presented to the NFC by Tracy Rosenberg on behalf of the [majority vote of the] LSB:

Motion #1: “The NFC recommends to the PNB: Spread out repayment of the unpaid central services KPFA owes Pacifica National from fiscal year 2009-2010 over the next three years – for a savings of roughly 1.25 FTEs." (Failed 1 for, 9 against). (Note: KPFA has not paid any central services to the national office since April. The national office needs central service funds in order to run the foundation and to pay our vendors such as Democracy Now and Free Speech Radio News, among others).

Motion #2: "The NFC recommends to the PNB: Suspend KPFA’s payments to replenish the national Heath Endowment fund – for the savings of roughly 0.5 FTEs" (fails 0 for, 10 against)

Motion #3: "The NFC recommends to the PNB: Suspend all in-person meetings of the Pacifica National Board, and return 1/5 of the of the savings to each of the five Pacifica stations, for a savings of roughly 0.4 FTEs." (Fails 0 for, 9 against)

Motion #4: "The NFC recommends to the PNB: Reduce KPFA’s Central Service Assessment by one percentage point to 18.5% in exchange for KPFA housing the Pacifica National Office." (Fails 4 for, 4 against, 2 abstentions).

(Note by CH: I think this is the one motion that is reasonable. The national office is housed next door to KPFA in office space owned by KPFA but has never paid KPFA any rent for the use of this office space.)