Originally posted March 16, 2015
Berkeley-“I’m not even thinking about the FY 2014 audit”. Those were the words of Pacifica’s auditor on March 10, 2015 at Pacifica’s audit committee. The audit he is not even thinking about is due to the Corporation for Public Broadcasting on April 17, 2015, so the nails in the coffin on Pacifica’s dwindling chances of being restored to Corporation for Public Broadcasting funding eligibility just got hammered shut.
The draft of the long-delayed FY2013 audit was approved by the audit committee more or less sight unseen, as changes were agreed upon and the draft audit approved before the changes were made and before back-up documentation requested by the committee were provided. The committee approved the audit by a razor thin 7-6 margin. The document, which will be released to the public after the sight unseen changes are made, posts a $2.8 million dollar annual loss, punctuated by some strange accounting maneuvers that include:
- Accruing $658,000 in expenses on the 5-year Democracy Now contract that expired October 1, 2012 before the fiscal year began
- Wiping pledges receivables to a mere $31,000 network wide(with KPFA in the middle of a fund drive that began September 23rd, the Berkeley station alone had more than $31,000 in pledges made but not paid at September 30)
- Muddling interorganizational debts with the preposterous claim that Texas station KPFT owes $504,000 to the other stations (it doesn’t)
- Dropping $1.4 million in income network wide from the number provided to the IRS on the 990 form. ($13,199,249 on the tax return and $11,740,124 on the audited financial statement).
Pacifica’s FY 2013 year was expected to show a large loss as the WBAI layoffs occured in July of 2013, 10 months into the fiscal year, despite clear evidence that revenue did not exist to meet that payroll, but it’s clear the auditing process mostly consisted of trying to generate as large a loss in the 2012-2013 fiscal year as possible. Despite all the effort, Pacifica’s largest loss in recent history remains the 2009-2010 fiscal year.
When the auditing firm was asked about the discrepancies, their response was “we are prohibited from commenting on inquiries without specific authorization from the interim executive director and the CFO”. The auditing firm is hired by the board of directors, not by Pacifica management, and their job is to investigate the veracity of the financial information issued by the nonprofit.
In a previous Pacifica in Exile newsletter, we provided an email from AM host Sonali Kolhatkar written in August of 2014 begging Pacifica management not to loot the bank account where the proceeds from her Indiegogo account were stored. Kolhatkar’s entreaties were in vain. A month later, Pacifica’s bank statements reveal $23,010 was removed from the account and transferred to Pacifica’s national operating account (to pay KPFK’s health benefits (as helpfully noted on the bank statement) followed by another remaining $8,224 the next month to pay a telephone bill. This latest mishandling of restricted funds (similar transfers are documented in June of 2014 from another restricted account) continue the rogue board pattern of snatching funds willy-nilly from any available source.
Almost a month after the “redone” selection process for an executive director for Pacifica, nothing has been announced and it appears the board’s second candidate of choice is not eagerly jumping into the position either, since being notified 3 1/2 weeks ago of their selection. The board has been trying to fill the position for a year.
National board member and KPFA delegate Jose Luis Fuentes, the former Siegel and Yee associate attorney who replaced his former boss Dan Siegel on the Pacifica National Board, has relocated to Los Angeles. Fuentes has not stated whether he will resign his position on KPFA’s local station board due to working and residing in Los Angeles (Fuentes recently accepted a position at the National Lawyers Guild LA office). If he remains, he will be the third Save KPFA-affiliated delegate on KPFA’s “local” board to reside more than 400 miles from the station. KPFA local board members Kate Gowen and Burton White reside in the state of Oregon.
Pacifica in Exile readers may write to the board at pnb@pacifica.org.
Pacifica In Exile will be featuring station by station financial discussion in upcoming weeks and we want to assure readers located outside of Northern California that the other signal areas will be fully covered. This particular issue will focus on Berkeley’s KPFA-FM. Other upcoming issues will focus on the other 4 station signal areas.
KPFA’s winter fund drive concluded in Mid-February with total pledges of $544,000, the lowest total in many years. A review of the last five years of fund drive results finds the highest totals in February of 2011, followed by May of 2011 ($719,000 and $712,000 respectively). The lowest totals were booked in February of 2015 and February of 2014 ($544,000 and $597,000 respectively).
KPFA has historically had financial problems when the station’s payroll and benefits (by far the largest expense) have approached 2/3 of total revenue, instead of the safer level of 50-60% of total revenues. This level was maintained in 2011 when the station’s ratio was $3.47M/$1.85M or 53%. It has started veering out of control again recently with a $3.03M/$1.98M or 65% ratio, similiar to the station’s predicament in 2010 when it was carrying a $2.2 million dollar payroll on income of $3.5 million, a 64% ratio.
The station’s problems were recently exacerbated when it reportedly had to refund a $50,000 donation in January 2015, after an elderly donor’s family showed up with a power of attorney and indicated dementia had caused the donor to remit the entirety of their annual living expenses to the radio station.
As the year-end process draws to a close, several financial allocations at the station appear troubling. Much-discussed Comnet Marketing Group, aka the “Tea Party Call Center” run by rightwing political consultant Bruce Hough in Southern Oregon, received a whopping $52,893 between June of 2014 and January of 2015.
Both temporary executive director Bernard Duncan, CFO Raul Salvador, and other national office staff drew checks directly from KPFA’s operating account in 2014, although they were employed by the national office. Several other checks dispensed to employees, including reimbursals of overpaid payroll, do not have clear explanations and local and national boards have been nonresponsive to inquiries.
In 2012-2013, $13,519 was directed to Martin and Associates Investigators, an Oakley California based private investigation firm. Questions to the local and national board about what was being investigated have not been answered. It’s possible the unbudgeted expense was for surveillance cameras installed after the Communications Workers of America bargaining unit filed complaints in 2012-2013 about unpaid programmer JR Valrey whose allegations of racist attitudes at the station and calls for a picket at a KPFA community event upset some of the station’s paid workers.
What is clear from the numbers is that KPFA, as with the other four Pacifica stations, has been financially destabilized by the loss of Corporation for Public Broadcasting funding caused by the rogue board’s lackadaiscal attitude toward getting annual audits done on time.
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Started in 1946 by conscientious objector Lew Hill, Pacifica’s storied history includes impounded program tapes for a 1954 on-air discussion of marijuana, broadcasting the Seymour Hersh revelations of the My Lai massacre, bombings by the Ku Klux Klan, going to jail rather than turning over the Patty Hearst tapes to the FBI, and Supreme Court cases including the 1984 decision that noncommercial broadcasters have the constitutional right to editorialize, and the Seven Dirty Words ruling following George Carlin’s incendiary performances on WBAI. Pacifica Foundation Radio operates noncommercial radio stations in New York, Washington, Houston, Los Angeles, and the San Francisco Bay Area, and syndicates content to over 180 affiliates. It invented listener-supported radio