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The below Pacifica financial report was prepared by Joe Wanzala, Vice Chair, Pacifica National Board, Listener Representative, KPFA Local Station Board (with input from Jamie Ross, Pacifica National Board Treasurer and Listener Representative on the WBAI Local Station Board)

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SUMMARY:

Pacifica’s overall failure to meet our budget goals (this is for figures available through May 31) is due to a number of factors, primarily:-

1) overspending at KPFA and at WBAI on salary and related costs, and
2) lower than expected income at KPFA, WBAI and WPFW.

It's important to remember that KPFA and WPFW have cash in the bank, so they can lose money during a fiscal year and still not run out. WBAI of course does not have money in the bank, so WBAI's annual deficits have to be funded essentially by KPFA listeners and to some extent by WPFW’s listeners. However, at the rate they are going, WPFW is going to put a serious bite in their reserves this year.

WBAI has been in a tailspin for the past 4 years, the recent fund drive following management changes there has resulted in the first successful fund drive in that same period. If this positive trend continues, both WBAI and Pacifica as a whole may be able to recover financially but this will depend heavily on continued strong leadership'.

If KPFA and WPFW continue to underperform that will be a problem as well - though there is some margin for error. Things are tenuous everywhere, really.

But WBAI’s recovery is the most crucial step since WBAI has high fixed operating costs - i.e. the rent for their space on Wall Street and the rent for the transmitter on the Empire State building which drain the rest of Pacifica if WBAI does not bring in adequate money, which is what's been happening for several years now.

DETAILS:

1) Pacifica is not meeting this year’s budget goals - when I say Pacifica, I mean all the Pacifica stations, as well as the National Office, the Archives and the Affiliates program as a total consolidated unit. The consolidated statement for May says we are behind budget by about $740K.

2) The Audit and recent cash flow figures show a continued loss of cash: At end of fiscal 07 we had $2.1 million unrestricted cash, end of FY 08 we had $1.4 million unrestricted cash, (both these figures are from the recent audit); recent cash flow projects that by end of FY 09 we shall have $773K in unrestricted cash. So Pacifica’s unrestricted cash is trending downward.

3) Recent drives basically met budget goals at all stations save for WPFW. WBAI, which has been a drain on the foundation for the last four years, exceeded budget goals in the most recent fund drive by $135k (this is what was pledged, what actually come in remains to be seen). This is a really significant change from the trend over the last four years and can be attributed to management changes made by the interim Executive Director Grace Aaron and the efforts of the
staff at WBAI working with interim General Manager Lavarn Williams who is doing double duty as interim Chief Financial Officer of Pacifica.

4) KPFA as of May 31 is running a deficit of over $300K. This is due to underperforming revenue - that is, listener support and donations and overspending on salaries. As far as I know, the staff cuts upon which the budget is based have not yet been made.

We have to assume that in the current economic climate, listener support will stay flat, and adjust our budget goals and operating structure accordingly. We also have to increase listenership, but also give our existing listenership more reasons to remain loyal and to support Pacifica in this tough economic environment. We should also keep in mind that even though National Public Radio has seen record listenership, there has been no corresponding increase in listener donations. So increased listenership does not necessarily mean more listener donations. Furthermore, if Pacifica cannot control, and
ratchet down, its operating costs, then increased listener donations will not necessarily mean financial stability for the Foundation.

5) In order to shore up its cash flow Pacifica took out a line of credit that was secured by a KPFA bank account. This line of credit is due to be repaid to Wells Fargo by August 1. The source for repayment of this line of credit is not is not clear. One theory is that the funds in the KPFA account will be used to repay the line of credit - this is obviously not something that the KPFA LSB would support, because Pacifica had to get the line of credit in the first place because WBAI and KPFK were not making central services payments to the national office last year.

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Chandra Hauptman