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Pacifica's present financial situation
Max Blanchet's analysis of Pacifica's's financial data shows the ups & downs of its treasury and predicts more trouble ahead, now that the Pacifica National Board did not renew the contracts of Executive Director Arlene Engelhardt and Chief Financial Officer LaVarn Williams. Their cost cutting measures brought positive results, but these will now be abandoned by a new alliance on the board, whereby - if it remains the majority - the network will be "on its way to bankruptcy hell".
A Few Comments on the Financial Crisis at Pacifica
As illustrated in the attached chart, I have kept track of the yearly changes in Pacifica's cash position from 2001 using data from the audit reports.
Column A lists the years from 2001 until 2013. Column B lists the actual changes in Pacifica's cash position in current dollars as reported in Pacifica's audit reports for 2001-2011. Column C lists these changes adjusted to 2012 dollars using the CPI deflator from US Department of Labor statistics. Column D accumulates the entries in Column C for 2006-2013. The entries in Column C for 2012 and 2013 are straightforward mathematical extrapolations of the data for 2006-2011.
Negative in 2001, the change in cash position remained positive from 2002 until 2007 and became negative from 2008 until 2010. After a positive change in 2011, it is extrapolated to be -$437,785 and -$496,185 in 2012 and 2013 respectively.
The cumulative change in cash position is projected to be -$2,334,292 for the 2006-2013 period in 2012 dollars.
How did Pacifica get into the mess it is in today? Prior to fiscal year 2008-2010, the big problem was at WBAI where bad management and equally bad programming depleted the finances of the station and made it impossible for it to meet its obligations towards the National Office. Effectively, WBAI was being subsidized by Berkeley, Los Angeles, Washington and Houston. This was compounded by the inability of the Pacifica National Board (PNB) to correct the situation there due to political collusion between an irresponsible majority on the PNB and an equally irresponsible and incompetent management team in NYC. [ Note: the "Concerned" Listeners/ "Save" KPFA was part of this majority. Also involved was the limited capacity of the network to behave as a truly unified entity especially with regard to accounting, financial and budgetary matters.
Starting with fiscal year 2008-2009, the recession hit all stations very hard with the end result that except for KPFK and KPFT the stations in DC and Berkeley --NYC was already insolvent—became insolvent due largely to their inability to cut costs and live within their means. This was particularly acute in Berkeley, the last financial pillar of the network to fall into insolvency following the frittering away of $1,000,000 in financial reserves.
Notwithstanding the cuts --substantial and painful as they may have been-- made here at KPFA and elsewhere in the network in the last two years we are still headed for trouble as evidenced by the projections made by National Office for Fiscal Year 2012. It is projecting a loss of $700,000.
To compensate for that loss, National Office recommended additional cuts amounting to $1,000,000 over the next 12 months across the network.
Following the PNB’s decision in July not to renew the contracts of the CEO and CFO it is doubtful these cuts will be implemented, leaving Pacifica in financial limbo on its way to bankruptcy hell!
I hope this analysis will help people focus their minds as to what needs to be done urgently to insure Pacifica's survival as a unified entity still faithful to its original mission.
THE HOUR IS VERY LATE !
Please join KPFA with a membership of $25 or more, or 3 hours of volunteer work. Then you will be able to vote in the upcoming election, and help vote out this slight majority which has caused so much damage to the station and network!