KPFA LSB Debate On Lawsuits, Receivership & Take-overs

Pacifica Director’s Report for December 2020 by Grace Aaron on KPFK Financial Crisis


Serious revenue declines threaten the future of KPFK and Pacifica. Membership, listenership and income have been decreasing over many years as well as per day fund drive totals. This has been masked by lengthening fund drives and by greater and greater dependence on premiums not directly related to our programming. We are now at a crisis point. We are spending much more than we make.

On June 11, 2020 the Pacifica National Board agreed that expense cuts of at least 30% at KPFK were urgently needed and directed the KPFK GM and the Pacifica interim Executive Director to make those cuts as soon as possible. Although expense cuts of between $200,000 and $250,000 have been made, these cuts have not been adequate.

* Anita Sims, Pacifica Interim Chief Financial Officer, estimates that KPFK will spend $115,000 more than it brings in in income this month (December) and may not have enough money to meet its next payroll.

* KPFK has been spending between $70,000 and $90,000 more than it has been bringing in in income for the last several months.

* KPFK has had to borrow funds from other stations and units to meet its payroll several times in the last few months.

* In his most recent General Manager Report, Anyel Fields stated, “We closed our 2019-2020 fiscal year in September with a projected shortfall of $697, 577.”

* Mr. Fields also stated that KPFK income dropped by $1 million between the last fiscal year and the fiscal year that just ended on September 30, 2020. Income declined from 3.7 million to $2.7 million.

* KPFK owes over $300,000 to the National Office which imperils the entire Network. Pacifica owes NETA, the accounting firm that takes care of our financial reporting, about $200,000. This could mean that NETA will not be able to continue their work for us because they will be unable to pay their own staff. This would mean that our Audits, tax returns and other financial reports will not be done which could jeopardize our nonprofit status and violates the terms of our $3.2 million loan.

Pacifica no longer has reserves to cover KPFK shortfalls.

KPFK has a narrow window of time to maintain its independence. All efforts to improve KPFK income have either failed completely or been inadequate to make up for revenue declines. If action is not taken to reduce expenses immediately drastic measures very damaging to KPFK may take place.

Sharon Adams, KPFA Treasurer, stated at a recent National Finance Committee Meeting that any station that can’t pay its bills should lay off all of its staff and become a ‘repeater’ station.

I strongly urge you to read the June 11th motion that was approved by the National Finance Committee and then adopted unanimously by the Pacifica National Board and support its implementation:

Whereas: Currently the National Office has over $500,000 in
outstanding payables. We owe NETA $206,000 currently as of June.

KPFK was unable to make its payroll in mid-April. About $45,000 had to be taken from an Affiliate Program bank account to make that payroll.

KPFK is at least 5 months in arrears on its Central Service payments. It currently owes $184,000 in Central Service payments. The KPFK Business Manager stated on May 14th that up to the end of April 2020, KPFK listener support had declined by 11%, its total income had gone down by 22%, although its payroll had increased by 5%.

The KPFK Business Manager stated that this decline had very little to do with the Coronavirus epidemic as these numbers are mostly from before the lockdown.

In the last 2 months KPFK's income has declined precipitously. KPFK is currently bringing in only half the income necessary to meet its expenses. This means that KPFK is not able to make Central Service payments currently, is backlogging bills and is having trouble meeting its own payroll. KPFK's monthly expenses are about $300,000. KPFK's income has only been $150,000 per month for the last 2 months.

It is unclear as to whether Pacifica will receive any emergency stimulus loans or if there will be any other significant influx of revenue sufficient to make up for the heavy loss of KPFK Central Service payments.

Compounding this is the fact that every station, with the exception of KPFA, is seriously in arrears in its Central Service payments, with the possible exception of KPFT.

We have no reserves. If our financial situation deteriorates any further we may be forced to sell one of our buildings.

Therefore, be it resolved that significant expense cuts be made at KPFK as soon as possible. These cuts should be at least 30%. Expenses must be less than income as there are no resources to cover any shortfalls.

Further, all units (excluding the National Office) should provide a plan within 1 week to the NFC, the PNB, the Management Team and the iED that balances expenses and revenues if the units in the preceding six months have had expenses that exceeded revenues. (ie, if a station's expenses are exceeding its income by 10% the plan should show an expense decrease of 10%.)
As KPFK is currently running a $150,000 per month deficit, it is
absolutely urgent that expense cuts be made immediately at that station.
Other fundraising plans should be encouraged, but they would not be able to cover shortfalls of that magnitude. Thus, substantial expense cuts are unavoidable.

The full minutes for June 11, 2020 can be found at:

https://kpftx.org/archives/pnb/pnb200611/pnb200611_6596_minutes.pdf

In peace,
Grace Aaron, outgoing Pacifica National Board Director
(It has been my pleasure to serve on the Pacifica National Board for the last 5 years with many wise and dedicated Directors from our 5 stations and Affiliates. I resigned from the local and National Boards this week as our Bylaws prevent me from serving more than 5 consecutive years and resigning a little early gives me the option of running for the Board again next year.)