Home > Financial Information > CFO Report to Community

PACIFICA FOUNDATION
CHIEF FINANCIAL OFFICER REPORT

There are several aspects to highlight this month.

Budget Matters

Summary Points:

1. We are on pace to achieve the one month proviso as a Network, however that is not true for several stations which are generating financial plans to achieve the goal of achieving a balanced budget by the end of this fiscal, or in the case of KPFA, next fiscal.
2. I have indicated that we may have the challenge of a financial perfect storm approaching. Much depends upon how well we can plan to ward off certain financial issues.
3. We are, as all know, moving into a transition period with our Executive Director leaving, a departing general manager at WBAI, several stations having to regroup financially and new stirrings from the CPB and the right on the horizon. These next 90 days are crucial for us to manage our way through to the other side. These were detailed to the Board at the last Board meeting. Hopefully, we can start the process of implementing those critical items.

Expense Forecast Summaries

February 2005 Forecast

March 2005 Forecast

What are the differences?

1. KPFK is projecting less reserves--down to 87K from 144k due in part to reductions in the estimates on the spring drive revenue (spring drive numbers are often less than winter ones) but also because some new expenses may arise in the union contracting process. The caution here is that if the next drive is not as successful as the first two, then even the 87k could quickly disappear.
2. KPFA is now projecting a smaller variance (77k-to 71K) but the issues there are complex. In order to reduce the variance the station is adding on extra days to its spring drive projections and having to utilize funds from prior fiscal year (cash on hand) of approximately 581k to make ends meet. The good news here is that “A” had 752k in cash on hand at the beginning of the fiscal year. A good part of the salary overspending derives from one-time expenditures (having two GM salaries for part of this year) will not be present next year. I expect “A” to muddle through this year and do better next year. Finally, it appears KPFA’s one month budget requirement was overstated by 77k. Therefore, the case can be made that in fact the station has met its one month reserve requirement. Finally, “A” is planning to present a cost reduction plan for next fiscal.
3. WBAI has increased its negative variance to 86k due to unexpected expenses. But things are still in flux there and I think that much depends on the next drive which has a target of 1.1 million. As usual with “I” there is the need for diligence. If the revenue picture goes south then there will be a need to look at expenses.
4. PRA’s forecast is unchanged since last month.
5. The National Office has little change in its forecast, and, has the prospect of gaining even more of a positive variance due to planned fundraising efforts. However, these are not currently in place thus a conservative estimate is what I have gone with here.
6. KPFT’s break even projection is dependent upon a plan by management and the KPFT Board to raise 149k over the next six months. Again, the over-all problem is deeper—that of a reduced listener ship. The station has responded with some new program changes and time will tell if this will help matters. Kudos’ to “T” for responding to the needs of the station and moving ahead.

To summarize:
We will have to decide whether or not to recommend a waiver for stations (WBAI-83k, KPFT—its 149k plan and KPFA’s plan as part of this budget approval process.

Other noteworthy items:
Variance notes have been added to line item and net changes in dollars are now being computed from month to month. In this way we can see what changed and why.

Strategic Issues

This section is repeated from last month’s report but is still relevant. Larger trends are impacting public and membership-based radio in general and Pacifica specifically. We have, as a network, developed three drivers which has sustained us over the years despite trends in public radio which show declining listener ship. Pacifica’s drivers, in my view, after having looked at the financial data over the last 15 years, have been three in number:

A. Crisis Driven
When ever there has been war, an international crisis or even our internal crisis over the last 4 years or so, the listener ship has responded and we see increases in revenue for the Network. The “spikes” have been striking dating back to the initial gulf war. The second gulf war also has been instrumental in that listeners have looked to Pacifica for non-partisan news and information and alternative perspectives and this shows up in spikes in our revenue. Our own internal crisis also revealed revenue spikes.

B. Talent.
We have on the Network personalities and journalists which listeners gyrate toward. “Democracy Now” and other specific shows undoubtedly bring listeners out and they support us and those shows magnificently. My estimate is that we receive at least one third of our total Network revenue from Democracy Now and other popular shows.
But, such tremendous support also creates vulnerability and clearly points out the need to diversify our revenue sources. Should, perish the thought, one of our long time “stars” leave us the impact on revenue is unknown.

C. Premium Driven:
We have over the years utilized premiums as an incentive for listeners. They have responded. But note the cost of getting premiums into the hands of our listeners approximated one million dollars this year. And, increasing it is clear that as we orient listeners to “premium incentives” they have learned to wait for special premium offers in the last days of a drive to make their contributions. This creates volatility and uncertainty—not good things in finance.

These “drivers’ in my estimation, each have their pros and cons and exemplify the need to identify our revenue strategy of the future. What would be, for us a non-crisis, non talent driven, non premium strategy? We have a few suggestions in this area and will bring them forth at the June Board. This is a critical issue for us in my view, in the current radio environment.

Capital Facility and Equipment Needs

I remain concerned with the following:

1. KPFA has deferred building needs which will cost the station at least 150k and more if these go unattended much longer.
2. KPFT has to look to rehabilitate its building. Cost 75k and up?
3. WPFW has to decide how to move and where to move to in an expensive real estate market
4. WBAI has to also look for new quarters to save money
5. KPFK is looking at satellite facilities and or rehabbing its current quarters.
6. We must evaluate digitization of the Network and it costs.
7. We must evaluate cost factors for our Race and Nationality initiatives
8. We must identify cost factors for Free Speech Radio News, our Short Wave Radio initiative and other unbudgeted needs.
9. And each station and the national office must have reserves against the bad drive and the rainy day. And the rainy day always comes.

ENSURING PACIFICA’S FUTURE
To ensure Pacifica’s future at this, our 56th anniversary, and as we look out upon the community radio environment, it is clear that storm clouds are gathering. NPR, PBS and indeed all of the Public Radio and Community Radio communities are clearly experiencing demands, and sometimes, new negative criticisms coming from those who have stated that programming in these areas is not “fair and balanced.” This is, as I write, being played out in Washington DC, in forums and other venues.

What does this mean for Pacifica?
My view:

1. We must have the financial solvency to withstand legal threats which will surely come and will be surely costly to defend
2. We must end internal disputes which only divide out energies. This can and should be done by clarifying who supports the Pacifica mission and who feel that the mission should be a different one. These differences, in my view, are at the base of on-going disputes.
3. We must adopt with one voice a single vision of Pacifica’s future and move toward that future as one.
4. Above all, we must model the values we espouse—not the negative values we oppose in others.

Budget Scheduling

We have to finish this fiscal year first to bring Network budgets into balance. Next year FY 06 is just beginning for us

The Timetable for FY 06 Budget

1. May-compile large ticket items which may impact next fiscal year FY 06 (Stations and the CFO)
2. May-Finance Committee begins preliminary looks at FY 06 identifying with the CFO priorities
3. June the Board in apprized of preliminary budget items and issues for FY06
4. July and August the LSB communities look at priorities and financial issues
5. September- the full Board reviews and or approves the budget for FY 06

Have You Seen:

The Pacifica Community Organization Events Calendar
Pacifica.org is happy to offer you an events calendar, that lets you easily find events in your community or by specific topic. You can even submit your own organization's events for our calendar!

the Pacifica Forums
If you are looking for a great forum to discuss what is happening, and communicate with other Pacifica listeners, visit our online forums - don't forget to visit the Pacifica Lounge!

Peace Resource Page
Check out our Peace Resource webpage, and find out how to get involved in the war resistance, and struggle for justice!