Pacifica Radio Ponders Spending Cuts

Faced with fundraising shortfalls and less Corporation for Public Broadcasting support, Pacifica Radio is considering “austerity measures” to reduce spending, including the possible cancellation of an in-person Board meeting this summer. During a recent Pacifica National Board (PNB) teleconference, Mike Martin, chair of the Finance Committee, reported that a combination of factors threaten the network’s financial stability.

The Board also heard promising news about programming from the new Executive Director, Nicole Sawaya, who recently held a two-day meeting in Houston with key staff from across the country. Pacifica is gearing up for the 2008 elections, she said, and is looking at how to combine station resources with the new distribution possibilities of digital communication.

But how much money will be available for such initiatives isn’t certain due to the financial crunch. Martin mentioned a $500,000 shortfall at New York station WBAI and the erosion of bank reserves at KPFK, based in Los Angeles, along with declining listener numbers and the cost of litigation. “We’re in crisis” on fundraising, said KPFK Director Margaret Prescod, while Martin, who represents KPFT in Houston, commented that “the house is on fire.” Pacifica, which was founded in 1949 as an educational foundation using radio to promote dialogue and social change, currently takes in about $17 million a year, mainly through contributions from individual listeners.

The Finance Committee has recommended eliminating the Board’s summer meeting, usually held in June, and projects savings of up to $70,000. But reducing the number of meetings may conflict with the bylaws, which calls for quarterly meetings at specific times in a prescribed order in the five areas where Pacifica owns stations. According to general counsel Dan Siegel, if the PNB adopts a motion that cancels the June meeting due to financial crisis, it’s unlikely that a judge will overrule that decision based on a lawsuit. But if sued the Board might have to provide details on the nature of the crisis.

In 2007, when the Board attempted to reduce the number of in-person meetings from four to three, several Local Station Boards (LSBs) rejected the idea and a bylaws amendment died. A study committee has been formed to look into a similar amendment that could win more support.

During a cordial session, the Board also discussed the cost of Pacifica’s governance and elections. Chief Financial Officer Lonnie Hicks reported that last year’s elections for LSB members went $80,000 over budget, which suggests that the total cost approached $300,000. At the same time, however, there has also been discussion of turning the elections over to an outside firm that specializes in proportional voting, a move that could further increase the cost.

“You can’t minimize the cost of governance,” said Sawaya, noting that Pacifica hasn’t projected the long-term impacts, including the cost of staff time and “what happens when elections implode.” The combined, direct cost of the elections and general governance expenses is around $500,000 a year. Pacifica stalwarts often note that “democracy is messy.” In this case, it’s also expensive and potentially damaging to organizational stability.

Siegel questioned the concern about legal expenses, noting that his firm billed only $62,000 last year. But Martin said that the Finance Committee is also looking at the cost of outside counsel and lawsuits pending in Los Angeles and New York, and feels that Pacifica needs a risk management plan to reduce litigation.

To address the financial crunch, the PNB has instructed Pacifica’s five sister stations to develop off air fundraising plans by June. Meanwhile, Hicks says the organization needs short-term contingency plans if the coming months require budget cuts or stations have troubling meeting payroll. He sees hope in the recent success of WPFW, Pacifica’s station in Washington, DC, which staged a 30^th anniversary gala that attracted major donors and breathed new life into a capital campaign for a new building.

Sawaya said such events are great for building awareness and cultivating donors, but she isn’t as sure they will always produce significant revenue. Working with staff, she is developing a major donor plan, but notes that this approach will require a “cultural change” in attitudes about raising money.

The Board is also considering whether to move the annual meeting, usually held in September, to August in hopes of saving on lodging, possibly by meeting on a college campus. And it has asked its Technology Committee and Sawaya to look into web-based conferencing. But that too could run afoul of the current bylaws.

WPFW Director Ambrose Lane suggested establishing a line of credit or borrowing money to handle short-term cash flow problems. “We haven’t treated this corporation like a corporation,” he said, pointing to the network’s preference for addressing finances on a local station basis. “We have to think like a corporation, that’s what we are.”

Another WPFW Director, Thomas Ruffin, recommended consolidation of Internet management, purchase of fund drive premiums and bank accounts under national office control to save money. Arguing that “stations have so much autonomy,” he questioned having separate websites and bank accounts for each one.

The next Board meeting is slated for April 11-13 at the Crown Plaza in Downtown Houston, Texas. Before the regular session, the 22 members of the national board will participate in anti-racism training.

The Pacifica National Board’s March 20 teleconference, on which this report is based, can be heard at KPFTX.

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