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Wednesday, June 14, 2017
Let's hope Reimers likes bologna sandwiches...
WBAI Treasurers Report
June 14, 2017
The National Finance Committee (NFC) met on May 2, and June 13, 2017. The local Finance Committee met on April 13, May 4, and June 8, 2017.
At the April 13, 2017, local Finance Committee meeting there was no quorum. The WBAI General Manager complained that the National Office was making mistakes in the Profit & Loss Statement, and they were carrying as payables bills that have already been paid. The General Manager also said that a collection agency lawyer had come to the station for payment of an Associated Press bill, and that bill was paid. He said that he would reduce the Verizon bill by about $20,000. The General Manager lauded the use of Quickbooks and Volusion over the standard MEMSYS and Great Plains software which are standard in Pacifica.
There was again discussion of the local Finance Committee wanting to get more, standard financial documents from the General Manager two days before each local Finance Committee meeting. The General Manager said that he had been working with the National Office on this to get us that information. The General Manager said that WBAI had about $16,000 cash in bank on that date. The General Manager said that the National Office was writing off some of WBAI's Central Services arrears.
There was concern raised regarding who would know about WBAIs finances if something happened to the General Manager.
The General Manager said that WBAI owes the Pacifica Radio Archives about $42,000 in Central Services fees, and he said that the National Office was owed about $79,000 in Central Services fees. He said that WBAI still owed WPFW $19,000 which he is not paying, and the station still owes WHCR $25,000.
At the May 2, 2017, NFC meting Alex Steinberg was elected Chair, I was reelected Secretary.
At that meeting the CFO reported that the Audit committee would meet to select an auditing firm for the FY15 audit. He reported that Pacifica is prepping for the auditors, but that the process has been going slowly. The CFO said that WPFW and WBAI dont have Business Managers sp theyre getting help from the KPFT and KPFK Business Managers to complete their accounts and the National Office is helping out as much as possible. The CFO said it was encouraging to know that both stations are coming around nicely and should be able to wrap up their audit preparations in a reasonable time. He said that KPFT and KPFK are in reasonably good shape and that the National Office has gotten lot of information from them; they have Business Managers and do audit requests. The CFO said that KPFA is the holdout, theyve been extremely late in submitting everything for the audit. The CFO is in communication with them, he said that KPFA will definitely cause delays. The CFO said that the stations have to do their preparations and only then can the National Office prepare for the auditors. He said that he couldnt give a firm date for the FY15 audit yet. The CFO said that the other big bottleneck is the staffing issue at National Office. He said that its difficult to hire skilled personnel because the National Office cant compete with others in terms of wages. He said that there is a backlog of work, and a lot of work has to be done before the audit can be started. The CFO said that he is getting help from the Business Managers and some part-time help at the National Office. He said that maybe by May 31, they could wrap it up. He said that the California Attorney General has given Pacifica till August 27, 2017, to complete the audits, which is a tight schedule.
The CFO said that to get the FY15 audit done a lot has to happen, and Pacifica has to change the culture of how the organization manages the whole process.
The CFO said that as of May 2, 2017, there was about $555,000 outstanding for Central Services in the last 15 months or so. He said that WPFW, WBAI and KPFT have outstanding Central Services payments. He said that more than a third of the budgeted Central Services fees have not been paid, and were seeing the results. He said that thats why Pacifica doesnt have the money to pay for critical services. He asked the NFC for help. He said that there are no consequences for non-payment of Central Services, and the National Office reminds stations, but it has no authoritative force behind it. The CFO said that stations are withholding payments and are balancing their books on the back of the National Office. The CFO called for an enforcing mechanism. He said that if a station is in difficulties they can ask for a waiver, but it should not be at the stations General Managers discretion. The CFO said that even when the stations get money they dont pay their Central Services fees anyway. He said that the National Office needs a motion that stations are bound to make payments or they have to look at their business model.
The CFO said that the only thing that can work is holding the General Manager and Business Manager of a station responsible. Not all NFC members agreed with this approach.
At this NFC meeting a motion was passed calling for 36 hours of pitching at all of the stations during the Spring on-air fund raisers to be devoted to raising funds to meet National Office expenses.
At this meeting the NFC also passed a motion recommending that the PNB give the CFO direct managerial control of all Business Managers and accounting personnel for the next year, and that the CFO have the authority to apply disciplinary measures through the General Managers of the stations, including adjustments in salary, termination and awarding of bonuses based on performance of all accounting personnel under the CFOs charge. The motion also provided for the General Managers to provide timely financial information to the CFO or the General Managers may face disciplinary actions initiated by the CFO and approved by the ED if they fail to comply.
At this meeting the NFC voted to recommend to the PNB that it rescind the SCA motion that delayed the FY17 budgets.
At this meeting the NFC voted to meet on the second and fourth Tuesdays of every month starting in June.
At the May 4, 2017, local Finance Committee meeting the General Manager reported that WBAI had about $7,700 cash in bank, and about $5,276 cash on the WBAI premises. The General Manager said that he was catching up on paying bills, including paying for premiums for the then ongoing Spring on-air fund raiser. He said that the National Office was not posting entries properly and that the FY14 audit may need to be adjusted. He said that WBAI probably owes the Empire State Building (ESB) about $2.1 million, and the station owes everyone else about $200,000. This includes owing PRA about $20,000 and seven months of National Office Central Services at $16,890 a month. The General Manager said that all of the information about WBAIs finances that would be needed for the FY15 audit was already at the National Office.
In answer to a question the General Manager said that bills are paid in order of what keeps the station alive: office rent, ESB tower payments, phone, payroll and consultants. He said paying for premiums is also important.
In answer to a question the General Manager said that all premiums for the Spring on-air fund raiser are 100% licensed. He said that there were 1,494 premiums that had not been shipped at that time.
The General Manager outlined his working arrangement with the KPFK Business Manager. He said that he didnt know who was double checking figures at the National Office, but that hed found a $500 mistake in a Corporation for Public Broadcasting (CPB) form that had been filled out. He said that the CPB forms are asking harder questions this year.
There was a discussion about how a Gary Null retreat premium was being handled. The entire retreat premium is given for a $2,500 donation. The General Manager said that the listeners send $2,500 to Gary Null and Gary Null sends $500 of that back to WBAI. The retreat expenses are $2,000. The committee had a discussion about this and raised the issue of who gets the tax credit for the donation to WBAI from this retreat premium. Committee members suggested that WBAI get the $2,500 donation and send Gary Null the $2,000 retreat expenses; this way listener sponsors get their proper tax credits. It was suggested that the General Manager check with an attorney regarding how these premiums are handled.
I sent a memo to the interim Executive Director and CFO regarding the above. That memo is Item #1 in the appendix of this report.
The General Manager said that he would get the local Finance Committee a list of outstanding bills.
Questions were raised regarding the hiring of a marketing firm called Yellow Magnet, which the General Manager said would market WBAI programs on social media. The General Manager said that they had been paid a $10,000 retainer. He said that he hoped to triple the BAI Buddy sustainer program this way. The local Finance Committee was skeptical about this company and the plan. This subject was also included in the memo I sent to the interim Executive Director and CFO, which is Item #1 in the appendix. The General Manager said that he would bring the contract signed with Yellow Magnet at the next local Finance Committee meeting.
Questions were also raised regarding a financial premium from a representative of a company called World Financial Group. To some local Finance Committee members the companys methods sounded like a multi-level marketing structure. Two committee members who are licensed financial professionals said that the premium was illegal because a paid employee of the company was pitching it on the air. The General Manager said he would stop the premium and get the committee more details on this at the next meeting. The committee also asked for the contract WBAI has with the World financial Group. This issue is also included in the memo in Item #1 in the appendix of this report.
At the June 8, 2017, local Finance Committee meeting the General Manager did not show up. The committee looked at the Profit & Loss Statement For the Six Months Ending March 31, 2017, from the National Office at this meeting. Discrepancies were noted on line 92 of that statement. The National Office is not using the right figures for WBAIs ESB rent.
The CFO had sent out a spreadsheet showing each stations situation with regard to Central Services payments. The CFO did not want me to tell the local Finance Committee the amount of WBAIs FY16-FY17 arrears on Central Services fees payments because a public discussion would be, detrimental to the finances of the station and [would] not solve the problem.
The committee discussed the chronic problem of not being able to get full financial information from WBAI Management regarding the stations finances.
At the NFC meeting of June 13, 2017, the CFO reported that the FY15 audit is going well. He said that the auditors are satisfied with Pacificas progress so far, they have been provided most of the information they needed. They have done sample testing with information from the stations. The CFO is meeting with the Business Managers every week to expedite the process.
The CFO again emphasized the need for radio stations to pay their Central Services fees. He said that the National Office has not gotten about $850,000 in Central Services fees over the past two years. He said that every month about $44,000 of Central Services fees are not paid due to three stations. He said that this is having a serious impact on the National Office finances. He again said that Pacifica doesnt have an enforcing mechanism for the mandated Central Services fee payments. He said that he wanted the NFC to consider making a motion about this.
He said that the recent on-air fund raiser to raise money for the audit got about $200,000.
This will be used for getting the FY15 audit. He said that Pacifica doesnt have the money, at this time, to pay for a FY16 audit.
I brought up the issue of the CFO not wanting the Central Services arrears of stations to be publicized. He reversed his previous statement and said that it was all right to do so. As of June 2, 2017, WBAI is $168,900 in arrears on its Central Services payments due since October 1, 2015.
There should be transparency about the finances of WBAI, but the CFO said that a vendor had cancelled a contract with one station because the vendor came to doubt the credit worthiness of that station, due to financial information it had learned about. Transparency is not free of problems.
The CFO said that the lack of funds at the National Office also makes it hard to hire and retain people, and that the California Attorney General had noted that Pacifica has not only been delinquent in getting its audits done, but has not been timely in filing its 990 tax returns. This is all due to an under-funded National Office.
When I brought up the issue of the discrepancies which had been noted on line 92 (the ESB rent) of the Profit & Loss Statement For the Six Months Ending March 31, 2017, the CFO was surprised and said that it sounded like a serious mistake which will throw that months income statement completely off. He said that he would revise that line.
The NFC passed a motion mandating each General Manager to make sure that the station they manage can generate enough revenue to pay the following three expenses each month, in full and on time: The staff payroll, Health care costs and the allocated Central Service Payment. There is a provision for disciplinary actions if a General Manager cant cover those three expenses. The question is whether this can work in Pacifica. A copy of the full motion is Item #2 in the appendix.
The NFC adjourned to an executive session meeting after this public session was over to
discuss a legal matter of a confidential nature.
The WBAI Spring 2017, on-air fund raiser ran from May 2, 2017, to June 4, 2017, a total of 34 days. In the daily tally reports the final tally is given as $338,695. This makes the daily tally about $9,962. The WBAI FY17 budget calls for a daily tally of $14,000 a day. The goal for the entire on-air fund raiser was $434,000.
A complaint was lodged regarding two of the premiums used in the Spring on-air fundraiser. I have seen on a public mailing list an E-mail from the interim Executive Director to the effect that two WBAI premiums, the Zapper and the Orgonite premium were ordered removed from the air. These two premiums appear to have been responsible for the two best tally days of the Spring 2017, on-air fund raiser. The claims made for both premiums were dubious.
The aforementioned Profit & Loss Statement for the first half of FY17 shows WBAI with a deficit of $131,472. It shows a Listener Support line of $945,889 which appears to incorporate almost all of the revenue that the station received in those six months, except for a $50 donation. As Ive pointed out before, this lumping of all revenue into the Listener Support line is not good. It inflates the stations Listener Support and it masks how the station is doing on the other revenue lines. This makes it hard to make good financial decisions regarding revenue sources and can result in erroneous financial statements to various agencies that require accurate accountings of non-profit organizations finances.
WBAIs and Pacificas finances continue on a serious downtrend. The General Manager estimates WBAIs ESB debt at about $2,100,000. The National Office is limping along. Pacifica and WBAI are very fragile financially right now. The major on-air fund raisers for 2017 are over, the Summer on-air fund raiser is generally less remunerative than the others are, and all of Pacifica has to get to FY18 before significant funds can be raised again. It all looks dire.
The next NFC meeting will be held on June 27, 2017, and will begin in executive session to consider legal and financial matters of a confidential nature. The next local Finance Committee meeting will be held on July 6, 2017, at WBAI, 388 Atlantic Ave, 3rd floor, Brooklyn, NY 11217. The public is invited to attend.
R. Paul Martin
WBAI LSB Treasurer
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