Station financial data, to 30June – the Tu11Aug PNB Finance Cttee

Data were given at the Tu11Aug PNB Finance Cttee that will circulate widely, despite their unacknowledged conceptual deficiencies. These necessarily make the data misleading, & so will misinform any decisions using them. (The deficiencies have been discussed in other posts, & will be elaborated in the revision of this post.) The data were in a written report by director Chris Corey (KPFA listener-delegate). The content wasn’t challenged by Chief Financial Officer Anita Sims. (Note, not a Pacifica employee but a key principal of NETA, Pacifica’s bookkeeper & accountant – so no possible conflict of interest there.) CC, not the Egyptian president, read the report to the Cttee: https://kpftx.org/archives/pnb/finance/200811/finance200811a.mp3 (10:37-19:34, then discussion).

The Cttee agreed to add the report to the minutes (19:46) however, these won’t be agreed until Tu25Aug at the earliest. Of course, no-one had the crazy idea to post the report immediately to the meetings archive, https://kpftx.org/archive.php. Communication remains a problem for this communications business. So it’s just as well that later today R Paul Martin (WBAI treasurer) is likely to publish it, at https://glib.com/treasurers_reports.html, as an appendix to his usual written report delivered to tonite’s WBAI Local Station Board. [UPDATE: oddly, this report still not published as of 1000 EDT, F14Aug.]

It means the content of this post is temporary, not least because, given the limited info disclosed, there are unavoidable inconsistencies in some of the absolute numbers that have been derived: station net income/loss, Oct-Dec2019 (the first quarter, Q1); station income & expenses, Jan-June2020 (Q2-Q3); & Pacifica consolidated quarterly figures.

~

Management accounts are designed, they don’t fall from heaven. Social, not natural. They’re designed to assist decision-making concerning internal affairs, such as operating units of an organisation – here, the five stations, Pacifica National Office (PNO), Pacifica Radio Archives (PRA), & the affiliates programme. Design means there are options, different ways of arranging the recording of the monetary transactions of the organisation, even extending to the creation of accounting units (as happened recently with Rosemary’s Ursula’s Baby, the affiliates programme). These alternatives exist even if they’re not recognised. Being a choice, it’s conscious, even if unrecognised, ill-informed, or mistaken.

For example, by accident of history, an operating unit can benefit from not paying studio rent, office rent, tower rent, so effectively being subsidised by the other stations. This has the important effect of necessarily distorting the relationship between accounting units – and the harm is compounded, unfortunately, because cost-cutting decision-making often suffers the unthinking default of focusing on the wrong level, on accounting-unit info, whereas the rational level for this work is Pacifica-wide info. Decision-makers may treat Pacifica as a federation, but RealWorld treats it as a unitary entity, Pacifica Foundation, Inc.: no station has legal personality.

And concerning the cost structure, what sticks out like a sore thumb is personnel, ~52% of the annual total, with ~56% of that eaten up by KPFA & KPFK: ~30% of Pacifica’s costs are workers & managers at the West Coast stations ([1 996 377 + 1 728 425] / 12 497 805 = 29.8%, the last audited figures, FY2016). And chopping these transforms those stations, turning them from paid-producer/presenter programming to volunteer programming. In a word, war. And hence the recent defensive attempts by KPFA station chauvinists to change the by-laws, making the composition of the national decision-making body, the Pacifica National Board, proportional to station membership. https://pacifica.org/finance/audit_2016.pdf (page 26; page 30 of the PDF)

But the truth is plain: there is no station property, only Pacifica property. A station-proprietary consciousness is a distortion of reality, it’s a mistake, it’s ideology, easily fuelling station chauvinism, especially in times of crisis. And it is in times of crisis that solidarity is needed, not separatism. Conceptualisations, like lives, matter. They have real effects.

It means all land, buildings, & towers, as well as such rents, should be stripped out of station accounts: they need to be in the National accounting unit (there is no office). And those rents, as a National expense, not a station expense, need to be paid from the central services fund, so by all stations. This simple procedure will end the double inequity suffered by WPFW & WBAI: (1) effectively subsidising KPFA, KPFK, & KPFT, allowing them to enjoy Pacifica property for free, whilst, (2), having to also pay their own rents for studios, offices, & towers. A double burden – why hast thou forsaken us, Pacifica?

Distortion of the assignment of expenses & income to accounting units, distorts the info available for decision-making concerning operating units. As noted, this is never more pertinent than when deciding on cutting costs, especially how much, & where – and smaller stations have less scope for cuts. Only comparing like-with-like is rational, & therefore fair.

Accounting matters. Accountancy is a means of control, helping to control the quality of the relations between people, not least the control of people’s access to ‘important stuff’. This makes accounting political. Accountancy is not purely technical, reducible to technique. Facts, numbers, never speak for themselves (the positivist illusion, as the epistemologists say): putative facts, claims to knowledge, need to be produced, put into a semantic context, before they have meaning. The clever Romans knew this: factum = an act, a deed. Yes, facts come out of factories, not picked up, in pristine condition, from the ground. Produced, not collected.

Nevertheless, there’s a crucial difference between the world & its representation: reality is mind-independent, not dependent on our recognition of it, & it’s discourse-independent, having its effects, even if the description is accurate. Facts are evidenced knowledge claims that have proven robust, crucially when tested in action rather than merely contested in discussion. It means descriptions, explanations, justifications, & prescriptions vary in their practical adequacy. Using facts simply improves the chance of making life easier.

Knowledge developers are fallible, but because they’re corrigible there can be growth in knowledge, improvement, & this includes being aware that accounting principles, methods, standards, & policies can be rationally challenged. This happened when the PNB majority insisted that the gain on the sale of the Nakapon building in FY2018, an income, be assigned not to KPFA but to National, thereby improving a Pacifica accounting policy. Yes, there is no station property, only Pacifica property.

Accountancy is social, a perspective on the world, & a practice in the world. And in being social, human made, it’s subject to evaluation, subject to critique. That’s the nature of accountancy, & the nature of humans.

~

Now the data disclosed at the Tu11Aug PNB Finance Cttee meeting. The period covered by Chris Cory’s report was the financial year to 30June, so the three quarters since 30Sep2019, Q1-Q3. (Additionally, NETA has just done the July figures – in six working days?, why not 24hrs?) He gave two sets of station net income/loss: the last six months, so 1Jan-30June (Q2-Q3); & the year to date, so 1Oct2019-30June2020 (Q1-Q3). He also gave the Q2-Q3 net income/loss as a percentage of income.

From this can be derived: Q1 net income/loss; Q2-Q3 income; Q2-Q3 expenses. Hence these data:

station . . . . . . . . . . . . . . . . . . . . . thousands of dollars ($k) . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . Q2 & Q3 . . . . . . . . . . . . . . . . . . . .|. . . Q1 . . .| . Q1 thru Q3 .

. . . . . . . . . income . . . expenses . . . net income/(loss) . .|. . . ni/(l) .|. . . . . ni/(l) . . . .

KPFA . . . . 2 000 . . . . . 1 980 . . . . . . . . . . . 20 . . . . . . . . . . . 130 . . . . . . . 150 . . . .

KPFK . . . . 1 338 . . . . . 1 766 . . . . . . . . . (428) . . . . . . . . . . . . 78 . . . . . . (350) . . . .

KPFT . . . . . . 345 . . . . . . 383 . . . . . . . . . . . (38) . . . . . . . . . . . 12 . . . . . . . . (26) . . .

WPFW . . . . 700 . . . . . . 777 . . . . . . . . . . . (77) . . . . . . . . . . . . 59 . . . . . . . . (18) . . .

WBAI . . . . . 714 . . . . . . 914 . . . . . . . . . . (200) . . . . . . . . . . . (14) . . . . . . (214) . . .

Note: Cory said depreciation is excluded, & rounding is to the nearest thousand

~

‘Interesting’ Cory also gave some Q1-Q3 pan-Pacifica figures (‘consolidated’, in the jargon), so including PNO & PRA (oddly, he was silent on the affiliates programme, so presumably their fabled net income has disappeared). These data: Pacifica had a Q1-Q3 loss of $128k, 1.5% of income; with unit net incomes of $296k for PNO, & $36k for PRA. These net incomes presumably arise largely from charges to the stations; also, being balances of intra-organisation transactions, they all drop out when composing the consolidated financial statements (a station’s central services charge is income for PNO, the net effect for Pacifica being zilch). (Note, rounding error, −$2k, re consolidation of the Q1-Q3 station net income/(loss): [150k − 608k] + [296k + 36k] − 2k = (128k).)

From this info, these data ($k) can be derived:

period — income — expenses — net income/(loss):

Q1-Q3: 8 533 — 8 661 — (128) . . . includes the elimination of PNO & PRA balances, so consolidated

Q2-Q3: 5 097 — 5 820 — (723) . . . unconsolidated

Q1: 3 436 — 2 841 — 595 . . . unconsolidated . . . [in this squaring line, the 595 is inconsistent with the 265 net income derived above (please see the table); note, 595 − 265 + 2 = 332 = the PNO & PRA net incomes]

Making them all consolidated, & assuming uniform quarterly PNO + PRA net income (so Q1, $111k; Q2, $111k; Q3, $110k):

period — income — nominal expenses – (re PNO & PRA) – adjusted expenses — net income/(loss):

Q1-Q3: 8 533 — 8 993 – (332) – 8 661 — (128)

Q2-Q3: 5 097 — 5 820 – (221) – 5 599 — (502)

Q1: 3 436 — 3 173 – (111) – 3 062 — 374 . . . [in this squaring line, the 3 173 is inconsistent with the 2 841 derived above, a difference of 332; & the net income is different from the 265 in the table – but note, 374 111 + 2 = 265]

~

Remarks:

  • in squaring the figures, inconsistencies necessarily arose
  • it seems Q1 generated a very welcome surplus, perhaps of the order of an unconsolidated $265k (per the table). (The consolidation, also derived, includes an inconsistency in its computation.)
  • given this likely Q1 net income, & because anti-COVID-19 mobility restrictions started Tu17Mar, first in CA, then NY state, it’s a pity Chris didn’t split the Q2-Q3 figures into the quarters; as it is, the scale of the effect of the COVID-19 societal crisis upon Pacifica is concealed, as is, correspondingly, the possible pecuniary progress made in 11 of that quarter’s 13 weeks; a break with his routine of solely compiling a 6-monthly rolling report would have been illuminating
  • for devising an emergency financial plan, the crucial info needed is the size of the effects of the COVID-19 societal crisis on Pacifica, especially week-by-week listener donations; all this info has to be used in producing credible FY2021 station budgets: applying prudence requires reliance on the new info since mid March, not historical data even from last year.

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