Finance

NFC Chair Report, 7/12/09

 

1. NFC met 7/7 and will meet on 7/14.

2. Wells Fargo Line of Credit – NFC passed this motion on 7/7: "The NFC approves in principle the renewal of the Wells Fargo Line of Credit in the amount of $300,000, if it is secured by restricted National Office assets, rather than KPFA's unrestricted cash.

The NFC requests 1) that the CFO provide a written description of the assets to be used as collateral, and 2) that our corporate counsel provide a written opinion on the appropriateness of the use of these assets as collateral for a line of credit prior to PNB action." (passed as amended without objection)

The CFO passed on to counsel the request for an opinion.

3. Cash – NFC reviewed a revised cash flow forecast provided by the national office on 7/7/09. (Thank you LaVarn and finance staff!) This document paints a grim picture:

• It projects $785,000 in cash foundation-wide as of September 30. This amount would cover less than three weeks of expenses for the foundation. Moreover, an improved forecast with more realistic projections predicts even less cash – around $500,000 – as of this date.

   

• Three stations – KPFK, WBAI, and WPFW – each will have less than $7000 in cash as of 9/30/09.

   

• The National Office projects a $347,000 cash deficit as of 9/30/09. We do not know how this need will be met.

   

• The only stations with cash reserves as 9/3/09 will be KPFA ($450K -$640K) and KPFT ($220K).

   

• If the Wells Fargo line of credit is renewed as planned, it will free up $400,000 more of KPFA cash, which will help.

   

Discussions of what to do about our looming cash shortfall have not yet been focused enough to come to a resolution. Does it make sense to get a real estate-backed loan given the current uncertainty of whether we can right the ship? Can we get a loan with our poor repayment history on the LOC? How to choose a property to mortgage so that all stakeholders will buy into it? Is doing emergency on-air fundraising the way to go? Can we scrape by and look to improving finances in the future as programming and management issues are addressed? There are arguments for and against all these approaches. Another as-yet-unbroached subject is contingency plans for WBAI (or any other unit) if it cannot correct its deficits, which are no longer supportable.

Here is a plot of Pacifica’s “cash and cash equivalents” at the end of the FY since 2002. The numbers are from the audits. Note that we plan to end 2009 with one-third the cash we had at the end of 2007. We are trending to end 2010 with no cash at all.

4. Performance in FY 09. NFC continues to monitor network financial performance over the current fiscal year by means of income statements (aka profit and loss) provided by the national office.

The June statement shows continued shortfalls network-wide (numbers thru June):

• The foundation as a whole has run a deficit of $26,000, $1.05 million short of the budget target.

   

• KPFA has run a deficit of $334,000, which is $339,000 short of the budget target.

   

• KPFK has run a surplus of $282,000, which is $162,000 short of the budget target.

   

• KPFT has run a $50,000 surplus, which meets the budget target.

   

• WBAI has run a $227,000 deficit, which is $432,000 short of the budget target.

   

• WPFW has run a $180,000 deficit, which is $300,000 short of the budget target.

   

• NO has accrued a surplus of $388,000, which is $234,000 ahead of the budget target. This does not translate directly in to cash in bank, as WBAI has not been paying Central Services. Despite that correction, I don’t understand how to square the accrued surplus with the projected large cash deficit.

   

(continues on next page) To better understand why most units are missing budget goals, I made three graphs that break out revenue, salary expenses, and all other expenses. First shows variance from budget goals for revenue. All units except NO are negative, meaning they are missing budget targets, with WBAI and WPFW the most extreme, at about $300,000. About $90,000 of WBAI’s variance can be discounted as a bookkeeping artifact.

The second plot shows variance from budget goals for salary and related spending. Again, all units are negative save KPFT, meaning they are overspending on salary and related. The station with the most pronounced overspending on this line is KPFA, by close to $300,000.

The final plot shows variance from budget of all expenses other than salary and related (programming, administrative, development, and community events). In constrast to the other two categories, all units are doing pretty well here. The largest negative variance is at WPFW ($45,000) and is due largely to unbudgeted legal expenses. The large positive variance at NO is partly due to inexpensive PNB meetings.

In conclusion, it looks like we are running shortfalls because 1) we are not bringing in enough money, and 2) we are spending more than expected on salaries.

PDF Version here.

The NFC met on 5/19/09. Motions passed at the meeting are pasted below
(thanks to our secretary R. Paul Martin).

The iCFO provided us with a comprehensive cash flow forecast for the
rest of the FY for the entire foundation, prepared by national office
staff. (This document is attached.) We were very pleased with the
quality and clarity of this document - each unit is a separate tab in an
excel sheet; all tabs are linked to the NO and Consolidated tab, so it
can easily be revised as new information becomes available.

The cash flow forecast shows $773,000 in unrestricted cash at the end of
the FY for the entire foundation. This is a very low number given that
the foundation as a whole spends about $1,200,000 a month.

For comparison, NFC member Susan Young assembled EOY unrestricted cash
info from the last two years:

$2.1 million October 1, 2007
$1.4 million October 1, 2008
$500,000 - $770,000 October projected for October 1, 2009

NFC reviewed the cash flow forecast and found it overly optimistic by
$150,000-$250,000. Another issue is that WPFW had not provided a cash
flow to NO in time for inclusion, so the WPFW tab is not complete.

The iCFO said she would provide us with a revised version after review
by the national finance office.

Our conclusion is that there is very real chance of serious cash
shortfalls in the upcoming few months. This is a serious situation. As a
consequence of our review of this document, we passed the first
resolution (below):

**************************************************************

(From NFC secretary R. Paul Martin):

These are the motions as I have them that were passed at the May 19,
2009, NFC meeting, not counting procedural motions, etc.

Motion: (Susan Young) "The National Finance Committee has in hand
information that lets us know that a potential cash shortfall is
imminent and that the Cash Management working group should develop
criteria for, and terms of, a loan application." (passed without objection)

Motion: (Jamie Ross) "The National Finance Committee believes cancelling
the election may create liability. The National Finance Committee
requests detailed spending plans to further understand the financial
impact of the upcoming LSB election. The National Finance Committee
urges the National Elections Supervisor to come back with plans that
would be cost effective and below the expenses of the last election,
including a scenario that minimizes all discretionary spending." (passed
without objection)

Motion: (Brian Edwards-Tiekert) "That the existing budget timetable be
communicated to all General Managers and Business Managers by by the
CFO." (passed without objection)

PACIFICA FOUNDATION
PNB MEETING NEWARK, NEW JERSEY
NATIONAL FINANCE COMMITTEE REPORT
FIRST QUARTER FISCAL YEAR 2008

The National Finance Committee met regularly as a group by teleconference and minutes are available for meetings on the following dates: October 25, November 26, December 10, January 17, and January 23 (draft). The Finance Committee monitored financial activities as reported by the CFO. The major task for fiscal First Quarter 2008 was to address the issues with the WBAI budget and financial outlook. The Committee also monitored the progress of the National Office Budget and the Pacifica Radio Archives. The next regular meeting of the National Finance Committee is scheduled for February 26, 2008, at 8:30 PM EST.

PACIFICA FOUNDATION
NATIONAL FINANCE COMMITTEE REPORT
March 23, 2007

The National Finance Committee met February 15, March 1 and March 22, 2007. We met as a group by teleconference and scheduled the next meeting for Monday April 9, 2007.

The Finance Committee monitored financial activities as reported by the CFO including January year-to-date financials and quarter ending headcount for the Foundation.