FINANCE COMMITTEE MINORITY REPORT
May 23, 2004
We do not recommend approval FYE 9/30/04 budget. We recommend that the foundation continue operating under the provisional approval of the November budgets (as it has since November). For the rest of this fiscal year, the finance committee will be focusing its attention on developing a good FYE 9/30/05 budget, developing a debt reduction plan for the national office, and monitoring income and expenses for the remainder of this year.
1) We cannot approve the salaries or consultants allocations in the FY '04 budget because we do not know what positions are being funded at what salaries or what positions are being filled by temporary help or consultants. We do not recommend approving any budget that is presented without a supporting schedule for each station, the archives and the national office that lists every salaried position by job title and the salary and benefits budgeted for that position for the period, as well as all positions filled by temporary help or consultants and their cost.
2) The budget does not make adequate provisions for this year's litigation expenses, including defense attorneys and settlement costs for the lawsuits brought by the former ED and two former Station Managers -- which are estimated at about $625,000 to $725,000, total -- or about $500,000 - $600,000 net after insurance proceeds. The attorneys' bills to defend these lawsuits -- estimated at $225,000 to $250,000 -- should be included in this year's operating budget under "Professional Services-Legal". The settlement payments -- estimated at about $225,000 - $275,000 net after insurance proceeds -- should be included as expense items partly in this fiscal year's operating budget and partly in next fiscal year's budget under an appropriate category on the operating budget.
This year's budget includes only $60,000 for "professional services-legal" in the operating budget, and makes no provisions in the operating budget (or the cash and capital budget) for payment of litigation settlement agreements entered into this fiscal year.
3) The budget does not make adequate provisions for National Office "Debt Retirement." The FYE 9/30/03 Audit shows $1,143,276 in "accounts payable and accrued expenses" for the National Office as of 9/30/03. This includes some ordinary operating expenses and some litigation expenses and settlement costs left over from the pre-2002 board. We understand that our auditor says that approximately $300,000 of this debt may be written off in a couple of years. However, that still leaves around $800,000 in national office expenses from prior years that need to be paid.
This year's budget includes only $287,168 for "debt retirement" in the Cash and Capital budget (and $291,000 in "special assessments" on the stations for legal expenses).
The budget needs to represent a payment plan for the national office debt over this and next fiscal years, along with identifying the amount of "special assessments" on station reserves that will be needed to pay prior years' national office debts, as well as current year's national office litigation and settlement costs.
4) We are concerned that inadequate funding is being provided to the Archives to maintain necessary staffing for maintenance, cataloguing and salvage work, in addition to staff positions for marketing work and order fulfillment.
Carol Spooner
Paul Surovell
LaVarn Williams
Finance 
