Minutes for the regular National Finance Committee meeting May 17, 2016.

Meeting convened at 8:36 PM (ET) a quorum being present, the Chair and
Secretary being present.
--------------------------------------------------------------------------------
--------------------
Attending: Sam Agarwal (CFO), Fred Blair, Adriana Casenave, Joseph Davis, Brian
Edwards-Tiekert (Chair), R. Paul Martin (Secretary), Tony Norman, Michael
Novick, Cerene Roberts, Eileen Rosin, Barbara Whipperman.
--------------------------------------------------------------------------------
--------------------
Agenda:

Agenda Approval (5 minutes)

Minutes Approval (5 minutes)
Minutes of April 19, 2016
Minutes of May 4, 2016

CFO Report (30 minutes)
Report (10 minutes)
Questions (10 minutes)
Motions / Actions (10 minutes)

Review of second-quarter financial results (60 minutes)

FY2017 Budgeting Timeline (10 minutes)

Special Meeting Schedule (5 minutes)

Motion referred from PNB for NFC review (10 minutes)

Policy motion re: allocating ambiguous donations (10 minutes)

Motion re: staffing review (10 minutes)

Motion re: Broadcast Equipment Replacement Funds (10 minutes)

Adjourn 10:30 PM (ET)
--------------------------------------------------------------------------------
--------------------

The Internet stream was down, the Chair ruled that the committee meeting could
start without it being on a stream and that the audio could be posted on
KPFTX.ORG at a later date.

Motion: (Michael Novick) "Top approve the agenda." (Passed without objection as
amended)

Amendment: (Joseph Davis) "To move 'Motion re: Broadcast Equipment Replacement
Funds' to last after item 9." (Passed without objection)

Minutes Approval 8:40 PM (ET)

Motion: (Michael Novick) "To approve the minutes of the April 19, 2016,
meeting." (Passed without objection as amended)

Amendment: (Barbara Whipperman) "To replace 'The CFO said that Pacifica should
hire a National Business Manager' with, 'The CFO said that Pacifica should hire
a National Business Development Consultant." (Passed without objection)

Amendment: (R. Paul Martin) "To drop 'Business' from 'National Business
Development Consultant.'" (Passed without objection)

Motion: (Michael Novick) "To approve the minutes of the May 4, 2016, meeting."
(Passed as amended 5 for, 0 against, 4 abstentions)

Point of Order: (Adriana Casenave) The meeting is going too fast. The member
wanted to abstain on the previous motion because she wasn't at that meeting.

The Chair ruled that voting was closed on that motion and the committee had
moved on to the next motion.

Amendment: (Michael Novick) "To replace, 'A member said that it was vital that
KPFT come up with a plan to build audience.' with, 'A member said that when the
loan to KPFT was approved for the new transmitter there was a proviso to
develop a plan to build membership to repay the loan, not simply rely on the
improved signal.'" (Passed without objection)

CFO Report 9:01 PM (ET)

Report 9:01 PM (ET)

The CFO said that the National Office has completed all requests and provided
all information requested by the auditors for the FY14 audit. He said that he'd
gotten an E-mail from the auditors saying that the FY14 audit should be wrapped
up in the next week to 10 days, although there may be some last minute
questions and procedures. He said that the auditors will conduct an exit
interview with the Audit Committee and will meet with Pacifica Management to
discuss the audit findings and the internal control assessment. He said that
the Pacifica has not paid the $75,000 that's outstanding for the FY14 audit and
that the National Office has not received the latest bill from the auditors.
The CFO said that the auditors have made it clear that they can't go on to the
FY15 audit until their bills are paid.
The CFO said that cash flow is a major concern, which he's been pointing
out for the past couple of months. He said that WBAI and WPFW are having
serious shortages in their cash flow. He said that on May 13, three stations
failed to meet the deadline for payroll, and he had to pull them out of the
regular payroll cycle because otherwise the National Office couldn't pay the
payroll for whole network. PRA came up with its payroll cash at the last minute
and their checks were cut manually in time. WPFW took money from a restricted
grant to make the payroll payment and pay their health care insurance premiums,
this was against the CFO's objection and an LSB motion that specifically
prevented them from taking that money. He said that he will elevate this issue
to the PNB because it's a serious breech of the grant's governance. He said
that for some months the National Office had been paying WPFW's health care
premiums because the station didn't have the money to do so. He said that in
May the National Office also did not have the money and so the WPFW health care
premiums couldn't be paid for that month. That's when WPFW Management took the
money from the restricted account to bring their health care premium payments
up to date. As a result of the delays, WPFW's payroll was one day late.
The CFO said that at WBAI they couldn't raise their payroll cash and
could only send a wire transfer on May 16, so the WBAI payroll was late by two
business days, or four days if you count the weekend. He said that this is a
serious issue which he will elevate to the level of the PNB. He said that this
circumstance was in the making for some time and we all knew that this was
coming for the last month or so. He said that he'd had conference calls with
WBAI Management and it had become very clear that they wouldn't be able to make
Central Services payments due to the serious cash shortfall. He said that his
biggest concern now is that stations are in their on-air fund raisers and they
may get short term relief from that revenue, but this problem will come back in
a much bigger way in late June or early July when the funds run out. The CFO
noted that these stations have fallen behind frequently. WPFW has not made
Central Services payments for several months nor have they paid health care
premiums, and the same is true of WBAI. He said that if these payments are not
being made then what about other critical services? He wants to focus on
addressing this situation. He said that decisive and bold Management action
needs to be taken and things can be turned around. He said that there has to be
an acknowledgment that this is something very critical and that fundamental
changes have to be made. The CFO told the NFC that on May 16, he had forwarded
a proposal that had been approved by the PNB of short term initiatives that
have to be taken. He said that LSB members can be involved in fund raising
activities or in soliciting donations for the stations and that can go a long
way. He said his second proposal was that if stations fail to make payments for
payroll or Central Services they have to look into programming changes. He said
that it's very clear that the operating model is not working and that it needs
to be fixed. He said that staffing cuts is generally an option but that alone
doesn't go a long way at WBAI and WPFW. In the case of WBAI staffing cuts are
at their limit and the station has lost productive capacity; at WPFW they can't
go a long way because the dollars are not there. He said that we have to be
more creative and innovative to figure out real solutions. He said he would try
to strike a balance given proper strategy and proper Management actions he
thinks we can recover or improve the financial situation at both stations.
The CFO noted that he had sent the NFC a statement last night regarding
deficiencies in the FY15 books which he had presented to the PNB on May 5.
While the FY14 audit is winding down, he's paying close attention to FY15
because that audit is necessary for us to get CPB funding. He said that he's
finding major deficiencies, primarily for two reasons; he said that we didn't
have the practice to prepare balance sheets, so for the past two years we don't
know what the balances owed by stations for Central Services are, or what we
owe to other entities, and that's a major gap which speaks to the skills that
we need. He said that the other big element he's finding is staffing shortages
at the National Office and the lack of Business Managers at the stations.

Questions 9:13 PM (ET)

The CFO was asked if the statement made on a mailing list by a Director that
the CFO had said that Pacifica was facing bankruptcy was accurate. The CFO said
that he would not address that on an open meeting and that people can draw
their own conclusions. The CFO was asked to give written reports to the NFC. He
was also asked if the auditor's bill was now under $70,000 and if he would send
a copy of the auditor's bill to the committee, he was asked if he had checked
all of the bank accounts in Pacifica before taking some employees out of the
payroll system, and if he would send the NFC the statements for all of the bank
accounts for all of the stations. The CFO said that he would send a written CFO
Report next time. He said that all of the stations were struggling to meet
payroll and that he doesn't subscribe to the practice of stations borrowing
money from other stations for expenses, and that we have to figure out what the
best practice is. He said that they had no choice but to take employees out of
the payroll system, and it was a burden to the National Office to do the manual
checks. The CFO said that the auditor's bill was for $75,000 and that he would
forward a copy of the bill to the NFC. In response to questions the CFO said
that he's in the process of moving the accounting for WBAI and WPFW to the
National Office, and that there is a lot of work to be done with respect to
those stations' accounting. He said that the MEMSYS reconciliation hasn't been
done but will be. He said that WBAI and WPFW are so far behind in terms of cash
flow a very serious effort will be required to put them on a recovery track. In
response to a question the CFO said that he is in contact with all of the
station Managements, especially WBAI and WPFW, and he watches their finances
very closely. He said that he can't discuss any options for turn around plans
or finances because they get distorted and interpreted in many different ways.
He said he would discuss this in a closed session, but that we have to take
action.

Motions / Actions 9:27 PM (ET)

The committee discussed the CFO report.

Motion: (Michael Novick) "That the NFC recommend to the PNB to direct all local
station boards and local station board members to immediately begin active fund-
raising for their stations and the Foundation, to include each local station
board member acting to seek sustaining donors, and work with their General
Manager and with the National Office to identify prospective no-interest
creditors, who will lend money to Pacifica to pay for fund-raising mailings to
members, former members and supporters" (fails 5 for, 5 against, 1 abstention)

The committee discussed the motion.

Amendment: (Joseph Davis) "To change 'LSB members' to 'General Managers.'"
(fails 4 for, 6 against, 1 abstention)

The committee discussed the amendment.
Motion: (Cerene Roberts) "To extend the time for this item by seven minutes."
(Passed without objection) 9:40 PM (ET)

Amendment: (Cerene Roberts) "That the NFC recommends the PNB direct the
formation of LSB Membership & Fund-raising Committees to immediately begin work
with local management to actively fund-raise for their stations and to seek
sustaining donors, and work with their General Manager to identify prospective
no-interest creditors, who will lend money to Pacifica to pay for fund-raising
mailings to members, former members and supporters, etc.

Where such committees already exist, they should immediately undertake this
assignment." (Fails 2 for, 6 against, 3 abstentions)

The committee discussed the amendment.

Motion: (R. Paul Martin) "To extend the time for this item by 10 minutes."
(fails 2 for, 7 against, 2 abstentions)

Motion: (Barbara Whipperman) "To take up items 5 and 6 ahead of item 4."
(Passed without objection)

FY2017 Budgeting Timeline 9:58 PM (ET)

Motion: (Michael Novick) "To adopt the prior year's budget timeline with the
following modifications: change '2015,' to '2016,' to move A to May 31, B to
June15, C to June 30, and D to July 15." (Passed without objection as amended)

Amendment: (Adriana) "To change the title to FY17." (Passed without objection)

The committee discussed the motion and amendment.

Amendment: (Adriana Casenave) "On B to make it read, 'Local Finance
Committees/LSBs, in consultation with GMs/BMsLSBs, in consultation with General
Managers/Business Managers.'" (passed 6 for, 1 against, 3 abstentions)

Special Meeting Schedule 10:13 PM (ET)

Motion: (Brian Edwards-Tiekert) "To schedule a special meeting of the National
Finance Committee devoted exclusively to reviewing the financial performance of
KPFK on Tuesday, May 31st, beginning at 8:30 PM Eastern." (Passed without
objection)

The committee discussed the motion.

Review of second-quarter financial results 10:18 PM (ET)

The Chair noted that the consolidated financial statement shows a deficit of
about $21,000 on about $5 million in revenue. The Chair noted that the network
is a cyclical business and that the stations have to rely on their on-air fund
raisers for raising revenue. Also, Listener Support shows about $500,000 less
revenue than last year at this time.

The Chair proposed that the committee look at the specific stations that failed
to make payroll.

WBAI 10:18 PM (ET)

A comparison of the first six months of FY15 to FY16 shows WBAI's revenue down
from about $900,000 to about $820,000. For all of FY15 WBAI showed a deficit of
about $560,000. On expenses, in the first six months of FY15 WBAI had about
$960,000 in operating expenses, and for FY16 that decreased to about $943,000.
Overall WBAI looks like it's about $43,000 worse than in FY15. The CFO noted
that these expenses include the full accrued $48,000 a month Empire State
Building (ESB) rent, and that WBAI is only paying $12,000 a month, which he
said was probably the rate that will be negotiated. The CFO said that removing
the accrued ESB rent brings WBAI's deficit down to about $34,000 YTD instead of
about $250,000.

A question was raised regarding the difference between the WBAI General
Manager's figure of the ESB monthly rent being $55,000 and the CFO's figure of
$48,000. The CFO said the ESB rent is composed of several parts, but he would
look into that. The CFO said that WBAI has plans for off-air fund raisers which
have been shared with the PNB. He said that the combination of Listener Support
revenue and the off-air fund raisers would still not be able to meet WBAI's
gap.

In response to a question the CFO said that he's not getting meaningful
information from WBAI, WPFW and the Pacifica Radio Archive (PRA) because they
don't have Business Managers, and he had to put together a six month
projection.

In response to a question regarding the books and the financial information the
CFO said that there are gaps and missing things and that it was not an
efficient process. He said that they are bringing the books for WBAI and WPFW
to the National Office and that then they will have proper control.

It was noted that in FY15 WBAI had about $900,000 in Listener Support for the
first six months of the year and about $400,000 for the rest of FY15. This year
WBAI has about $627,000 in Listener Support. There was a short discussion of
how to attract listeners with the station's limited financial resources.

Motion: (Brian Edwards-Tiekert) "To extend the time of the meeting by15
minutes." (Passed without objection) 10:32 PM (ET)

WPFW 10:32 PM (ET)

A comparison of the first six months of FY15 to FY16 shows WPFW's revenue down
from about $800,000 to just over $500,000. On expenses, in the first six months
of FY15 WPFW had about $630,000 in operating expenses, and for FY16 that
decreased to about $530,000. For all of FY15 WPFW's deficit was about $190,000
and is the station is on track to produce a very large deficit.

The CFO said that he is not getting financial information from WPFW and that
it's a bad situation.

The WPFW Treasurer said that there are a lot of plans for raising funds and
efforts involving the LSB where people have committed to raising money. She
said that WPFW's current on-air fund raiser was going very well. She said that
the Business Manager is only there for 10 hours a week, which is not enough.
The CFO agreed with the WPFW Treasurer and said that the current numbers show
that the station will not be able to make critical payments.

In response to a question regarding the books and the financial information the
CFO said that WPFW's books have also not been moved to the National Office yet.
He said that WPFW was lacking in business management experience and is having a
hard time managing its operations. He said he has some plans that he is
bringing to the PNB about this and that he hopes that things can be turned
around in three to six months.

It was noted that WPFW's financial inability to make critical payments could
present a systemic threat to Pacifica; if WPFW can't make its health insurance
fee and the rest of Pacifica can't make up the difference, that endangers the
rest of the network. The CFO noted that a motion was passed that WPFW is
required to submit a plan within a 60 day period. The CFO said that WPFW had
borrowed money from a restricted grant to make a recent payroll and pay the
health insurance premiums. He said there was not much hope of getting out of
this without changes, and that staffing cuts won't do it.

Motion: (Adriana Casenave) "To have a special executive session meeting on May
31, 2016, at 9:30 PM (ET) to discuss recommendations regarding WPFW and WBAI
that would impact individual employees or would involve proprietary
information." (Passed without objection)

Point of Order: (Brian Edwards-Tiekert) "Call for the orders of the day." 10:44
PM (ET)

The Chair noted that PRA is not getting Central Services fees from the stations
and so can't pay its bills. He asked if the committee wanted to extend the
time for the meeting.

There were some short discussions, including questions about WPFW's overall
revenue drop.

Point of Order: (Cerene Roberts) "Has the meeting been extended?"

Adjourned 10:51 PM (ET)

Submitted by R. Paul Martin, Secretary.