June 21-23 iPNB Treasurer's Report of Jabari Zakiya

Introduction
This report primarily covers the period from the March iPNB meeting in LA to the present. Its purpose is to provide a review of specific issues I feel are important to address by the iPNB and to inform the public about.

This report will not get into detailed discussion of the Foundation budget, audit, or debt reduction specifics. These topics will be specifically addressed by the ED and auditor reports, and there will be a specific time allotted to their discussion on the agenda.

I have addressed the following items in alphabetical order:

Accounting Software
Training was conducted for Great Plains Dynamics 6.0 accounting software from April 10-12, 2002. Its purpose was to train all the business managers, and Finance Office personnel, in the use of Dynamics. Also attending were myself, Valerie Van Isler (GM NY), Brian Gibbons (NO) and ED Dan Coughlin (for the first day only). The training was given by Applied Accounting Technology of Fairfax, VA. By all accounts it was excellent, and elevated the participants to a much higher level of productivity with the software.

Networking and phone line issues prevented some of the units (most notably NY) from becoming fully operational until about the middle of May. Currently, all units can manage their financial operations over the Internet through the central server in the Finance Office (DC). As I write this (6/6/02) PRA (Pacifica Radio Archives) cannot write its own checks to pay its bills, which must be done be the Finance Office, until it receives its printable check stock.

I am also assessing the migration of our present accounting software to a system which runs on the Linux Operating System Linux OS). The current software runs under Microsoft Windows, which puts us in a security and financial bind. The whole Finance Office has already gone down once on Christmas Eve 2001 because of a virus hit, and Microsoft's announcement of a new licensing scheme for all of its software (OSes and applications)will greatly increase the cost of operation of our current infrastructure if we don't seek less costly alternatives now.

Audit
On Monday, April 22, 2002, the audit of FY 2001 was started by Ross Wisdom and his assistant, from the accounting firm Kimerling, Margulies & Wisdom, LTD, of New York City. This is the same accounting firm which conducted a preliminary assessment of Pacifica's financial situation in January this year and submitted a report and recommendation to the iPNB, dated February 9, 2002.

The big issue for the audit is the extraction of data out of the old Solomon accounting system software, which resides physically on its own server computer) and the conversion and importation of that data into the Dynamics software. Again, Applied Accounting Technology was contracted to do the data conversion and importing. They are also contracted to do report creation for analysis and presentation of the data.

The Finance Office (Yhasmine and 3-4 staff people) had to work long overtime, and on weekends, just to identify, find, process, and reconcile old accounts and transactions to make them auditable. This included the necessity of having the BMs from NY and PRA (and WPFW) come to the Finance Office in DC to assist with the grunt work involved in the process.

Presently, the auditors still need more information, but are scheduled to release a report, probably now in late July or early August. Ross Wisdom, however, is scheduled to be at the Berkeley meeting.

Banking
All units have operating accounts which they can write checks against to pay their own bills (with the current noted temporary exception of PRA).

There is also a serious need to assess making the banking structure more efficient by evaluating the consolidation of all the unit accounts under one bank, or at least, creating more efficient and accessible electronic banking. I have had a proposal from one national bank since February to consolidate our banking activities. It needs to be thoroughly reviewed, and other possible proposals need to be sought out.

Budgeting Process
In April, all the units submitted their proposed FY 2002 budgets. Yhasmine Bryan (Controller) compiled this information into a proposed FY 2002 National Budget. The proposed budget was presented to the iPNB in writing, and discussed via a conference call meeting on May 8, 2002, along with accountant Ross Wisdom.

This proposed FY 2002 budget still needs to be ironed out. The presentation of the information was not given to the Finance Office in a standard format from each unit. Accounting codes need to be modified for consistency; line items weren't consistent; and expense and revenue listing wasn't consistent.

Also, the GMs and BMs for each unit are supposed to create their budgets together. Each budget should then be reviewed by the National Office (ED & Controller) to assess its financial accuracy, and reflection of reality, as well as it adherence to local and national imperatives (this can also be done in conjunction with each LAB finance committee too). Then, the iPNB Treasurer and Finance Committee should review the whole budget for financial realism and mission consistency and compatibility.

As it stands, the proposed FY 2002 budget has not been scrutinized to the level necessary to assess its financial accuracy and mission compatibility. Also affecting this exercise is the affect of the professional services debt the corporation inherited pursuant to past litigation.

Example 1:
The fund drives use too many vendors, which cost too much money, which reduce the Net Realized Revenue (NRR) [actual fund drive revenue received - fund drive expenses]. Its not just how much money is received, but also how fast/when it is received. We must wean listeners off of material premiums, and replace costly vendors with PRA and other less expensive premium alternatives. We should promote the programming as THE product, not CDs, books, and T-shirts.

Example 2:
Budgeting should realistically reflect mission requirements. A cursory assessment of WBAI and WPFW budgets for a (local?) News Department (6671) shows a disparity in the monthly money allocation to provide this activity. WBAI budgeted $208/month over the full year for a "News Department", while WPFW allocated $1000/month, but only starting in June 2002, for the same line item.

But what do these News Departments purport to do? And it would seem logical that New York, being much larger in area/population than DC, would require more resources, in order to produce local news for a larger area/population. Also, these allocations presumably do not account for the personnel to do "news" in each case.

What we need to do is create a better accounting matrix which allows for specific station activities/departments to be tracked in a clearer manner.

	news depart	program develop	fund drive
overhead	111.11	222.22	333.33
personnel	111.11	222.22	333.33
equipment	111.11	222.22	333.33
phone/fax	111.11	222.22	333.33
postage/shipping	111.11	222.22	333.33
......	xxx.xx	yyy.yy	zzz.zz
......	xxx.xx	yyy.yy	zzz.zz

These kinds of reports/accountings can be easily done if the major/sub-accounting fields are designed into our software to accommodate the kind of granularity we need to make the data conform to how we need to view it.

In all other activities outside of radio broadcasting there are none, and have never been, any management/budget resources to promote the other elements of the Pacifica mission. This needs to be rectified.

Debt Reduction
It is my opinion that Pacifica needs to eliminate its professional service debt as soon as possible, targeting towards FY 2003. Presently (6/6/02) there exists about $1.6M outstanding. There is planned a day of national programming and fund raising on June 19, 2002 to raise money specifically to apply toward the debt.

Until this debt is eliminated it will continually act as anchor dragging on the sea floor as we try to sail forward. It puts a damper on our credit rating, which forces us to pay for almost everything in cash. It diverts revenue which should be going to pay for current and new activities, which distorts our budgeting process and stunts any meaningful strategic development and planning.

Further reluctance/resistance to make admitably unpalatable settlements with certain creditors will likely just delay the inevitable, with no reduction in ultimate total outlays. Financially speaking, it would be best just to hold our noses, swallow the pill, and get rid of this debt asap, so we can financially, and figuratively, close the books on this episode in the Foundation's history.

Finance Committee
On May 20, 2002 the iPNB Finance Committee held its first conference call meeting to discuss issues concerning the professional service debt, and to give guidance to the executive officers on how to proceed.

I would like to see the committee provide oversight, planning, and monitoring of the stations budgets, in concert with station/LAB finance committees. Under a new governance structure, the creation of the roles and duties of station/LAB finance committees should be formalized. This could greatly aide the PNB in its oversight, planning, monitoring and analysis of financial data and issues, and proclude the necessity of seeking outside talent to provide these skills. There is enough talent within the Pacifica family to manage our finances wisely. We should set up a structure to identify and use this talent.

Finance Office Operations
The Finance Office currently consists of 4 people: the Controller, one accounts payable person, one cash management person, and one payroll management person. This office is woefully understaffed to efficiently manage the financial operations of an organization our size. At least two additional people need to be hired who can do work with the accounts, general ledger, and cash management activities.

Finance operations and policies still need to be formalized and put into operation. This includes determining the specific accounting code items and numbers, check writing and banking practices, documentation and oversight requirements, and other practices and procedures which should be standardized across the units.

Once data from FY 2001 from the old accounting software (Solomon) has been fully converted into Dynamics the office will have two years (2001/2) almost fully accessible. But much work will still be necessary to track down and reconcile old data preceding 2001, if really required. This may not be possible, or even if so, not an advisable utilization of this office's time, energy, and staff use.

It is imperative that the current staff in the Finance Office be retained to perform these tasks, as well as buttressed with new staff. The loss of the institutionalized knowledge of the accounting systems, vendors, undocumented transactions, banking activities, etc, would make these tasks impossible.

It will take a minimum of at least three years to get the Foundation's financial operations developed to the level of efficiency, stability, and maturity to really accommodate just the current needs of the organization. This projection is with the assumption that our debt can be eliminated within the next two fiscal years and that no new catastrophes plague us. This is also with the assumption that a new governance/management structure, per the Settlement Agreement, is achieved, which doesn't impede the financial and day-to-day operations of the Foundation through this period.

Because of these factors, the decision to move the Finance Office from DC "when feasible" should be rescinded until such time as efficient financial operations, and financial stability of the Foundation, has been demonstrably achieved, and there is a clear requirement to do so. The resolution made in March in LA to move the Finance Office was imprudent. It not only went against the recommendation of the February 9, 2002 accounting report of Ross Wisdom to not disrupt the financial operations of the Foundation, because its very precarious financial health and stability, the decision was made with no assessment of its financial and operational impact on the Foundation. Any disruption of the Finance Office personnel and operations would not be in the best interest of the Foundation any time soon.

Fund Raising/Drives
Presently the Foundation receives about 85% of its yearly revenue from the stations listener fund drives. CPB grants that have typically accounted for about 10% of operating revenue. We need to make the fund drives more efficient at each station so that their Net Realized Revenue (NRR) is higher. This can be immediately achieved by reducing the number of vendors used, replacing them with PRA provided items, and reducing the reliance on premiums. We also need to create an efficient and easy to use web presence for generating and collecting revenue.

We also need to develop alternative streams of regular revenue, to not only take the stress off the listener fund drives, but to also raise more revenue on a regular basis in order to fund more programs and other Foundation activities. This should be the primary function of a National Development Director/Office.

National Office Staffing
There is a definite need for office staff to service the activities of the PNB. This staff would organize the meetings, make travel arrangements, transfer communications to PNB members, compile PNB meeting packages, compile/distribute committee reports/minutes, act as contact points for the PNB for outside entities, etc.

There are also another whole set of activities which can only be performed effectively and efficiently at the national organization level which need to be established and funded:

1) National Program Director
This position/activity would include developing network programs, national days of programming, affiliate relations and program distribution, working with IMCs and other potential external program content providers, and other related matters. This position creation was also Hot Item 5 under the Settlement Agreement.

2) Office of Technical Operations and Development
This would include maintaining our radio infrastructure (transmitters, generators, etc), and staying abreast of requirements and technology in radio (digital, low power, and ultra-wideband). Also, developing, operating and maintaining a first class, secure and robust IT (information technology) infrastructure. This would include our Internet presence, internal email/communication services (e.g. chat rooms, and data collection). Also, creating and maintaining a database of members necessary to facilitate voting, LAB needs assessment, fund raising, etc.

3) National Development Director
The position/activity would be fulltime focused on fund raising and endowment building. This would include fund raising for targeted projects, such as transmitter upgrades and repairs, building funds (to have all our stations in Foundation owned property), and non-radio mission based activities (like scholarships, internships, etc).

Strategic Planning
The Foundation currently does no real strategic planning to expand or improve in any significant way. The last significant act of strategic planning was the application to the FCC in 1968 to acquire a station in DC (WPFW), which took 9 years to achieve. It is imperative that the Foundation engage in real strategic planning, and provide the financial resources to do so, in at least the following areas:

A) Broadcast Development -- assessment and development of emerging broadcast technology (e.g. low/micro power community radio, digital radio transmission, and ultra-wideband transmission) must be planned for.

B) Endowment Fund -- capital to buy station buildings, major capital equipment purchases (transmitters, etc), scholarship funds.

C) License Purchases -- expanding the broadcast operations through future licensing fees, purchases and partnerships.

D) Print Publishing -- expand revenue and social mission through a Pacifica Press. There is technology (which will be expanding and becoming cheaper) which allows for producing printed material (books, paperbacks, pamphlets) on demand.

E) Strategic Alliances -- creating, expanding common mission activities with like minded charities, organizations, and NGOs to fulfill the complete mission and achieve economies of scale in product purchasing and professional services.

Summary
The Foundation continues to move toward financial stability, but still should not be considered fully recovered from the Pacifica wars. We have been able to reduce the projected yearly debt cited in the February 9, 2002 accounting report by over 50%, to under presently $2M in litigation debt, and have greatly reduced the past operating debts at the stations. This was done primarily due to generous support of Pacifica listeners during two listener fund drives in Feb/March and May/June.

It is imperative that we learn, and act, to operate the Foundation in a more efficient and effective fiscal manner. This is especially important as we try to create a new governing structure for the future to operate under. Hopefully, we will be able to work over our differences and distrusts, and begin to build and operate the Foundation, in the totality of its original vision, to make not only Pacifica the organization it should be, but also the country.