CapRadio in turmoil, explained: resignations, layoffs and millions in debt
The future of Sacramento’s staple broadcasting stations, Capital Public Radio, is in jeopardy due to financial mismanagement and mass resignations.
Known as CapRadio, the nonprofit station has two networks in Sacramento for news (90.9 KXJZ) and music (88.9 KXPR).
Here’s what to know about what’s going on at CapRadio:
1. CapRadio has millions of dollars worth of debt
CapRadio’s financial crisis resulted in layoffs for 15 employees and four canceled music shows in September, but its woes have a higher price tag, The Bee reported.
The NPR member station owes vendors — including NPR — $3.3 million in unpaid bills, according to a budget presentation in August.
That figure doesn’t include the unpaid rent the station owes California State University, Sacramento for its headquarters in East Sacramento, which has been mounting since September 2022. Rent was $17,787 per month as of 2022, Bena Arao, former treasurer for CapRadio and the chair of the Finance Committee, told The Bee.
An audit released in early October revealed further mismanagement of funds, The Bee reported. This includes more than $1.1 million in loans for equipment and furniture, which didn’t have CapRadio’s board approval; unreviewed credit card charges, overcharges and late fees; non-documented vehicle donations; and an improperly executed loan of $8 million from the university. CapRadio also owns a Lake Tahoe-area timeshare with an unauthorized endowment fund.
Sacramento State said the audit findings “detail long-standing issues, including a lack of financial and governance processes and protocols, lines of credit and loans secured without campus approval or CapRadio Board of Directors awareness, submission of inaccurate or incomplete financial information to the board, the Corporation for Public Broadcasting, external auditors, and the University, and much more.”
The audit shows that as of June 2022, CapRadio is liable for more than $27.2 million.
2. The radio station’s board of directors has been stripped
Eighteen members of CapRadio’s board of directors have resigned over the last 10 days, leaving just six still in place.
Nonprofit boards typically help govern and oversee the organization’s strategy, operation and compliance.
On Oct. 5, 13 members of CapRadio’s board resigned due to disagreements on how to address its financial issues. That group included prominent area business leaders and lawyers.
“(T)he board was working at all times with the university and the university has access to all the financial documents, as is their responsibility,” local attorney and one of the resigned members Roger Dreyer told The Bee. “At no time did anybody from the university come to the board and say, ‘We’re seeing problems.’ There’s no malfeasance. This audit is not going to turn up anybody lining their pockets.”
The radio board’s treasurer, Bena Arao, stepped down in a separate resignation. He is also Sacramento State’s senior director for resource and organizational management.
Then on Thursday, four more members resigned. Their reasons for doing so are not yet clear.
As of Thursday, only six board members remained at CapRadio, The Bee reported, including the student representative, the radio station’s interim general manager and two business owners.
According to CapRadio’s website, it is working with Sacramento State to fill the open seats and an updated calendar will be posted soon to announce new board members and committee meetings.
3. Sacramento State is undergoing a multimillion-dollar endeavor to save CapRadio
Sacramento State President Luke Wood told The Bee in an Oct. 5 story that the university had spent $12 million to keep CapRadio from closing.
And it may spend another $5 million to continue propping the radio station up.
“My understanding is if the university had not come in they would not have made payroll...,”Wood said. “If it wasn’t for Sacramento State, Capital Public Radio would already be gone. That’s how big this is.”
Since CapRadio is a nonprofit, it cannot file for bankruptcy, Wood told The Bee in a September story.
“... Any debt accumulated is the ultimate responsibility of Sacramento State, its fiduciary,” he said.
Following the audit, Sacramento State announced it was taking over the station’s accounting, financial and other operations except content.
4. The future is “unclear,” and employees and listeners are worried
It’s not certain if Sacramento State’s attempt to save the station will be enough.
“The future of CapRadio, I think, is unclear,” Wood told The Sacramento Bee on Oct. 4. “We’ve had a chance to look at their finances and come the first quarter of next year they’re going to run out of fiscal resources.”
CapRadio employees are sad, worried and exhausted; and listeners of the station are angry and frustrated, workers told The Bee.
“I thought the layoffs were the worst day,” said Aram Sarkissian, the managing editor of CapRadio’s news and talk formats. “This is as tough, if not (a) tougher week.”
He told The Bee that some reporters are avoiding staff meetings and communication with Wood and Tom Karlo, the station’s interim general manager.
Programming at the stations continues, despite operating on “bare bones” and old equipment. Engagement member coordinator Rachael Cowan said she’s gotten calls from supporters upset about canceled programs and listeners who are confused and frustrated about recent events.
What other questions do you have about CapRadio’s current situation? Email reporter Hanh Truong at htruong@sacbee.com.
The Bee’s Sam Stanton and Ishani Desai contributed to this story.
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