Sacramento State University has released the details on an organizational audit and taking direct University supervision of Capital Public Radio “CapRadio” and their Classical 88.9 KXPR Sacramento/88.7 KXJS Sutter/91.7 KXSR Groveland CA and Public News/Talk 90.9 KXJZ Sacramento/88.1 KQNC Quincy/90.5 KKTO Tahoe City/91.3 KUOP Stockton CA.
The audit found 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. The University’s financial team recognized discrepancies in financial statements.
The Sacramento Bee reports that the station owes $3.3 million in unpaid bills from the past two fiscal years including all programming fees to NPR for over a year. Interim General Manager Tom Karlo told listeners, “The finances are pretty severe right now for CapRadio. We owe a lot of money to vendors. We barely have enough cash to keep us going right now. We are making payroll. It’s just been a very, very tough time. We have no reserves.” CapRadio laid off 12 percent of its staff on August 30.
As part of the University taking back management oversight of the stations, Sacramento State will find a new permanent General Manager and other upper-management positions. A new Chief Content Officer will remain an auxiliary employee to enable CapRadio’s journalistic independence. The plan also will see Sacramento State will oversee and manage CapRadio’s accounting department, endowment, and finances to ensure the auxiliary remains in compliance with CSU financial policies, procedures, and state laws, require CapRadio to rotate auditing firms on a biennial basis to ensure the auditing process remains unbiased, and require the station to uphold its educational mission to benefit Sac State students. They will also commission a forensic examination to determine the origins and causes of CapRadio’s operational and financial problems.
CapRadio also operates Chico State University’s “North State Public Radio” 91.7 Chico, 88.9 KFPR Redding, and eight translators across northern California.
Sacramento State is instituting changes in financial oversight and management for University auxiliary Capital Public Radio (CapRadio) in response to findings from an organizational audit released today by the California State University (CSU) Office of Audit and Advisory Services. The CSU audit reveals substantial problems within the auxiliary, which operates as a popular public broadcasting outlet. Given these findings, operational management of CapRadio will be placed directly under University supervision, while the news and entertainment programming of the National Public Radio affiliate will remain independent.
This course of action is designed to address and resolve areas of significant mismanagement and lax accountability within the auxiliary that are highlighted in the CSU audit.
The 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. Sacramento State’s financial team recognized discrepancies in financial statements and then-President Robert S. Nelsen subsequently requested the CSU organizational audit.
“I want to thank President Nelsen for requesting the audit last year, adding Sac State’s chief financial officer to the CapRadio board, and for committing the resources necessary to stabilize the station’s operations,” said President Luke Wood, who began his leadership of Sacramento State in July 2023. Nelsen requested this audit in 2022.
“One thing is abundantly clear: We have real and immediate work to do to ensure CapRadio’s financial controls and operational processes are disciplined, sound, and transparent going forward. The financial implications of CapRadio’s mismanagement have significant consequences for Sacramento State, but we will make it through,” Wood said.
“Now is the time for the community to continue its support for CapRadio. Given the changes the University and CapRadio board are putting into place, donors should feel confident moving forward that their generous contributions will be well stewarded.”
Although Sac State holds CapRadio’s broadcast license, what began as newsroom independence has evolved over the years into an organizational divide that must be remedied, Wood said. The University and CapRadio Board will work collaboratively to address the issues raised in the audit.
In August, at Wood’s urging, the board appointed Tom Karlo to serve as interim general manager of CapRadio. Karlo has 47 years of experience working in public media and expertise in addressing financial challenges. In addition, the president and his leadership team have developed and will work with CapRadio to implement a five-point plan to stabilize the station’s management, finances, and operations:
- Sacramento State will move the operational management of CapRadio under University supervision, including a forthcoming permanent general manager and several upper-management positions. A new chief content officer, who will oversee station programming, will remain an auxiliary employee, ensuring CapRadio’s journalistic independence.
- Sacramento State will oversee and manage CapRadio’s accounting department, endowment, and finances to ensure the auxiliary remains in compliance with CSU financial policies, procedures, and state law.
- Sacramento State will require CapRadio to rotate auditing firms on a biennial basis to ensure the auditing process remains unbiased.
- Sacramento State has commissioned a forensic examination to determine the origins and causes of CapRadio’s operational and financial problems.
- Sacramento State will require CapRadio to adhere to the auxiliary license and operating agreement, which requires the station to uphold its educational mission to benefit Sac State students.
President Wood acknowledged this is a difficult time for the organization’s staff and members.
“We are fighting to save our auxiliary,” Wood said. “CapRadio has been part of the fabric of Sacramento and northern California for decades. It is important to us to maintain the health and integrity of such a valuable and beloved media institution.”
