California public radio station in chaos amid layoffs, audit

Capital Public Radio in Sacramento is in turmoil, following the layoff of 12% of its staff, cancellation of four music shows, a scathing audit and the Wednesday resignation of more than half of its board of directors.

The developments leave the future of CapRadio uncertain.

Here’s what you need to know:

Capital Public Radio — also known as CapRadio — operates two public radio stations in the Sacramento area, one focused on music, one on news.

It describes itself online as the National Public Radio station for Northern California and Western Nevada, including the Central Valley and Sierra Nevada.

CapRadio also operates North State Public Radio in Chico and North Coast Public Radio in Arcata and

Eureka.

The main license for Capital Public Radio is held by Sacramento State University, where the station is headquartered.

As a nonprofit, the station is largely funded by contributions, though the university has loaned CapRadio millions, including $8 million toward a new downtown Sacramento headquarters.

The station has a roughly $21 million budget.

What’s happened?

Facing financial difficulties, the station announced on Aug. 30 that it was laying off 12% of its staff, including nine employees in Sacramento and three in Chico. At the same time, it canceled four music shows it produced. Station officials blamed the cuts on a precarious financial situation. Late in September, the California State University chancellor’s office released an audit that warned that CapRadio could be insolvent by January and identified a number of instances of financial mismanagement.

Those failures included not making payments on an $8 million loan the university obtained for construction of a new downtown headquarters, not having the purchase of $1.1 million in studio equipment and office furniture properly approved by its board, and not properly reviewing credit card purchases, as well as poor recordkeeping, lack of oversight and a lack of knowledge of proper accounting and financial practices.

In the wake of the devastating audit, 13 of the 23 members of CapRadio’s board of directors submitted their resignation Wednesday. In a letter to Sacramento State University President Luke Wood, obtained by the Sacramento Bee and CapRadio’s news staff, the directors complained about recent university actions to take over management of CapRadio operations and said it has been a poor partner, failing to share concerns about finances with the board.

The board’s treasurer also resigned on Wednesday but did not sign the letter, according to CapRadio. Wood accepted the resignations.

What does Sacramento State say?

Capital Public Radio is an “auxiliary” of Sacramento State, so the university has responsibility for its oversight. Over the years, the university said, the “firewall” between CapRadio and the university grew because both wanted to maintain the broadcaster’s journalistic independence.

Sacramento State spokesperson Lanaya Lewis said in an email to the Chronicle that the university became aware in 2021 of “inconsistencies” in CapRadio’s financial reports, including expenses at its on-campus headquarters. It reported those inconsistencies to the CSU chancellor’s office, which conducted an audit of CapRadio.

Wood recently appointed the university’s chief financial officer to “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.”

The university said it expects to spend $12 million on Capital Public Radio in the coming years. It expects that money will be repaid and said the expenditure will have no impact on education or campus operations.

What does Capital Public Radio have to say?

Capital Public Radio was not immediately available for comment on Thursday, but Tom Karlo, the broadcaster’s interim general manager, told CapRadio in a recent statement for a news report: “We are exploring every option to keep CapRadio going.”

What’s the future of CapRadio?

Capitol Public Radio’s stations remain on the air, and the nonprofit continues to solicit donations.

“Sacramento State is doing everything to save CapRadio, and it started with the audit request back in 2021,” Lewis said. “If it were not for the audit request, there’s a chance CapRadio (would) not be here today. CapRadio is an integral part of the Sacramento community and has shown how important it is to have public media.”

As the popular broadcasting industry saying goes, “Stay tuned.”