UN I V E R S I T Y D A I L Y K A N S A N
Mondav. Mav 5.1997
11A
What went wrong at KANU?
By Nicholas Charalambous Kansan Staff writer
The financial crisis that has embroiled University of Kansas' public radio station, KANU, appears to have been a boon to the station's pocketbook and its morale.
About 1,700 listeners pledged more than $138,000 to the station in April, the highest total in KANU's 45-year history.
"I was concerned about their confidence in us, and for me that was the biggest boost," said KANU's interim director Janet Campbell. "I feel now they're confident in giving us their money and trusting us to deal correctly with it."
The University still never fully has accounted for the causes of the station's nearly $200,000 projected deficit that was discovered in December and precipitated wrenching changes.
Some listeners say that the University neglected its public trust. And some KANU staff and former employees also charge that the University did not exercise proper financial oversight of the station and ignored red flags for many years. These sources say the University shares the responsibility for the station's financial train wreck.
After the deficit was discovered, KANU was forced to lay off six staff members and to stop broadcasting from midnight to 5 a.m. until April. Howard Hill, director and general manager of KANU for 20 years, was reassigned to other duties at the office of University relations.
SECRETS
Mitch Lucas / KANSAN
Neva Entrikin is a loyal listener and financial supporter of KANU. Because she thought the University had not been forright about the station's financial problems, she pledged less money than usual for the station's spring fundraiser.
The University said there were no secrets to KANU's financial crisis
"It's like they don't want to let the secrets out of the bag," she said. "I've donated money to the station and I am entitled to know where my money has gone."
Theresa Klinkenberg, associate University director of administration, said in early January that KANU's projected deficit of $197,900, out of a budget of $1.2 million, resulted from overspending that the station had no way to anticipate. She cited increases in National Public Radio dues for the programs Fresh Air and Car Talk and increases in staff salaries.
The deficit was discovered during a routine review of the station's finances, she said.
KANU was forced to cut back staff and programming, halt equipment purchases and curtail other expenses, such as travel. The University gave KANU a non-interest bearing loan of $150,000, but a schedule had not been set for renavment. Klinkenberg said.
KANU staff and former employees continue to say that the University hasn't given a credible explanation of what went wrong at KANU.
"It is absurd that Howard did not know there would be salary increases of 2.5 percent and that NPR dues would go up," said Vance Hiner, who quit as KANU news director in August 1996 after six years at the station. "I believe that the public trust was violated. I believe that the University and Howard Hill should admit their mistakes rather than allowing many people who still work at the station to be blamed by inference."
LOOKING FOR ANSWERS
Both Klinkenberg and KANU's interim director Janet Campbell rationalize the station's financial problems in the context of the public radio industry as a whole, which has faced unexpected costs, rising expenses and flat income during a number of years.
But if the station faced a tight fiscal situation for a number of years, neither the University nor KANU are trying to explain why so huge a deficit only was discovered recently.
Neither Klinkenberg nor Campbell considered finding the answers behind the financial crisis a priority.
"I haven't had the time or the energy to focus on what happened, on what might have been, or what should have happened," Campbell said. "My charge is to get the financial affairs in order now. Some day I can go back and educate myself."
Finding reasons for the station's financial crisis isn't easy. Many sources refused to talk and others insisted on anonymity fearing for their jobs or the jobs of their spouses.
"I think those who still work at the University are obviously reficient to go on the record for fear of retribution, and for those who no longer work for the station, they are afraid of the impact on their future references," Hiner said. "For some, the whole affair was so painful they want to put the whole affair behind them and not talk about it."
POOR MANAGEMENT
Those close to the station say Hill was incapable of adjusting station spending to match long-term reductions in the station's revenue from University, state and federal sources.
"Howard failed to ever implement a long-range financial plan like you would find at any business," Hiner said. "The result was that he was deficit spending for years. If he had a motto it would be: 'Never do today what you can put off until tomorrow.'"
Hill operated the station without departmental budgets or quarterly financial reports and allowed up to four staff members a $200 purchase authority, meaning staff members spent funds without his authorization and without knowledge of a spending limit.
"We never had any sense of our financial reality, about how much we
had to spend," said KANU news director Nick Hines, who has worked at the station since 1992.
Hill's management style, the sources say, also allowed personnel conflicts to develop between departments that led to a furry of staff resignations.
"He let everybody do whatever they wanted," said Kathy Fain, a producer and announcer for KANU from 1988 to 1993. "You have to have someone who for, frankly, three times my salary, doesn't mind being unpopular."
Multiple sources also charge that the University did not properly supervise the station, despite top University officials being warned on several occasions, in 1985, that the station was not being run effectively.
"Hill is a lot less responsible than the University itself," said Bob Pearson, who quit as KANU's chief engineer in February. "Every year the station had auditors come in and no one caught anything. In theory, you cannot be poorly run at the University for more than a year. The University's oversight of the station has been abominal."
'AN UNFORTUNATE CIRCUMSTANCE'
Hill said that KANU's financial problems weren't expense-related and that he had overproved income.
"Public broadcasting stations like KANU have faced these kinds of financial difficulties," he said. "I think it's a fairly typical situation. We felt the budget squeeze for years and years and it probably caught up with us a little later. It's not an unusual circumstance. It's an unfortunate circumstance, and I take full responsibility for it, but it is not something that is unknown."
Although Hill now has a different job within the University, he still earns his general manager's salary of $87,000.
Records from KANU's development department show that income at KANU was on the rise. In 1995 and 1996, the station increased membership income by more than 15 percent and underwriting income by more than 20 percent. Projected increases in membership and underwriting income for 1997 are at the same level and expenses have been cut by nearly $200,000.
University, state and federal support for the station declined in 1995 and 1996, in line with broad trends that Hill said he had been aware of.
DEEP IN DEBT
Contrary to the University's previous insistence that the station's deficit and financial crisis were projected, rather than actual, documents show that at least from July 1996 thru February 1997, the station was chronically in debt.
KANU owed money to NPR, utilities companies, its press service, a haulage company, several broadcast supply firms and many others. Until the University loaned the station $150,000, the station did not have any money in University accounts to pay outstanding bills, records show.
Mitch Lucas / KANSAN
KANU also accumulated a large number of late payment charges, including $2,961 to NPR that had been due since at least January 1996. Some business proprietors and former KANU employees say that the station had an even longer history of difficulties paying its bills on time.
Nancy Strattan, vice president of Professional Studio Distributors, a firm that supplies audio tape to KANU, said that since October 1995, it had taken the station 60 to 90 days or longer to pay bills. She did not levy late payment charges.
"This seem to be standard procedure with them," Strattan said. She set up a detailed record keeping and ordering system exclusively for KANU. "We sell to a lot of radio stations on state contracts and these were the only people that bothered us."
KANU was in bad enough shape that that it had trouble paying its most basic bill—its dues to NPR.
KANU's killer budget problem was acknowledged as early as December 4, 1996, as a result of NPR dues, according to staff meeting minutes. A past due payment of $79,620 was made in the fall of 1997.
NPR made special arrangement with KANU to pay the remainder of 1996 dues in installments. No future installment plans would be tolerated, or the station's services would be terminated, said Mary Lou Joseph, vice president of member services for NPR.
Records show that KANU had been on a payment plan with NPR for three years and had been charged interest of 1.5 percent a month on late payments since the fall of 1995.
Why didn't KU catch the problem sooner?
Hemenway told staff he was disappointed that the auditors had not caught the station's financial problems, staff members at the meeting said. After more than 10 years with Schehrer, Bennet and Lowenthal, the University put KANU's contract out for bid a week later.
Tom Singleton, who was in charge of KANU's audits, said that his firm had audited the station according to strict professional standards and that the firm would bid again for the contract.
Klinkenberg said that despite the chancellor's comments, bidding out for new auditors was standard practice for contracts that had been in place more than three to five years and was unrelated to the firm's auditing of KANU.
Whatever KANU's difficulties, they were hidden deep enough that auditors didn't spot them. In a February 5 meeting, however, Chancellor Robert
UNIVERSITY OVERSIGHT
KANU's problems have run deep and wide, former and current staff members say. The station's personnel and financial management had been called into question as early as the mid 1980s.
"I came to a conclusion very early that University performance evaluations were a joke," said former chief engineer Bob Pearson. He recalled that the University ignored a critical report by a senior staff member in a 1985 performance review that outlined several areas in which the station's finances were not being managed effectively.
Documents show that Bob Bearse, associate vice chancellor for research and public service and who directly oversaw Hill, was aware in late 1992 that senior staff had brought in Gordon Fitch, KU professor of business, to help review its operations. Many of the review's recommendations regarding financial procedures were not implemented until Janet Campbell took over the station's finances in December 1996.
At least three former employees also requested exit interviews with University administrators to share their concerns about personnel problems at the station and the lack of University oversight.
Andrew Debicki, former vice chancellor for research and public service, who heard two of the complaints, said he made certain a performance review took place on schedule in 1995.
But most KANU staff and former employees say that the review did not present an accurate picture of how KANU was being run. Current and former employees described it as glowing.
"My personal feeling with that office was that personnel management needed attention," he said. "I can't remember if the review committee did or did not deal with financial matters."
It was only after the University-wide administrative reorganization that placed KANU under the direct authority of the chancellor that a financial review of the station took place and the true nature of the station's problems were discovered.
But Helen Moritz, a part-time producer and announcer of 15 years, who was laid off as part of budget cutbacks, said that the staff had been treated shabbiby the University. She was not surprised that Hill was reassigned to other duties and still earning his salary of $57,000.
"It's probably the good-old-boy network," she said. "He seems to have landed on his feet."
MEETING THE CHALLENGE
After the upheavals of the last several months, KANU is moving toward the future with a renewed sense of purpose. The flood of support for the station during the spring fund drive was a shot-in-the-arm for KANU's staff, who all have had to assume additional responsibilities during the station's restructuring.
Campbell said she was confident that the station's problems had passed. She has introduced a detailed accounting structure with help from the University's internal auditors and reduced station expenses by using a satellite feed for overnight jazz. She also scaled back resource-draining live shows, Imagination Workshop and Good Time Radio Revenue, from 13 annual performances to five.
"If our income projections hold, as we think they will, we will be in good shape," she said.
And if the development department has its way, money could soon be rolling into the station's coffers.
KANU is one of 10 NPR member stations selected to participate in a national underwriting initiative sponsored by the Corporation for Public Broadcasting, said Kathryn Wiese, development director for KANU. The goal of the program is to increase underwriting support for the station by 300 percent.
"I see KANU being a major force behind the future of public broadcasting in this state and, indeed, the Midwestern region," Wiese said.
For Campbell, the changes at KANU ultimately will make the station stronger and better able to fulfill its mission.
"The challenge of the station is to continue to provide a mix of programming that meets as many needs as possible and to always stay in tune with what listeners want, because it changes every day," she said.
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