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Stations question diversion of CSG cash to Future Fund
CPB allots seed money for coming transition

Adapted from Current, July 31, 1995
By Geneva Collins

Dozens of public TV and radio general managers are questioning the legality of CPB's decision to partially finance a new $11 million Future Fund by taking money from its heretofore sacrosanct Community Service Grant pool.

The CPB Board voted July 17 [1995] to create the controversial fund to help radio and TV stations increase efficiency, automate, consolidate operations and boost revenue during the coming phaseout of federal aid.

Critics of the fund haven't heard much about how the fund would operate, but do know that all stations would lose a chunk of CSG income that has few strings attached, and that selected grantees would get that money back to undertake specific projects.

The idea of the Future Fund came out of CPB-appointed radio and TV Issues and Policy Task Forces, which will circulate proposals in coming weeks.

A major use of the fund may be investments in system automation, which CPB expects to permit staffing cutbacks and multimillion-dollar savings.

The radio task force has issued broad objectives for the fund. It would be used to: support projects that together raise the level of public radio's annual listener and underwriting support by $60-100 million within five years; encourage more efficiency in the public radio system via consolidations and other partnerships; and assist licensees vulnerable to defunding under audience service criteria currently being developed.

More specific ideas floating around the radio system about how the money might be used include: consultancies, joint underwriting ventures, a national underwriting rep, severance pay for laid-off employees, and online projects.

"Absolutely outraged"

With CPB's diversion of CSG money into the Future Fund, individual stations will see next year's CSGs drop by only 0.4 to 3.1 percent, compared with earlier expectations for the year, but compared with the fiscal 1995 CSG pool, the Future Fund plan will reduce the pool by about 8 percent.

CPB's Future Fund is actually two funds: a $6.4 million television fund and a $3.6 million radio fund. Of that $11 million total, $3.75 million will come from the $176 million CSG pool; CPB will cough up the remaining $7.5 million out of its $16 million system support fund.

That formula was a compromise reached after the board heard objections to its earlier plan, which would have drawn half of next year's Future Fund from the CSG pool. But that will be the plan for financing the Future Fund in the following year, fiscal 1997, the board said.

This means that, with the CPB appropriation continuing to fall, if the Future Fund continued at the $11 million level, the CSG pool for that year could shrink about 12 percent below the 1995 pool, by Current's calculation.

Many station execs argue that CPB shouldn't be taking money from stations that are still reeling from the latest congressional rescission.

David Brugger, president of America's Public Television Stations, said "40 or 50'' managers had asked him to look into the legality of CPB's action.

"We're just going back into the statute and looking at the report language--looking to see if things were done the way they were supposed to be done, does CPB have the authority to distribute this money in this way, under what conditions can that happen,'' he said.

"When I worked there [Brugger was a senior v.p. at CPB until 1988], it was always my understanding that this kind of thing could not happen. ... There seems to have been a real change in policy.''

"We did a legal analysis through our legal counsel before it was submitted to the board,'' responded CPB spokesman Mike Schoenfeld. "Because every penny of the funds earmarked for the CSGs is going directly to the stations, it is a legal and legitimate use of the funds.''

"Do you have earmuffs?'' said Bill Reed, g.m. of KCPT in Kansas City, Mo., when asked how he felt about CSG money being used for the Future Fund. "I am absolutely outraged over this.'' Reed said he has asked an attorney to investigate the legality of the CPB Board's action.

Ruth Seymour, g.m. of KCRW-FM, Santa Monica, said CPB's approval of the fund is a "slap in the face'' to NPR stations that voted during the PRC, 89-62, against lifting the funds from the CSG pool.

The statute at the heart of the legal debate is Section 396 of the Communications Act, which spells out how CPB must spend the money Congress gives it.

Paragraph (3)(A)(ii) of Section 396 says the CSG money "shall be available for distribution among the licensees and permittees'' of public television and radio.

Many had not 'focused' on issue

Some station managers who oppose CPB's action say they approve of the Future Fund itself. Their objection lies with the haste in which it was adopted, before the issue could be thoroughly vetted and the fund's mechanics worked out.

TV task force member Fred Esplin, g.m. of KUED in Salt Lake City, acknowledged that station managers have been preoccupied with common carriage and underwriting controversies with PBS, as well as their funding fate on Capitol Hill, to concentrate on the CSG revamping.

"It was hard to get people to focus on this issue,'' he said, noting that virtually no one attended a session on the CSGs at the June Summer Planning Meeting in Washington because it was held the same time as a PBS Board meeting. A session at the Chicago programming meeting a month earlier was also sparsely attended.

Until the July 17 CPB Board meeting, the radio and TV funds had separate names: the Public Radio Growth Fund and the Public Television Efficiency Fund. But the board decided that since the funds' goals were the same, the names were changed to the Radio and TV Future Funds.

The chief financial officers of eight of the largest public television stations sent a detailed letter to the CPB Board addressing a number of proposed CSG reforms.

"Removing [money] from the pool on short notice will have an unusally large negative impact on stations' operations. Most stations' budgets are set for 1996 and commitments have already been made based on expectations about CPB funding levels,'' said the CFOs of KCET in Los Angeles, KQED in San Francisco, WETA in Washington, WGBH in Boston, WHYY in Philadelphia, WNET in New York, WQED in Pittsburgh, and WTTW in Chicago.

Although many station executives are crying foul over the siphoning of CSG funds, the fact is when they were drawing up their budgets (most stations' fiscal years began July 1, though CPB's does not start until Oct. 1), they were expecting the CSG pool to take a much larger hit, based on DACS memos CPB sent out in June.

Because CPB is upping its own contribution and taking less from the CSG pool, stations will be getting more money than they probably planned.

Bass, for example, had expected to lose about $20,000 from WGBY's budget, but now predicts it will be $8,000.

According to CPB station grants administrator Priscilla Weck, the CSGs for small TV stations will shrink by 0.4 percent, medium stations by 1.5 percent, and large stations by 2.3 percent. For radio, the numbers are 1.8 percent, 2.7 percent and 3.1 percent, for small, medium, and large stations, respectively.

Jacqueline Conciatore and Steve Behrens contributed to this report.

Web page posted March 11, 1996, revised Feb. 11, 2004
Current: the newspaper about public TV and radio
in the United States
Current Publishing Committee, Takoma Park, Md.

RELATED ARTICLES

Planners see savings in automation of stations, 1995.

LATER ARTICLES

Faced with new criticism of the legality of the TV Future Fund, CPB calls it off, 2004.

Current gives a guided tour of the law governing CPB.

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