Collaboration in Civic Spheres

Corporation for Public Broadcasting: Examination of Northwest Communities’ Education Center and KDNA-FM

by Andrew Hart July 7th, 2010

BACKGROUND: KDNA-FM is a radio station based in Granger, Washington licensed by the Northwest Communities’ Education Center (NCEC). NCEC is a non-profit community organization serving the Latino/Chicano/Hispanic populace of the region. NCEC uses KDNA to address the educational, informational and cultural interests of the Hispanic/Latino community. KDNA is funded by government grants, private donors, program underwriting, membership dues, and funds from the Corporation for Public Broadcasting (CPB).

After allegations that the station was not complying with CPB and Communications Act of 1934 requirements, the CPB Office of Inspector General conducted an examination of the station and submitted a report to CPB management on March 31, 2010. Specifically, the examination sought to determine whether KDNA: (a) made inappropriate expenditure of CPB grant funds, (b) improperly claimed non-federal financial support on fiscal year 2008 annual financial reports, (c) kept inaccurate financial records for fiscal year 2009, and (d) insufficiently responded to public requests for information and open public meetings as required by CPB and the Communications Act.

KEY LINK: Examination of Northwest Communities’ Education Center, KDNA-FM, Report No. ASR911-1002

KEY FINDINGS: For the period ending September 30, 2008, the examination of KDNA conducted by the CPB’s Office of Inspector General found several issues:

  1. $58,587 in grant funds were used to pay salaries and fringe benefits of a KDNA producer and news director rather than for funding national programming.
  2. KDNA over-reported non-federal financial support by $494,539 for fiscal year 2008, which could lead to CPB making excess grant payments in the future.
  3. KDNA’s financial records of CPB revenues and expenditures for the calendar year 2008 were inaccurate.
  4. KDNA did not adequately comply with Communications Act requirements. KDNA failed to provide the public with information regarding public meetings and financial information. The examination also found that KDNA did not follow CPB’s requirements for: holding open public meetings; maintaining open financial records, equal employment opportunity information, and information on donors and political activities.

Based on the findings, the Office of Inspector General made the following recommendations to CPB management:

(a) For the misuse of grant funds from CPB: The misused amount of $58,587 should be recovered. KDNA should establish a spending control system. KDNA should report how it spent funds from 2009 and how it will in 2010.

(b) For improperly inflating the amount of non-federal financial support on its annual financial report: The amount over-payed by CPB to the station as a result of falsely claimed non-federal financial support ($30,723), should be recovered by CPB. CPB should require KDNA to resubmit annual financial reports. CPB should require KDNA to put in place new controls over annual financial report preparation and have reports prepared by station officials.

(c) For KDNA’s inaccurate accounting records involving CPB income and payment: CPB should require KDNA to reconcile accounting differences with that of CPB for calendar year 2008, and accurately record the station’s CPB-funded expenditures for fiscal year 2009.

(d) For non-compliance with Communications Act requirements, CPB should require KDNA to: Revise policies concerning open meetings, equal employment opportunities, and donor lists. Follow CPB’s open financial records expectations and provide documentation to CPB that verifies KDNA’s adherence to these requirements. Until compliance with these requirements are met, the Office of Inspector General recommends that CPB withhold grants for FY 2010.

STATION’S RESPONSE:

On March 28, 2010 NCEC Interim Executive Director Mirta Laura Contreras responded to the examination findings in a letter to the CPB Office of Inspector General.

(a) KDNA officials have refuted claims of inappropriate spending, providing documentation they hope will prove that grant funds were used for national programming. Officials said that they are in the process of developing controls for accounting and bookkeeping and that grant funds in 2010 will be used for national programming. The CPB Office of Inspector General considers the issue of misuse of CPB grant funds unresolved.

(b) Regarding improperly claiming non-federal financial support, KDNA officials acknowledged reporting errors, and agreed to submit a revised 2008 annual financial report and impose new controls over report preparation. The CPB Office of Inspector General considers these issues resolved pending implementation.

(c) KDNA has not responded to the recommendations concerning inaccurate record-keeping because it was not included in the report that was given to KDNA. But KDNA has since acknowledged the need to accurately account for CPB expenditures.

(d) KDNA officials acknowledged the need for policies that ensure compliance with Communications Act and CPB requirements. KDNA claims that it will maintain records of its efforts for at least three years. The CPB Office of Inspector General considers these issues resolved pending implementation.

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