Capital Public Radio projected to be insolvent by January, Sacramento State says

Days after the release of a blistering audit that found widespread financial mismanagement at Capital Public Radio, Sacramento State announced Saturday that the operation is expected to be insolvent by January and that a new administrator from the school is being put in charge.

Sac State President Luke Wood said he was appointing Jonathan Bowman, the university vice president for administration and business affairs and its chief financial officer, to oversee CapRadio.

“The appointment follows an internal analysis of CapRadio’s finances that projects the university auxiliary will have no financial resources remaining in January 2024,” Sac State said in announcing Bowman’s appointment. “This finding follows a CSU system audit that revealed significant problems with CapRadio’s financial health, governance, and operations.

“As a nonprofit auxiliary, CapRadio cannot file for bankruptcy, and any debt accumulated is the ultimate responsibility of Sacramento State, its fiduciary.”

The move comes in the wake of deep financial troubles at the operation, which laid off 12% of its staff a month ago and was the subject of a highly critical audit from the Chancellor’s Office of the 23-campus Cal State system that was released Wednesday.

The bombshell led to Sacramento State announcing it was taking over control of the operation’s accounting, financial and other operations except for content.

“The financial implications of CapRadio’s mismanagement have significant consequences for Sacramento State, but we will make it through,” Wood said in a statement after the release of the audit.

Sacramento State holds the license for CapRadio, a National Public Radio member that operates KXJZ-FM (90.9) and KXPR-FM (88.9) and a network of repeater stations, including KUOP-FM (91.3). CapRadio also manages North State Public Radio, which has two stations owned by Chico State.

The audit, which was requested a year ago by former Sacramento State President Robert Nelsen, found numerous management problems, including unpaid rent and annual audits by an outside firm that “have been identified as potentially inaccurate,” the audit said.

Other problems identified by the audit included lax control over employee credit cards, a lack of written agreements with the two entities CapRadio uses for its vehicle donation fundraising efforts and a lack of programs for university students.

“Based on discussions with campus and CPR management, we noted that CPR did not have hands‐on student involvement in staffing, internships, or programming and therefore did not appear to provide any instructionally related activities for the benefit of Sacramento State students,” the audit found.

CapRadio’s board of directors brought in Tom Karlo, a longtime San Diego public broadcasting executive, several weeks ago to serve as interim general manager. Wood, who took over as Sac State president in July, urged the board to make the move.

Karlo replaced Jun Reina, who served as general manager and vice president as the operation sought to move from the university campus to a new headquarters and performance space in downtown Sacramento.

Reina left the station in March after 15 years with CapRadio, and Karlo is staying on in the interim post.

Sac State said Bowman was the official who noticed “inconsistencies” in CapRadio’s financial reports and operations in 2021, a discovery that led to the audit.

Bowman’s accounting and financial team assumed control of CapRadio’s finances in August, Sac State said.

“I am a believer in public broadcasting and am committed to public media and to seeing CapRadio through this difficult time,” Bowman said in a statement. “I look forward to collaborating with interim General Manager Tom Karlo and CapRadio to address the issues identified in the audit, restore public trust in the station, create sound financial practices, and develop a new operating agreement with the University.

“I also believe strongly in preserving CapRadio’s journalistic and programming independence, which has made it a leading source of news in Northern California.”

Sac State officials had said after the audit’s release that the broadcaster’s news operations would remain independent of university management.

This story was originally published September 30, 2023 at 2:49 PM.