A financial mess, a mass exodus and a Tahoe timeshare: Can Sac State rescue CapRadio? | Opinion

The mass exodus of more than half of Capital Public Radio’s Board of Directors is a sad but necessary step for the station to have its best chance to survive. Sacramento State is now fully in charge. But the depth of the station’s financial disaster is still coming into focus.

What started just a week ago as an audit leading to increased oversight by the university has exploded into a complete takeover amid rapidly unfolding developments.

This is a moment to rally behind — not abandon — this vital outlet of news and information. Those left behind, an outstanding group of journalists and support staff, represent the brains and soul of CapRadio. The jewel is all still there. Now, a new generation of leadership must quickly take the reins because the station’s future remains too much in doubt.

Wednesday night’s resignation of 13 members of the board of directors has sent the institution into a temporary tailspin. University President Luke Wood was quick to accept the resignations. The board had been negotiating a contract for a new general manager with a compensation package approaching a half a million dollars. The directors wanted Sacramento State to foot the bill with funds that normally go to educating students. And in this moment of leverage, the university on Tuesday reportedly asked for these board members to resign.

The request was for the good of the radio station, given the rapidly degenerating circumstances. The audit revealed that CapRadio had ceased making payments on an $8 million university loan to avoid a financial collapse resulting from the radio station’s plan to abandon its campus studios for new downtown offices with monthly leases exceeding $100,000. The university separately unearthed an assortment of other questionable business decisions. One board member was married to a developer with a financial connection to one of the station’s downtown sites. Another board member sold the station furniture to help fill the downtown offices. And an unauthorized endowment fund not managed by the university included a Lake Tahoe-area timeshare.

The board Tuesday night refused to resign. Instead, members dug in. The university announced it was not providing the funds for the new general manager position. Later, the board members in their Wednesday resignation letter blamed the university for failing “to engage with the board in good faith.”

This was never a negotiation. This was Sacramento State, the parent institution that assumes all the financial risks, taking measures to protect its much larger institution with its much broader mission. A CapRadio board accustomed to decades of independence and autonomy was struggling to comprehend its actual place in the greater university organizational chart. By claiming to be unaware of the station’s financial problems, failing to consistently submit conflict-of-interest forms and failing to prevent its own members and direct relatives from doing business with CapRadio, their window of opportunity to show leadership had closed, despite years of good intentions.

Waiting a day to resign and then blaming the university only made things worse. By Wednesday night, the unnamed candidate for general manager allegedly had lost interest in the job amid the chaos. Whether the university could even afford such a pricey compensation package is another question altogether. Regardless, what should have been an orderly and dignified transition was instead a sad display of finger-pointing and board claims of ignorance about the state of station finances.

Hindsight provides so many lessons for all involved.

The parent has some self-reflection to do. Sacramento State has paid a dear price for too often taking a hands-off approach and for failing to reinforce with each new station manager and board director that CapRadio first and foremost has an educational mission. The only reason the university holds the station license is to expose students to journalism, the art of news gathering and the craft of broadcasting. The whole idea of moving off campus to downtown undercut that mission. There are plenty of university representatives on this board who should have said no. And failing that, the campus president should have spoken up. Instead, students were left on the sidelines, missing out on the educational opportunity that Capital Public Radio could have provided.

CapRadio leadership clearly had ambitions to evolve into something it never was, some high-profile player in Sacramento’s downtown. Station leaders appeared enamored with rubbing shoulders with the powerful — as well as perks such as CapRadio swag and the station’s own Tahoe timeshare. They created a dangerous mirage that nobody in charge managed to see through, even as the station turned upside down financially. The lack of self awareness, even to the board’s bitter end, was breathtaking.

Board members’ failure to consistently complete standard forms detailing financial dealings that may pose conflicts of interest is just yet one more example of station leadership’s aversion to transparency and accountability. Failing to file that routine disclosure is a giant red flag signaling the lack of proper controls and procedures. New CapRadio leadership needs to instill a culture of accountability, and fast.

Now Sacramento State faces the unenviable task of fully dissecting CapRadio’s financial past with a followup forensic audit. What’s most important is looking forward. Managing a radio station with self-decapitated leadership is not part of any university’s core competencies. The swift actions taken by Wood offer hope that his team is up to the challenge. But it will cost Sacramento State dearly and will undoubtedly raise questions from faculty. Wood estimates that the university has spent $12 million of its funds so far to prop up the radio station and may have to spend another $5 million. With a total university budget of approximately $400 million, this is real money with real university consequences.

The quality of any journalism outlet is measured by the quality of its journalists. Beneath all this financial mess and drama, the same CapRadio that has well served this community still exists. Let’s hope those voices will stick around to keep us all informed. The university and listeners should rally behind this valuable institution and rescue CapRadio from its past leadership failures. This transition will not be easy; there are many challenges and plenty of pain still to come.

For the supporters of CapRadio saddened by what has happened, this is a crucial opportunity. With a window for new leadership and much-needed change wide open, the future of public radio in Sacramento and the affiliates throughout Northern California is in our collective hands.

This story was originally published October 5, 2023 at 10:52 AM.