Sacramento State CFO will oversee CapRadio as station faces insolvency by January
Sacramento State is appointing its chief financial officer to oversee the operations of Capital Public Radio after an audit found significant mismanagement and the university’s internal projections showed the Sacramento NPR member station “will have no financial resources remaining in January 2024.”
Jonathan Bowman, Sac State’s CFO and vice president for Administration and Business Affairs, was appointed as “administrator in charge to CapRadio” by university President Luke Wood on Saturday. Last Wednesday, the California State University Chancellor's office released an audit which detailed numerous instances of financial mismanagement and questioned the station’s ability to meet its obligations, including for a downtown headquarters and live event venue.
CapRadio is an auxiliary of Sac State, the FCC license holder for the station.
The university said that in 2021 Bowman noticed inconsistencies with CapRadio finances which led to the university requesting the audit. He was appointed to the CapRadio board of directors earlier this year, and his finance and accounting team took over CapRadio’s finances in August.
“I am a believer in public broadcasting and am committed to public media and to seeing CapRadio through this difficult time,” Bowman wrote in a statement released by Sac State. “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.”
There have been significant leadership changes at CapRadio over the past few years.
Rick Eytcheson retired as general manager in 2020, after serving in that role since 2006. He stayed on as president emeritus until June 30, 2023.
Eytcheson was replaced as general manager by Jun Reina, another longtime CapRadio employee, who had previously been the station’s chief operating officer and chief financial officer. The CapRadio board announced in March it would start a search to replace Reina, who would stay on until a successor could be found, but Reina left the station in June.
Karlo joined CapRadio as interim general manager in August after serving as general manager of San Diego’s NPR and PBS station KPBS from 2009 through 2020.
“Most of the leadership is gone. And I feel that on a day-to-day basis,” Karlo said in an interview Thursday, before Sac State announced Bowman’s appointment.
Karlo was not available for an interview Monday to discuss the university's announcement, but in an email said that Bowman will oversee the general manager and CapRadio, and that the station is continuing its search for a permanent general manager.
“We are exploring every option to keep CapRadio going,” Karlo wrote.
After the audit’s release, Sac State announced it would institute changes in management and oversight at CapRadio, including moving operational and financial management under university supervision and reevaluating how the station contributes to Sac State’s educational mission. CapRadio had an internship program, but discontinued it during the pandemic and it has yet to return.
The university has said that CapRadio’s news and entertainment programming will remain independent.
In a video released Friday evening, Wood said that Sac State’s internal analysis projected that CapRadio “will likely have no remaining financial resources by January.”
“What I have seen is egregious, astounding and heartbreaking,” Wood said in the video. “CapRadio is a valuable and beloved media institution that has been part of the fabric of Sacramento and Northern California for decades. To see so many donors in our community dismayed by the lack of accountability at CapRadio, to see reckless decisions made by radio management affecting the lives and careers of hardworking and talented people and to see the impact that this has had on the bottom line for the university necessitated difficult decisions.”
Wood said that while “more difficult decisions lie ahead,” CapRadio’s financial problems would not impact the university's day-to-day operations.
“I want to assure the Sacramento State campus community that these difficulties will not undermine our educational mission, our commitment to high quality instruction, or diminish our capacity to serve our students, faculty and staff,” Wood said.
The CSU audit documented a host of financial issues at CapRadio. Those included a failure to make payments the past two years on an $8 million loan Sacramento State assumed for tenant improvements to the station's planned downtown Sacramento building, and more than $1.1 million in loans for studio equipment and furniture that had not been approved by the station’s board.
CapRadio’s downtown projects include a new headquarters at 730 I Street and a separate live event space at 1010 8th Street. It has also failed to pay rent to Sacramento State since September 2022 for its current Folsom Boulevard office, which CapRadio had expected to vacate two years ago with the planned move downtown.
The audit also comes one month after CapRadio laid off 12% of its staff and canceled four music shows. CapRadio announced the layoffs on the same day the board approved the budget for the 2023-24 fiscal year, two months after the year began.
Of the $21 million in expected revenue, at least $5 million are one-time funds, according to information Board Treasurer Bena Arao presented during the August budget meeting. Operating expenses are projected at $19.2 million, an increase of 8% compared to the prior year.
The budget’s expenses also include $3.3 million in outstanding bills CapRadio has yet to pay from the 2022-23 and 2021-22 fiscal years.
Sac State said as a nonprofit auxiliary, CapRadio cannot file for bankruptcy, and any debt accumulated is the ultimate responsibility of the university, its fiduciary.
More audits are expected. Sac State added that it has commissioned a “forensic examination to determine the origins and causes” of CapRadio’s operational and financial problems.
Disclosure: This story was reported and written by News Editor Chris Hagan and edited by Insight Host Vicki Gonzalez, with additional reporting from CapRadio Homelessness and Housing Affordability Reporter Chris Nichols. Senior Producer Drew Sandsor edited content for CapRadio newscasts. Following NPR’s protocol for reporting on itself, no CapRadio corporate official or news executive reviewed this story before it was posted publicly.