A year after scathing CSU financial audit, CapRadio moves forward on Sacramento event space
An audit of Capital Public Radio released just over a year ago brought into the public's view long-standing financial problems that touched off fears for a valued journalism institution on the brink of insolvency, scourged by potential financial impropriety by its management and the turnover of nearly its entire board.
The California State University released one year ago last Friday the first glimpse into issues roiling the station. The Sept. 27, 2023, audit was preceded by layoffs cutting 12% of CapRadio's staff, announced that August.
Sacramento State, under which CapRadio is an auxiliary, paid $12 million of taxpayer money for contractors, rent and other bills, university President Luke Wood said at the time. Sacramento State assumed control of the station's finances in October 2023 and still oversees its accounting department.
CapRadio is on track to incorporate the recommendations provided within CSU's audit by the end of this month, said Chris Bruno, CapRadio's chief revenue and marketing officer.
As the station moves forward, projects planned before the financial crisis boiled over are scheduled to continue. CapRadio Live, located at 1010 Eighth St., is projected to open late this year or in early 2025 in partnership with Sacramento State, Bruno said.
CapRadio also planned to lease a second building, at 730 I St., as its new headquarters to replace its current site on the university campus.
Wood last year said the finances just weren't there to support an ambitious move downtown ; in an October interview, he said the university was exploring the possibility of trying to get out of the leases.
So how is CapRadio paying for the buildings after it was projected just a year ago to be insolvent?
Bruno pointed to an increase in revenue, a slash of the marketing budget and otherwise streamlined operations.
Listenership is up 37% compared to a year ago, he said. Membership has increased by 9%, along with 300% growth in email fundraising. Finances are stable. And the board has been more engaged to ensure oversight and accountability.
"It has been a journey for everyone here," Bruno said. "It's not just what happened ... there's almost a story of the resiliency and commitment of staff when we think about our public service mission."
Bruno added that Sacramento State is not paying for the 1010 Eighth St. space, and that station is solely on the lease.
"There are really no issues related to paying the lease at 1010 Eighth Street," he said.
The planned move from Sacramento State's campus to the 34,000-square-foot downtown Eighth Street building was announced in 2019 by then-general manager Rick Eytcheson, flanked by Mayor Darrell Steinberg, then-Councilman Steve Hansen and California Lt. Gov. Eleni Kounalakis.
Bruno said this month that staff will stay put at the headquarters located just off of Folsom Boulevard.
"That's in part because it currently meets all our needs," he said. "But also, its a more accessible location" as they continue to offer educational opportunities to students.
He declined to answer questions about the future of 730 I St., including whether the university helped to pay for the lease and if the station is still on the lease.
University spokeswoman Lanaya Lewis did not make a Sacramento State representative available for comment after multiple requests spanning about two weeks.
What is CapRadio Live?
Bruno said the collaboration between CapRadio and Sac State — called a "learning lab" — involves students using the CapRadio Live event space. It's a "win, win, win" opportunity, he said.
Sacramento State students of theater, dance, audio/visual, technology, marketing, hospitality and design can use the space, he said.
"It's an opportunity for them to either hold classes or get real-world experience putting on certain events," Bruno said.
Bruno said the details of how the students or CapRadio will use the space are not settled. But the space could potentially also be rented out to other vendors, he said, and it has passed all inspections for full occupancy.
It's unclear whether any new employees will be hired to staff the building.
Sutter Health retains its naming rights to the stage, after the Sacramento-headquartered health care provider donated about $2 million for those rights in 2019.
Turmoil detailed in two audits
CSU released the first of two scathing audits into CapRadio's financial situation. Accounting firm Clifton Larson Allen also conducted a forensic examination commissioned by the university and released it Aug. 5, months late after it was promised to be available early this year.
Clifton Larson Allen's audit revealed Jun Reina, the former general manager, is accused of spending at least $460,800 "without corresponding evidence of expense reports and/or receipts." Reina's identity and the names of all other figures in the audit were redacted, but meeting minutes, invoices and other documents matching those described within the audit confirm Reina as "Subject #1" in the report.
The audit also describes potential conflicts of interest involving former board members with ties to business that appeared before the board while serving on it.
Former CapRadio board treasurer Bill Yee, the president and CEO of Western Contract, entered into a contract with the station for his furniture company to furnish the two downtown buildings.
The audit conducted by CLA said the contract with Western Contract "was entered into without evidence of undergoing a competitive bid process," which the audit further notes is necessary under Sacramento State policy for personal property contracts exceeding $100,000 in value.
Yee said he recused himself from conversations about the contract, according to previous reporting.
New vs. 'old' CapRadio
The "old" CapRadio, Bruno said in an emailed response to follow-up questions, "was incredibly inefficient."
CapRadio has since cut "nearly the entire marketing budget — around half a million dollars a year — and instead maximized use of (its) owned and operated media channels," Bruno said.
"The old CapRadio used to operate in silos, with little collaboration between departments," he added. "We broke down those silos while always respecting the editorial firewall, of course, and now work together to deliver on our public service mission and grow sustainably.
"We have seen overwhelming support from the community."
Strategies have shifted, as well. Bruno said CapRadio has drastically increased the frequency of spots drawing attention to its vehicle donation program: instead of a little more than one per day, they're now hourly.
"In the last three months alone we have increased vehicle donation revenue by 20% compared to a year ago," he said.
Renewed internship program
The station will welcome six new students this year as it revives its paid internship program that shuttered during the COVID-19 pandemic.
Every applicant has been from Sacramento State, said Nia Towne, managing editor of news. The one-year program had opened to both Sacramento State and Chico State.
Interns will dive deep into the particulars of running a radio station and being a journalist replete with tight deadlines, broad categories of assignments, beat reporting and working with an editor, Towne said.
Three will be assigned to the news team while the other three will have assignments unrelated to journalism. The salaries of each position have been baked into the station's budget, Bruno said. The goal is to have them be exposed to each team, Towne said.
Part of last year's CSU audit focused on internship opportunities, or lack thereof: "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 internship program can have long-lasting benefits for student reporters.
It was a dream come true for Devan Kortan when he received a chance to intern at CapRadio. As a teenager obsessed with radio, that program was why he went to Sac State.
He "did a little bit of everything" — from stuffing envelopes to helping run news show "Insight" — which eventually helped him land a job at the station as a jazz announcer .
Kortan still works with sound as a freelance podcast producer with the Atlanta Journal-Constitution.
But his first love is still radio — there's nothing like making it, Kortan said.
