CALIFORNIA, USA — Sacramento State is taking over oversight of Capitol Public Radio after an audit found operational and financial mismanagement.
"Our review indicated poor recordkeeping in several areas, a lack of management oversight, a lack of accounting and financial knowledge during the audit period, and a need to enhance several processes," according to the audit.
Sacramento State has held the broadcast license since it began as a student-operated radio station in 1965. Over the years CapRadio expanded to serve Sacramento and Northern California. The audit said this expansion was coupled with the station limiting student involvement. Sacramento State President Luke Wood said the independence of CapRadio has evolved into an "organizational divide."
Previous Sacramento State President Robert Nelson requested an audit of CapRadio in 2022.
“One thing is abundantly clear: We have real and immediate work to do to ensure CapRadio’s financial controls and operational processes are disciplined, sound, and transparent going forward. The financial implications of CapRadio’s mismanagement have significant consequences for Sacramento State, but we will make it through,” Wood said.
One of the issues outlined in the audit includes an $8 million loan the campus took out in 2021 to assist with improvements of CapRadio's new downtown Sacramento location. The last payment made was in November 2021 and the payments totaled at around $904,000. Cap Radio was behind in its payment by $1.8 million plus interest as of July 2023. The audit also found the campus made an additional payment to contractors in June 2023 of $1.1 million to release a lien on the new location because Cap Radio hadn't made a full payment.
Sacramento State took responsibility for the debt and payments for the on-campus space used by CapRadio in Sept. 2022. The understanding was that CapRadio would leave the space and campus programs could use it. However, CapRadio still operates out of a space on campus without an agreement with the campus for payment, rent deferral or a documented value exchange.
Though the university is working on a rental agreement dating back to Sept. 2022, based on the station's financial statements the audit states it's unclear if Cap Radio could make payments on the new rental agreement or continue making payments on the new location and equipment, which is about $218,245 per month.
The new location and current Sacramento State space along with other issues in the audit raise financial concerns for CapRadio.
According to the audit, it was limited in scope because some financial records were unavailable and management at CapRadio lacked knowledge and information on the station's history.
CapRadio didn't maintain financial records, according to the audit.
"We also found that CPR lacked complete and current policies and procedures in almost every financial and operational area reviewed, further contributing to the issues noted throughout this report," the audit said.
Based on the audit, Sacramento State and the CapRadio Board will be working together to address the issues outlined in the audit.
Sacramento State will take over operational management including a permanent general manager and upper-level management positions. A new chief content officer will oversee programming and maintain journalistic independence.
The university will manage CapRadio's accounting department, endowment and finances. There will be an examination to figure out the causes of CapRadio's operational and financial problems.
CapRadio will also be required to uphold its educational mission to benefit Sacramento State students.
Find more information on the audit HERE.
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