fy2010 annual report of the kgnu budget committee

8/8/2019 FY2010 Annual Report of the KGNU Budget Committee

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Annual Report of the Budget Committee

For the Fiscal Year 2010 (Ended 30 September 2010)

Prepared & Submitted by Basit Mustafa, Treasurer, BCBA d/b/a KGNU Radio on 9 November 2010

KGNU Community Radio 4700 Walnut Street Boulder, CO 80302 88.5FM 1390AM kgnu.org

Community BroadcastBoulder

Assocation


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Table of Contents

About This Document 3About Your Budget Committee 4Thanks & Gratitude 6Overview of FY2010 Operational Performance, Balance Sheet, and Overall Position 8Income 9Expense 14Statement on Net Income 18Assets & Liabilities (Balance Sheet) 18Accounting Errata & Information 23Closing Remarks From The Treasurer 24

Boulder Community Broadcast Association

FY2010 Annual Report 2


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About This Document

This document is the formal written submission of the Budget Committee for KGNU Community Radio (KGNU Radio) operated by the Boulder Community Broadcast

Association (BCBA). Its purpose is to communicate and inform on KGNUs overall fiscal position, operations ,and projects & processes as they relate to the financial

management, leadership, and planning of the organization for the fiscal year dated 20101.

This document may contain projections for the future, statements of opinion, and even statements of fact. It may also contain errors (it is possible, even at KGNU),

however, reasonable attempts have been made to ensure this report, the data contained or referenced herein, and conclusions drawn are accurate, factual, and well-

vetted.

However thorough the preparation of & information in this document, it should not be construed as an official financial statement of any kind. The BCBA d/b/a KGNU

Radio retains an independent external auditor to provide a separate audited financial statement that serves as the primary official financial statement of the BCBA d/b/a

KGNU Radio.

This document was created by Basit Mustafa with input directly from the committee throughout FY2010 and a final FY2010 results analysis meeting held on 28 October

2010.



1 Fiscal Year 2010 is consists of all business booked beginning 1 October 2009 and concludes the final business recorded through 30 September 2010 (FY2010).


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About Your Budget Committee

The Boulder Community Broadcast Associations (d/b/a KGNU Radio) bylaws instruct the board to maintain a standing committee charged with the creation,

maintenance of, and reporting against an operating budget and related financial management & processes as they concern the organization. This committee is to be

chaired by the Treasurer of the Board of Directors with membership unrestricted from the KGNU staff, volunteer, and board groups alike.

Currently, Basit Mustafa serves as the Treasurer of the Board and the Chairperson of the Budget Committee. The most generous roster of committee membership is

most likely reflected in the membership roster for [email protected] mailing list, however, the active members of the Budget Committee (defined as attending

meetings in a consistent fashion, contributing a notable body of work to the core mission of the committee, or providing on-going counsel as a functioning member of

the committee) as understood by the leadership at the conclusion of FY2010 are, in no particular order, as follows:

Mike Massa, Accounting Specialists & KGNU Accountant

Sam Fuqua, Station Manager/Executive Director, KGNU Radio

Steven Sherman-Boemker

Jim Carlo

Basit Mustafa, Chairperson, Treasurer & Director, BCBA d/b/a KGNU Radio

Karen Gruber

Chip Grandits

Shawna Sprowls, Membership Director, KGNU Radio

Annie Sugar, former Denver Development Director, KGNU Radio (separation early 4Q10)

The Budget Committees aegis runs the gamut of financial planning, analysis, and management at KGNU. Broadly speaking, the Budget Committee is responsible for:

Planning, defining, and obtaining approval of an operating budget

Managing, analyzing, forecasting, and reporting of KGNUs Balance Sheet, Operating P&L, Capital Expenditures, and Financial Obligations on an on-going,

quarterly, and annual basis

Establishing, enforcing, and maintaining financial/business controls, financial policy/plans, and audit as appropriate

Advising and reporting to the Board as appropriate - pro-actively, on a regular schedule, and upon demand


mailto:[email protected]:[email protected]:[email protected]


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Understanding and monitoring the relationship/impacts between KGNUs strategy, operations, processes, and programs and KGNUs financial posture

Defining, managing, and maintaining relationships with external financial partners, institutions, financial regulatory agencies, and managing other fiduciary

interests of the organization

Providing support in financial planning, P&L management, and business support to the station manager, staff, and other committees/designees of the Boardas appropriate/directed




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Thanks & Gratitude

A debt of gratitude is owed to anyone who has ever contributed, volunteered, or even tuned in to KGNU on-the-air or online. However, despite making this an

exceedingly long document, it would also overshadow the only recognition that many of the key behind-the-scenes players in KGNUs fiscal operations receive. The

Budget Committee would like to specifically thank a few individuals & organizations for their work with or on the Budget Committee

The Bank of Denver, and its president, Lori Rock-Radcliffe, have been solid, reliable, and trusting bankers to KGNU. Lori and her staff at the Bank of Denver

have provided KGNU with stellar financial services, products, advice, and most of all, relationships. Lori has ensured KGNU has continued access to the right

mortgage lending, credit instruments, and deposit account products. She has done this with personal attention, understanding of our organization & mission,

and time focused on our account despite the broad portfolio and interest of her business in many other for-profit ventures. KGNU, and the Budget Committee

specifically, value the relationship at both an organizational and personal level.

A deep and continual thank you to Mike Massa and his team at Accounting Specialists, without whom our books simply would not exist, Sam & Basit would

be found curled up the fetal position while crying in the corner of the Grey Studio, and business simply would not be done. Mike (and his team of

professionals) dedicate a major amount of time, energy, and expertise on a monthly basis to provide the BCBA with a sensible, accurate, timely, and

professional accountancy -- often well beyond what one would expect judgement from the paltry sum they charge KGNU in both quality & quantity. Mikespassion for KGNU (and QuickBooks) shows through in his work at every meeting & report. In addition to his (and his business) support of Budget Committee

business, Mike is a long-time & seasoned volunteer, listener-member, and institution of KGNU. His impact on the committees business is so great that there is

a rumor that next years report will be renamed the Mike Massa FY2011 Finance-a-palooza Sponsored by Accounting Specialists to more accurately reflect

reality.

Jim Carlo came out of retirement recently to become an active member of the committee he once chaired during his tenure as treasurer. Jims work on

managing our external relationships, monitoring the changing credit markets, and ensuring KGNU is properly aligned thereto representes no small body of

work, pain, and clipped newsprint.

A special thanks to Arrone Arpel of the eponymous Arrone Arpel, CPA, LLC. Arrone has long served as the BCBAs independent auditor and performed these

services with an expertise specific to KGNUs business that is shown in the quality & efficiency of the independent audit produced yearly. Despite audit

services being Arrone Arpel, CPA, LLCs primary business & income, Arrone has continued to provide a generous consideration on independent audit fees for

KGNU. The Budget Committee extends a debt of gratitude (audit that!), as much as can be considered appropriate for a financial management team thanking

their independent auditor.

The staff of the Twisted Pine, especially those working 2nd/3rd Thursday nights every month, for putting up wi th us and not cutting us off despite whatever the

beer/cash flow problem!




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If you see any of these people, please take the time to thank them for their work and contribution to KGNU. If you are one of the many people who should be listed

here, but are not due to time, space, or synapse limiations on behalf of the Budget Committee, please complain to Mike.




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Overview of FY2010 Operational Performance, Balance Sheet, and Overall Position

The Boulder Community Broadcast Association completed its most recent fiscal year on 30 September 2010. While final and certified statements are not yet available

and minor items will continue to be booked to the ledger, the Budget Committee believes the major body of business has been settled. For FY2010 KGNU achieved

97% of planned income through operations and exercised tight controllable expense discipline to spend only 77% of plan on operations in FY2010. Continued

investments in capital equipment from grants, capital campaigns, and operational income along with payments on debt/notes outstanding have improved KGNUs fixed

asset position and modestly reduced liabilities outstanding.

Plan Actual

Income $832,120 $806,514 (97% of Plan)

Expense $832,120 $654,007 (77% of Plan)

Table 1. Overview of Operational Income & Expense vs. Plan (FY2010)

While a positive operational cash flow ($152,506 as currently accounted) is certainly a surprising and pleasant result, especially considering the backdrop of weakness

in the broader economy & specifically in charitable giving from individuals and institutions alike, this measurement cannot be considered in isolation. Intrinsically

speaking, it is accurate to conclude that operations in FY2010 netted KGNU $152,506 as of the latest accounting. However, several circumstances met over the

course of late FY2009 & through FY2010 to create this operational surplus and considering the implications of those circumstances puts important qualifications around

how that surplus was realized and should be allocated going forward into FY2011.

However FY2010 is measured, KGNU demonstrated a very strong performance on its sustainable & continuing core operations in spite of the challenging economy &

market in which KGNU operates. A tight expense posture combined with a strong, motivated volunteer corps & dedicated staff executing on KGNUs mission has

provided KGNU the resiliency to post such a performance on a consistent and sustainable basis.

This core operational strength & sustainability is an important asset for the organization. The FY2010 budget was created on a conservative set of income & risk

assumptions and aggressive expense controls, however, set challenge level membership, underwriting, grant, and events goals. Posting a 97% attainment againstthese aggressive goals is an important barometer showing the health of the organizations core operations.

Despite positive performance in operations, slower-than-expected growth in the AM signal area continues to pose challenges in balancing the financial needs of

executing its mission and growing its presence/relevance in the Front Range with the financial obligations from the purchase of the AM asset. Over four years in to

Denver, KGNU is now an important player in that market, and the AM signal area represents an important & well-integrated area of operations and support for KGNU.

However, despite breakthroughs with several AM signal lenders in forgiveness, renegotiated terms and conditions, or deferrals of payments. A few agreements with

terms & conditions that cannot be feasibly honored continue to put pressure on the organization wherever questions of balancing the needs of funding KGNUs mission

& making modest payments on notes outstanding arise.




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Despite these challenges, KGNU has maintained positive relationships with each of its major lenders associated with the AM signal project and will continue to place a

priority on ensuring those relationships are mutually beneficial, supportive, and fair & that KGNU is set on a path to be debt-free as quickly as possible without

compromising the growth & strength of its core operations.

Income

KGNU demonstrated relative strength in income performance, however, above-plan performance in Underwriting, Year-End Donations, and increased CPB funding f rom

a non-recurring Stimulus Plan payment partially compensated for weakness in memberships, grant income, and events. To have an meaningful understanding of the

overall 3% gap to plan and certain over/(under) statistics inside this number it is important to discern between those income events/performance factors based on

continuing, controllable operations and those acute events/those events largely attributable beyond the influence of KGNUs operations. Overall, the Budget Committee

believes a strong focus on Membership by staff, volunteers, and stakeholders has created a strong, sustainable performance directly contributing to strength in the

bottom line despite missing plan by a small margin. On the other hand, the lack of a cohesive, replicable, and well-marketed events bill, personnel/resource constraints

in managing a healthy grant wri ting pipeline, and personnel/resource constraints in the Development Director position created challenges in FY2010 adversely affected

the bottom line. While Underwriting provided remarkable strength in FY2010, personnel changes in that position, while positive in the long-term, will affect KGNUs

ability to replicate an equally above-plan performance in FY2011, however, the FY2011 budget line item for Underwriting does account for the financial impact from a

training & ramp-up period associated with new Underwriting Sales staff.

Memberships are paid and realized into the operating budget on a 12-month amortization schedule and do not immediately appear due to the 12-month term of a

membership. Any peaks and valleys in performance from drive-to-drive are delayed and normalized through this mechanism as well. In this case, the data of modest

improvements in funds raised during pledge drives through calendar 2009 and 2010 supports the conclusion that the improvement in memberships will be slowed by

this amortization schedule over the coming 6-9 months as improvements from the Spring & Fall 2010 drives are disbursed in the form of larger amortized payments in

to the operating budget.

KGNUs income performance is indicative of the focus and success in the memberships and underwriting programs. Conversely, the continued challenges in creating

successful and replicable events, gift & grant development, and outreach programs that contribute to the appropriate budget line items is also reflected in the weakness

against plan. The results from FY2009 and FY2010 imply that an increased level of strategic, management, and organizational development focus and energy be

invested in these areas if these programs are going to continue to be held accountable for significant portions of income. This focus includes strategic planning at a

program level that is well integrated with KGNUs strategic priorities, accountable project management that includes direct metrics & measurements against pro-rata

budget targets, and continual pipeline assessment & development by the respective management teams.

KGNU has much to celebrate in the strength of its relationships with its partners, underwriters, and listener-members. The financial impact of that strength is

measurable in one way by examining the Membership, Underwriting, Year-End Donations, and Major Gift line items. With Memberships coming in slightly short of its

mark and Major Gifts underperforming even when FM Upgrade gifts are imputed therein, that celebration & morale is best used as a reminder that there is a clear sense

that KGNU must continue to challenge itself to grow its sophistication as an organization and in more traditional measures of influence, li stener-membership, and NFFS/




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Arbitron rankings. Applying the same goal-oriented planning, management, & execution discipline from Membership & Underwriting toward programs not currently

meeting their financial obligations to the station or their mission-driven objectives is the only sustainable way to creating measurable change in the more traditional

measures of success against which KGNU is measured both internally and externally.




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Figure 1. Income Distribution by Line Item (FY2010)

9%

1%1%

12%

7%

0%

8%

53%

0%0%

7% 0%Income: Plan Distribution by Line Item

12%

1%1%3%

14%

5%0%

5%

51%

0%0%0%5%

1%0%4%Income: Actual Distribution by Line Item

Bus & Ind Underwriting* Business & Ind Match Community SharesFM Upgrade Corp'n For Public Broadcasting GrantsInterest & Dividends Major Gift Solicitations MembershipsMiscellaneous Income Program Guide RafflesSpecial Events Studio Production Time Volunteer Training FeesYear End Donations




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Figure 2. Income Performance Versus Plan by Line Item

(60%)(51%) (43%)(34%) (26%) (17%) (9%) 0% 9% 17% 26% 34% 43%

Bus & Ind Underwriting*

Business & Ind Match

Community Shares

FM Upgrade

Corp'n For Public Broadcasting

GrantsInterest & Dividends

Major Gift Solicitations

Memberships

Miscellaneous Income

Program Guide

Raffles

Special Events

Studio Production Time

Volunteer Training FeesYear End Donations

Income: Over/(Under) Plan % by Line Item (Bigger is Better - 0% is at Plan)




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Actual Plan$ Over/

(Under) Plan% of Plan

% Over/(Under)

Income

Bus & Ind Underwriting* $94,060.00 $74,120.00 $19,940.00 127% 27%

Business & Ind Match $5,031.00 $5,600.00 ($569.00) 90% (10%)

Community Shares $5,239.00 $5,000.00 $239.00 105% 5%

FM Upgrade $23,200.00 $0.00 $23,200.00 100% 0%

Corp'n For Public Broadcasting $111,043.00 $100,000.00 $11,043.00 111% 11%

Grants $38,979.00 $62,200.00 ($23,221.00) 63% (37%)

Interest & Dividends $525.00 $600.00 ($75.00) 87% (13%)

Major Gift Solicitations $40,252.00 $70,000.00 ($29,748.00) 58% (42%)

Memberships $408,324.00 $444,880.00 ($36,556.00) 92% (8%)

Miscellaneous Income $2,846.00 $2,520.00 $326.00 113% 13%Program Guide $1,502.00 $0.00 $1,502.00 100% 0%

Raffles $695.00 $1,500.00 ($805.00) 46% (54%)

Special Events $40,061.00 $62,200.00 ($22,139.00) 64% (36%)

Studio Production Time $4,620.00 $3,500.00 $1,120.00 132% 32%

Volunteer Training Fees $1,355.00 $0.00 $1,355.00 100% 0%

Year End Donations $28,781.00 $0.00 $28,781.00 100% 0%

Total Income $806,513.00 $832,120.00 ($25,607.00) 97% (3%)

Table 2. Income Actual vs. Plan - Adjusted2 (FY2010)



2 *Underwriting income at KGNU has been traditionally accounted & planned as a net income item - this report marks a declared change in this practice. To ensure

consistency with NFFS (Non-Federal Funding Source) reporting to the PTFP (Public Telecommunications Facilities Program), KGNU will now apply gross accounting

treatment for Underwriting income. Commensurately, future budgets should add a funded Underwriting Commissions line i tem should be included as a normal ex-

pense. In this view, and any year-over-year analysis performed from Underwriting Net Accounted data, an unfunded Underwriting Commissions line item must be

applied to reflect the portion of Underwriting income paid as a commission in the Net accounting practice.


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Expense

KGNU has demonstrated excellent controllable expense discipline through direct actions of staff & volunteers. Much like creating a meaningful interpretation of the

income line items, delineating between controllable expense actions and incidental/acute expense events is important in understanding KGNUs successes and areas

for improvement. Unlike income, however, nearly every expense reduction has been driven by direct action of the staff. Di fficult decisions on programming, benefits,

payroll, reimbursements, and even supplies has created tight adherence to controllable expense. Creative problem solving and day-to-day innovation by staff &volunteers has reduced the required outlay for equipment, services, and consulting across the IT, programming, production, legal, and accounting needs at KGNU.

Several partner organizations, volunteers, listener-members, and community members have provided KGNU with substantial in-kind support of professional goods &

services. It is impossible to accurately and efficiently name each herein, however, their contributions are significant in reducing expense.

Areas of expense increase include health benefits (although, notably, KGNU employees have agreed to higher deductibles, etc to stem rising costs), rent at transmitter

sites (both as increasing cost of goods and as a result of physical projects by KGNU requiring additional space), satellite interconnect fee increases, payroll raises ( long

overdue to staff as a basic hedge against increased cost of living at the very least), and costs associated with capital improvements to the FM signal.

It should be noted and full y understood that the expense under-run has not been a product of an overall expense cuts-against plan in non-future debt service/cash

reserve payment line items (although this has occurred at an operational line-item level, overall, there is near parity to plan when operational items are considered as a

whole) as it has come from avoiding payments into cash reserves, making debt payments from cash-on-hand, or through deferral/renegotiation of KGNUs capital

obligations funded by the Debt Payments operational l ine item. In fact, the $152,506 surplus matches nearly identically to the required payments into cash reserves &

against future debt service.

While it might appear favorable to always see a reduction in expense it is the opinion of the Budget Committee that any further reduction in expense would interfere with

the operation of the station unless that reduction comes from uncontrolled items such as employee attrition, reduction of insurance premiums without reduction of

benefits provided, or decrease in other procurement costs without reduction in goods/services received, etc. In fact, the FY2010 budget expense reductions were

undertaken explicitly with an understanding that many reductions were not to be permanent and are unsustainable without unreasonable damage to KGNUs ability to

execute on its mission/operations or staff. Examples of this include, expenditures on staff cost-of-living expenses, benefits, reimbursements, hospitality, outreach, and

Fund Drive Premiums. Certain expense reductions will be reversed or eased as FY2011 warrants, however, many will remain in place as long as the cost-benefit-

goodwill-karmic analysis continues to indicate is appropriate. Specific areas of concern for the Budget Committee as they relate to expense cuts compromising the

ability of the station to operate in a sustainable manner include, in no specific order:

Payroll, Bonus, and Recruiting

Fund Drive Premiums & Hospitality

Plan toward future Debt Service & Payments to Cash Reserves

Studio Physical Plant investments (Repair, Cleaning, etc)




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The operational decisions on how these expense cuts are eased or removed lies primarily with the Station Manager, however, high-level priorities and values are

discussed by the Budget Committee and it can be said that the following non-exclusive list of items is a part of the decision calculus in how incrementally returning

KGNU to a normal, sustainable expense posture that supports the organizations operations & strategic goals when appropriate, presented in no particular order.

Employee Morale, Retention, & Development

Capital outlay opportunities/broadcast infrastructure requirements

Maintenance of the physical plant

KGNUs obligations to capital campaign lenders

Impact on representing under represented media/mission

Effects on Outreach

KGNU should continue its current expense control and continue to monitor the effects of cuts to expense, specifically the items considered a risk to the core

operations, staff, and business of the station. In order to keep KGNU a mission-driven organization with a sustainable financial & operational model it is critical that the

station, its leaders, and all stakeholders work to increase income so KGNU can honor its commitments, mission, and return to a sustainable expense posture as soon

as possible.




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Expense

Bank Charges $8,617.00 $11,000.00 ($2,383.00) 78% (22%)

Cash Reserves $0.00 $52,879.00 ($52,879.00) 0% (100%)Debt Payments $0.00 $102,920.00 ($102,920.00) 0% (100%)

Dues & Subscriptions $4,476.00 $6,000.00 ($1,524.00) 75% (25%)

Employee Benefits $41,594.00 $58,250.00 ($16,656.00) 71% (29%)

Employee Retirement $0.00 $3,000.00 ($3,000.00) 0% (100%)

Employee Search $55.00 $0.00 $55.00

Fund Drive & Premium $1,555.00 $7,500.00 ($5,945.00) 21% (79%)

Hospitality $956.00 $1,000.00 ($44.00) 96% (4%)

Insurance $19,354.00 $19,000.00 $354.00 102% 2%Interest Expense $1,200.00 $3,521.00 ($2,321.00) 34% (66%)

Internet $5,113.00 $6,000.00 ($887.00) 85% (15%)

Janitorial $2,880.00 $2,000.00 $880.00 144% 44%

Labor $1,252.00 $1,500.00 ($248.00) 83% (17%)

Mileage & Reimbursements $0.00 $1,000.00 ($1,000.00) 0% (100%)

Mortgage Interest $26,517.00 $27,000.00 ($483.00) 98% (2%)

Office $15,185.00 $15,000.00 $185.00 101% 1%

Outreach/Promotion $4,663.00 $5,000.00 ($337.00) 93% (7%)

Postage $8,608.00 $8,100.00 $508.00 106% 6%

Production Supplies $2,554.00 $2,500.00 $54.00 102% 2%

Professional Fees $55,850.00 $55,000.00 $850.00 102% 2%

Program Acquisition $32,727.00 $37,000.00 ($4,273.00) 88% (12%)

Rent - AM Tower $30,000.00 $30,000.00 $0.00 100% 0%

Rent - FM Tower $12,843.00 $16,000.00 ($3,157.00) 80% (20%)




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Rent - Denver Studio $2,988.00 $0.00 $2,988.00

Repairs & Maintenance $5,291.00 $6,000.00 ($709.00) 88% (12%)

FM Salaries $258,056.00 $263,250.00 ($5,194.00) 98% (2%)

AM Salaries $22,570.00 $20,250.00 $2,320.00 111% 11%

Satellite Interconnect $7,100.00 $7,100.00 $0.00 100% 0%

Storage $2,200.00 $2,100.00 $100.00 105% 5%

Taxes - Other $561.00 $2,000.00 ($1,439.00) 28% (72%)

Taxes - Payroll $22,481.00 $22,750.00 ($269.00) 99% (1%)

Telephone $22,552.00 $20,000.00 $2,552.00 113% 13%

Travel & Conferences $716.00 $500.00 $216.00 143% 43%

Underwriting Commissions* $14,000.00 $0.00 $14,000.00

Utilities $19,493.00 $17,000.00 $2,493.00 115% 15%

Total Expense $640,007.00 $832,120.00 ($192,113.00) 77% (23%)

Table 3. Expense Actual vs. Plan - Adjusted3 (FY2010)



3 *Underwriting income at KGNU has been traditionally accounted & planned as a net income item - this report marks a declared change in this practice. To ensure

consistency with NFFS (Non-Federal Funding Source) reporting to the PTFP (Public Telecommunications Facilities Program), KGNU will now apply gross accounting

treatment for Underwriting income. Commensurately, future budgets should add a funded Underwriting Commissions line i tem should be included as a normal ex-

pense. In this view, and any year-over-year analysis performed from Underwriting Net Accounted data, an unfunded Underwriting Commissions line item must be

applied to reflect the portion of Underwriting income paid as a commission in the Net accounting practice.


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Statement on Net Income

KGNU plans against a balanced budget and all intermediate operational forecasts & course adjustments are made with that goal in mind. However, outside of sheer

statistically improbable luck or fancy accounting tricks/line items, a net-zero result is quite elusive. For FY2010, KGNU plans to reflect a $152,506.00 operational

surplus. However, as indicated in previous discussions on Income & Expense, the surplus monies are not free and clear for KGNU to spend as its pleases. Costs

associated with the FM Upgrade, cash to ensure proper liquidity as FY2011 begins to show income and cover A/R float from a due PTFP receivable, debt payments,and payments into cash reserves must be balanced to allocate the surplus equitably. Already, modest debt payments, capital equipment costs, professional services,

and cash reserve payments to ensure KGNU remains inside proper risk management guidelines have allocated the large majority of this surplus.

Net Ordinary Income $152,506.00 $152,506.00

Net Income $152,506.00 $152,506.00

Table 4. Net Income From Operations FY 2010

Assets & Liabilities (Balance Sheet)In FY2010, KGNU made significant investments in the broadcast infrastructure, modest debt payments, and continued payments on the consolidated mortgage. A

major portion of these payments came either from grants, forgiveness, or operational income. Each of these items has improved the position of assets on the balance

sheet and reduced the outstanding liabilities of the station.

While significant notes remain outstanding on the AM signal project, KGNU continues to reflect a strong base of valuable assets, cash-on-hand, and allocated grant

monies to consistently support a nearly $1.7M equity valuation in-spite of these liabilities.

For an organization such as KGNU, it is important to consider the Balance Sheet a snapshot in time. Unlike many for-profit enterprises or other organizations whose

operations are very tightly tied to a quarter/year model, KGNU operates largely on a be present, plan what is right operational model. Programs, projects, grants, and

other business is planned around the needs of the mission first, and financial calendars only as a secondary consideration. As such, distilling a meaningful view of

continuing operations for a Year-over-Year analysis must be conducted. A thorough understanding of the outlay, income, and various projects/programs underway

when each snapshot was taken is important to have when making any judgements, inferences, or conclusions from Balance Sheet analysis, especially when

undertaken comparatively with previous snapshots of the Balance Sheet/Assets & Liabilities Statement.




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30-Sep-2010 30-Sep-2009 YtY

AS ET

Curre t s etsChecking/Savings

Checking - Mutual $8,542.90 $105,110.05 ($96,567.15)

Checking - BOD Bldr $14,162.19 $20,676.86 ($6,514.67)

Checking - BOD AFT $1,610.25 $8,659.85 ($7,049.60)

Savings - BOD $79,238.66 $33,903.57 $45,335.09

Savings - BOD Loan Acct $6,699.33 $6,303.48 $395.85

BME-Capital Campaign A/C $728.89 $728.89 $0.00

Calvert Money Market $1,619.08 $1,643.08 ($24.00)

NPC Brokerage Account $14.88 $1,314.88 ($1,300.00)

Raffle Account $772.80 $1,719.96 ($947.16)

Vanguard Money Market $1,087.43 $1,086.60 $0.83

Total Checking/Savings $114,476.41 $181,147.22 ($66,670.81)

Other Current Assets

Employee Advance $150.00 $96.09 $53.91

Accounts Receivable $0.00 $15,000.00 ($15,000.00)

Prepaid Expenses $6,143.00 $6,143.80 ($0.80)

Prepaid Transmitter Rent $11,358.44 $7,459.52 $3,898.92

Prepaid Federal IT $955.14 $955.14 $0.00

Total Other Current Assets $18,606.58 $29,654.55 ($11,047.97)

Tot l urre t Assets $133,082.99 $210,801.77 ($77,718.78)

Fix dAs ets




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Land $350,000.00 $350,000.00 $0.00

Building $1,044,048.32 $1,044,048.32 $0.00

Building Improvements $35,262.78 $35,262.78 $0.00

Denver Production Studio $36,111.75 $36,111.75 $0.00

Equipment Office $78,708.99 $78,708.99 $0.00

Equip. Studio & Broadcast $503,383.30 $501,221.08 $2,162.22

FM Upgrades $77,534.66 $0.00 $77,534.66

Record Library $350,353.36 $350,353.36 $0.00

Translator $8,859.16 $8,859.16 $0.00

Transmitter Building $1,495.68 $1,495.68 $0.00

Leasehold Improvements $11,081.32 $11,081.32 $0.00

Accumulated Depreciation ($1,041,002.00) ($1,041,002.00) $0.00

Total Fixed Assets $1,455,837.32 $1,376,140.44 $79,696.88

Other Asse s

AM 1390 Signal $4,100,000.00 $4,100,000.00 $0.00

Accumulated Amortization ($1,366,665.00) ($1,366,665.00) $0.00

Total Other Assets $2,733,335.00 $2,733,335.00 $0.00

TO AL ASSETS $4,322,255.31 $4,320,277.21 $1,978.10

LIABILITI S QUITY

Lia ili ie

C rr nt Liabilities

Accounts Payable

Accounts Payable $6,669.21 $22,476.38 ($15,807.17)

Total Accounts Payable $6,669.21 $22,476.38 ($15,807.17)




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Other Current Liabilities

Colorado Creates Grant $7,780.00 $0.00 $7,780.00

Digital Conversion Advance $0.00 $22,200.00 ($22,200.00)

Destination Freedom Project ($525.00) $439.00 ($964.00)

Eat Your Radio $53,020.35 $41,777.55 $11,242.80

Golden Mouse Fund $3,355.75 $3,355.75 $0.00

Greenfield Grant $0.00 $9,709.16 ($9,709.16)

HCCRC Reporter ($4,030.98) $11,948.52 ($15,979.50)

Tributaries Project $156.50 $126.50 $30.00

Escrow - Ft. Collins $4,250.00 $4,250.00 $0.00

FM Memberships Prepaid $82,900.07 $130,548.93 ($47,648.86)

AM Memberships Prepaid $14,616.61 $34,905.16 ($20,288.55)

Payroll Taxes Payable

FICA & Fed W/H Tax Payable $2,871.91 $3,261.19 ($389.28)

State W/H Tax Payable $848.00 $982.00 ($134.00)

SUI Tax Payable $79.55 $0.00 $79.55

Total Payroll Taxes Payable $3,799.46 $4,243.19 ($443.73)

Total Other Current Liabilities $165,322.76 $263,503.76 ($98,181.00)

Total C rrent Liabilities $171,991.97 $285,980.14 ($113,988.17)

Long Term Liabilities

Note Payable - Mortgage $394,635.64 $413,175.72 ($18,540.08)

Loan Payable-Private 1390 Notes $2,395,000.00 $2,413,000.00 ($18,000.00)

Total Long Term Liabilities $2,789,635.64 $2,826,175.72 ($36,540.08)

Tot l ia ilities $2,961,627.61 $3,112,155.86 ($150,528.25)




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Eq ity

Fund B lance $1,208,121.35 $1,444,839.39 ($236,718.04)

N t I come $152,506.35 ($236,718.04) $389,224.39

Tot l q ity $1,360,627.70 $1,208,121.35 $152,506.35

TO AL LI BILI IES & EQUITY $4,322,255.31 $4,320,277.21 $1,978.10

Table 4. Balance Sheet Snapshot End of FY2010 vs Snapshot End of FY2009




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Accounting Errata & Information

1. As previously noted, KGNU will, where appropriate for NFFS reporting to the PTFP, move to gross accounting treatment for income line items not already

accounted as gross income. Currently, this will only impact Underwriting. A matching expense line item will be added. This has implications for the

methodology used in year-over-year analysis to ensure the data is adjusted and normalized to create copacetic comparisons.

2. The inclusion of non-operating line items in FY2008, FY2009, and FY2010 budgets creates a disparity requiring similar adjustments and normalizations as

noted in #1. No non-operating line items have been included in FY2011, instead, a capital budget/plan must be created.

3. CPB Funding is based on a 2-year trailing metric based on the NFFS metric reported to the PTFP. FY2010 saw additional CPB monies disbursed as part of

the economic stimulus programs in 2010.




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Closing Remarks From The Treasurer

KGNU Radio has provided a valued community service for nearly 34 years. If anything testifies to KGNU being a relevant, engaged, and vital institution in the Boulder

(and now Denver) area, it must be that than many of KGNUs volunteers and listener-members were yet to be when KGNU was born, yet, many founding members of

KGNU remain active in our community today. Any institution with such a record, or any organization hoping to attain such a record, must maintain some kind of timeless

relevance and connection to its community.

KGNUs identity as a community-operated radio station for locally produced under-represented media touches on the same basic needs of progressives & artists in our

community as it did the day of KGNUs first radio broadcast - and every broadcast in-between. Todays consolidation of music broadcast and marginalization of a news

media independent of influence from business & politicians is nothing new, just as the basic human need to have a media & interactions built on our shared values has

lived through centuries of human & societal evolution.

None of the challenges on KGNU Radios P&L or Balance Sheet threaten our ability to continue to deliver our contribution of independent, community-created media to

the Boulder/Denver community. However, the same trends that built KGNUs success over the last 33 years may come in different forms for the next 33 and beyond.

The need for independent news & music media that reflects our shared values may be timeless, but how that media is delivered, financed, and consumed is changing

and evolving quite rapidly.

It is our duty, and luckily, our passion, to engage those around us by sharing music, news, and talk that is relevant & meaningful to community. We started doing this as

a small radio station over three decades ago without much of a permanent physical presence and we have now grown that to a solid, 4000-watt FM and AM presence

out of two studios in the Front Range and beyond with kgnu.org. That growth and response to the needs of our community through the work put in by volunteers and

staff doing what they love has positioned KGNU Radio as an institution dedicated to independent, community-produced media.

The dollars and cents, spreadsheets, and checks are the means to serve our listener-members needs. We have a commitment to our community to serve them and

grow with them, and it certainly is not without a heavy financial cost. Our listener-members are our main source of our income, and our ability to grow with them comes

primarily from their support in the form of pledges, major gifts/contributions, and engaging their networks and relationships to bring new voices to KGNU. Become a

member, continue to renew your membership at a higher level, gift memberships to those who value progressive media around you, and share KGNU with them.

I firmly believe we have a unique formula that has built a relevant and engaged station that enjoys great financial support from i ts community. Just like the fundamental

need for independent, local media that reflects our values as a community will not change, the financial need to produce and evolve that media will not subside, either.

KGNU works because there is a two-way exchange of ideas, news, music, and support between KGNU and the community.

As we head into FY2011, we will keep focusing on what we do best - and that is a community-produced radio station, and as we begin the next Strategic Plan, we will

have the opportunity to have a community dialogue on how we keep doing that and what else should incorporate in the years to come. Please show your support for

your community radio station by being a part of that process and sharing your vision, needs, and wants. Buy yourself or your friend a membership while youre there,

too!



fy2010 annual report of the kgnu budget committee

Documents