It is crucial to understand the role that this letter to Lynn Chadwick from Richard Madden, Vice-President for Radio at the Corporation for Public Broadcasting (CPB), played in the vote taken in February 1999 by the Pacifica Board of Directors that gave the Board exclusive control of its own composition.  The letter is dated Feb. 24, 1999.  The vote on the Bylaws changes that were proposed by the Board Governance and Structure committee occurred Feb 28, 1999.  California Corporations Code requires 45 days advance notice of any Bylaws changes, while Pacifica's own Bylaws require that the exact text of any Bylaws changes be included with the notice of the meeting at which they will be voted on.  Madden's letter was *MAILED* AFTER the date at which ANY change in the Bylaws proposal could have been made if they were to be voted upon at the Feb. 28, 1999 meeting, because the notice of meeting had been mailed a week prior.  Thus, the threat the letter contains, "to withhold Pacifica's second FY 1999 payments for each of its five stations, due for release in mid-March, unless the Pacifica board chooses to bring itself into compliance with the requirements of the law," forces the Board to accept the Bylaws changes proposed by the Board Governance and Structure Committee (i.e. the Board elects itself) without revision or face witholding of CPB funds.  There are indications that the Bylaws proposal would not have gotten the necessary 2/3 majority vote, and instead the matter would have been continued to the next meeting, without this last-minute threat.  The threat dovetailed nicely with the reports that managers at each of the 5 stations had been instructed to prepare to show what would happen if CPB funding were deleted from their budgets.  With the exception of Nicole Sawaya of KPFA, all managers took the cut from staff salaries, meaning up to ¾ staff layoffs in some cases.  Under such circumstances, it is not too surprising that Board members who might have preferred to continue the matter opted to vote in favor of the changes.  It should be noted that Madden's letter specifies that CPB had not heard from Pacifica in the 5 months between CPB CEO Robert Coonrod's threat and this letter, an assertion that seems quite surprising given the timing of his letter.

Finally, it should also be noted that Madden's letter states: "We will, of course, examine closely the final structure and composition the Foundation may choose to adopt.  CPB will do so to ensure compliance with Section 396(k)(8)(C) of the Communications Act of 1934 as amended which provides that "[t]he role of the [advisory] board shall be solely advisory in nature.....," and the advisory board shall advise the governing body of the station and therefore must be distinct from and independent of the governing body."

The ellipsis in Madden's quote of the Communications act substitutes for the phrase, "…except to the extent other responsibilities are delegated to the board by the governing body of the station."  This means that having advisory boards with the responsibility to elect governing board members does not violate any regulations.  The key issue that Coonrod's Sept. 14, 1998 letter raised was the simultaneous membership of a majority of Governing Board members on their station Local Advisory Boards.  The obvious solution to the supposed problem, i.e. LABs continue to elect a majority of Governing Board members but that any LAB member elected to the Governing Board would become an ex officio member of the LAB, could only have been considered if the matter could have been continued to the subsequent Pacifica Board meeting.  But of course, the Governing Board had been trying for years to get control of its own majority.  This collusory CPB gambit was how they forced the issue.

Corporation for Public Broadcasting
901 E Street, NW
Washington DC 20004

Richard H Madden
Vice-President,  Radio

February 24, 1999

Ms. Lynn Chadwick
Executive Director
Pacifica Foundation
1929 Martin Luther King, Jr. Way
Berkeley, CA 94704

Dear Lynn,

I think it is useful to summarize in writing our conversation since CPB's Sept. 14 letter to Pat Scott.

The Pacifica Foundation is welcome to operate with any board structure of its choosing.  It is free at any time to shift board composition to one that it believes will best achieve successful public service programming to the listeners of its five stations.  Because CPB has no interest in intrudung in any process that may yield a change in structure or composition, we do not need to review board structure options.

We will, of course, examine closely the final structure and composition the Foundation may choose to adopt.  CPB will do so to ensure compliance with Section 396(k)(8)(C) of the Communications Act of 1934 as amended which provides that "[t]he role of the [advisory] board shall be solely advisory in nature.....," and the advisory board shall advise the governing body of the station and therefore must be distinct from and independent of the governing body.  Our understanding is that Paciica may have filed annual certifications with CPB stating it was in compliance with this portion of the law and our published guidelines when that may not have been true.  Accepting Pacifica's representations in good faith, CPB made grants to Pacifica.

It is to Pat's credit that she brought Pacifica's non-compliance to our attention.  It is to your credit that you seek a constructive solution, one that achieves what we both seek-- a governance structure that meets Pacfica's needs and continued funding from the CPB.  The approach that Pat and you have pursued is absolutely consistent with the national leadership roles that each of you has played over the years.  Having served on multiple review panels, you both have dealt with CPB on a good faith basis
and we have tried to respond in kind.  That is why we are reluctant to take the position on this issue that we know we must.

This is because CPB's obligation is to apply the law.  Our legislation, sometimes broadly, sometimes specifically, dictates the circumstances under which we may fund a licensee.  In this instance, the legislation is specific.  It precludes funding of any licensee with the type of board compostion now in place at Pacifica.  Though I have not seen it, you have advised me that counsel to Pacifica concurs with CPB's opinion.  If our mutual understanding is incorrect, please advise.  If it is correct, then
Pacifica is not in compliance with the law and, therefore, is not now eligible for CPB funding.

You have asked about how flexible CPB might be.  That was the purpose of our Sept. 14 letter.  CPB made a first payment on Pacifica's FY 1999 grants on the assumption that Pacifica would resolve this issue promptly. It is now five months later and I am not aware that Pacifica has adopted a plan to achieve compliance.  What CPB wrote then, I repeat now: "compliance with this portion of the law gives little wiggle room to CPB in its interpretation."  If we are to comply with the law and apply it
equitably -- that is, as we have other grantees -- than CPB has no choice but to withhold Pacifica's second FY 1999 payments for each of its five stations, due for release in mid-March, unless the Pacifica board chooses to bring itself into compliance with the requirements of the law.

I know what I have stated here is consistent with our conversations.  I hope this clarifies our position.

Sincerely,

Richard H. Madden
Vice President, Radio