Judging from an email that WGBH president/CEO Jon Abbott sent to staff yesterday, things at Boston's public-broadcasting powerhouse aren't quite as bad as they are at, say, the Globe. But they're not great, either, for a bunch of distinct but related reasons.
Abbott's email follows. (Full disclosure: I'm a frequent guest panelist on WGBH-TV's Beat the Press.)
To all WGBH employees:
When we gathered together in June for our All-Staff Meeting, I shared as much information about our FY10 budget as was available and promised to update you once we had a more solid forecast. We now have a clearer picture of our financial circumstances going into the next fiscal year, which begins September 1. I want to bring you up to date and tell you about the steps we are taking to address our situation.
As you know, we adjusted the FY09 budget twice to account for the impact of the global economic crisis on WGBH’s sources of discretionary income, including membership, major donor support, corporate sponsorship, and our endowment. With the help of all our employees—including our AEEF and NABET union members—and the guidance of our Board of Trustees, we were successful in closing our budget deficit. I want to reiterate how important it was that we were able to face the FY09 challenges as a united organization.
Unfortunately, given the sustained recession, the downward pressure on our discretionary revenue will not abate in FY10. In fact, as I noted at our June meeting, we will feel additional pressure in the coming year as the impact of the economic turmoil now affects key WGBH sources of restricted revenue, including PBS, CPB, and private foundations.
We are not alone. The entire public broadcasting system is feeling the impact. Production funding has decreased. The foundations and corporate sponsors the system relies on are adjusting their support to match their own shrinking endowments and reduced marketing budgets.. Audience contributions are under stress across the system. Many stations dependent upon state financing have either lost their funding or experienced significant cuts, which threatens their ability to invest in PBS programming. That, in turn, has a significant impact on us as the largest producer of PBS prime-time, Web, and children’s content—and thus, highly reliant on PBS funding. We have seen visible signs of this cumulative stress in layoffs and cuts at PBS, NPR, and many of our fellow member stations.
Complicating the situation for us here at WGBH is where we are in the normal ebb and flow of our production cycle. We anticipate being able to greenlight some exciting new projects in the next six weeks or so, and we look forward to announcing them. But there’s a natural cyclicality to our work, and this downturn in restricted funding comes at a time when we’re in a less active phase of that cycle.
As a result, WGBH will have a smaller production volume for FY10. In turn, our discretionary budget—which depends on overhead and employee benefits assessments paid by the productions—will be considerably reduced. Continued pressure on membership and local corporate sponsorship also will impact our discretionary budget. And while we have stabilized our endowment, the amount that can be drawn down is determined in part by the endowment’s performance over the last 12 quarters. Given all this, we are projecting a decline in discretionary and restricted revenue for FY10 of 12%.
In our initial round of discretionary budget planning for FY10, we asked departments to cut 5% of non-personnel costs from their budgets, to account for a projected loss. We also built into our planning most of the cost-reduction strategies implemented in FY09, including no across-the-board wage increases for employees who are not AEEF members. Despite those efforts, we are addressing a projected discretionary budget gap of $6.9 million dollars for the coming fiscal year that we must and will close. Here are the resulting steps we are taking to address that deficit:
• We have asked departments to reduce their total discretionary costs by up to an additional 8%.
• We are evaluating whether there are infrastructure investments we might postpone.
• We have negotiated better rates for our employee benefits, reducing our costs..
• Finally, we have approached the leadership of AEEF to bargain the FY10 raises and retirement contribution matches for that union’s membership. A successful outcome could save WGBH approximately $1.3 million, of which $1 million represents savings to the discretionary budget. That amount would close 15% of the budget gap and relieve some of the stress on departments.
Departments are in the process of submitting their revised budgets. We are scheduled to present our proposed FY10 budget to the Finance Committee of the Board of Trustees in early August. We hope to conclude bargaining with AEEF in early to mid-August so we will have resolution before the start of the new fiscal year.
Throughout this difficult time, our primary focus has been to minimize negative impact on our programs and services and disruption to our workforce. That hasn’t changed. But we know we have difficult decisions ahead. I know the question at the top of everyone’s mind is what further cuts and reductions we will need to sustain. Unfortunately, because the final outcome is dependent in part on negotiations with AEEF, we don’t know at this time. I promise to share more information about the FY10 budget as soon as it is available. In the meantime, I encourage you to discuss any questions or concerns with your supervisor, and to bring forth any suggestions you might have.
I appreciate your continued patience, and I want you to know how much WGBH benefits from and values your commitment and hard work, as we all redouble our efforts to meet challenges unlike any in our nearly 60 years of serving the American public.
President and CEO, WGBH