CORPORATION FOR PUBLIC BROADCASTING AMOUNTS BUDGETED FOR SPECIFIC PROJECTS, SEPTEMBER 30, 1977

Mr. LOOMIS. The $8 million is a different thing.

7,787, 604

Mr. MICHEL. Mv notes show that is $8,241,865 and no cents. Mr. LOOMIS. Right. From its very beginning the corporation felt that it was prudent and wise to keep some uncommitted funds. The Congress in its wisdom gave us no-year funds. We are a private company. Of our first 60 months of existence, 40 months were on continuing resolutions.

I can remember when I first got here the authorization had just been vetoed and it was difficult.

Mr. MICHEL. I recall some of those days.

Mr. LOOMIS. We made the planned decision to use up half of our reserve, which was then $4 million, so that we would not have to cut operations until and unless we got an appropriation. We never did get an appropriation that year.

The next year we made the even more difficult decision of planning to have the reserve go to zero, if necessary, to keep our operations going. Luckily, we were saved at the last minute and did get an appropriation and we were able to build the reserve back.

The concern that I have and our board has is our vulnerability if we lose advanced-year funding. As you are well aware, our authorization, 5-year authorization, is over in 1980. If we do not get an authorization and appropriation for 1981, this fiscal year, our line of credit goes from $32 million to $16 million. That means we will have to recompute everything.

We felt that—and we have been deliberately building this up just as rapidly as we could, so that when we had the maximum exposure due to the Congress not wishing to or not just getting around to, or for any reason, our advanced-year funding collapsing, that we would not have the whole house of cards go down. This of course is drawing interest, but when the satellite is built and as the line of credit gets less and less, we become less exposed, this will be reduced. That is in our plan, we will reduce it in future years.

CPB REVENUES EXCEED EXPENDITURES

Mr. MICHEL. Your corporation showed an excess over expenses of about $9.8 million, something like that. What accounts for that? Extraordinarily good management?

Mr. LOOMIS. We try to have prudent management.

Mr. MICHEL. I like to run my own business that way, but I wonder why you could show that much more revenue over expenditures? Then I guess the natural question is, are you having a tough time using it all up? Again I have to be convinced when it comes to supplemental funds, et cetera, et cetera.

Mr. LOOMIS. We had a difficult time this last year in spending the community service grants on time because of the new and very specific and legally binding requirement to justify the non-Federal income to the penny. This was a new requirement. It took us quite a while to develop reasonable and intelligible specifications, directions how to do it.

Mr. MICHEL. I cannot fault you on that.

Mr. LOOMIS. Have them approved by the GAO, issue them to the stations, go over the difficult parts with the stations; we went on round-robins all over the country, going over them with the stations. The problem is, what is the fair market value of a facility in an old college in the middle of the prairie? What is the fair market value of a new office building in city X? Those kinds of things are individual cases. We have to be able to certify to the Congress-I mean to the Treasury, to the penny, and that takes some time.

This year is going far better because it is the second time around.

INTEREST INCOME

Mr. MICHEL. On that interest side, you have income of $4.1 million, which represents an increase of $3.1 million over the interest of roughly a million dollars for 1976. Why was there such a large increase in interest income over 2 fiscal years?

Where is the principal amount on which the interest was earned located? In banks?

Mr. LOOMIS. It is in banks.

Mr. MICHEL. Locally?

Mr. LOOMIS. Some in Riggs, some in Chase. Most of it was in Chase, it is now in Bank of America. The reason for that again goes back to our funding history.

You will remember that it was not until the fall, September if my memory is correct, of 1976 that we got the advanced-year funding and got an appropriation at all. We were on a continuing resolution at $62 million through virtually all the fiscal year. Then the Congress passed the bill and we got appropriations for 1976, 1977, and 1978 in one whap; 1976 suddenly went from 62 to 78, and there it was the last month of the year, you could not turn around and spend it.

We tried to manage prudently. In fact, we have telegraphic deposits, every minute counts. They go into Federal paper. So in that sense it is helping the government. We try to do this just as rapidly as we can and that money was there in a big slug because it was no-year funds. We certainly did not want to rush it out the door. We had these new requirements on the non-Federal funds and we adopted the principle of not paying the first CSG payments until we got the annual report. That is the only real pressure you can put on the station to put in the report.

CPB CONTINGENCY RESERVE

Mr. MICHEL. Just one final one.

In your 1979 budget request, you are asking $5.7 million for so-called contingencies, which is more than double last year's appropriation. You know, contingency to some means slush fund to others, or it can be any number of other things. How come that much of an increase? Mr. LOOMIS. That is an item which we have deliberately added to the budget once we had advanced-year funding. When we have to try to justify or plan precisely how we are going to spend the money in 1981, if we did that and used up every dollar, that is absurd, because you know something is going to happen. If it changes you would have to undo something. People would have had expectations and you have a problem.

Mr. MICHEL. What if we kept that contingency fund just at last year's level?

Mr. LOOMIS. We will probably allocate about half of it next year when we are one year away. We allocate the last bit of it the month before the fiscal year begins. This is trying to have a proper balance between predictability and flexibility. We need the predictability, the stations need predictability, the program producers need predictability. Mr. MICHEL. I wish we could guarantee ourselves the same kind of predictability up here.

Mr. LOOMIS. It would be helpful.

Mr. MICHEL. Thank you, Mr. Chairman.

Mr. FLOOD. Let me say this: If you can imagine Flood being at a loss for words, I am at a loss for words to tell you how sorry we are going to be that you are going to leave the organization. We have been advised that you are leaving the Corporation. I can assure von that you have made an excellent presentation, you have done well by the

government, you have done well by this committee, and it will be a loss to everybody.

Mr. MICHEL. I want to join in echoing that sentiment wholeheartedly.

Mr. LOOMIS. Mr. Chairman and Bob, I cannot tell you how much I appreciate those words.

CORPORATION FOR PUBLIC BROADCASTING

PUBLIC BROADCASTING FUND

(Supplemental now requested, existing legislation)

For an additional amount for "Public Broadcasting Fund," $12,050,000; Provided, That no funds made available to the Corporation for Public Broadcasting by this Act shall be used to pay for receptions, parties and similar forms of entertainment for government officials or employees: Provided further, That none of the funds contained in this paragraph shall be available or used to aid or support any program or activity excluding from participation in, denying the benefits of, or discriminating against any person (in the United States), on the basis of race, color, national origin, religion or sex.

Amounts available and proposed for obligation, fiscal year 1978

These funds are provided for general operational use to the stations under an agreement with PBS. Reports from stations indicate that approximately onehalf of the grant funds made available to the stations are used for programming support and related services. We expect this trend to continue and to increase as additional discretionary funds are made available.

The impact of these funds will mean that the average station for FY will increase from $338,000 to $366,000.

CPB considers the improvement of public broadcasting's program services at every level one of its highest priorities. As previously reported, about two-thirds of public broadcasting's income is used for production activities.

CPB's direct support of television national production from FY 1977 appropriation was $13.3 million. While this represented only a fraction of the total funds applied to national and local programming in public television, CPB has attempted to use its funds to develop innovative programming, including programs for minorities and other special interests. It has done this by generating a number of potentially excellent television series, and in addition, by serving as an effective catalyst to public television as a whole. The major task now is to find sufficient support to get these programs into series productions.

These additional funds will be used to further CPB's increasing commitment to programs for minorities and other special audiences as well as general audience programs. About a half-dozen major development and pilot projects for and about Black, Hispanic and Native Americans are being supported and evaluated for possible series funding. CPB has supported a number of national public television programs for women and minorities which have already been distributed by PBS-Black Perspective on the News, Black Journal, Woman Alive!

The move to satellite in the next few years, however represents the major opportunity and challenge in the area of program service. The satellite system will have major implications in terms of greater diversity of program sources and wider program choice for stations and their audiences. By providing this additional $2.5 million, CPB will be working toward its goal of providing more diverse programs to various and growing audiences.

The distribution of radio Community Service Grants over the years, based upon gradually more stringent qualifying criteria has had a substantial impact on improving the service provided by local public radio stations. These funds not only provide a source of funds for local operations, but provide incentives to substantially upgrade local fund-raising awareness efforts of these stations.

The need for this additional support to the radio stations as they prepare for the satellite system is urgent. The current distribution system severely hampers programming flexibility and precludes quality music broadcasts. The satellite