KPBS Deep in Financial Quagmire : Budget: Some say $9 million should be enough to allow for more local programming, but it’s not that simple.

Not everyone agrees with KPBS management when it says that the television station can’t afford to do more local programming.

“With a $9-million budget, they could do a good public service here,” said one staffer, echoing the attitude of many.

Program production is expensive, but the issues are not that simple.

For example, the station says an episode of “Seniors Speak Out,” the seniors talk show, costs $8,000 to $10,000 per episode to produce. But only a fraction of that, maybe about $2,000, goes for actual out-of pocket expenses, such as tape costs, rental equipment and salaries for employees who only work on the show.

The rest of the expenses are so-called “soft” costs--money the show is billed for use of the studio and the other KPBS facilities. The billing of soft costs is a common accounting practice that allows the station to demonstrate the costs of running the production department. For some KPBS-produced shows, no money actually changes hands for some of the soft costs because the station can absorb the expenses.

The soft costs go to pay for the audio engineers, camera people, promotions and other station employees, as well as maintaining the equipment. For example, “Seniors Speak Out” is billed for everything it does, including use of cameras and audio equipment. It is billed $277 an hour for use of the studio and $79 an hour to set up the studio, for example.

“The money has to come from somewhere” to maintain the studio and repair equipment, said KPBS business manager Horst Bruenjes.

Grants pay for much of the “hard costs” of many of the station’s shows. The grant process, as much as any philosophy, often drives local programming. For example, the station does several programs each year on the local arts scene, thanks to a grant from the city’s Commission for Arts and Culture specifically targeted to support programs about the local arts scene.

There are some exceptions to the must-have-a-grant philosophy, such as an upcoming profile of the late Roger Revelle, which was produced without a sponsor already lined up. But the exceptions are rare.

In many cases, the underwriters are paying the “hard costs,” the out-of-pocket expenses, but sometimes they also pay for the “soft costs.”

In the past, about half of the “Seniors Speak Out” total budget, far more than the hard costs, was paid by underwriters. Now that several underwriters have left the show for reasons ranging from the economy to limitations by underwriters written into some of their own grants, the show is in danger of being shut down, despite its national distribution. When a producer like Paul Espinosa gets a grant to cover all his expenses for a project, the San Diego State Foundation will usually take about 10% off the top for administrative expenses.

In the 1992 fiscal year, KPBS spent about $950,000 for local programming, $60,000 in hard costs and $887,000 in salaries and related expenses, up slightly from the previous year.

About $140,000 of the local programming expenses was paid for by underwriters and grants.

Membership revenues are still the backbone of the station--more than $4 million in 1992--and management believes that national programming is more important to the members than local programming.

“It is more cost effective to put money in national programming,” Bruenjes said.

Membership revenue has grown slowly over the last three years, but the price of national programming has steadily risen.

In 1992 and ‘93, the station will pay about $1 million for PBS programs, contrasted with about $450,000 in 1985. The costs of the programming on the radio side has increased at about the same rate.

KPBS does receive money from the college. But most stations the size of KPBS receive about 30% of their budget from the associated college, according to a study by the Corporation for Public Broadcasting, while KPBS only receives 17%--about $1.5 million--a slight decrease from the previous year.

Most of the other revenue comes from grants and support from the Corporation for Public Broadcasting, about $1.1 million, which has remained consistent over the last couple of years.

Some employees believe that more of the cuts should come from the top management level. Management salaries cost the station more than $1.3 million in the 1990-91 fiscal year and have been frozen in the past year. There were cuts in expenses at the management level, but no cuts in total salary expenditures.

Management argues that most of the aspects of management raise revenue for the station, and that there is no flab in it.

“There have been studies about the cost of management,” said business manager Horst Bruenjes. “We’re actually a little lower than the average for a station our size in our market.”