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The Impact of Federal Funding

It is hard to overestimate the value of Federal funding to public broadcasting. A realization of the need for such support led to the passage of the Facilities Act in 1962 and Puolic Broadcasting Act in 1967. Even so, Federal funding provides a minority of the financial support for public broadcasting. As has already been noted, Federal sources provided just over one dollar in four of public broadcasting's income in Fiscal 1976; and even at the highest level of income projected in this report, they would still provide less than 40%.

Still, the impact of any significant increase in Federal funding is worth noting. These projections show one such increase in Fiscal 1981, when the match ratio for Federal funds is assumed to change from 2.5:1 to 2:1. At least $40 million of new Federal money would be added to public broadcasting income by the new ratio, and the vast majority of it should go into programming and other priority areas.

There are other ways to show how substantial the impact of significant increases in Federal funding would be. Figure V shows one simple example; the projected income curve is advanced a year (showing the projected income for Fiscal 1981 in 1980, for 1982 in 1981, etc.) and laid over the curve of currently projected allocations for base costs. The impact---which symbolizes the result of substantially increased Federal funding at any time---is dramatic. In this simple model, for example, in Fiscal 1981 the base costs of the system would still be the projected $290.8 million; but, if the income were $845.9 million (now projected in FY 1982), base costs would be only about one-third of the total income.* Public broadcasters would have an additional $70 million to spend; most would be spent on their discretionary priorities, with at least $50 million likely to go to programming. The same general pattern can be predicted under a rapid increase in Federal support under almost any circumstances.**

Thus, most of the impact of a rapid and substantial increase in Federal funds at any point in time could be brought to bear on the system's problems as generally perceived: shortfalls in needed program dollars; undercapitalization; slow staff growth, inhibiting an increase in the employment of minorities and women; and poor coverage and the related problems with signal delivery. Increased Federal funds would

⭑ Extra funds would no doubt go in part into base costs, but much less rapidly than these sorts of increases in funds; thus, such a ratio as this would likely be about right.

** The one exception, of course, would be if the additional Federal funds came through the EBFP and thus were limited to facilities.

also have a multiplier effect of inspiring later increases in other funds, as a result of increased or improved programming and fund-raising.

Summary of Projections

Public broadcasting can look forward to a slow but steady real growth in income of less than five percent per annum, with Non-Federal growth largely stemming from NonTax-based sources. The allocation of resources should continue in a pattern which will steadily increase the share of funds available for discretionary uses beyond the support of basic activities. Rapid increases in Federal funding would substantially increase these discretionary funds.

The long-range future of public broadcasting is in its own hands; its capacity to raise funds from diverse sources, particularly from its viewers and listeners, will remain the key to the viability of independent public television and radio systems. But the speed at which they can fulfill their promise, and at which they can solve their major problems, depends in the short run upon substantial Federal contributions to the public broadcasting enterprise.

Mr. FLOOD. For the record, insert a listing of the sources of nonfederal revenues and the amounts for fiscal year 1976. [The information referred to follows:]

SOURCES OF NON-FEDERAL MATCHING FUNDS, FISCAL YEAR 1976

In 1976, non-Federal income for public broadcasting was $298 million (72.3 percent of all income raised that year). The sources and amounts are listed below:

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'All others include income from other (private) colleges and universities, interest, profit, funding organizations (est. for public television), rentals, guide advertisement, program sale, miscellaneous others, unidentified others.

STATIONS' ACCOUNTING PRACTICES

Mr. FLOOD. The corporation must rely on local stations' fiscal records to determine the nonfederal support. Do you feel these

local stations have adequate accounting procedures to maintain accurate records for you?

Mr. LOOMIS. I think the majority of them do. There are a few of the smaller stations that are having problems. We require, as you know, that the exact reporting of their nonfederal income be certified by an outside public accountant. We audit the stations. We have now audited about three-quarters of them to check on that. The system that we worked up we showed to the GAO, and at the time they thought it was a reasonable system-It wasn't their function to approve it but they felt it was a reasonable approach. We feel that this information is accurate.

LEVEL OF FEDERAL APPROPRIATION

Mr. FLOOD. Since you project a substantial increase in the nonfederal funds, why shouldn't the federal appropriation be cut back? Mr. LOOMIS. I think the real problem with that-

Mr. FLOOD. You knew I was going to ask you that.

Mr. LOOMIS. Yes, I thought you might, sir. It is a subject which other people have raised on occasion. I think the answer, to me at least, is that public broadcasting is nowhere near fulfilling the promise that we all felt and the Congress felt and everybody felt when it was created 10 years ago, that the amount of money spent in public broadcasting is grossly less than what is required.

Mr. FLOOD. But it is doing a lot better than a lot of people thought it would.

Mr. LOOMIS. I think that is also true. We are now getting from all sources $400-some million dollars. This compares to the about $8 billion that the commercial networks have.

Mr. FLOOD. But $400 million isn't hay, even here.

Mr. LOOMIS. That is correct. That is both television and radio. We felt some number in the order of twice that amount would be required to be able to provide the kind of quality and the kind of diversity of programming which we believe is the purpose of the whole exercise.

PROPORTION OF FEDERAL FUNDING

Mr. FLOOD. What proportion of the total costs of the public broadcasting system comes from the Federal Government?

Mr. LOOMIS. Twenty-eight percent, I believe, sir, was the last figure I saw. I will check that for the record, but that is about it. Mr. FLOOD. I would like to have that.

[The information referred to follows:]

FEDERAL INCOME FOR PUBLIC BROADCASTING

In 1976, 27.7 percent of the income raised by public broadcasting came from the Federal Government.

Mr. MICHEL. Is that an increase or decrease?

Mr. Loomis. That has been increasing at the expense of local tax sources. Then the private money has been increasing, particularly the memberships. Again, if I may submit for the record, we have this carefully graphed. I am doing this from memory. I will be very happy to submit it.

25-260 (Pt. 7) O 78 32

Mr. FLOOD. Do you think a higher federal proportion of the costs is necessary?

Mr. LOOMIS. I think it is desirable. I think that the 2-to-1, which is what Public Broadcasting asked for from the very beginning, is about right. It is one third. We asked that of the White House, the Nixon White House, when we first started. Mr. Whitehead felt that 3 to 1 would be sufficient. So, not surprisingly, we ended up by compromising on the 22 to 1.

Our views have not changed. My personal views-and I want to stress the word personal-is that the Federal Government should not have more than that. Other people would like to see the ratio changed more.

OTHER FEDERAL FUNDS AVAILABLE FOR MATCHING

Mr. FLOOD. Can the corporation, directly or indirectly, use any other federal funds to match the appropriation requested in this budget? That is a tough one.

Mr. LOOMIS. I would want to double check my answer.

Mr. FLOOD. I heard a half dozen arguments on this. Will you put in the record counsel's opinion, or anybody else's opinion? Mr. LOOMIS. Yes, I will.

[The information referred to follows:]

OTHER FEDERAL FUNDS AVAILABLE FOR MATCHING

The answer depends on the way you are using the word "match", Mr. Chairman. If you are asking whether CPB could certify funds received from a Federal agency, by CPB or any public broadcasting entity, to "match" or draw down any part of this appropriation, the answer is clearly "no". The Public Broadcasting Financing Act permits us to certify only "non-Federal" revenues to the Treasury for matching purposes. Even if a public broadcasting entity reports revenues from a Federal source to CPB, CPB does not use those revenues in certifying “total non-Federal revenues" to the Treasury for "matching". (See 47 U.S.C. 396(k)(4).)

If you are asking whether funds received by CPB pursuant to this appropriation may be used as the non-Federal contribution sometimes required to qualify an applicant for a grant from a Federal department or agency, the answer will vary with the legislation or the regulations involved. Generally, Federal departments and agencies read their "matching" authorities and regulations quite narrowly. There may be cases, however, where a law or regulation might permit this kind of matching. I am unaware of any occasion on which CPB has sought any Federal assistance using appropriated funds to meet a "matching" requirement.

In a much looser sense of the word "match", CPB and Federal departments or agencies have, in the past, made contemporaneous grants to the same public broadcasting entity to support the same project. I would certainly hope this kind of cooperation in support of worthy projects would continue. It has brought many programs to public broadcasting audiences in recent years.

COORDINATION OF FEDERAL SUPPORT FOR PUBLIC TELEVISION

Mr. FLOOD. There are several budget requests here from other government agencies that relate to television programming. The Office of Human Development, the Office of Education, and other agencies at HEW are funding various television projects. You mentioned the National Foundation for the Arts and Humanities. They also support activities of this kind.

Who in the world is responsible for coordinating Federal support for public television? How do you avoid overlapping? How do you avoid duplication? It is a can of worms.

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