Valley PBS failed to comply with requirements for Corporation for Public Broadcasting grants and federal Communications Act public records disclosures, CPB’s Office of the Inspector General says in a new draft audit report.

The Inspector General is recommending that the corporation require Valley PBS, also known as KVPT/Channel 18, to repay $214,230 in overpaid community service grants, fully comply with Communications Act requirements to make financial records, employment statistical reports and hiring information openly available to the public, require the station to fully comply with rules for harassment prevention training and the Diversity Statement, and identify the corrective actions it will undertake to prevent future such violations.

The audit, which covered the period from July 2019 through June 2021, was performed as part of the OIG’s annual audits of public television and radio stations, which had been delayed nationwide by the COVID pandemic. It reportedly is the first such negative audit in the station’s history.

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The auditors found that the station had overstated by nearly $1.7 million its claim of nonfederal financial support, resulting in potential overpayments of community service grants totaling $214,340. Grants are awarded based on the amount of nonfederal financial support claimed.

Station Disputes Audit Findings

In its response, which is included in the audit report, Valley PBS disputes that it overstated the nonfederal financial support but detailed how it’s correcting required discrete accounting, harassment training, and diversity.

CEO Jeff Aiello’s response blamed leadership turnover, “dwindling” board membership, and inexperienced staff as among the factors for the station’s failure to follow the federal requirements.

But Valley PBS’s staff was severely reduced in recent years by cost-cutting CEOs, with some of the most experienced staffers either resigning for new jobs or being laid off.

Concerns about the station’s operations and its future prompted former officials to speak out in op-ed pieces in an effort to raise community awareness.

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GV Wire’s report in September 2021 on Valley PBS spotlighted the problems that have plagued the station in recent years, including a revolving door of CEOs and financial officers, a lack of transparency on the station’s website, including the failure to post required public records, and the failure to stay on schedule with its federally required nonprofit tax reports, or Form 990s. The station also failed to recruit new board members, and its Community Advisory Board also has dwindled.

The station’s programming decisions also have been questioned by many who are concerned that a conservative political agenda is being served by local programming of which Aiello’s company has been the primary producer. Those concerns were not addressed in the Inspector General audit.

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The Corporation for Public Broadcasting will submit a draft response with proposed actions within 90 days, and the final management decision will be provided to Valley PBS within 180 days, the audit report says.

Aiello told GV Wire on Tuesday afternoon that station officials are hopeful the financial impact will be minimal since there is no guarantee that the Corporation for Public Broadcasting will uphold the Inspector General’s recommendation. If the corporation decides there was an overpayment in community grants, the amount will be deducted from future grant awards, he said.

Audit a ‘Huge Blow’

Phyllis Brotherton, the station’s former chief financial officer and interim chief executive officer, said she suspects the audit report and recommendations are a “huge blow” to the current board and management. But given the large number of experienced employees who were laid off during the pandemic, the report should not be altogether surprising, she said.

The station should have mitigated the loss of those employees by bringing in outside expertise to make sure the rules were being followed, Brotherton said. She acknowledged that those rules are complex and subject to change, “which appears to have occurred here in some instances.”

Brotherton said she’s encouraged that the station has hired an outside accounting firm that has staff who are experienced in compliance requirements and public broadcasting accounting practices.

“Though the findings of the report and the recommendations are unfortunate, I am confident systems are now in place to assure accurate CPB reporting and compliance, so the perfect storm of those two years doesn’t happen ever again,” she said. “I think members, donors and the community can be assured of that.”

Office of the Inspector General Draft Audit Report