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1.

Some confusion exists regarding exactly who is covered by this requirement. The Act defines "public telecommunications entity" [Section 397(12)] as "...any enterprise which (A) is a public broadcast station or a noncommercial telecommunications entity; and (B) disseminates public telecommunications services to the public."

However, the Conference Report says that "...the conferees do not agree to extend this provision to cover 'public broadcasting entities.'"

The Act defines "public broadcast entity" as "...the Corporation, any licensee or permittee of a public broadcast station, or any non-profit institution engaged primarily in the production, acquisition, distribution or dissemination of educational and cultural television or radio programs."

The two definitions overlap, so that, for example, public broadcast stations are clearly included under the provision by the text of the Act, and yet seem to be excluded by the intention of the conferees, as stated in the Conference Report. This may require a clarification or technical amendment to the Act.

However, for the present, it seems clear that the conferees wanted the scope of the provision to include basically all disseminators of public telecommunications services who receive financial assistance from CPB. Likewise, they did not intend to include entities such as PBS, NPR, or other production organizations which do not also disseminate programs to the public. It should be noted that all organizations which receive financial assistance from CPB must still make their books and records available for audit and examination by CPB and/or GAO. In addition, the records of CPB are subject to examination by GAO and Congress.

In any event, it is safe to assume, in light of the legislative history, that all public broadcast stations, in order to be eligible for CPB funds, must allow public inspection of the financial reports and records filed with CPB.

2. A literal reading of the law indicates that the legal requirement would be met if either the annual financial reports and audit reports or other information regarding finances is maintained for public inspection. In other words, the law is written in an alternative manner by the use of the word "or" rather than using the word "and" in which case both types of records, i.e. the annual financial and audit reports and the other information regarding finances would be available

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for public examination. However, the legislative history indicates that the intention was to have both types of records filed with CPB to be available. It is not intended to allow a choice of types of records.

B. Retroactivity

Nothing in the legislative history suggests that the open financial records provision has any retroactive effect. The Act calls for compliance with this provision on the effective date of enactment - November 2, 1978. Therefore, any financial record or report, fitting the description below, that is filed with CPB after November 2, 1978 would fall into the category of those which must be made available for public inspection.

1. Financial information provided to CPB to accompany a proposal for program assistance will be considered confidential by CPB before the proposal is accepted for funding by CPB. After acceptance by CPB for program funding the financial information should be made available to the public at the station as a part of the CPB funding agreement, unless a proprietory element exists. In addition, any other proposal for CPB financial assistance of any kind will be considered confidential until it is accepted for funding by CPB, if at all.

2. Financial support information which is required to be kept by recipients of CPB funds in order to substantiate an audit of an activity in which CPB funds were involved record keeping provisions of 396 (1) (3) (C-D)] would not be considered records subject to public examination, except if they came into the possession of CPB under Section 396(1)(g) (3). However, the audit reports created by CPB would be available for public examination at CPB.

3. Any financial records which deal with personnel matters and which would be kept confidential under the provisions of the Privacy Act would also not be required to be made available for public inspection.

III. Minimum Compliance Requirements

A. All public telecommunications entities must make the following types of financial records available for public inspection:

1. Annual financial reports filed with CPB. These would include the CPB Annual Survey;

2. Annual audit reports filed with CPB. These include the new requirement for an annual audit to be conducted by independent certified public accountants or state certified independent public accountants, according to the CPB developed audit standards; and

3. Other information regarding finances, submitted to CPB. This information would include financial information accompany any agreements for production assistance, training grants and contracts, research or consultant grants or contracts, or any funding agreement with CPB which require a financial report.

B. All public telecommunications entities must make any of the above-described financial records or reports filed with CPB on or after November 2, 1978 available for public inspection. Suggested Mechanisms for Compliance

IV.

A number of mechanisms are available for stations to comply with this provision. The choice of mechanism is left to each station's discretion. It is hoped that each entity will choose the method that best accommodates the public.

The basic question is how to make the records available. All stations must maintain a public inspection file for FCC purposes. Copies of the required financial records could be included in the public file. Arrangements for photocopying the contents of the file records, at cost, could be similar to the arrangements for reproducing other documents in the public file. In this regard the stations should refer to FCC regulations.

An alternative mechanism is to have the records located in the offices of the station for inspection upon request, as long as any request is not unreasonably denied. It would not be unreasonable to require an appointment with the station to review the material as long as the process is not burdensome to the public. Any costs charged to a member of the public should be at cost to the station. In no event should a member of the public be charged solely to inspect these public records.

v. CPB Procedures for Certifying Compliance

A.

Documentation

1. Each recipient/public telecommunications entity, after reviewing the above information, is to develop documentation indicating the manner in which they have complied with this requirement of the 1978 Financing Act. This documentation should contain information that will indicate, for example: the type of records made available for public inspection (by specific description), the mechanism by which the records are made available (and, if appropriate, the location of these records), the arrangements made for reproduction of the documents by members of the public, and any limitations placed on access to the file by the entity.

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2. The documentation should be kept at each station and be made available to CPB, upon request, to determine the fact and extent of compliance. CPB's investigation of a particular station's compliance would be in response to complaints received by CPB, that CPB determines to be significant enough to warrant inquiry.

3. The documentation should also be made available to CPB auditors who may be making periodic audits of a station.

B. Letter of Certification

1. As soon as possible after the receipt of this interpretative paper, but in no event later than April 30, 1979, each recipient/public telecommunications entity shall provide to CPB a written document certifying its compliance with this provision of the Act. The letter of certification shall indicate compliance with the 1978 Act as its provisions are made known to the station by CPB and as interpreted by CPB and the station.

2. The letter of certification shall be signed by the designated official responsible for the activities of the licensee (Chairman of the Board of Directors, Chairman of the University Board of Regents, President of the School Board, etc.) and the chief executive officer in charge of the operation of the station (President, station manager, Head of the Speech Department, etc.)

Community Advisory Board Requirement of

the Public Telecommunications Financing Act of 1978

A.

Section 396(k)(9) of the Public Telecommunications Financing Act of 1978 provides in pertinent part:

"(A) Funds may not be distributed pursuant to this sub-
part to any public broadcast station unless such
station establishes a community advisory board.
Any such station shall undertake good faith efforts
to assure that the composition of its advisory board
reasonably reflects the diverse needs and interests
of the communities served by such station.

"(B) The board shall be permitted to review the programming
goals established by the station, the service provided
by the station, and the significant policy decisions
rendered by the station. The board may also be dele-
gated any other responsibilities, as determined by the
governing body of the station. The board shall advise
the governing body of the station with respect to
whether the programming and other policies of such
station are meeting the specialized educational and
cultural needs of the communities served by the
station, and may make such recommendations as it con-
siders appropriate to meet such needs.

"(C) The role of the board shall be solely advisory in
nature, except to the extent other responsibilities are
delegated to the board by the governing body of the
station. In no case shall the board have any
authority to exercise any control over the daily manage-
ment or operation of the station.

"(D) In the case of any public broadcast station in existence on the effective date of this paragraph, such station shall comply with the requirements of this paragraph with respect to the establishment of a community advisory board not later than 180 days after such effective date.

"(E) The provision of subparagraph (A) prohibiting the
distribution of funds to any public broadcast station
unless such station establishes a community advisory
board shall be the exclusive remedy for the enforce-
ment of the provisions of this paragraph."

B. Date of Compliance - 180 days after the effective date of the Act, which was November 2, 1978. Therefore, any public broadcast station in existence on that date must comply with