In response to continuing debt at the Daily Nexus, university officials recently combined the publication’s two off-campus bank accounts with its university account – a move that has already reduced debt and increased transparency of accounting, but will limit the paper’s financial autonomy.
Since 2001, the Daily Nexus has struggled to repay a debt to the university that has varied between about $80,000 and $700,000. Yearly audits of the paper’s finances demonstrate that the debt gradually increased over the years due to declining advertising revenue and increasing personnel costs.
In addition, Bill McTague, a budget officer for the Division of Student Affairs, said several necessary investments in the past four years such as updating office electrical wiring and computers further drained Nexus accounts.
The elimination of the deficit – which first began during the tenure of former Storke Publications Director Tybie Kirtman – will fall squarely upon the shoulders of new Publications Director and former Santa Barbara News-Press Editor Jerry Robert. He said his goal is to revitalize the paper’s revenue intake.
“[To alleviate debt,] you need to focus a lot of your energies on the revenue side,” Roberts said. “I don’t think as an overall philosophy you can cut your way to prosperity; you have to grow the business.”
Meanwhile, with Kirtman’s retirement, the UCSB administration, in collaboration with Nexus account manager Linda Meyer, has taken a more active role in working with the publication to pay down the deficit.
School administrators have significantly reduced the debt by consolidating the Nexus funds that were kept off-campus into its university account, and have devised a plan through which the publication will pay off between $100,000 and $150,000 yearly, McTague said.
Kirtman kept two off-campus bank accounts – one for daily operation, and another for reserve money – in conjunction with the Nexus’ university account. McTague said the two off-campus accounts were worth about $130,000, which, combined with the university account, helped to decrease the newspaper’s debt – listed as $683,154 in the latest audit. This, in addition to other measures, shrunk the debt to the current level of $500,000.
Dean of Students Yonie Harris, who has been involved in the effort to get the Nexus back in the black, said the two accounts were merged on campus in an effort to increase future fiscal transparency. The move will limit the Nexus’ financial autonomy, because the administration will now have complete access to its records.
“We pulled the off-campus account in under the university one,” Harris said. “[The off-campus accounts were] perfectly legal, but what they did was hamper our ability to monitor the financial status of the Nexus. This gives us the opportunity to look any day and see where we are and monitor income versus expenses.”
McTague said the account will now be reviewed on a monthly basis in order to facilitate paying down the debt with the help of Roberts.
“Financial control is with the university now, we’ll be reviewing it every month,” McTague said. “Our goal is to pay down $100,000 to $150,000 a year. Our operating expenses need to be reduced. The new director is going to have to deal with that.”
However, Roberts, who will begin work Feb. 20, said that instead of cutting costs, the focus should be on growing the newspaper’s revenue stream. He suggested luring new advertisers and increasing online content as ways to achieve this goal.
The Nexus is primarily operated through advertisement revenue. It also receives a $0.85 per student per quarter lock-in fee during the academic year, as well as $0.57 per student per quarter during summer sessions, accounting for roughly 7 percent of its operating budget.
The student newspaper’s financial woes first came to light when Kirtman returned from a hiatus following a battle with cancer. McTague said it was around this time in 2001 when UCSB Accounting informed administrators that the university was paying Daily Nexus employee salaries, but was not being reimbursed.
“Tybie went out for her cancer,” McTague said. “She came back, and then probably six months after that, payroll notified us that … they were short. … The payroll for the Nexus staff is paid through the university.”
In the years that followed, according to McTague, Kirtman attempted to bring the budget out of the red, but was stymied by several years of poor advertising revenues.
Audits of Nexus funds show that between 2000 and 2001, Nexus revenue fell from $718,415 to $610,672. In the same period, personnel costs rose by $43,058 and the cost of printing the paper increased by $17,223.
The trend continued over the next few years. According to the audit, in 2002, the first year the publication posted a debt, it owed $84,997 to the university. By 2005, the figure had ballooned to $404,798. According to the most recent audit of its finances, the Nexus had incurred a $683,164 debt.
Meyer said that nationally the current climate is very difficult for newspaper advertising and ad revenues are down for newspapers across the board. Meanwhile, McTague added that newspapers are prone to instability in ad revenue.
“The paper business is tough,” McTague said. “Cost monitoring is really critical for its success. If [the Nexus has] $700,000 in revenue in one year, that could drop to $500,000 in a heartbeat the next year. That’s what happened to [Kirtman]. A down year is not 2 or 4 percent, it’s 10 or 20 percent.”
According to Meyer, the publication raised advertising rates by 5 percent in the past year, which will contribute to its fiscal health. She said the paper has also begun collecting on past-due accounts.
The Nexus has also traditionally had a financial connection to the La Cumbre yearbook because the organizations have shared some costs, such as the publication director’s salary. Meyer said that in previous years, the yearbook was a money-losing operation, so some La Cumbre ads in the Nexus went unpaid. The paper recently collected on these past-due accounts as well.
Along with these factors, the Nexus office required expensive renovations from 2002 to 2004, due to outdated electrical wiring that did not meet code. Additionally, because of the shift to digital publishing in 2004, the staff needed new computers, expenses that were necessary, but that pushed the paper further into debt. McTague estimated that each project cost between $20,000 and $30,000.
Kirtman said she has high hopes for the paper’s future in spite of its current difficulties.
“I hope [the Daily Nexus] thrives, and I think they have the ability to do that,” Kirtman said. “Print is becoming more and more difficult financially. They have the right kind of people. I think they’ll do just fine.”