Throughout 2012, CPB continued to focus on strengthening and advancing public media in specific ways at a time of great economic challenge. We did this by helping stations innovate, collaborate and consolidate as well as share content and embrace more efficient and effective ways to serve their communities.

Through public media's trusted high-quality content created to educate, inspire, inform and entertain, on air and online, we continued to serve the American people in ways that are relevant to their lives today.

Our commitment to innovation was demonstrated in our continued support to projects such as PBS Learning Media, PBS Kids Go!, the Public Media Platform, Bento, and OVEE. Our commitment to funding content that matters was exhibited in our continued funding in areas of public media's core competencies, education and journalism, through Ready To Learn, American Graduate, the Local Journalism Centers, the Editorial Integrity initiative for stations, as well as in new grants to NPR to support foreign correspondents and journalists assigned to provide deep coverage of local communities.

Our commitment, through grants, continued to support and affirm public media's twin pillars of education and journalism, focusing our efforts, in particular, through the innovative and effective American Graduate: Let's Make It Happen initiative. The initiative, which comprises public media stations and now more than 1,000 business and nonprofit organizations working together, addresses the nation's high school dropout challenge: more than1million young people failing to graduate.

In September 2012, WNET/New York hosted American Graduate Day, a live seven-hour national broadcast event that garnered extensive media coverage, reaching 3 million people on Twitter and attracting new American Graduate champions who signed up at americangraduate.org to pledge their time and resources to serve as mentors to young people in their communities. More than 140 public media stations throughout the country participated with national partners such as America's Promise Alliance, Big Brothers and Big Sisters, the Boys and Girls Clubs of America, United Way, Communities in Schools and many more.

John Bridgeland, CEO of Civic Enterprises and creator of the Civic Marshall Plan, said, "Although many organizations are involved with the dropout issue, only public media was able to convene so many organizations in one day, on-air, online and across communities to spotlight solutions and activate participation."

CPB also invested in journalism projects to increase the impact of the American Graduate initiative. These included the Frontline special Dropout Nation, Ideas in Action with Jim Glassman's special A Matter of Leadership, and P.O.V.'s documentary Up Heartbreak Hill.

Dropout Nation focused on a Texas high school and the challenges faced by its teachers, administrators, parents and four students at risk of dropping out. The national response to Dropout Nation included offers of scholarships for some of the students featured in the program.

In A Matter of Leadership, Jim Glassman highlighted success stories from across the country and focused on two core components that have proved effective—middle school intervention and innovative leadership training.

Up Heartbreak Hill chronicled the lives of three Native American teenagers in Navajo, New Mexico, as they navigated their senior year at a reservation high school. In addition, PBS NewsHour covered the dropout crisis throughout the year, airing special American Graduate segments as part of its regular newscasts.

In 2012, CPB continued to support capacity building and news content production in public media at the national, regional and local levels. Our investments in public television journalism included ongoing news and public affairs series in the PBS National Program Service such as Frontline, PBS NewsHour and Washington Week. CPB's support for journalism also included a third year of funding for the Harvest, Fronteras and Innovation Trail local journalism centers (LJCs). This third year of support will enable each LJC to increase its content output, engage more thoroughly with its communities, and solidify a path to sustainability.

CPB also began the process of transitioning the American Archive of Public Media, a landmark project in the history of public broadcasting, to a permanent home. CPB has incubated the archive initiative for the past several years, and now, with an advisory panel of opinion leaders from many fields led by former CPB Board Chairman Bruce Ramer, the decision was made to work with WGBH and the Library of Congress. CPB management is working to complete the process.

With regard to CPB's funding, FY 2012 marked the end of our digital appropriation. In addition, the Office of Management and Budget (OMB) directed us to set aside 10 percent of our $445 million base appropriation for the following fiscal year should sequestration across the federal government go into effect. Working with the CPB Board of Directors, we moved on two tracks: Internally, we set aside $44.5 million and began to identify ways CPB could adjust for a loss of approximately $2 million in funding. To defray administration costs, we employed a series of "belt tightening" measures.

Externally, the CPB Board and management reviewed ways to help stations in the short term so they could plan for the future. The result was a recommendation from CPB management, unanimously supported by the Board, to provide stations with 70 percent of their Community Service Grants (CSG) in the first payment of FY 2013, rather than the usual 50 percent. General managers appreciated this plan, as it would give them more time and resources in the short term to raise the additional funds they would need from their communities and other sources.

While we focused on CPB's core competencies of education and journalism in measurable ways and worked to deal with the loss of funding for the Public Telecommunications Facilities Program, digital grants, and constraints on our budget, we were also called upon to allocate time and resources to respond to an important request from the House and Senate appropriations committees to report to Congress on "alternative sources of funding for public broadcasting stations."

To address this request in a thoughtful and unassailable way, CPB engaged Booz & Company and consulted with the leaders of the national public broadcasting organizations, representatives from public radio and television stations across the country, and media and financial experts to explore and analyze possible alternatives to the federal appropriation, to identify existing funding sources that could yield significant new revenue, and to consider the likely impact on the public media system if the federal appropriation were lost.

To ensure we met the congressionally imposed deadline, we established an internal team to produce the report. The result was a thorough and definitive response to the question, "Are there viable alternatives to federal funding for public media?"

In Alternative Sources of Funding for Public Broadcasting Stations, we affirmed that there is "simply no substitute for the federal investment to accomplish the public service mission that Congress assigned to public broadcasters and that the American people overwhelmingly support." Without federal funding, public media as we know it—noncommercial and free, delivering content that matters—would cease to exist.

The report has an evergreen shelf life. It is being used by station general managers in their internal decision-making, as well as by APTS, PBS, and NPR in their talking points with opinion leaders. We provided copies to Members of Congress and their staffs, followed by meetings on the Hill to respond to questions and continue a thoughtful dialogue.

The process of creating this report further established CPB's role as a system leader, providing general managers and our partners with the information they needed to understand not only the unequivocal importance of the federal appropriation but also the need to collaborate, innovate, connect to new audiences, and engage communities to build financial and public support.

I want to acknowledge all members of the Board of Directors for their insights, guidance and commitment. The CPB Board has dealt with tough issues confronting public media in a bipartisan way, showing how, by working together, we can effect positive change.

As the Alternative Sources of Funding for Public Broadcasting Stations report affirms, public media strengthens our civil society by investing in education, journalism, and informational and cultural content. The need for public broadcasting's trusted and high-quality content is greater than ever.

Respectfully submitted,
Pat Harrison