Tuesday, June 7, 2011

Bill to Open Foundation Books Advances

There was a big brouhaha last year when a state senator insisted that California State University Stanislaus tell the world what it was paying Sarah Palin.

Palin was inked to speak at a fundraiser for the university’s nonprofit foundation. And since Palin’s contract was executed by said nonprofit foundation, the university insisted it did not have to cough up the number.

Nonprofits are exempt from the California Public Records Act as they are not, technically, public, it argued.

Well! This led to dumpster diving by students who fished pages of the contract out of the trash; several lawsuits; and an investigation by then-Attorney General Jerry Brown.

In the end, it resulted in the release of university emails laying bare officials’ contempt for those seeking the information (disclosure “will just cause another round of newspaper stories,” they wrote before cheering the chancellor’s decision to withhold the information); the revelation that Palin was paid $75,000, plus expenses (her speech brought in more than $200,000); and the point of our missive today:

A new law working its way through Sacramento to ensure this doesn’t happen again.

Senate Bill 8 would apply to the likes of the UC Irvine Foundation (with net assets of $255.5 million), the CSU Fullerton Philanthropic Foundation (with net assets of $51.5 million) and would “bring greater transparency and accountability to California’s public higher education institutions – University of California, California State University, and the state’s community college system,” according to its rabble-rousing author, Sen. Leland Yee (pictured below).

“SB 8 will ensure UC, CSU and the community college auxiliaries and foundations adhere to state public records laws. Under SB 8, all other financial records, contracts, and correspondence would be subject to public disclosure upon request.

The bill passed Friday on a 38-1 vote, and now makes its way to the Assembly. But it”s not the first time Yee has tried to get this done.

A similar bill was killed last year after opposition from UC and CSU — which feared it would force them to out donors who wish to remain anonymous. Former Gov. Arnold Schwarzenegger vetoed the bill.

This time, however, it looks like things will be different. Yes, there’s a new governor — but more importantly, Yee has struck a compromise with the universities to protect donor anonymity “in most cases.”

The only exceptions would be “where there is a quid pro quo in which the donor or volunteer receives something from the university valued at over $2,500, or in which the donor or volunteer receives a sole source (no-bid) contract within five years of the donation,” Yee said in a statement. “Anonymity would not be provided to any donor who attempts to influence curriculum or university operations.”

In a prepared statement, Steve Juarez, associate vice president of UC State Governmental Relations, said this about the bill:

“The University of California is pleased to remove its opposition to SB 8 in response to amendments that will protect donor privacy and recognize that University campus foundations are non-profit organizations that exist solely to assist UC with its educational, research and public service mission. Senator Yee, his staff, and the sponsors of SB 8, in particular the California Newspapers Publishers Association, are to be applauded for negotiating a compromise that provides for greater transparency and accountability without sacrificing privacy protections that University donors and volunteers have a right to expect. ”

(We didn’t have anything to do with that plug for the CNPA, we swear.)

Why, precisely is it needed? See Yee’s list of outrages below.

Meantime, we’ll be digging around in the financials of the UCI and CSU Fullerton foundations that are currently public record over the next couple of weeks. They supply tens of millions of dollars to support the universities every year — and the recession has taken its toll on them, as it has everyone else. Stay tuned.

  • At Sonoma State, a $1.25 million loan issued to a former foundation board member two days after he resigned. A bankruptcy court forced the Sonoma State Foundation to return a portion of that loan which the former board member attempted to pay outside of the bankruptcy court proceedings. The Attorney General’s office and the FBI are investigating a number of auxiliaries at Sonoma State.
  • The Fresno Bee newspaper was denied information in 2001, specifically concerning the identity of individuals and companies that received luxury suites at the Save Mart Center arena at Fresno State. The denial resulted in CSU v. Superior Court (McClatchy Company), in which the Court opined that although it recognized university auxiliaries ought to be covered by the CPRA and that its ruling was counter to the obvious legislative intent of the CPRA, the rewriting of the statute was a legislative responsibility.
  • At San Francisco City College, a campus executive has been indicted for using money from the San Francisco City College Foundation for personal and political purposes. At San Jose/Evergreen Community College, the Chancellor was found to have engaged in lavish travel and other examples of financial impropriety that prompted her resignation. Since local community college campus auxiliaries are already subject to the CPRA, these instances of waste and abuse have led to the parties being held to account.
  • Sacramento State President Alexander Gonzalez spent over $27,000 from the campus auxiliary money to remodel his kitchen in 2007 and received over $80,000 for housing expenses on top of a foundation loan of over $230,000. An Attorney General audit said the situation created “the appearance of impropriety.” Additionally at Sacramento State, $6.3 million of public funds was transferred to University Enterprises Inc. – a campus auxiliary – to backfill losses from a property acquisition, which is completely contrary to UC and CSU claims that no taxpayer dollars are used for campus auxiliary operations.
  • In October 2009, Cal Poly San Luis Obispo eliminated a guest lecture at the request of executives from the Harris Ranch Beef Company, who threatened to withhold $500,000 in support for a new campus meat-processing center. Emails obtained by the San Luis Obispo Tribune also found that Harris Ranch may have also forced the resignation of a faculty member who taught a course on sustainable farming. Harris officials then requested a meeting with Cal Poly administrators to determine whether or not to continue with their donation.
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