Monday, August 16, 2010

Assembly Approves Higher Education Transparency Bill - Update on SB 330

NOTE: Before heading to the Governor, SB 330 must receive a procedural concurrence vote in the Senate. Then, the Governor can either sign the bill or veto it-again.

Yee's bill expands public records law to campus auxiliaries and foundations

SACRAMENTO – On a bipartisan 71-0 vote, the State Assembly today approved legislation authored by Senator Leland Yee (D-San Francisco) to bring greater transparency and accountability at California’s public higher education institutions.

SB 330 – a reintroduction of last year’s SB 218 – would update the California Public Records Act (CPRA) to include auxiliary organizations and foundations that perform government functions at the University of California, California State University, and California’s community colleges.

To address the Governor’s veto message from last year, the new bill has been amended to exempt from disclosure the names of volunteers and donors who wish to remain anonymous provided they do not receive something of value greater than $500 in exchange for their donation or service. The bill will also exempt information obtained in the process of soliciting donations.

“SB 330 will help ensure government transparency and will protect funds for public education,” said Yee. “With today’s vote, we are one step closer to eliminating waste, fraud, and abuse at UC and CSU. The Governor has a second chance to do the right thing and to provide taxpayers and students what they deserve – information on how their universities are being run and how money is being spent that is intended for the benefit of the public institution.”

“SB 330 would remove the cloak of secrecy that prevents the public from understanding whether significant amounts of educational funding for taxpayer-funded colleges and universities is being spent for the benefit of all Californians or just a privileged few,” said Jim Ewert, Legal Counsel for the California Newspaper Publishers Association.

The most recent scandal of an auxiliary organization involved the CSU Stanislaus Foundation. The Foundation negotiated a speaking contract with Sarah Palin, but originally refused to disclose her compensation. They first claimed they had no documents pertaining to her June visit. After emails written by administrators regarding the visit were uncovered, they then claimed the Foundation was exempt from the state’s public records law despite being fully staffed by taxpayer-funded employees.

Students later found pages 4 through 9 of the Palin contract in the administration’s Dumpster, which showed her visit requirements include a hotel suite, first class airfare or a private Lear jet, pre-screened questions, and “bendable straws.” As a result of significant public pressure, the CSU eventually disclosed after her visit that she also received $75,000 plus expenses – more than double what a local Republican Party in Lane County, Oregon paid Palin in April.

The incident spurred an investigation by the Attorney General, which has been put on hold pending the outcome of a lawsuit by Californians Aware – a nonprofit organization committed to open government. Senator Yee also received several hate messages after he made a public records request for the Palin contract and other University correspondence.

The UC and CSU have often evaded the public records act by shifting some responsibilities to foundations and other auxiliary organizations operating on campuses. Several recent examples demonstrate the need for increased public oversight and accountability provided by SB 330:

• At Sonoma State, a $1.25 million loan issued to a former foundation board member two days after he resigned. Recently 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 and the FBI are investigating a number of auxiliaries at Sonoma State.

• At Fresno State, a no-bid managing contract was given to a foundation member for a theatre complex in which he held a financial interest. In addition, 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. 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 lead to the parties being held to account.

• Sacramento State President Alexander Gonzalez spent $200,000 from the campus auxiliary money to remodel his kitchen in 2007 which created “the appearance of impropriety,” according to an Attorney General audit. 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.

• Campus leadership at Cal Poly San Luis Obispo appears to be under the influence of a well-heeled donor. In October 2009, Cal Poly 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 recently 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 are now requesting a meeting with Cal Poly administrators to determine whether or not they will continue with their donation.

According to the CSU Chancellor’s Office, 20 percent of its $6.7 billion budget, or $1.34 billion, is held in their 87 auxiliaries and foundations, and out of public view.

“If government agencies can spin off front groups to handle their income with no transparency, those who provide that funding will never know quite where their money goes,” said Terry Francke, General Counsel for Californians Aware.

Before heading to the Governor, SB 330 must receive a procedural concurrence vote in the Senate.


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