Universities Erroneously Claim Transparency Will Result In Lost Revenue, Yet Another State Saw Significant Increases Under Similar Law
California Newspapers Overwhelmingly Endorse SB 330- it is now on the Governor's desk - will he sign it or veto it? You can contact the Governor by phone or email here.
If you need details on the $ scandals see this post
SACRAMENTO – While the administrations of the University of California (UC) and the California State University (CSU) are attempting to get Governor Arnold Schwarzenegger (R-Los Angeles) to veto legislation that would bring greater transparency to their campus subsidiary organizations, their main argument is being quickly debunked by the bill’s supporters and author, Senator Leland Yee (D-San Francisco). UC and CSU have claimed Senate Bill 330 would result in a “chilling effect” on private donations, yet another state saw significant increases in such donations after a similar law was enacted.
“UC and CSU administrators are doing a disservice to taxpayers by misleading the Governor,” said Yee. “Their claims are completely erroneous and unfounded. Secrecy breeds corruption and not more donations. I expect the Governor will see through their charade and sign SB 330 into law.”
Yee’s SB 330 will result in greater transparency and accountability regarding how student fees and private donations are used at the CSU, UC, and California Community Colleges by placing the institutions’ subsidiary organizations – known as “auxiliaries” – under the scope of the California Public Records Act (CPRA) without creating new state costs. The bill will also further the priorities enacted by Proposition 59 – approved by 83% of voters in 2004 – granting the public a constitutional right to access public records.
Under existing law, these public institutions are able to hide billions of dollars within their auxiliary organizations and foundations, which are often staffed by public employees. This secrecy has encouraged colleges and universities to create an increasing number of auxiliaries to run campus operations such as food services, parking facilities, housing and bookstores – all of which would be subject to public oversight if they were administered by the agency and not an auxiliary.
While SB 330 specifically exempts from disclosure the identity of donors who wish to remain anonymous provided they do not receive something of value greater than $500 in exchange for their donation, UC and CSU administrators are still claiming the bill will result in millions of dollars in lost revenue and would have a “chilling effect on private donations to the Campus Foundations.” While the California Community College system is neutral on the bill, the UC and the CSU administrations argue without a shred of evidence that secrecy is needed to encourage donations.
In contrast, however, research shows that when another state enacted a similar law, their public universities saw a significant increase in donations.
A case watched closely by public university foundations and open records advocates was settled in February 2005 when the Iowa Supreme Court ruled that the state’s public university foundations must open records to the public.
The ruling – involving records held by the Iowa State University Foundation – stated that the foundation “is performing a government function, and therefore its records are subject to disclosure…The foundation’s activities support a myriad of university programs, scholarships, facilities, and projects. The foundation is plainly performing a government function by virtue of its contract with ISU, and therefore…the Iowa Freedom of Information act mandates disclosure.”
In the year prior to the ruling, Iowa State University, University of Iowa and the University of Northern Iowa saw a combined $234.6 million in donations to their foundations. Following the ruling, the universities saw a 26 percent increase – an additional $59.9 million – in donations. The subsequent four years after the ruling, Iowa public universities received on average $289.3 million annually in donations – an average of $54.7 million more than the year prior to the ruling.
“The result in Iowa confirms that the ‘chilling effect’ argument drummed up by UC and CSU is specious,” said Jim Ewert, Legal Counsel for the California Newspaper Publishers Association. “Donors are more willing to give to institutions that operate in the open with nothing to hide so they can ensure that their gifts are not being misused.”
“The evidence demonstrates that transparency does not have a negative effect on donations to university foundations,” said Lillian Taiz, President of the California Faculty Association. “Instead, the lack of transparency in the CSU foundations has led to mismanagement and commingling of state and private dollars. As the case in Iowa shows, potential donors want to have confidence that their funds are being used appropriately and both the UC and the CSU are simply making specious arguments so that they can continue to operate in secrecy.”
The “chilling effect” argument being made by UC and CSU is not the first time they used such a claim to avoid greater transparency and accountability.
When the CSU made the same argument in 2001 in California State University Fresno Association Inc. v. Superior Court (McClatchy) – the case involving well-heeled donors who were given exclusive access to luxury box tickets at the campus arena – the court concluded: “Any claims by the [CSU] that donations will be canceled are speculative, supported only by inadmissible hearsay…[and] are inadequate to demonstrate any significant public interest in nondisclosure…The unsupported statements [that a “chilling effect” would occur] constitute nothing more than speculative, self-serving opinions designed to preclude the dissemination of information to which the public is entitled.”
By its own admission, 20% of the CSU’s operating budget – or $1.34 billion – is funded by the hidden budgets of its campus and system auxiliaries.
Governor Schwarzenegger has until September 30 to sign or veto SB 330.
California Newspapers Overwhelmingly Endorse SB 330:
SAN JOSE MERCURY NEWS: Yee's crusade is about public disclosure, not Sarah Palin – Yee has proposed legislation, SB 330, to provide more oversight. It's overdue. And this time, Gov. Arnold Schwarzenegger, who vetoed a similar bill last year, should sign it.
LOS ANGELES TIMES: Fundraising, with limits – Sponsored by Sen. Leland Yee, the rare legislator who seems to have minded his knitting this term, SB 330 would make it expressly clear that auxiliaries are adjuncts of the schools. If they were genuinely private, they might have a claim to privacy, but they are not. With his signature, the governor can right a wrong.
SAN FRANCISCO CHRONICLE: Open the windows on UC, CSU foundations – The foundations aren't at all transparent, and it appears that they aren't always responsible, either. CSU officials have admitted that the foundations have mixed private and public money to the point where it's impossible for them to track the monies separately. There's more at stake here than just careless accounting. It's time for the public to know what the foundations have been doing with our money.
SACRAMENTO BEE: Palin visit becomes a teachable moment – It took Sarah Palin's celebrity status to elevate what had been a sleepy issue about California's colleges and universities hiding information behind their "private" nonprofit foundations. This case also revealed how the college's top administrators and foundation board are virtually the same. Lawmakers passed a bill to include these nonprofits in the Public Records Act. The governor should sign it.
SANTA ROSA PRESS DEMOCRAT: Opening Up – Yee's new bill exempts volunteers and anonymous donors from disclosure unless they receive benefits worth more than $500 in return. We can't always rectify our mistakes, but Gov. Arnold Schwarzenegger has a golden opportunity.
MODESTO BEE: It's time for foundations to be open – We encourage Gov. Schwarzenegger to sign the bill, which addresses a major concern he had last year when he vetoed similar legislation. While the Stanislaus foundation's secrecy over Palin's June appearance at the Turlock campus clearly added fuel to the fire, the issue is much greater than politics. Openness is openness, and we need more of it by foundations associated with public universities.
STOCKTON RECORD: CSU slush fund – It's time to increase transparency of university system's foundations. The fact that Palin's visit resulted in the largest fundraising event in the university's history is utterly beside the point. Taxpayers have a right to know how their money is being spent. We urge the governor to sign Yee's bill.
FRESNO BEE: College foundations should be open – There have been serious questions about how foundations have used their money. We think the public -- and foundation supporters -- deserve to know about such things.
BAKERSFIELD CALIFORNIAN: Keep tabs on state university foundations – Classifying such documents as public record not only minimizes the chances that state resources will be doled out extravagantly or irresponsibly, it limits the chances of individuals using such funds for personal benefit. Yee rewrote the bill to address one of the governor's primary concerns. These universities are playing with our money. Taxpayers deserve the right to keep closer tabs on them.
MONTEREY COUNTY HERALD: Someone has to watch college foundations' spending – It makes no sense that foundations closely affiliated with universities should be allowed to spend money on programs or facilities in secret. The foundations often play a valuable role supplementing state dollars, but officials at all levels of the state and college systems have shown strong tendencies to play fast and loose even with purely public money. What they are capable of without public scrutiny is anyone's guess.
MERCED SUN-STAR: It's time for openness at universities – Senate bill to shine a light on foundations is on governor's desk. Gov. Arnold Schwarzenegger should sign the bill, which addresses a concern he had last year when he vetoed similar legislation.
SACRAMENTO STATE HORNET: Shine a light on auxiliary funding – Students, being paying members of these universities, deserve to know where this money is coming from and how it is spent. The Hornet hopes Schwarzenegger will not veto this bill when it comes to his desk.
CSU LONG BEACH DAILY 49ER: CSU needs new atrium to view corruption – It’s in all of our interest to be transparent. It’s important that these foundations end the practice of secrecy so such conflict-of-interest scandals cease to plague the system. Those of us who attend any California system of education are at the doorstep of change.
- Richard Blum (AGAIN!)
- Wm. De La Pena
- Gareth Elliott
- George Kieffer
- Sherry Lansing (AGAIN!)
- Monica Lozano (AGAIN!)
- Hadi Makarechian
- Eloy Ortiz Oakley
- Norman Pattiz (AGAIN!)
- John A. Pérez
- Bonnie Reiss
- Richard Sherman
- Bruce Varner
- Charlene Zettel
- VACANT (M Anguiano?)
- VACANT (L Park?)
- UC Regents Committees
- Staff Advisors, Faculty Reps, Designates
- Ex Officio UC Regents
- UC Alumni Regents
- VACANT (E Tauscher?)
- VACANT (H Guber?)
- Paul Monge
"If the University were a business, it would likely be the largest corporation in California."
"If The University Were A Business, It Would Likely Be The Largest Corporation In California"-Regents Minutes (2010)