Senator Leland Yee has tried but failed twice before to pass legislation that 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.
Previous efforts were opposed by the leaders at UC and CSU and subsequently vetoed by former Governor Arnold Schwarzenegger.
“After several years of fighting to open up the books of our public universities, I am pleased that we are able to come to this agreement,” said Senator Yee in a news release from his office. “Finally, we will have true sunshine and accountability of the administration of billions of dollars within UC and CSU. I commend the universities for seeing the light and allowing us to strike this deal.”
According to that release, amendments to 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.
However, the bill will protect the anonymity of donors and volunteers in all cases except in those situations “where there is a quid pro quo in which the donor or volunteer receives something from the university valued at over $2500 or in which the donor or volunteer receives a sole source (no-bid) contract within five years of the donation.”
Senator Yee’s office asserts, “Anonymity would not be provided to any donor who attempts to influence curriculum or university operations.”
That is the key provision that allowed both UC and CSU to drop their opposition to the legislation.
“The CSU [system] has always been in favor of transparency, but we’ve been concerned about donor privacy,” said Mike Uhlenkamp, a CSU spokesman. “With new amendments, these concerns have been put to rest.”
UC officials had previously argued that SB 8 would have “a serious impact on UC Campus Foundations and their ability to attract donors to further the mission of the University.”
Under a previous version, the bill would have only protected “the name, address or telephone number of an anonymous donor” but the UC Campus would “still be required to disclose a donor’s financial holdings, investments and other personal information such as a medical condition that may be the impetus for their interest in a particular area of scientific research.”
UC officials believed that SB 8 version would have had a “chilling effect” on private donations estimating “conservatively” that “the provisions of this legislation could result in an annual revenue loss of almost $7.5 million because SB 8 places UC Campus Foundations at competitive disadvantage to other charities, including private colleges and universities in California, who can guarantee donor confidentiality.”
They argued, “Senator Yee has used phrases like “pay to play” yet he cannot identify a single example of wrongdoing by UC Campus Foundations. SB 8 puts over $500 million raised annually by the Campus Foundations at serious risk.”
However, with amendments in place, UC announced on Wednesday that they were removing their opposition to SB 8.
“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,” said Steve Juarez, Associate Vice President of UC State Governmental Relations.
“Senator Yee, his staff, and the sponsors of SB 8, in particular the California Newspaper 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,” he continued.
“We are delighted that, after a three-year struggle to require the CSU auxiliaries and UC foundations to operate openly and transparently, an agreement has been reached among the stakeholders that pulls the curtain back on these quasi-government agencies to inform the public about their operations while protecting the privacy of donors who choose to remain anonymous,” said Jim Ewert, General Counsel for the California Newspaper Publishers Association.
“The California Faculty Association is heartened that CSU and UC are removing their opposition to this common sense reform for increased transparency,” said Lillian Taiz, CFA President. “We also want to thank Senator Yee for his willingness to negotiate language to which all the parties could agree. He is truly a great champion for accountability and transparency in higher education.”
If SB 8 is signed into law by Governor Jerry Brown as expected, it would allow for the first time that the public be able to examine more than $600 million in the foundations’ financial records, contracts and correspondence – something that can be done elsewhere in the university under current law.
The impetus for this law would seem to be the scandal from last year in which the CSU Stanislaus Foundation failed to disclose compensation to Sarah Palin for a speaking contract at their graduation.
After a lawsuit filed by CalAware, a judge ruled that the CSU acted illegally and forced them to disclose the contract.
Senator Yee’s office cites at least five other examples that illustrate the need for this legislation.
At Sonoma State, a $1.25 million loan was 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 California Public Records Act 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.
—David M. Greenwald reporting
