Wednesday, August 19, 2009

Legislation to Increase Accountability for University Foundations & Auxiliaries Passes Key Committee

Legislation to Increase Transparency & Accountability in
University Foundations & Auxiliaries Passes Key Committee
Senate Bill (SB) 218 comes in response to financial scandals involving foundations in the already cash-strapped state university system

Legislation to make the spending practices of California State University subsidiary organizations and foundations more transparent was approved by the Assembly Appropriations Committee Wednesday.

Senate Bill 218 – authored by Sen. Leland Yee (D-San Francisco) – updates the California Public Records Act to include campus and statewide
auxiliary organizations at CSU, University of California and California Community Colleges. The bill – which is co-sponsored by CFA and the California Newspaper Publishers Association – was passed unanimously by the committee with just one abstention.

“Placing state college and university auxiliaries under the authority of the public records act will safeguard the use of taxpayer funds and provide much needed accountability and oversight to state policymakers,” said CFA President Lillian Taiz, a professor of History at CSU Los Angeles. At the CSU alone, these auxiliaries manage more than a billion dollars with little or no public oversight.

As legally separate tax-exempt entities, they are not currently covered by the California Public Records Act, even though the universities that form these subsidiaries are. According to data from the CSU Chancellor’s Office, 20% of the CSU’s $6.7 billion budget is funded by these auxiliaries and foundations.

“This legislation will enable us to pull back the curtains that hide these foundations and ensure that taxpayer dollars for our public universities are used as they were intended and not for the pet projects and slush funds of campus administrators,” said Taiz.

The bill must now be voted on by the full Assembly, perhaps as early as next week. The bill previously passed the state Senate by a margin of 35-1 and has received zero no-votes thus far in the Assembly.

Earlier this year, a campus foundation at Sonoma State University was found to have used donated funds to provide huge personal loans to a former foundation board member. Some of this money may never be recovered. This money was intended to fund scholarships for qualified students.

There are currently 87 CSU-related non-profit auxiliary organizations connected with the 23 CSU campuses and/or the CSU Chancellor’s Office. CSU auxiliaries often operate campus bookstores, concessions and student unions, manage foundations to benefit students, and operate campus parking facilities, to name a few of their functions.

Many newspaper editorial boards from across the state have come out in support of SB 218, including the Los Angeles Times, the Sacramento Bee and the Riverside Press Enterprise.

NB: On Oct. 11 of this year, Gov. Schwarzenegger vetoed the bill, which had passed both houses of the state legislature with seemingly overwhelming support. One can only imagine that the UC and CSU systems together brought to bear considerable pressure on a governor who would not benefit much by passage of this bill. Needless to say, the veto was a great disappointment to advocates for an open and transparent operation of the state's two higher education pillars.

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