OPEN GOVERNMENT -- Free speech groups are trying to force the state’s public universities to disclose financial relationships
worth more than $6.25 billion. At issue are scores of nonprofit foundations
linked to the schools, each serving a campus in the UC and CSU systems, which insist that disclosing the
finances would cost millions of dollars in staff time, reports Maryam Ali for Capitol Weekly.

The quest for details of the nonprofits’ money – where the money comes
from and how it is spent – follows a series of disputed financial
transactions
at schools across the state.

For example, the Sonoma State University Academic Foundation’s $1.25 million loan to former board member Clem Carinalli
has come under scrutiny. 
Also last month, Philip Day Jr., former chancellor
of City College of San Francisco, faced eight felony
counts and one misdemeanor count related to the misappropriation
of $150,000 of public money.

University officials estimate that enactment of legislation
that would force disclosure would cost $6.6 million and force a commensurate reduction in funds
for campus programs and services.

The cost stems from the amount of time that the staff
would spend responding to requests submitted under
the Public Records Act (PRA), as well as any necessary legal action that they say
would cost a minimum of $50,000 per court case.  

But one of the Legislature’s foremost critics of UC’s governance is not
convinced. Sen. Leland Yee, D-San Francisco, has authored legislation,
SB 218, that would force the universities and their nonprofits
to disclose their finances.

At stake is big money.

Currently, CSU has 89 auxiliaries or foundations with net operating
revenues
of $1.25 billion. UC’s annual reports show around $5.01 billion spread
throughout 10 primary foundations on each campus and around 250 support
groups.

Jim Ewert, legal counsel for the California Newspaper
Publisher’s Association and a proponent of the bill, said that
the Legislature does not know the details of how that
money is being used. “When they’re making determinations as to what should be cut at
the CSU or the UC, this is hidden money. They’re not able to make an informed decision.”

Universities and colleges argue that PRA provisions
will not make available any new information to the
public.

“It is an exercise in futility,” said Geoff O’Neill, assistant vice president of institutional advancement
at the UC. “The concern is that it will stifle the ability to discuss
issues of great importance to the university due to
fear that there’s going to be a PRA report on notes related to the
discussion.”

O’Neill said the objective of the bill is unclear since
there is no financial information that is not public.
In addition to filing yearly tax returns, which are
publicly available, all UC foundations have annual
audits conducted by an international accounting firm,
PriceWaterhouseCoopers. He added that he is unaware
of any instance where information requested, related
to university activities, has not been provided.

The CSU too said that revenues and expenditures of
their auxiliaries are public under current state and
federal law. The Humboldt State University Advancement
Foundation, for example, post annual financial reports
on its website.

“What we’re doing is opening up a whole Pandora’s box of requests without anything really of substance
that would be added to the public’s knowledge of what the university is doing,” said O’Neill.

The disclosure problem arises in part when the foundations
hold money in between disbursing scholarships. “They are acting like a
bank,” said Alice Sunshine, communications director at the
California Faculty Association.

In some cases, the foundations are responsible for
determining appropriate investment methods for money
collected from donations until it is ready to use for
their non-profit purpose. Giving out personal loans, Sunshine
said does not fit the category. “Outstanding loans from the 90s for a
scholarship fund? It’s starting to look really ugly, that’s a favor for
a buddy.”

Sunshine said that the lack of openness leaves bad
situations brewing until they are circumstantially
discovered.

Too many disputes, including Sacramento State University 
President Alexander Gonzalez’s low-interest loan in 2007, come to the forefront coincidentally.

In one instance, a reporter following a different money
trail at the county tax assessor’s office found links to a university loan. In another,
the discovery in a lawsuit brought by a rival cinema
complex suing the university found an implicated trustee,
and a student reporter following an assignment for
class in a library records discovered Gonzalez.

“This isn’t right and we’ve only got a peek under the rug. You take very little
public oversight and a billion dollars and put it together
and you know it’s just the recipe for things to happen,” Sunshine said.