Responding to Senator Leland Yee's amendments to his latest higher education sunshine bill, California college and university foundations and other "auxiliary organizations" have agreed to abide by transparency rules comparable to the California Public Records Act in return for keeping their donors' names confidential—except in certain circumstances.

As reported by his office,

For the past three years, Senator Yee (D-San Francisco), along with open government advocates including Californians Aware, students, and workers, have been trying to 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 legislative efforts have been opposed by the administrations of UC and CSU and vetoed by former Governor Arnold Schwarzenegger (R-Los Angeles), but today, the sides announced a compromise that will remove the universities’ opposition, protect donor anonymity in most cases, and increase transparency at auxiliary organizations and foundations operating on public campuses.

“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 Yee. “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.”

The amended version of 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.

In addition, the bill will protect the anonymity of donors and volunteers in all cases except in 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. Anonymity would not be provided to any donor who attempts to influence curriculum or university operations.

“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 Newspapers 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.”

“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 the 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.”

According to the CSU Chancellor’s Office, in 2009, 20 percent of its $6.7 billion budget, or $1.34 billion, was held in their 87 auxiliaries and foundations.

Several recent examples demonstrate the need for increased public oversight and accountability provided by Yee’s legislation.

• 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. After a lawsuit filed by CalAware, a judge ruled that the CSU acted illegally and forced them to disclose the contract.

• At Sonoma State, a $1.25 million loan 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 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 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.