OPEN GOVERNMENT/WHISTLEBLOWERS — Senator Leland Yee (D-San Francisco) has reintroduced two bills vetoed last year by Governor Schwarzenegger, designed to bring greater transparency and accountability to the State’s public higher education institutions, Yee's office has announced.

“These bills are imperative in order to rid the University of California and the California State University of waste, fraud, and abuse,” said Yee.  “Through this legislation, we will give the Governor a second chance to do the right thing.  Taxpayers and students deserve to know how their public universities are run.”

SB 330, which is a reintroduction of last year’s SB 218, would update the California Public Records Act (CPRA) to include auxiliary organizations that perform government functions at the UC and CSU.  To address the Governor’s veto message, the new bill will exempt from disclosure the names of volunteers and donors who wish to remain anonymous provided they do not receive something of value greater than $500 in exchange for their donation or service.

(Note: SB 330 passed its first hurdle in the Senate Judiciary Committee today on a partisan 3-2 vote.)

SB 650, which is a reintroduction of SB 219, would provide UC and CSU employees who report waste, fraud and abuse, with the same legal protections as other state employees.  Specifically, the bill will ensure that UC and CSU employees can exercise their right to seek damages in court if the university has either reached or failed to reach a decision regarding a complaint within the time limits established by the Regents and Trustees respectively; or if the university has not satisfactorily addressed the complaint within 18 months.
“These bills are the right tools to give Californians confidence in our institutions of higher learning,” said Lakesha Harrison, President of AFSCME Local 3299.  “Californians deserve Governor Schwarzenegger to keep his word and stamp out waste, fraud and abuse of taxpayer funds throughout government.”
“The time has come to bring transparency and accountability to our public colleges and universities,” said Lillian Taiz, President of the California Faculty Association and a history professor at CSU Los Angeles.  “Because of state funding cuts to public higher education, we must ensure that what money the system has is spent as it was intended – in the classroom educating students.”
SB 330
The UC and CSU have often evaded the public records act by shifting some responsibilities to foundations and other auxiliary organizations operating on campuses.  Several recent examples demonstrate the need for increased public oversight and accountability provided by SB 330:
·        At Sonoma State, a $1.25 million loan issued to a former foundation board member two days after he resigned.  He is now defaulting on that loan, which leaves less money in the foundation’s endowment for scholarships and other more important causes.
·        At Fresno State, a no-bid managing contract was given to a foundation member for a theatre complex in which he held a financial interest.  In addition, 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.  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 lead to the parties being held to account.
·        Sacramento State President Alexander Gonzalez recently acknowledged his campus is being investigated by the Attorney General in relation to inappropriate expenditures of campus auxiliary money, including $200,000 to remodel President Gonzalez’ kitchen in 2007.  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. 
According to the CSU Chancellor’s Office, 20 percent of its $6.7 billion budget, or $1.34 billion, is held in their 87 auxiliaries and foundations, and out of public view.
“SB 330 would remove the cloak of secrecy that prevents the public from understanding whether significant amounts of educational funding for public colleges and universities is being spent for the benefit of all Californians or just a privileged few,” said Jim Ewert, Legal Counsel for the California Newspaper Publishers Association.
“In just the last month alone, the scandals involving these foundations have expanded significantly to reveal that money has been used inappropriately for personal expenses, questionable loans, no-bid contracts, and executive perks for college administrators,” said Taiz.
SB 650
In July 2008, the California Supreme Court ruled (Miklosy v. the Regents of the University of California (S139133, July 31, 2008) that UC employees who are retaliated against because they report wrongdoing cannot sue for damages under the state’s Whistleblower Protection Act, so long as the University itself reviews the complaints in a timely fashion.  The ruling uncovered an oversight made by the Legislature when the Act was amended in 2001, wh
ich provided legal standing for all other state employees to seek damages.

“This is the classic case of the fox guarding the hen house,” said Yee.  “UC and CSU executives should not be judge and jury on whether or not they are liable for monetary claims.  This was not the intent of California’s whistleblower law.”
In the Miklosy decision, three of the seven judges urged the Legislature to consider changes to the law, as the current statute undermines the purpose of the Act.
“The court’s reading of the Act, making the University the judge of its own civil liability and leaving its employees vulnerable to retaliation for reporting abuses, thwarts the demonstrated legislative intent to protect those employees and thereby encourage candid reporting,” wrote Justice Kathryn Mickle Werdegar, joined by Chief Justice Ronald George and Justice Carlos Moreno.  “If the same government organization that has tried to silence the reporting employee also sits in final judgment of the employee’s retaliation claim, the law’s protection against retaliation is illusory.”
The Miklosy decision deals with the plight of two former scientists at UC’s Lawrence Livermore National Laboratory, who repeatedly told their supervisors about equipment problems and poorly trained operators of a project designed to determine the safety and reliability of the nation’s nuclear weapons stockpile.  One of the scientists, Leo Miklosy, was fired in February 2003 and the other, Luciana Messina, resigned a few days later after overhearing a supervisor say she would also be fired.

“SB 650 will resolve the ambiguity in statute referenced by the Supreme Court and will ensure that all UC and CSU employees are given the same real – and not illusory – whistleblower protections as other state employees,” said Terry Francke, General Counsel for Californians Aware.
“SB 650 would protect UC and CSU employees, who continue to face reprisal for reporting bad behavior and, without protection, will likely no longer be willing to provide journalists, the Legislature and the public with essential information about the operations of these high profile institutions in an era where available financial resources are increasingly scarce,” said Ewert.