CSU, UC Administrators Continue to Mislead Governor, Taxpayers
California Political Desk
September 15, 2010
SACRAMENTO – While the administrations of the University of California (UC) and the California State University (CSU) are attempting to get Governor Arnold Schwarzenegger (R-Los Angeles) to veto legislation that would bring greater transparency to their campus subsidiary organizations, their main argument is being quickly debunked by the bill´s supporters and author, Senator Leland Yee (D-San Francisco). UC and CSU have claimed Senate Bill 330 would result in a "chilling effect" on private donations, yet another state saw significant increases in such donations after a similar law was enacted.
"UC and CSU administrators are doing a disservice to taxpayers by misleading the Governor," said Yee. "Their claims are completely erroneous and unfounded. Secrecy breeds corruption and not more donations. I expect the Governor will see through their charade and sign SB 330 into law."
Yee´s SB 330 will result in greater transparency and accountability regarding how student fees and private donations are used at the CSU, UC, and California Community Colleges by placing the institutions´ subsidiary organizations – known as "auxiliaries" – under the scope of the California Public Records Act (CPRA) without creating new state costs. The bill will also further the priorities enacted by Proposition 59 – approved by 83% of voters in 2004 – granting the public a constitutional right to access public records.
Under existing law, these public institutions are able to hide billions of dollars within their auxiliary organizations and foundations, which are often staffed by public employees. This secrecy has encouraged colleges and universities to create an increasing number of auxiliaries to run campus operations such as food services, parking facilities, housing and bookstores – all of which would be subject to public oversight if they were administered by the agency and not an auxiliary.
While SB 330 specifically exempts from disclosure the identity of donors who wish to remain anonymous provided they do not receive something of value greater than $500 in exchange for their donation, UC and CSU administrators are still claiming the bill will result in millions of dollars in lost revenue and would have a "chilling effect on private donations to the Campus Foundations." While the California Community College system is neutral on the bill, the UC and the CSU administrations argue without a shred of evidence that secrecy is needed to encourage donations.
In contrast, however, research shows that when another state enacted a similar law, their public universities saw a significant increase in donations.
A case watched closely by public university foundations and open records advocates was settled in February 2005 when the Iowa Supreme Court ruled that the state´s public university foundations must open records to the public.
The ruling – involving records held by the Iowa State University Foundation – stated that the foundation "is performing a government function, and therefore its records are subject to disclosure…The foundation´s activities support a myriad of university programs, scholarships, facilities, and projects. The foundation is plainly performing a government function by virtue of its contract with ISU, and therefore…the Iowa Freedom of Information act mandates disclosure."
In the year prior to the ruling, Iowa State University, University of Iowa and the University of Northern Iowa saw a combined $234.6 million in donations to their foundations. Following the ruling, the universities saw a 26 percent increase – an additional $59.9 million – in donations. The subsequent four years after the ruling, Iowa public universities received on average $289.3 million annually in donations – an average of $54.7 million more than the year prior to the ruling.
"The result in Iowa confirms that the ´chilling effect´ argument drummed up by UC and CSU is specious," said Jim Ewert, Legal Counsel for the California Newspaper Publishers Association. "Donors are more willing to give to institutions that operate in the open with nothing to hide so they can ensure that their gifts are not being misused."
"The evidence demonstrates that transparency does not have a negative effect on donations to university foundations," said Lillian Taiz, President of the California Faculty Association. "Instead, the lack of transparency in the CSU foundations has led to mismanagement and commingling of state and private dollars. As the case in Iowa shows, potential donors want to have confidence that their funds are being used appropriately and both the UC and the CSU are simply making specious arguments so that they can continue to operate in secrecy."
The "chilling effect" argument being made by UC and CSU is not the first time they used such a claim to avoid greater transparency and accountability.
When the CSU made the same argument in 2001 in California State University Fresno Association Inc. v. Superior Court (McClatchy) – the case involving well-heeled donors who were given exclusive access to luxury box tickets at the campus arena – the court concluded: "Any claims by the [CSU] that donations will be canceled are speculative, supported only by inadmissible hearsay…[and] are inadequate to demonstrate any significant public interest in nondisclosure…The unsupported statements [that a "chilling effect" would occur] constitute nothing more than speculative, self-serving opinions designed to preclude the dissemination of information to which the public is entitled."
By its own admission, 20% of the CSU´s operating budget – or $1.34 billion – is funded by the hidden budgets of its campus and system auxiliaries.
Governor Schwarzenegger has until September 30 to sign or veto SB 330.
"UC and CSU administrators are doing a disservice to taxpayers by misleading the Governor," said Yee. "Their claims are completely erroneous and unfounded. Secrecy breeds corruption and not more donations. I expect the Governor will see through their charade and sign SB 330 into law."
Yee´s SB 330 will result in greater transparency and accountability regarding how student fees and private donations are used at the CSU, UC, and California Community Colleges by placing the institutions´ subsidiary organizations – known as "auxiliaries" – under the scope of the California Public Records Act (CPRA) without creating new state costs. The bill will also further the priorities enacted by Proposition 59 – approved by 83% of voters in 2004 – granting the public a constitutional right to access public records.
Under existing law, these public institutions are able to hide billions of dollars within their auxiliary organizations and foundations, which are often staffed by public employees. This secrecy has encouraged colleges and universities to create an increasing number of auxiliaries to run campus operations such as food services, parking facilities, housing and bookstores – all of which would be subject to public oversight if they were administered by the agency and not an auxiliary.
While SB 330 specifically exempts from disclosure the identity of donors who wish to remain anonymous provided they do not receive something of value greater than $500 in exchange for their donation, UC and CSU administrators are still claiming the bill will result in millions of dollars in lost revenue and would have a "chilling effect on private donations to the Campus Foundations." While the California Community College system is neutral on the bill, the UC and the CSU administrations argue without a shred of evidence that secrecy is needed to encourage donations.
In contrast, however, research shows that when another state enacted a similar law, their public universities saw a significant increase in donations.
A case watched closely by public university foundations and open records advocates was settled in February 2005 when the Iowa Supreme Court ruled that the state´s public university foundations must open records to the public.
The ruling – involving records held by the Iowa State University Foundation – stated that the foundation "is performing a government function, and therefore its records are subject to disclosure…The foundation´s activities support a myriad of university programs, scholarships, facilities, and projects. The foundation is plainly performing a government function by virtue of its contract with ISU, and therefore…the Iowa Freedom of Information act mandates disclosure."
In the year prior to the ruling, Iowa State University, University of Iowa and the University of Northern Iowa saw a combined $234.6 million in donations to their foundations. Following the ruling, the universities saw a 26 percent increase – an additional $59.9 million – in donations. The subsequent four years after the ruling, Iowa public universities received on average $289.3 million annually in donations – an average of $54.7 million more than the year prior to the ruling.
"The result in Iowa confirms that the ´chilling effect´ argument drummed up by UC and CSU is specious," said Jim Ewert, Legal Counsel for the California Newspaper Publishers Association. "Donors are more willing to give to institutions that operate in the open with nothing to hide so they can ensure that their gifts are not being misused."
"The evidence demonstrates that transparency does not have a negative effect on donations to university foundations," said Lillian Taiz, President of the California Faculty Association. "Instead, the lack of transparency in the CSU foundations has led to mismanagement and commingling of state and private dollars. As the case in Iowa shows, potential donors want to have confidence that their funds are being used appropriately and both the UC and the CSU are simply making specious arguments so that they can continue to operate in secrecy."
The "chilling effect" argument being made by UC and CSU is not the first time they used such a claim to avoid greater transparency and accountability.
When the CSU made the same argument in 2001 in California State University Fresno Association Inc. v. Superior Court (McClatchy) – the case involving well-heeled donors who were given exclusive access to luxury box tickets at the campus arena – the court concluded: "Any claims by the [CSU] that donations will be canceled are speculative, supported only by inadmissible hearsay…[and] are inadequate to demonstrate any significant public interest in nondisclosure…The unsupported statements [that a "chilling effect" would occur] constitute nothing more than speculative, self-serving opinions designed to preclude the dissemination of information to which the public is entitled."
By its own admission, 20% of the CSU´s operating budget – or $1.34 billion – is funded by the hidden budgets of its campus and system auxiliaries.
Governor Schwarzenegger has until September 30 to sign or veto SB 330.
Print
Email
