Amid new allegations of wrongdoing, suspicion continues to reign over the California State University and the many auxiliary organizations that operate on behalf of its campuses.
The latest incident involves Cal State Stanislausâ€™ refusal to make public the contracts involving an upcoming speaking engagement by former Alaska Governor Sarah Palin. Portions of a document thought to be part of the contract were later found by two CSUS students in a university dumpster.
â€œI never thought I would have to live through Watergate again, but to some extent, this is our own little Watergate here,â€ California Sen. Leland Yee (D-San Francisco) said at an April 13 press conference.
Yee had requested the documents to ascertain that taxpayer monies were not being used for the event, which is being funded by the nonprofit CSU Stanislaus Foundation. CSU auxiliaries and foundations are legally separate from the campuses they serve and are not subsidized by the university.
The incident has prompted Attorney General Jerry Brown to launch an investigation into CSUS and whether the Foundation is properly managing its $20 million in assets.
It comes on the heels of several other alleged improprieties involving CSU auxiliaries:
The CSUS incident raises concerns, because the Foundation that is funding the Palin event is housed in the same office building as campus administrative offices. The university president is the chair of the Foundationâ€™s board of directors and the university vice president of business and finance is also the treasurer for the Foundation.
â€œItâ€™s hard to tell where the university stops and the Foundation begins,â€ said Brian Ferguson, spokesperson for the California Faculty Association, a union representing 23,000 CSU educators.
According to the CSU Chancellorâ€™s Office, 20 percent of the CSUâ€™s operating budget â€“ $1.34 billion â€“ is held in their auxiliaries and foundations. Some of that money comes from fees paid by students.
â€œOur feeling is that the university budget comes from the state, and often these auxiliaries and foundations are funded by activity fees on campus,â€ Ferguson said. â€œWe just want to make sure that if things are operating on our campuses, we can ask questions and get the proper information and know how the money is being spent.â€
He added that, given the current fiscal environment, itâ€™s critical that the money is being spent for its intended purpose â€“ to educate students.
This latest incident has sparked renewed interest in the transparency and accountability of the 90-plus CSU auxiliaries, which are currently exempt from the California Public Records Act because of their nonprofit status.
In December, Yee introduced Senate Bill 330, which, if passed, will change the status of the CSU auxiliaries to public agencies, making them subject to the same CPRA laws as the universities.
Gov. Arnold Schwarzenegger vetoed a similar bill in October 2009, claiming it could potentially keep donors and volunteers from participating if their names would be disclosed.
â€œWe think thatâ€™s a crazy assertion considering all the problems weâ€™ve seen in the last year at Sonoma State and now Stanislaus,â€ said Adam Keigwin, chief of staff for Yee.
â€œIf you donâ€™t believe that your money is going to go where you thought it was and, instead, itâ€™s going to bail out a bad loan or finance a campus presidentâ€™s luxurious lifestyle, youâ€™re not going to donate,â€ Keigwin said.
The new bill addresses the governorâ€™s concerns by adding a section that states donors and volunteersâ€™ names need not be disclosed provided the donor does not receive gifts or financial compensation exceeding $500.
According to a Senate Bill Analysis, the CSU objects to SB330, in part, because the costs of responding to public records requests and related legal costs would lead to drops in revenues.
Keigwin called that absurd.
â€œThen letâ€™s just get rid of CPRA!â€ he said.
â€œThe public has said open government transparency is important, and thatâ€™s why they overwhelmingly support (this bill). It saves money and prevents wrongdoing and abuse. If the public doesnâ€™t know whatâ€™s going on, corruption is going to breed,â€ he continued.
If SB330 passes, existing records held by CSU auxiliaries and foundations that are not proprietary or do not threaten any trade secrets will be available to the public, said David Hawkins, legislative director for CFA.
â€œThe same rights the public has to access university records will apply to university auxiliaries and foundations,â€ Hawkins said.
Auxiliary organizations have been part of the CSU system since 1922, when the Fresno State College Association was established. Currently, there are 93 auxiliaries operating on the 23 CSU campuses â€“ four at Cal State Fullerton, including the Auxiliary Services Corp., which oversees the TSU food court and Titan Shops.
ASC Controller Tariq Marji explained that, although the auxiliaries are not public agencies, as nonprofit organizations, they are still subject to IRS rulings.
â€œWe have a financial audit by an independent auditor and itâ€™s put on the website. Our board meeting minutes are on the website, so weâ€™re very transparent in that sense,â€ Marji said. â€œIâ€™m not sure why Senator Yee is looking at us…because if anybody asks, we have to give them that information, because the IRS requires us to do that.â€
According to CSU Auxiliary Organizations Association officials, the auxiliaries exist to provide services to the universities that the state cannot â€“ purchasing real estate, for example â€“ and to protect the state from high-risk enterprises like international travel and food service.
â€œNow that protection is being eroded under the name of transparency and accountability,â€ argued Dave Edwards, AOA president.
He said the AOAâ€™s issue with SB330 is not about having the auxiliaries abide by the CPRA, but rather that the regulation would redefine the auxiliaries as public agencies and, by doing so, change the nature of what they are and what they do.
â€œEven though the bill addresses some of the donor anonymity issues, there is still concern about the financial impacts,â€ Edwards said. â€œRight now, the auxiliaries can get the lowest bids and make the most money for the campuses. Being redefined as a public agency will eliminate that ability by making public these contracts with their vendors.â€
There has been a lot of noise surrounding this issue, Edwards said, but at heart a great deal of transparency already exists. All 93 auxiliaries post audited financials, business practices and policies and procedures on their websites and follow open meetings law and legislation.
Edwards declined to comment on the recent allegations of corruption within the CSU auxiliaries. However, the threat of pending investigations and new legislators taking office in the fall may have ushered a new era of openness and compromise on the part of the AOA.
In March, they passed an alternative resolution they say offers greater transparency than SB330 and also protects their donors.
Edwards called it a â€œbill with real teeth.â€ However, offers to work with Yee to amend SB330 have been refused, he said.
SB330 has overwhelming bi-partisan support and is expected to reach the governorâ€™s desk this summer.