Palin Stanislaus controversy sparks fiscal scrutiny of CSU foundations

In Campus News, Introspect, Introspect, State News

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 Stanislaus’ 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.

“I never thought I would have to live through Watergate again, but to some extent, this is our own little Watergate here,” 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:

  • At Sonoma State, a $1.25 million loan was issued to a former board member. He since defaulted on that loan.
  • At Fresno State, a no-bid managing contract was given to a foundation member to build a theater complex in which he held a financial interest.
  • Sacramento State is being audited by the Attorney General for inappropriate expenditures of their campus auxiliary money, including $200,000 to remodel the school president’s kitchen. Additionally, $6.3 million of public funds were transferred to a campus auxiliary to backfill losses from a property acquisition.
  • 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 Foundation’s board of directors and the university vice president of business and finance is also the treasurer for the Foundation.

    “It’s hard to tell where the university stops and the Foundation begins,” said Brian Ferguson, spokesperson for the California Faculty Association, a union representing 23,000 CSU educators.

    According to the CSU Chancellor’s Office, 20 percent of the CSU’s operating budget – $1.34 billion – is held in their auxiliaries and foundations. Some of that money comes from fees paid by students.

    “Our feeling is that the university budget comes from the state, and often these auxiliaries and foundations are funded by activity fees on campus,” Ferguson said. “We 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.”

    He added that, given the current fiscal environment, it’s critical that the money is being spent for its intended purpose – 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.

    “We think that’s a crazy assertion considering all the problems we’ve seen in the last year at Sonoma State and now Stanislaus,” said Adam Keigwin, chief of staff for Yee.

    “If you don’t believe that your money is going to go where you thought it was and, instead, it’s going to bail out a bad loan or finance a campus president’s luxurious lifestyle, you’re not going to donate,” Keigwin said.

    The new bill addresses the governor’s concerns by adding a section that states donors and volunteers’ 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.

    “Then let’s just get rid of CPRA!” he said.

    “The public has said open government transparency is important, and that’s why they overwhelmingly support (this bill). It saves money and prevents wrongdoing and abuse. If the public doesn’t know what’s going on, corruption is going to breed,” 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.

    “The same rights the public has to access university records will apply to university auxiliaries and foundations,” 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 – 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.

    “We have a financial audit by an independent auditor and it’s put on the website. Our board meeting minutes are on the website, so we’re very transparent in that sense,” Marji said. “I’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.”

    According to CSU Auxiliary Organizations Association officials, the auxiliaries exist to provide services to the universities that the state cannot – purchasing real estate, for example – and to protect the state from high-risk enterprises like international travel and food service.

    “Now that protection is being eroded under the name of transparency and accountability,” argued Dave Edwards, AOA president.

    He said the AOA’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.

    “Even though the bill addresses some of the donor anonymity issues, there is still concern about the financial impacts,” Edwards said. “Right 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.”

    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 “bill with real teeth.” 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 governor’s desk this summer.

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    4 commentsOn Palin Stanislaus controversy sparks fiscal scrutiny of CSU foundations

    • Notice Leland Yee and Jerry Brown use taxpayer money to “investigate” a private group that is raising money for a public institution under the guise of watching out for “taxpayer dollars.”

      This is so twisted an obviously political. California is a joke… Living here it saddens me to say that too..

      It’s no wonder why this state is holding on by a thread. Look at the leadership. Arnold is no better. There are no political parties here. They are all the same.

    • Comparing the annual salaries of CSU Presidents’ to that of President Obama and other US officials is not a reasonable comparison. I think that the CSU system should be compared and measured in accordance with a similar organization that is supported by state funds, such as the UC system or that of private California universities. Get back to us with this when you can make equal comparisons between similar systems.

    • No Boss Tweeds

      The 2 comments above are outrageous. Public service used to be for those who wanted to give back and do good for society. No one expected to get rich. Now, these public parasites want it all — a fat private industry level salary, tenure or nearly impossible to fire jobs, lifetime appointments where they can suck off the public tit well into their 80’s, then longer when they finally retire with fat pensions, while the rest of us have to fight to get 1/10th their income and may not even have a pension when we grow old.

      I’d like to see someone with an EdD in “teacher training” and an MEd in “Secondary Education” (aka, high school), like Chuckie B. Read (don’t forget the BS in P.E.), get his bloated salary in private industry. If he can (maybe he can go work for University of Phoenix?), more power to him, but the taxpayers should not be enriching anyone.

      One reason California is so screwed up at local AND state government levels is the fat executive salaries we taxpayers pay them — I’m talking billions of taxpayer $$. Just looking at the 21,000 UC employees who make over $100K per year, if they all made the minimum $100K to get into that category, we are talking about $2.1 billion (w/ a “B”). In reality, most make more. Between CSU and UC alone, just talking people who make over $100K, we are talking something over $3 billion state taxpayer $$, just for 25,000 people out of how many UC/CSU employees? Have you looked at how many city, county and state and federal “executives” also get these big $$? Many city officials in even small cities make more than state legislators. No wonder State and local govts are bankrupt and laying off (gotta lay off 10 $27K/yr people to pay for one $270K/yr “valuable” executive). Have you seen how many “administrative” positions even our CSUF president has open? Have you read those crap planning documents? How many taxpayer and student fee supplied $$ went into that paper-generating sinkhole?

      Wanna talk about the executive pay in the Postal Service? And you wonder why the Post Office is going bankrupt.

      Comparing CSU salaries to UC or private colleges (like Harvard, MIT or Caltech) is not the same. UC’s were a top tier school, CSUs are not. But it should be of interest that many of these people make more than the Governor of the State, who supervises it all, or the President of the U.S., who has his finger on the nuclear trigger. And yes it is reasonable to compare their ivory tower salaries with the guy who has perhaps the most responsibility in the world, just to show how distorted those other salaries are.

      Let’s see these top public $$ leeches do it in private industry. If they can, maybe they will help us out of this near depression. They are not helping us where they sit now.

      Until we can reign in executive salaries in public service, you may as well figure that we will drive the State into bankruptcy. Have you looked at the low end non-union govt. pay? They are still very low ($9-$13/hr), like traditionally they have been. Not so with executive pay and perks.

      btw, I wonder if the above 2 posters are either members of the campus’ administrative staff, or are hypocritical Republicans who call for less government while the same time more taxpayer-supplied pay for even more public executives and administrators.

      It’s time to fall on your sword, Chuckie. It’s time to retire, Uncle Milt. We could hire more than 30 people for your prices.

      oh, btw, simion. If you don’t like living here, move.

    • Offhand, I’d say the first two commentators are shills of the administration. That’s a common “argument.” Oh, we have to compare pay rates at other universities. I’ve heard my JC profs compare themselves and their pay to the local UC. Ridiculous. It’s also ridiculous to compare public “executive” pay rates to private industry and argue you have to match them.

      It used to be you traded work in the public sector at lower pay for job stability. You want high pay? Go work in private industry, with its inherent job stability risks.’

      One reason California is so broke is overpriced executive pay in various government agencies. While the proletariat workers still make low pay, bosses make big $$ w/ perks, fat retirement checks and what amounts to golden parachutes at taxpayer expense.

      Yes, I think it is ridiculous that Milton Gordon makes more than the Governor of California, and Charlie B. Read (CSU Reichchancellor) makes more than the man in the White House who has responsibilities to the country and the World, and who also has his finger on the nuclear trigger and the power to destroy the World. Let’s see Uncle Milt and Uncle Charles make their salaries in private industry. Gordon is 84 years old, way past mandatory retirement in most industries. Sad thing to say, he wouldn’t even get a job, but he has a fat taxpayer-supplied retirement check coming his way, so he’s not so bad off.

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