CSUN University News Clippings

Editorial: End secrecy for campus nonprofits

(July 16, 2009)

You might recall a Bee story in 2007 on questionable activity by a foundation at California State University, Sacramento.

University Enterprises spent $27,000 on a kitchen remodel for a house that Sacramento State President Alexander Gonzalez purchased. And it gave him $233,000 in personal loans at an attractive 1.697 percent interest rate.

This doesn’t seem to be all that unusual. News reports this month have revealed that a Sonoma State University foundation made personal loans to a former foundation board member – and might be out more than $1 million because he can’t repay.

In both cases, the money didn’t come from the university directly. And that means the public is shut out from getting details on the public’s business – where did the money come from, and who decided to use it that way?

The reality is that California’s public colleges and universities receive and spend millions in gifts, property and funds through nonprofit foundations and enterprises that are largely hidden from public view. Unlike the colleges and universities themselves, these “auxiliary organizations” are not subject to California’s Public Records Act – a major loophole that the Legislature needs to close.

Sen. Leland Yee, D-San Francisco, has legislation (Senate Bill 218) that would do that.

Currently, these nonprofits operate in a netherworld, outside of the normal rules for public accountability.

They are separate legal and financial entities but are supposed to contribute to the educational mission of the public campuses. All their activities are under the direct control of the colleges and universities, with oversight by the campus president and boards.

For the most part, they dole out scholarships and grants, and fund student and faculty programs. But when it comes to details about how the money is being spent, these nonprofits often deny public requests for information. They say they are not part of the university and are not state agencies subject to the public records act.

Under SB218, public college and university auxiliary organizations would be subject to the California Public Records Act – exempting anonymous donations, commercial enterprises on campus (like Taco Bell) and any trade secrets and proprietary information. The bill passed the Senate 35-1. It has received unanimous support in Assembly committees and awaits a vote on the floor.

But the battle isn’t over. The colleges and universities are mightily opposing the bill.

The issue will land at the desk of Gov. Arnold Schwarzenegger, who came to office promising to be a “sunshine” governor. Now more than ever, voters want accountability on how public institutions handle money and how special interests throw their weight around. Schwarzenegger should sign this bill and give the public that access.

Publication: Sacramento Bee