Governor's Veto Hides Funding Flaws

SB 218's Passage Would Have Provided Greater Accountability in Public University Spending Remains

Jennifer Kimbell/Illustration

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The governor's veto of Senate Bill 218 on Sunday was a very bad move for the future of California's system of public higher education.

That law would have brought new public openness to an important source of the funding that goes to the University of California, California State University and community college systems. When we are in the midst of the worst funding crisis we have ever seen, we need accountability for how every dollar is spent.

While everyone is well aware of funding from the state, a large portion of our funding also comes from so-called "non-profit auxiliaries" that handle donations as well as income from all sorts of vendors and operations such as bookstores, food sellers and parking.

In the CSU system alone, there are 87 non-profit auxiliaries connected with the 23 campuses and the CSU Chancellor's Office. These auxiliaries manage billions of dollars with little or no public oversight for colleges and universities. As legally separate tax-exempt entities, they are not covered by the California Public Records Act.

According to the CSU Chancellor's Office, 20 percent of the California State University's $6.7 billion budget, or $1.34 billion, is held in foundations and other auxiliaries out of public view.

It's dangerous to combine large sums of money with little or no public openness. It's an invitation to corruption.

And that is not merely speculation. Investigative journalists have uncovered examples in which university leaders on auxiliary boards have mismanaged, and even misdirected, precious dollars meant to advance education for our students.

Last summer, the Santa Rosa Press Democrat revealed that the Sonoma State University Academic Foundation used donated funds to provide huge personal loans to cronies of foundation board members as well as former board members themselves. Some of this money may never be recovered. It was meant to fund student scholarships.

Improprieties having to do with community college and state university auxiliaries also have also been revealed by news investigations in Fresno, San Francisco and San Diego.

That is why the California Faculty Association, along with the California Newspaper Publishers Association, sponsored SB 218. Senator Leland Yee's bill would have closed a loophole in the California Public Records Act by specifically applying it to UC, CSU and community college auxiliaries.

We felt that donors, as well as students whose spending finances the vendor income to these auxiliaries, want greater openness and reasonable accountability in how money is used.

CSU and UC executives spent heavily on State Capitol lobbyists to stop the bill. Nevertheless, it passed through the state legislature with Democrat and Republican co-authors and only one "no" vote in either house. Many newspapers editorialized for the bill, including the Los Angeles Times, Riverside Press-Enterprise, and Sacramento Bee.

On Oct. 11, Gov. Schwarzenegger vetoed SB 218. The bill had been written to protect anonymous donors, yet the governor blithely argued in his veto message that the donors might be fearful of exposure if SB 218 became law.

We are outraged. Certainly donors, anonymous or not, are deeply concerned that the money is used appropriately- that is, to advance students in getting higher education. This veto will have a chilling effect on giving to the university since donors will have no assurance that there is any public mechanism in place to expose misuse and misdirection of their gifts.

Further, it would appear that the governor's well-publicized statements about his commitment to transparency and accountability are only lip-service. When given the opportunity to provide the public with real, meaningful transparency in its public universities-he failed miserably.

Tags: SB 218

Lillian Taiz is president of the California Faculty Association. Reply at [email protected]

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