After three years of legal wrangling, the quasi-public California State University, University of California, and state community college foundations will no longer have immunity from public record laws.
Gov. Jerry Brown signed The Richard McKee Transparency Act of 2011 into law on Wednesday, requiring foundations to disclose financial records, contracts, and correspondence upon request.
“Three years of hard work and dedication have finally culminated in a very real victory for transparency and accountability,” said Lillian Taiz, a CSU professor and president of the California Faculty Association.
The fine line between university foundations – non-profit organizations created to accept donations, and closely intertwined with universities – and their parent colleges came to the forefront locally when former Alaska Gov. Sarah Palin was invited to speak at California State University, Stanislaus' 50th Anniversary Gala Fundraiser in 2010.
Californians Aware, an organization dedicated to open government and the free exchange of information, filed a public records act request with the university and the foundation for a copy of Palin's contract. The foundation said it was not subject to the act, and the university claimed it had no copy of the contract – despite significant overlap between the two.
President Hamid Shirvani, Vice President for University Advancement Susana Gajic-Bruyea, and Vice President of Business and Finance Russ Giambelluca all held non-voting roles within the foundation — chairman, executive director and treasurer, respectively.
Eventually, some pages of a draft version of Palin's contract came to light after two CSU Stanislaus students found the document in a Dumpster. Well after the gala, the foundation reveled Palin was paid $75,000 for her appearance, and that the event netted over $207,000 in revenue.
In the future, foundations will now be required to release documents like Palin’s contract.
“We are delighted that the governor agreed that the activities and operations of these quasi-public entities should be brought out of the shadows,” said Jim Ewert, general counsel for the California Newspaper Publishers Association.
In a point of compromise with the universities, the bill protects the anonymity of foundation donors. The exemption does not cover those who receive something from the university valued at more than $2,500, receive a no-bid contract, or attempt to influence curriculum or university operations.
That compromise led the UC and CSU systems to remove their opposition to the bill, leading to Brown’s approval. Prior versions of the bill were vetoed by former Gov. Arnold Schwarzenegger in 2009 and 2010, despite bipartisan support in the Assembly and State Senate.
“Finally, we will have real transparency at our public universities,” said Leland Yee (D-San Francisco), the bill’s author. “While this law does not technically go into effect until Jan. 1, I am urging the UC and CSU to immediately begin complying and providing sunshine to the actions of their foundations and auxiliary organizations.”
Once the law goes into effect, the veil will be lifted on the billions of dollars held by foundations. Per the CSU Chancellor’s Office, as much as 20 percent of campus budgets – $1.34 billion – was in CSU auxiliary and foundation coffers in 2009.
“This has been a long fight, but I am proud of our coalition of open government advocates, students, faculty and workers who have stayed so persistent in helping protect the public trust,” Yee said.
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