"Governor’s Legacy a “Failure” on Open Government:
Schwarzenegger Vetoes bill to expand public records law to campus auxiliaries and foundations"
SACRAMENTO – Despite bipartisan support in the Legislature and a history of rhetorically supporting open government, Governor Arnold Schwarzenegger (R-Los Angeles) vetoed legislation to bring greater transparency and accountability at California’s public higher education institutions. The bill’s author, Senator Leland Yee (D-San Francisco), referred to the Governor’s action as “completely hypocritical” and referred to Schwarzenegger’s tenure as a “failure” on issues of open government.
SB 330 would have updated the California Public Records Act (CPRA) to include auxiliary organizations and foundations that perform government functions at the University of California, California State University, and California’s community colleges.
“For a Governor who wanted to blow up the boxes and whose rhetoric is filled with platitudes of open government, it is a disgrace and completely hypocritical to then veto legislation to bring real transparency and accountability to our public universities,” said Yee. “The Governor, like his ivory tower counterparts within the UC and CSU administrations, failed California taxpayers and students by vetoing this sunshine legislation. He has secured his legacy as Governor – a failure when it came to open government.”
While the community college administration was neutral on the bill, the administrations of the UC and CSU succeeded in getting a veto by falsely claiming it would result in a “chilling effect” on private donations. In fact, the bill allows for donors to stay anonymous under all circumstances unless they receive something of value over $500 in return. Also, another state saw significant increases in donations after a similar law was enacted.
Earlier this month, in his weekly radio address, the Governor stated, “I have always said that you cannot have efficient and effective government without transparency.” He also called on Californians to demand transparency of their institutions “at all levels of government.”
“It is appalling, especially after the recent outrage regarding the City of Bell, that the Governor would ensure that scandals continue to plague our public universities,” said Yee. “His veto allows these public institutions to continue to hide billions of dollars without any accountability. He ignored the facts – these auxiliaries are fully staffed by public employees; they often administer public funds; the donors were provided anonymity; and that secrecy breeds corruption, not more donations.”
“Those taking his veto message seriously would be left wondering if the Governor even bothered to read the bill, or instead took the word of an aide with poor reading skills,” said Terry Francke, General Counsel for Californians Aware (CalAware). “SB 330 allowed anyone making a true gift of money or time to do so anonymously. Only those wanting a costly quid pro quo – purchasers, in effect – would have been named.”
The most recent scandal of an auxiliary organization involved the CSU Stanislaus Foundation. The Foundation negotiated a speaking contract with Palin, but originally refused to disclose her compensation. They first claimed they had no documents pertaining to her June visit. After emails written by administrators regarding the visit were uncovered, they then claimed the Foundation was exempt from the state’s public records law despite being fully staffed by taxpayer-funded employees.
Students later found pages 4 through 9 of the Palin contract in the administration’s Dumpster, which showed her visit requirements included a hotel suite, first class airfare or a private Lear jet, pre-screened questions, and “bendable straws.” After a lawsuit filed by CalAware, a judge ruled that the CSU acted illegally and forced them to disclose the complete contract which showed she also received $75,000 plus expenses.
“It is infuriating that the Governor has opted to side with secrecy and financial corruption rather than transparency and accountability,” said Alicia Lewis, one of the two CSU Stanislaus students who found the abbreviated version of the Palin contract. “He has let down the students of this state and all those who have fought so hard to shed light on university finances.”
The other student Ashli Briggs said, “We finally thought we had a chance to truly change the way foundations in the CSU and UC system conduct business and how they act in the name of our state’s higher education system. SB 330 was exactly what we had been hoping for and unfortunately Governor Schwarzenegger has let us down tremendously.”
“In the wake of the Bell scandal, we are deeply disappointed that the Governor, in vetoing SB 330, has once again prevented the public from accessing information about corruption and self-dealing that is entrenched in these massive shadow governments,” said Jim Ewert, Legal Counsel for the California Newspaper Publishers Association. “The Governor's action also significantly diminishes his legacy of strengthening California's laws on open and transparent government.”
“We are disappointed that Governor Schwarzenegger has vetoed this important legislation and chosen to rely on a misinformation campaign orchestrated by the CSU and UC administrations to avoid public scrutiny of billions of dollars in hidden funds,” said Lillian Taiz, a CSU professor and President of the California Faculty Association. “This action will encourage our public universities to continue their misdeeds and abuses caused by a continuing lack of accountability and transparency. It is also an especially sad day for our students who we believe would have benefited most from the proper use of this money.”
“Governor Schwarzenegger's decision to veto this hugely important bill is another example of broken promises and failed policies in bringing open government and transparency to Californian's public colleges and universities,” said Lakesha Harrison, President of AFSCME 3299.
The UC and CSU have often evaded the public records act by shifting some responsibilities to foundations and other auxiliary organizations operating on campuses. Several recent examples demonstrate the need for increased public oversight and accountability provided by SB 330:
· At Sonoma State, a $1.25 million loan issued to a former foundation board member two days after he resigned. Recently a bankruptcy court forced the Sonoma State Foundation to return a portion of that loan which the former board member attempted to pay outside of the bankruptcy court proceedings. The Attorney General and the FBI are investigating a number of auxiliaries at Sonoma State.
· At Fresno State, a no-bid managing contract was given to a trustee for a theatre complex in which he held a financial interest. In addition, the Fresno Bee newspaper was denied information in 2001, specifically concerning the identity of individuals and companies that received luxury suites at the Save Mart Center arena. The denial resulted in CSU v. Superior Court (McClatchy Company), in which the Court opined that although it recognized university auxiliaries ought to be covered by the CPRA and that its ruling was counter to the obvious legislative intent of the CPRA, the rewriting of the statute was a legislative responsibility.
· At San Francisco City College, a campus executive has been indicted for using money from the San Francisco City College Foundation for personal and political purposes. At San Jose/Evergreen Community College, the Chancellor was found to have engaged in lavish travel and other examples of financial impropriety that prompted her resignation. Since local community college campus auxiliaries are already subject to the CPRA, these instances of waste and abuse have lead to the parties being held to account.
· Sacramento State President Alexander Gonzalez spent $200,000 from the campus auxiliary money to remodel his kitchen in 2007 which created “the appearance of impropriety,” according to an Attorney General audit. Additionally at Sacramento State, $6.3 million of public funds was transferred to University Enterprises Inc. – a campus auxiliary – to backfill losses from a property acquisition, which is completely contrary to UC and CSU claims that no taxpayer dollars are used for campus auxiliary operations.
· Campus leadership at Cal Poly San Luis Obispo appears to be under the influence of a well-heeled donor. In October 2009, Cal Poly eliminated a guest lecture at the request of executives from the Harris Ranch Beef Company, who threatened to withhold $500,000 in support for a new campus meat-processing center. Emails recently obtained by the San Luis Obispo Tribune also found that Harris Ranch may have also forced the resignation of a faculty member who taught a course on sustainable farming. Harris officials are now requesting a meeting with Cal Poly administrators to determine whether or not they will continue with their donation.
According to the CSU Chancellor’s Office, 20 percent of its $6.7 billion budget, or $1.34 billion, is held in their 87 auxiliaries and foundations, and out of public view.
“I will not give up this fight for our students and our state,” said Yee. “Fortunately, we will soon have a new governor.”
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