Community College Fund Accumulates Millions : Foundation’s Closed-Door Policy Draws Fire

When the 1978 passage of Proposition 13 threatened to cut into the San Diego Community College District’s funds, Chancellor Garland Peed turned to the fund-raising foundation he had established two years earlier to aid the district’s college programs.

The coffers held $1,000.

Today, the San Diego Community College District Foundation boasts assets totaling more than $5.2 million, a fund that may be the largest enjoyed by any of the state’s 106 community colleges.

In an era when fund raising can be crucial to filling the gaps left by inadequate state payments, the foundation has turned over nearly $500,000 to the schools during the last two years and annually generates more than $1.4 million by finding student customers for some district classrooms.

But along with its millions, the foundation has accumulated a reserve of ill will among district union leaders and some faculty members, who object to the steady stockpiling of funds in a nonprofit corporation that they say is difficult to monitor and operates independently of the district’s elected Board of Trustees.

Though the county grand jury and state attorney general’s office consider the foundation’s practices legal, some teachers believe that the foundation is merely a way to avoid collective bargaining agreements and set aside funds that could be used to pay teachers more.

“In effect, the board has transferred responsibility for defining the public interest to a non-public body,” said Frederick Horn, president of the San Diego Community College Teachers Assn., the district’s teachers union.

Even Charles Reid, one of the five district trustees who appoint the foundation’s five-member board of directors, worries that oversight of the foundation has been taken out of his hands.

“If I appoint someone to an office, then it appears to me that I should have some control over that person. And I don’t,” Reid said.

Other trustees, however, are satisfied that they can assert control over the corporation’s board of directors and are comfortable allowing them to control the foundation’s assets.

“I feel we have enough control,” said Louise Dyer, president of the board of trustees. “Realize that we appoint these people and if we don’t like what they’re doing, we can appoint someone else. . . . I’m just sold on our foundation.”

Virtually all of the state’s 70 community college districts have fund-raising affiliates, and some have several, according to state education officials. But few are organized like the San Diego Community College District Foundation Inc. or earn money the way it does.

It is that structure and those fund-raising methods that have raised the foundation from the dormancy of the mid-1970s. But those same practices sparked faculty suspicion and led to a legal battle with one of the district’s unions.

Peed established the nonprofit, public benefit corporation, giving the trustees the power to appoint and fire its five-member board of directors. All other business is conducted by the directors, Peed and the foundation staff.

Reasoning that the community college would have little success competing for donations, the foundation several years ago changed tactics and decided to bid for contracts to provide teaching and training.

“If the community college goes out to raise money through donations,” Peed said, “where are we going to be on the list? You’ve got USD, Point Loma (Nazarene) College, USIU, UCSD, San Diego State. There’s no way we can compete against those guys.”

The foundation has won contracts with the federal government to help refugees find jobs, with the county to rehabilitate handicapped people, and with The Broadway department store to teach sales techniques to employees. Faculties with expertise in those fields are hired part-time.

The foundation has bid to offer programs as far away as Honduras and Saudi Arabia, often encountering tough competition from community colleges, private universities and training institutes around the country, said Executive Director Hollie Elliott.

That fund-raising technique makes the foundation virtually unique among California community colleges, state officials said. It also makes the foundation rich.

A fiscal year 1985 report filed with the attorney general’s charitable trust section shows that the foundation is worth $5.2 million. Though no definite statistics are available, that total is probably the largest of any community college foundation in the state, said Steve Nakamura, staff analyst in the state community college system’s fiscal services unit.

But some faculty object to the way part of that sum is raised. Under a 1982 agreement between the foundation and the district, the foundation receives a portion of the money that the district is paid for running classes on Navy bases. In fiscal 1985, that portion amounted to nearly $1.2 million.

Some faculty believe that money belongs in the district’s budget.

“Why is it necessary to transfer money out of a public institution like the community college for that money to be used to benefit the community college and the community it is supposed to serve?” asked Walt Seymour, an accounting instructor at San Diego Mesa College.

But Peed said that the foundation’s staff is far more efficient than district employees at scheduling, counseling, registering and advising the 16,000 Navy personnel in the classes. The foundation, he said, is actually saving the district money by running the classes.

“I don’t see anything wrong with it,” said trustee Daniel Grady. “The foundation is actually doing a service, and this is what the foundation is getting paid for.”

Meanwhile, a separate union is contesting the district’s decision to switch control of all adult education foreign language classes to the foundation in 1984.

The switch allows the foundation to pay the faculty who teach those courses a lower base wage than they received as district employees. They are paid under an incentive plan allowing them to earn more by attracting larger numbers of students to their classes.

For some of the more senior faculty, the switch amounted to more than a 50% pay cut, said James Gattey, who is representing the San Diego Adult Educators union before the state Public Employees Relations Board.

The district “set up obligations and negotiated a contract, and pretty much dumped them out the window,” Gattey said.

Dyer said the district switched the courses over to the foundation when budget cuts made them too expensive.

Grand Jury Review

Horn and others also contend that they cannot monitor the foundation’s use of funds because it does not publish minutes, hold open meetings or allow the public to review its contracts. As a corporation, the foundation is exempt from such requirements, said William Abbey, deputy attorney general in the charitable trusts section.

Though the foundation files public, annual reports detailing income and expenditures with Abbey’s office, Horn and others said they have had difficulty obtaining information from the foundation office. Last year, Horn brought his concerns to the county grand jury, which conducted a preliminary review but did not find reason to do a full investigation.

“I have no way of knowing how they’re spending the money because I have no access to their records,” Horn said. “I’ve asked to be informed of their meeting times and places and they’ve said ‘it wouldn’t do you any good because we wouldn’t let you in to observe.’ ”

“It’s a private operation,” Peed countered. “It’s a nonprofit corporation. Fred Horn has no right to go over and scrutinize what National University does. (They) would tell him to go jump in the lake.”