Fundraising, with limits

In an understandable quest to make up for budget cuts, California public colleges and universities have developed new fundraising methods, including the establishment of foundations known as “auxiliaries” that function as arms of the schools but that legally exist outside of them. That fiction has allowed schools to raise money through the auxiliaries without being subject to the rules that govern public institutions, including the requirement that they disclose information covered by the Public Records Act. This has fostered secrecy, which in turn has bred abuse. Thankfully, the Legislature has passed a bill to correct it, and the governor now has the opportunity to sign it. He should.

Sponsored by Sen. Leland Yee (D-San Francisco), the rare legislator who seems to have minded his knitting this term, SB 330 would make it expressly clear that auxiliaries are adjuncts of the schools. If they were genuinely private, they might have a claim to privacy, but they are not. They often share buildings and staff and intermingle their funds with the schools to which they are attached, so the bill merely conforms the law to reality. In the process, it would end a charade that has permitted managers of auxiliaries to engage in practices that run the gamut from objectionable to illegal: offering tickets to school events or other freebies to donors, hiding fees paid to campus speakers, making personal loans to auxiliary board members. An audit by the California attorney general’s office found that auxiliaries have also lent money to university officials and picked up expenses for them.

Such are the natural outcomes of removing public accountability from those charged with administering funds for public institutions. Happily, they’re easy enough to stop, simply by making those institutions explicitly public. That’s what Yee’s bill does.

A similar measure passed the Legislature last year, but Gov. Arnold Schwarzenegger vetoed it because he feared that it would make it impossible for donors to give anonymously, a price he felt was too high to pay in tough economic times. Yee reintroduced the bill, this time carving out an exception for any donor who chooses to give anonymously, so long as the donor does not receive in return anything valued at $500 or more. Problem solved.

SB 330 is supported by unions, advocates of open government, teachers, tax groups and even the Consumer Federation of America. It was passed overwhelmingly by both houses of the Legislature. With his signature, the governor can right wrong.