BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
SB 218
Senator Yee
As Amended May 5, 2009
Hearing Date: May 12, 2009
Education Code; Government Code
GMO:jd
SUBJECT
Public Records: State Agency: Nonprofit Entity
DESCRIPTION
This bill would include, as a state agency covered by the
California Public Records Act (CPRA), an auxiliary organization
of a California State University, the California Community
Colleges, or the University of California, and an entity that
operates a campus facility such as a bookstore, sports complex,
arena, theater, student center, parking program, or similar
activity, at a California public postsecondary education
institution. It would define what is essentially an "auxiliary
body" for the University of California for this purpose.
The bill would expressly reject the court's decision in
California State University, Fresno Assn., Inc. v. Superior
Court (2001) 90 Cal.App.4th 810 (CSU Fresno Assn.), relating to
the application of the Public Records Act to auxiliary bodies
such as the CSU Fresno Association that was the subject of the
case.
BACKGROUND
According to the sponsors of SB 218, the bill is a response to
several situations that have arisen on campuses of the
California State University. The first situation involves the
factual background for the decision in CSU Fresno Assn., supra.
(This case is discussed in Comment 2.) In that case, the Fresno
Bee's CPRA request for information was made in October, 1999.
In the second scenario, in 2008, a non-profit corporation,
University Enterprises, Inc (UEI), which operates the student
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bookstore at CSU Sacramento, relied on the CSU Fresno Assn.
decision to deny a CPRA request made by a student attempting to
obtain textbook pricing information from UEI. The student, a
member of the student association's bookstore advisory
committee, sought the information contained in the contracts
between UEI and the book vendors to determine whether UEI was
complying with the College Textbook Transparency Act (AB 1548,
Solorio, Ch. 574, Stats. 2007). AB 1548 requires colleges and
universities to disclose specified information about textbook
sales on their campuses, thus acting as a check on the
ever-rising prices college students pay for their textbooks.
In between the 2001 CSU Fresno decision and last year's CPRA
request by a CSU Sacramento student, the people of California
passed Proposition 59 by an overwhelming 83 percent vote in
2004. Proposition 59 guarantees the constitutional right of the
public to access public records, favoring transparency, open
disclosure, and the narrow reading of exemptions from public
disclosure provided by statute. Proposition 59 is enshrined in
the California Constitution as Article 1, Section 3.
CHANGES TO EXISTING LAW
Existing law , the California Public Records Act governs the
disclosure of information collected and maintained by public
agencies. (Gov. Code Sec. 6250 et seq.) Generally, all public
records are accessible to the public upon request, unless the
record requested is exempt from public disclosure. (Sec. 6254.)
There are 30 general categories of documents or information that
are exempt from disclosure, essentially due to the character of
the information, and unless it is shown that the public's
interest in disclosure outweighs the public's interest in
non-disclosure of the information, the exempt information may be
withheld by the public agency with custody of the information.
Existing law provides that a person whose request for a public
record under the CPRA is denied may file an action in superior
court for an order requiring disclosure. (Sec. 6258.). The test
for a determination of whether a record may be withheld from
public access is whether the public's interest in disclosure is
outweighed by the public's interest in withholding disclosure of
the record. (Sec. 6255.)
Existing law , Article 1, Section 3 of the California
Constitution declares the people's right to transparency in
government: (...(b)(1) The people have the right of access to
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information concerning the conduct of the people's business, and
therefore, the meetings of public bodies and the writings of
public officials and agencies shall be open to public
scrutiny...").
Existing law defines state agency, for purposes of the CPRA, to
include every state officer, department, division, bureau,
board, and commission or other state body or agency, except for
the Legislature and the Judiciary. The California State
University, the University of California, and the California
Community Colleges are considered to be state agencies for this
purpose. (Sec. 6252.)
Existing law authorizes the University of California, the
California State University, and the California Community
Colleges to form auxiliary organizations for the various
purposes related to their educational mission. (Ed. Code Secs.
72670.5, 89900 et seq.)
Existing case law holds that a non-governmental association,
which was a nonprofit auxiliary corporation affiliated with a
state university, and which operated a multi-purpose arena being
built on campus was not a "state agency" for purposes of the
CPRA, and thus could not be compelled under the CPRA to disclose
requested information. (California State University, Fresno
Assn., Inc. v. Superior Court (2001) 90 Cal.App.4th 810.)
This bill would include, in the definition of "state agency" for
purposes of the CPRA, organizations operating as "auxiliary
organizations" of the California State University, the
California Community Colleges, and the University of California
(as described in a newly-created provision).
This bill would further include, in the definition of "state
agency" for purposes of the CPRA, an entity that operates a
campus facility, including, but not limited to, a bookstore,
sports complex, arena, theater, student center, parking program,
or other similar activity at a California public postsecondary
education institution.
This bill would make the CPRA applicable to any entity "whose
purpose is to promote or assist the Regents of the University of
California, or to receive gifts, property, and funds to be used
for the benefit of the regents, or any person or organization
having an official relationship with the regents.
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This bill would express the Legislature's intent to reject the
court's interpretation of state law regarding the application of
the CPRA to auxiliary bodies such as the CSU Fresno Association
described in California State University, Fresno Assn., Inc. v.
Superior Court (2001) 90 Cal.App.4th 810.
COMMENT
1. Stated need for the bill
The author writes:
SB 218 strengthens the legislature's long and rich tradition
of protecting the public's fundamental right of access to
information concerning the conduct of the people's business by
ensuring that documents and other information used by public
officials is open to public scrutiny.
2. Auxiliary organizations and the California Public Records
Act (CPRA)
a. This bill responds to the court's call to fix a problem
identified in CSU, Fresno Assn. Inc. v. Superior Court
This bill would express the Legislature's intent to reject
an eight-year old decision, CSU, Fresno Assn. Inc. v.
Superior Court, supra, that held auxiliary organizations
are not state agencies and therefore not subject to the
disclosure of public records requirements of the CPRA. It
is important to understand the factual background of CSU
Fresno Assn. in order to examine the impact of this bill on
groups affiliated with the publicly-funded universities and
colleges in the state.
When CSU Fresno built a multipurpose arena on its campus,
it was funded primarily by private donations and operated
by the CSU Fresno Association, a nonprofit corporation that
operates all of the university's commercial enterprises
such as the bookstore, food services, housing, and student
union. In exchange for generous gifts to the university's
foundation ( a separate nonprofit corporation whose purpose
is to manage all aspects of the financial activities for
grants, trust accounts, investments, endowments,
scholarships, gifts, loans, and donations and to provide
assistance to faculty and staff with their grants and
contracts), some donors obtained luxury suites in the arena
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for a specified number of years pursuant to licensing
agreements between the donors and the CSU Fresno
Association. The Fresno Bee made a CPRA request for the
licensing agreements and other documents, in an attempt to
learn the identity of the donors and investigate whether
the donors received favorable treatment from any of the
entities involved. The association and the foundation
denied the request for information, claiming that they were
not state agencies as defined in the CPRA and therefore not
subject to the disclosure requirements of the act.
The Fresno Bee filed a superior court action to compel
disclosure, and the trial court ordered disclosure. The
appellate court reversed, concluding that the CPRA was not
written broadly enough to include either entity in the
definition.
This bill would expressly include auxiliary organizations
within the scope of the CPRA by their enumeration in the
definition of "state agency." Doing so in fact would answer
the CSU Fresno Assn. court's call for the Legislature to
clarify its original intent and cure this anomalous
omission from those organizations covered by the CPRA. The
court based its conclusions on the CPRA as it existed at
that time and the comparisons it made of the CSU Fresno
Association to those groups in other states and the federal
government labeled "agencies" under their own versions of
the CPRA or the Freedom of Information Act (FOIA). The
court further stated:
We are fully cognizant of the fact that our conclusion
seems to be in direct conflict with the express
purposes of the CPRA - "to safeguard the
accountability of government to the public?" (Citation
omitted). The Legislature's decision to narrowly
define the applicability of the CPRA, balanced against
its sweeping goal to safeguard the public, leaves us
scratching our judicial heads and asking, "What was
the Legislature thinking?" In many ways the
Association can be characterized as a
"state-controlled" corporation that should be subject
to the CPRA. (Citation omitted.) However, courts "do
not sit as super-legislatures to determine the wisdom,
desirability or propriety of statutes enacted by the
Legislature." (Citation omitted) The rewriting of a
statute is a legislative, rather than a judicial
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function, a practice in which we will not engage.
(Citation omitted.)
b. Auxiliary organizations are defined in statute
To be sure, state colleges and universities have formed
auxiliary organizations for the purpose of furthering the
educational mission of their institution. There are alumni
groups, student associations, faculty organizations, and
all kinds of groups that bear the name of the particular
college or university or campus, and for the most part
these groups operate as nonprofit associations or
corporations, called "foundations" in many instances, to
imply their nonprofit character.
In order to operate under the aegis of the university or
college however, an auxiliary organization must meet
certain standards of operation, such as: (1) auditing and
financial reporting procedures with oversight by a
certified public accountant; (2) expenditures that are in
accordance with policies delineated by the trustees; and
(3) conformity of operational procedures with regulations
established by the trustees. (Ed. Code Sec. 89900.)
An "auxiliary organization" is defined to include the
following:
(a) any entity in which any official of the university
participates as a director as part of his or her official
position; or
(b) any entity formed or operating as a student
association; or
(c) any entity which operates a commercial service for the
benefit of a campus of the university on a campus or
other property of the university; or
(d) any entity whose governing instrument shows its purpose
is to promote or assist any campus of the university, or
to receive gifts, property, and funds to be used for the
benefit of such campus or any person or organization
having an official relationship therewith and shows that
any of its directors, governors, or trustees are either
appointed or subject to the approval of an official of
any campus of the university or selected ex officio from
the student body or faculty or the administrative staff
of the campus.
The court's description of the auxiliary organization, the
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CSU Fresno Association, that was the petitioner in the case
mentioned in Comment 2a above would place that organization
squarely within the statute. Thus, were such organizations
mentioned in the definition of "state agency" in the CPRA,
they would have been required to make their records subject
to public inspection, just as the California State
University, Fresno itself was required to do. The statute
has not been revised since 1991.
c. SB 218 would place auxiliary organizations plus any
other entity that operates the college's or university's
commercial enterprises, such as a bookstore, sports
complex, theater, student center, and more under the CPRA
The court in CSU Fresno Assn. acknowledged that California
courts had, at that time, generally recognized that
auxiliary organizations are not part of the state body they
aid or assist. However, the court said, previous cases had
not addressed whether state university or community college
organizations are state agencies for purposes of the CPRA.
The court thus concluded that, under the legislative scheme
of that time, the courts were to develop the extent of the
CPRA's coverage on a case-by-case basis. This bill would
provide clarity and avoid this case-by-case analysis to
determine whether the CPRA covers auxiliary organizations.
However, SB 218 would not only include "auxiliary
organizations" as defined in the Education Code provisions
applicable to the CSU, community colleges, and the
University of California, but would also include "any
entity that operates a campus facility, including, but not
limited to, a bookstore, sports complex, arena, theater,
student center, parking program, or other similar activity
at a California postsecondary education institution."
This definition goes to the heart of the concern that the
sponsors and author of the bill have: whether those
commercial enterprises are conducted with sufficient
transparency. They are concerned not only with the manner
by which the college or university selects their
"commercial partners" in these profit-making enterprises
and what profit-sharing arrangements are made, but also
with the end-use of the profits flowing from the
enterprises. In light of recent controversies over
compensation of executives at these public institutions,
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the inability of a student member of the bookstore's
advisory board to access information on the bookstore's
vendors, and withheld information on university-let
contracts to third parties that contain confidentiality
provisions, these concerns have merit.
On the other hand, the universities and colleges have their
own concern over their ability to construct the best deal
possible for their institution when negotiating with a
vendor or contractor, if the terms of the contract will
have to be exposed to the vendor's competitors through the
CPRA. "Pouring rights," for example (who gets to serve the
soft drinks at all campus sponsored events) are supposedly
a lucrative contract that beverage manufacturers who wish
to promote their products seek and pay for.
In order to not severely restrict the universities' and
colleges' ability to obtain the best contract they can in
terms of sharing the profits from these commercial
enterprises, the author should consider further narrowing
down the application of the CPRA to these specified
activities on campus.
d. Concern over anonymous gifts
While it may be appropriate to expressly include auxiliary
organizations that engage, on behalf of or instead of the
university or campus, in the commercial-like enterprises of a
college or university's administration in furtherance of its
public goal to educate the state's citizens, there is a lot of
concern over the exposure of donors who give anonymous gifts
to these institutions for research or other academic pursuits,
as well as other more general reasons, through the
"foundations" that do little more than receive and administer
gifts and trusts for the university or college.
It should be noted that in CSU Fresno Assn., the court upheld
the trial court's finding that the foundation, a nonprofit
entity that received the donations from private parties, but
was not involved in the commercial enterprise to build the
sports arena, was without question not subject to the CPRA.
Suggested amendment:
In light of these concerns, the bill should be amended to
provide an exemption for information concerning private
donors who gift funds or property directly to the
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university or college under terms requiring anonymity, and
not through an auxiliary organization's activity.
3. University of California (UC) auxiliary organization:
definition
This bill would define, for purposes of applying the CPRA, those
entities that operate as "auxiliary organizations" to the
California State University (CSU), the California Community
Colleges (CCC), and the University of California (UC) systems.
While "auxiliary organizations" for the CSU and the CCC are
defined in the Education Code, there is no specific description
of an auxiliary body for the UC system.
This bill attempts to define one for the UC by creating a
provision that makes the CPRA applicable to "any entity whose
purpose is to promote or assist the Regents of the University of
California, or to receive gifts, property, and funds to be used
for the benefit of the regents, or any person or organization
having an official relationship with the regents."
While this language is lifted from Education Code Sec. 89990, it
is not a complete copy of the definition of an auxiliary
organization under that code provision. Since the aim of this
bill (as well as others that deal with open records,
transparency, and comparable treatment as state agencies of the
three types of public postsecondary educational institutions) is
to place all of these auxiliary bodies on the same playing
field, the definition of an auxiliary organization for the UC
should probably mirror that of an auxiliary organization for the
CSU.
SHOULD THE DEFINITION OF AN AUXILIARY ORGANIZATION OF THE UC OR
UC CAMPUS MIRROR THAT OF THE CSU?
4. Supporting arguments; more opposition concerns
Because the latest amendments to SB 218 have just gone into
print, all letters expressing support or opposition to the bill
are directed at the earlier version of the bill. While the
views of both sides are already expressed within this analysis,
some statements, though written prior to these last amendments,
are general enough and could help shine the light on the nature
of the problem that SB 218 is trying to fix.
The California State University Chancellor's Office contends
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that in general, SB 218 would subject auxiliary organizations
"to unnecessary, time-consuming and costly efforts to respond to
PRA requests; requests that would not result in better service
to students and the state. Instead, SB 218 will require staff
of these self-supporting entities to redirect their attention
from their core mission for the university, students and faculty
to preparing responses to PRA requests. Under the law we can
only charge for the copying costs for PRA requests; there is no
remedy for the loss of staff time diverted from their real job
or the impact on the programs and services supported by the
auxiliary."
The CSU offers amendments to deal with: (1) protecting the
privacy of donors that the author may wish to consider in light
of Comment 2d; and (2) protecting successful partnerships with
outside commercial ventures.
The CSU also offers amendments to delete the bill's legislative
declaration of intent to reject the CSU Fresno Assn. decision.
Actually, should this bill be enacted specifically adding
"auxiliary organizations" and the other described entities to
the definition of "state agency" for purposes of the CPRA, the
CSU Fresno Assn. decision would be effectively nullified,
rendering the specific language rejecting the decision
unnecessary.
Other opponents, like the Associated Students, Inc. of CSU
Fullerton contend that the term state agency does not represent
the nature of their organization, because the ASI does not
receive General Fund appropriations, and the ASI has "sufficient
accountability measures without government regulations." They
argue that while "[a]ccountability is important, so are
independency (sic) and sovereignty (sic) of ASI."
Supporters, on the other hand, point to an August 2008
California State Audit Report on college textbooks that
recommended increasing awareness and transparency about the
reasons why campus bookstores add markups to publisher's invoice
prices. Citing the incident at CSUS involving a student member
of the bookstore advisory committee, this group states, "[w]e
believe students should have access to [information regarding
contractual provisions that determine textbook markup rates],
which directly impacts their education. ? As a statewide student
organization we recognize that the value of transparency is
building trust with the students we represent."
Support : California Teachers Association; California Nurses
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Association; California State Student Association; State
Employees' Trade Council (SETC-United); American Federation of
State, County and Municipal Employees (AFSCME), AFL-CIO;
AFSCME-Local 3299 (representing UC employees); California Aware;
SEIU California State Council; Associated Students of UC Davis
Opposition : California State University, Fresno Association,
Inc.; California State University Office of the Chancellor; San
Diego State University Aztec Shops; Associated Students, Inc. of
California State University Fullerton; Three members of the CSU
Fullerton Philanthropic Foundation; CSU Fullerton Auxiliary
Services Corporation; Auxiliary Organizations Association of the
California State Universities; California Association of
Nonprofits
HISTORY
Source : California Faculty Association; California Newspaper
Publishers Association (Co-sponsors)
Related Pending Legislation : None Known
Prior Legislation : None Known
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