BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
SB 330
Senator Yee
As Amended December 15, 2009
Hearing Date: January 12, 2010
Education Code; Government Code
GMO/BCP
SUBJECT
Public Records: State and Local Agencies: Auxiliary
Organizations
DESCRIPTION
This bill would redefine "local agency" and "state agency" to
include auxiliary organizations of a California State
University, the California Community Colleges, or the University
of California, for purposes of the California Public Records Act
(CPRA).
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 California Public Records Act to
auxiliary bodies such as the CSU Fresno Association that was the
subject of the case.
Finally, the bill would exempt from disclosure under the CPRA
the name of an auxiliary organization donor or volunteer who
requests anonymity, unless the donor or volunteer receives, in a
quid pro quo arrangement, anything with a value of $500 or more
for the service or donation.
BACKGROUND
SB 330 is substantially similar to SB 218 (Yee, 2009), that was
vetoed by the Governor. The Governor's veto message reads, in
part:
While I am a firm believer in providing openness and
(more)
SB 330 (Yee)
Page 2 of ?
transparency when it involves public entities and public
funding, this bill inappropriately defines private
auxiliary organizations as a state or local public agency
for purposes of the California Public Records Act (CPRA).
Subjecting the altruistic activities of private donors and
volunteers to the CPRA will have a chilling effect on
their support and service, if they believe their personal
privacy could be compromised. Hindering private giving of
time and resources becomes a detriment to our higher
education institutions.
Enacting this bill would result in a loss of private
donations and volunteer activities supporting California
public institutions of higher education, at a time when
the University of California, California State University,
and Community College campuses are facing significant
reductions in state funding during this difficult fiscal
situation.
Responding to the Governor's message, SB 330 would include a
revised exemption for the names of donors and volunteers. (See
Comment 3.) The remainder of the bill consists of the same
provisions.
According to the sponsors of SB 330, 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
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.
Last month, the Attorney General initiated an audit of the
operations of nonprofit organizations affiliated with the
California State University, in response to reports of improper
SB 330 (Yee)
Page 3 of ?
use of funds raised by the auxiliary organizations. Some of the
items mentioned in the news report of the Attorney General's
audit included loans from the organization to CSU executives,
and identified expenses of executives paid out of funds raised
by these organizations.
In between the 2001 CSU Fresno decision and the 2008 CPRA
request, 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. (Gov. Code
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 the person whose request for a public
record under the CPRA is denied may file an action in superior
court for an order requiring disclosure. (Gov. Code 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. (Gov. Code Sec. 6255.)
Existing law , Article 1, Section 3 of the California
Constitution declares the people's right to transparency in
SB 330 (Yee)
Page 4 of ?
government. ("The people have the right of access to
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. (Gov. Code 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, 92034 et seq.)
Existing law defines "local agency" for purposes of the CPRA, to
include a county; city, whether general law or chartered; city
and county; school district; municipal corporation; district;
political subdivision; or any board or commission or agency
thereof; other local public agency; or entities that are
legislative bodies of a local agency as defined. (Gov. Code Sec.
6252(a).)
This bill would include, in this definition of "local agency" an
auxiliary organization of a California Community College, as
defined.
Existing law defines "state agency" for purposes of the CPRA, to
include every state office, officer, department, division,
bureau, board, and commission or other state body or agency, but
does not include those agencies named in Article IV (the
Legislative branch) or Article VI (Judicial branch) of the
California Constitution. Under existing law, the CPRA applies
to the California State University and to the University of
California. (Gov. Code Sec. 6252(f).)
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
SB 330 (Yee)
Page 5 of ?
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 or the
University of California (as described in a newly-created
provision).
This bill would define an "auxiliary organization" of the
University of California (UC) to include various entities,
including an entity that operates a commercial service for the
benefit of a UC campus or other UC property, and an entity whose
"purpose is to promote or assist any campus of the University of
California, or to receive gifts, property, and funds to be used
for the benefit of that campus, or any person or organization
having an official relationship therewith."
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 and to construe and
clarify the meaning and effect of existing law.
This bill would exempt from disclosure under the CPRA the name
of a person who donates or volunteers services to an auxiliary
organization, if that person requests anonymity, unless the
donor or volunteer receives in a quid pro quo arrangement
anything in return that is valued at $500 or more.
COMMENT
1. Stated need for the bill
The author writes:
Ensuring adequate transparency and oversight of all funding
sources is critically important, especially during tough
budget times. According to a 2007 report by the
non-partisan State Auditor, who was tasked with determining
executive compensation levels of CSU executives, "...
because of the large number of auxiliaries and potential
outside sources of income, we cannot be certain that we
identified all additional compensation [given CSU
executives]." This occurred despite assurances by the CSU
SB 330 (Yee)
Page 6 of ?
that its auxiliaries are held to "strict accountability and
transparency standards." According to the California State
University's own budget documents, 20 percent of their
funding comes from auxiliary organizations. This
translates to $1.34 billion dollars that, according to the
State Auditor, lacks adequate accountability.
SB 330 updates the California Public Records Act to include
auxiliary organizations at UC, CSU, and CCC campuses. Placing
state college and university auxiliaries under the authority
of the Public Records Act will safeguard the use of taxpayer
funds and provide much needed accountability and oversight to
state policymakers.
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 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
SB 330 (Yee)
Page 7 of ?
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" and, in the case of an auxiliary
organization affiliated with a community college, in the
definition of "local 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 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
SB 330 (Yee)
Page 8 of ?
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 CSU
Fresno Association, 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
SB 330 (Yee)
Page 9 of ?
since 1991.
c. SB 330 would place auxiliary organizations 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.
3. No public disclosure required for names of anonymous donors
and volunteers, unless a quid pro quo exchange is valued at
$500 or more
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, debate over SB 218
(Yee, 2009) centered around 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.
In response to the concerns raised during the SB 218
deliberations and to the Governor's veto message, this bill
contains an exemption to protect from disclosure, under the
CPRA, the name of an auxiliary organization donor or volunteer
who requests anonymity, unless the donor or volunteer receives,
in a quid pro quo arrangement, anything that is valued at $500
or greater.
4. Supporting and opposing arguments
SB 330 (Yee)
Page 10 of ?
The California Faculty Association, co-sponsor, contends that
this bill would "provide the same transparency and public
accountability - 'a fundamental and necessary right of every
person in the state' - for college auxiliaries that the CPRA now
requires of the CSU, UC and community colleges." The California
Taxpayers' Association, in support, further notes that, "[b]y
some estimates, [auxiliary] organizations provide as much as 20
percent of the funding for these postsecondary institutions that
also receive general fund moneys. If any of this funding is
going toward administrative excess, while student fees are
rising, the public should have a right to be informed about it."
The California State University (CSU), in opposition, asserts
that SB 330 is duplicative and unnecessary because "[a]ll
auxiliaries are accountable and transparent to
the public under current state and federal laws [and that] SB
330 will not make more information available that isn't already
available and or protected by law." CSU also contends that this
bill would lead to increased costs and reduced revenues to the
University. Specifically, CSU maintains that this bill "would
result in drops in non-state revenues for programs and services
for two reasons: (1) revenues redirected to respond to PRA
requests and related legal costs; and, (2) reduction in our
fundraising from individuals and corporate in response to the
lack of clarity with regard to the privacy rights of such
individuals under the bill and current statute."
Support : Californians Aware; California Taxpayers' Association;
California Nurses Association / National Nurses Organizing
Committee; Service Employees International Union
Opposition : California State University
HISTORY
Source : California Faculty Association; California Newspaper
Publishers Association; American Federation of State, County and
Municipal Employees (AFSCME), AFL-CIO
Related Pending Legislation : None Known
Prior Legislation : SB 218 (Yee, 2009) (See Background.)
**************
SB 330 (Yee)
Page 11 of ?