BILL ANALYSIS
SB 330
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Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Marty Block, Chair
SB 330 (Yee) - As Amended: June 7, 2010
SENATE VOTE : 37-1
SUBJECT : Public records: state agency: auxiliary
organizations.
SUMMARY : Requires auxiliary organizations of the University of
California (UC), the California State University (CSU), the
California Community Colleges (CCC), or, as specified, to comply
with the California Public Records Act (CPRA) except in
specified instances. Specifically, this bill :
1)Requires UC, CSU, and CCC auxiliary organizations, as well as
entities that operate campus facilities such as bookstores,
sports complexes, arenas, theaters, student centers, parking
programs, or similar activities to comply with the public
records disclose requirements of CPRA.
2)Defines UC auxiliaries, comparable to existing statutory
definitions for CSU and CCC auxiliaries, as follows:
a) An entity in which a UC official participates as a
director as part of his or her official duties.
b) An entity that operates a commercial service for the
benefit of a UC campus on a UC campus or other UC property.
c) An entity whose governing instrument provides in
substance both of the following:
i) That its purpose is to promote or assist any UC
campus 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;
and,
ii) That any of its directors, governors, or trustees
are either appointed or nominated by, or subject to, the
approval of an official of any UC campus, or serve, ex
officio, from the membership of the student body or the
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faculty or the administrative staff of a campus.
d) Any entity whose governing instrument provides in
substance both of the following:
i) That its purpose is to promote or assist the UC
Board of Regents (Regents), or to receive gifts,
property, and funds to be used for the benefit of the UC
Regents, or any person or organization having an official
relationship therewith; and,
ii) That any of its directors, governors, or trustees
are either appointed or nominated by, or subject to, the
approval of the UC Regents or a UC official, or serve, ex
officio, from the membership of the UC Regents or the UC
administrative staff.
e) An entity that is designated by the UC Regents as a UC
auxiliary organization.
3)Stipulates that nothing in this bill shall be construed to
require disclosure of the names of individuals who volunteer
their services or donate to an entity, as specified, or to a
nonprofit entity, as specified, if those individuals request
anonymity, except as follows:
a) A donor, in a quid pro quo arrangement, who receives
anything valued more than $500 in exchange for the service
or donation;
b) A volunteer or donor is a member of the governing board
of an auxiliary; or,
c) A donor or volunteer who engages in direct communication
for the purpose of influencing an administrative or
academic action within UC, CSU, or CCC.
4)Clarifies that the following are not subject to disclosure:
a) Proprietary information, trade secrets, or privileged
information;
b) Information that is protected from disclosure by several
other provisions of law, including but not limited to
preliminary notes, information concerning pending
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litigation, personnel files, and medical records; or,
c) Information obtained in the process of soliciting
potential donors that has actual or potential independent
economic value because it is not generally known to the
public or because individuals can obtain economic value
from its disclosure or use.
5)Expresses the Legislature's intent to reject the court's
interpretation of state law regarding the application of CPRA
to auxiliary bodies such as those described in California
State University, Fresno Assn., Inc. v. Superior Court (2001)
90 Cal.App.4th 810 (CSU Fresno v. Superior Court).
EXISTING LAW :
1)Declares the people's right to transparency in government
(Article 1, Section 3 of the California Constitution):
[(b)(1) 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..."].
2)Establishes CPRA, which requires all public records to be
accessible to the public upon request, unless the record
requested is exempt from public disclosure, as specified. UC,
CSU, and CCC are considered to be state agencies for this
purpose. CPRA governs the disclosure of information collected
and maintained by public agencies. Generally, all public
records are accessible to the public upon request, unless the
record requested is exempt from public disclosure. 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. A person whose request for a public record under
CPRA is denied may file an action in superior court for an
order requiring disclosure. 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.
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3)Authorizes UC, CSU, and CCC to form auxiliary organizations
for various purposes related to their educational missions and
defines CSU's and CCC Board of Governor's auxiliaries.
FISCAL EFFECT : This bill has been tagged non-fiscal by
Legislative Counsel.
COMMENTS : Double-referral : This bill was approved by the
Assembly Governmental Organization Committee on June 16, 2010,
by a vote of 19-0.
Background : This bill is substantially similar to SB 218 (Yee)
of 2009, which was vetoed by the Governor. The Governor's veto
message reads, in part:
While I am a firm believer in providing openness and
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, this bill now exempts the
names volunteers, as well as donors. While this bill's intent
remains the same, it now applies CPRA to auxiliaries via a
cross-reference rather than including auxiliaries under the
definition of state and local agencies.
Auxiliaries : Auxiliary organizations are formed to further the
educational missions of their institution. Examples include
foundations, alumni groups, student associations, faculty
organizations, and groups that bear the name of the particular
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college or university or campus. Foundations at each of the 10
UC campuses control assets totaling nearly $4 billion, according
to an independent audit commissioned by UC. By comparison, UC
received $2.6 billion in state general funds in 2009-10. CSU's
93 auxiliary bodies and foundations control $1.34 billion,
according to the CSU Chancellor's Office.
Oversight and transparency : Auxiliaries operate as nonprofit
public benefit corporations chartered under the California
Nonprofit Public Benefit Corporation Law and 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 governing body; (3) meetings of
boards and committees that are open to the public; and (4)
conformity of operational procedures with regulations
established by the governing body. The Attorney General has the
authority to examine an auxiliary's assets to determine the
condition of its affairs and whether it has departed from its
public purpose. As charitable organizations, auxiliaries are
under the supervision of the Department of Justice, Registry of
Charitable Trusts, and as tax-exempt public charities under
federal law [Internal Revenue Code Section 501(c)(3), 509 (a)],
auxiliaries must make their federal annual tax returns and
audits available to the public.
Precedent : This bill sets the precedent of expanding CPRA to
private nonprofit organizations, registered 501(c)(3)
organizations. Examples of other quasi-governmental non-profit
organizations include regional centers, the State Parks
Foundation, and Friends of Public Libraries.
CSU Fresno Association v. Superior Court : In the late 1990s,
CSU Fresno built a multipurpose arena on its campus funded
primarily by private donations and operated by the CSU Fresno
Association, a nonprofit corporation that operates all of the
campus's commercial enterprises, including the bookstore, food
services, housing, and the student union. In exchange for
generous gifts to the campus'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
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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 CSU Fresno Association and
the campus foundation denied the request for information,
claiming that they were not state agencies as defined in CPRA
and therefore not subject to its disclosure requirements. The
Fresno Bee filed a superior court action to compel disclosure,
and the trial court ordered disclosure. The appellate court
reversed the trial court's decision ( CSU Fresno v. Superior
Court ), concluding that CPRA was not written broadly enough to
include either entity in the definition. The court based its
conclusions on CPRA as it existed at that time and its
comparisons of the CSU Fresno Association to those groups in
other states and the federal government labeled "agencies" under
their own versions of CPRA or the Freedom of Information Act.
Recent issues : In 2008, a non-profit corporation, University
Enterprises, Inc (UEI), which operates the student bookstore at
Sacramento State University, relied on the CSU Fresno
Association 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), Chapter 574, Statutes of 2007]. AB 1548
requires colleges and universities to disclose specified
information about textbook sales on their campuses, thus acting
as a check on the prices college students pay for their
textbooks.
In April, the Attorney General initiated an audit of the
operations of nonprofit organizations affiliated with CSU, in
response to reports of improper 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. The
Attorney General is also investigating CSU Stanislaus and its
Foundation for their handling of a contract with former
vice-presidential candidate Sarah Palin, as well as the
Foundation's finances.
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In between the 2001 CSU Fresno Association decision and the 2008
CPRA request, the people of California passed Proposition 59 by
an overwhelming 83% vote in 2004, which 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.
Arguments in support : The California Faculty Association states
that auxiliaries raise significant amounts of money that are
used to support these public institutions, yet the public cannot
access the auxiliaries' records under CPRA. According to the
California Newspaper Publishers Association, "SB 330 would bring
quasi-public auxiliaries in from the shadows and is consistent
with the legislature's long-standing commitment to open and
transparent government as well as Article I, Section 3 of the
state constitution added by Proposition 59 by 83% of the state's
voters in 2004."
Arguments in opposition : CSU argues potential private vendors
and partners will fear that their proprietary information will
be disclosed under a CPRA request, and auxiliaries will have to
redirect resources and staff time away from raising funds to
responding to and defending CPRA requests. In addition, CSU
believes this bill is unnecessary and duplicative because as
non-profit organizations, they are subject to state and federal
law and regulation, and their financial records are available to
the public. UC opposes the bill unless its requested amendments
are accepted to ensure that CPRA would not apply to its
Foundations, which UC argues are distinct from their
auxiliaries. According to UC, its campus foundations do not
expend any gift fund directly other than for administrative
costs. UC Foundations believe this bill will severely hamper
their ability to raise private donations because they will not
be able to guarantee a donor's confidentiality if that donor is
a member of the Foundation's governing board, who are generally
their biggest donors and instrumental to generating additional
philanthropy.
Related legislation : AB 2220 (Silva) of 2010, which was held in
the Assembly Appropriations Committee, would designate regional
centers as a local agency and require them to be subject to
CPRA.
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REGISTERED SUPPORT / OPPOSITION :
Support
Academic Professionals of California
American Federation of State, County and Municipal Employees
California Association of Licensed Investigators
California Nurses Association
California State University Employees Union
Californians Aware
Cal-Tax
SEIU California
The Greenlining Institute
Opposition
Andrew Katz, Member, UCLA Foundation Board
Associated Students, California State University, Fullerton,
Inc.
Auxiliary Organizations Association
Betsy Wool Knapp, Chair, UCLA Foundation Board
California State University
Catherine H. Podell, Member, UC San Francisco Foundation
Seymour Consulting Group
UC Davis Foundation
UC Riverside Foundation
UC San Francisco Foundation
University of California
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960