BILL ANALYSIS
SB 330
Page 1
SENATE THIRD READING
SB 330 (Yee)
As Amended August 9, 2010
Majority vote
SENATE VOTE :37-1
GOVERNMENTAL ORGANIZATION 19-0 HIGHER
EDUCATION 6-0
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|Ayes:|Coto, Anderson, |Ayes:|Block, Adams, Chesbro, |
| |Blakeslee, Chesbro, | |Fong, Portantino, Ruskin |
| |Cook, De Leon, Evans, | | |
| |Hall, Hernandez, Hill, | | |
| |Lieu, Ma, Mendoza, | | |
| |Nestande, V. Manuel | | |
| |Perez, Portantino, Silva, | | |
| |Torres, Tran | | |
| | | | |
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SUMMARY : Requires auxiliary organizations of the University of
California (UC), the California State University (CSU), the
California Community Colleges (CCC) 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;
and,
c) An entity whose governing instrument provides in
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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
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, addresses or telephone
numbers 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
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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
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).
FISCAL EFFECT : This bill has been tagged non-fiscal by
Legislative Counsel.
COMMENTS : 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
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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
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
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
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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), 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 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
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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 recently completed an investigation of 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. The Attorney General found no
wrongdoing on the part of the Foundation but questioned the
Foundation's spending decisions.
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.
Analysis Prepared by : Sandra Fried / HIGHER ED. / (916)
319-3960
FN: 0005777