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california legislation > SB 8

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SENATE COMMITTEE ON EDUCATION
Alan Lowenthal, Chair
2011-2012 Regular Session


BILL NO: SB 8
AUTHOR: Yee
INTRODUCED: December 6, 2010
FISCAL COMM: No HEARING DATE: May 11, 2011
URGENCY: No CONSULTANT:Kathleen Chavira

NOTE: This bill has been requested by the Senate Rules
Committee for consideration of a request to be heard by the
Senate Appropriations Committee. A "do pass" motion should
include referral to the Senate Rules Committee.

SUBJECT
: Public records and auxiliary organizations.

SUMMARY

This bill requires that the auxiliaries of the California
Community Colleges, the Board of Governors of the
California Community Colleges, the California State
University and the University of California comply with the
California Public Records Act, but prohibits certain
information, as specified, from being disclosed.

BACKGROUND

Existing law, the California Public Records Act (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. 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 that has
custody of the information.

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




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California State University, the University of California,
and the California Community Colleges are considered to be
state agencies for this purpose.
(Government Code 6250, et al)

Current 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.
(Education Code 72670.5, 89900 et seq.)


ANALYSIS

This bill :

1) Requires auxiliaries of the California Community
Colleges and the Board of Governors, and the
California State University to comply with the
California Public Records Act. Further, it:

a) Prohibits disclosure of any
information obtained in the process of soliciting
potential donors that has actual or potential
independent economic value, as specified.

b) Prohibits disclosure of
information exempt from disclosure under
specified Civil Code, Evidence Code, or
Government Code provisions.

c) Prohibits the disclosure of the
name, address, or phone number of a person who
volunteers services or donates to a CCC governing
board if that person requests anonymity unless:

i) The volunteer or donor
is a member of the governing board

ii) The volunteer or donor, in a quid
pro quo arrangement, receives any item
valued at $500 or more in exchange for the
services or donation.

2) Declares the Legislature's intent that the provisions
affecting auxiliaries of the BOG are not for the




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purpose of designation of the auxiliary as a state
agency.

3) Establishes new provisions governing the auxiliary
organizations by the University of California. More
specifically it:

a) Defines auxiliary organizations as
including any entity:

i) In which a UC official
participates as a director as part of
his/her official duties.

ii) That operates a commercial service
for the benefit of a UC campus located on
the campus or located on other UC property.

iii) Whose purpose is to promote or
assist any campus of the UC or the UC
Regents to receive gifts, property, and
funds for the benefit of the campus, any
person, or any organization, with an
official relationship to the campus and
whose directors, governors, trustees, are
appointed or nominated by an official of any
UC campus, or serve as an ex officio member,
as specified.
b) Requires auxiliaries of the UC to
comply with the California Public Records Act
consistent with the requirements and prohibitions
outlined for the CCC and the CSU in #1.

c) Declares the Legislature's intent
that the provisions affecting auxiliaries of the
UC are not for the purpose of designation of the
auxiliary as a state agency.

4) Declares the Legislature's intent in enacting the
bill's provisions to reject the decision in CSU,
Fresno Assn., Inc. v. Superior Court (20010 90
Cal.App.4th 810 regarding the application of the
California Public Records Act to auxiliary
organizations.

STAFF COMMENTS





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1) Need for the bill . According to the author, ensuring
adequate transparency and oversight of all funding
sources is critically important, especially during
tough budget times. According to a 2007 report by the
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
(for CSU executives)." The author reports that the
CSU's budget documents indicate that 20% of their
funding comes from auxiliary organizations. According
to the author, this translates to $1.34 billion
dollars that lacks adequate accountability.

2) Related court case . California State University,
Fresno Assn., Inc. v. Superior Court was a case before
California's Fifth District Court of Appeal in 2001
concerning donor anonymity and the definition of
public agency.
In the late 1990's CSU, Fresno constructed a multipurpose
arena (the Save Mart Center) on its campus. The
funding for the project was primarily from private
donors and was to be managed by a university
affiliated non-profit auxiliary organization. In some
cases, these donations were made in exchange for
luxury suites in the new arena by private donors who
requested anonymity. In October 1999, the McClatchy
Company, under the California Public Records Act,
requested the records of those who had donated and
received luxury suites. The University rejected the
request and the McClatchy Company filed suit on March
24, 2000. Although a lower court ruled in favor of
McClatchy in 2000, the University and the Association
appealed in January 2001. The court found that based
upon the limited nature of the CPRA's definition of
public agency the Association (auxiliary) is not a
public body and therefore not subject to public
records requests.

3) Role of auxiliaries . The CSU reports that there are
more than 90 recognized auxiliaries within the system.
Authorized functions for these auxiliaries include
student association activities, bookstores, food and
college services, college union facilities and




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programs, housing facilities, loans, scholarships,
grants-in aid, research, gifts, bequests, endowments
and trusts, and others. According to the CSU, certain
of their activities (investment in equities, buying,
selling, and holding real property, participation in
statewide education bond campaigns) are severely
restricted by state law or the state constitution, and
auxiliaries offer a means to engage in these and other
legal activities, subject to California non-profit
corporations law.

The UC reports that their auxiliaries support a wide
array of research, teaching, and public service
activities. Gifts can be made directly to the
University or to a Campus Foundation. Sources of
support include corporations, foundations, alumni,
friends, parents, and others.

4) Acknowledged need for greater transparency . In 2010
the CSU commissioned a Review Committee to look at
issues surrounding the auxiliaries of the CSU. Among
other things, the Review Committee found that
additional disclosure of auxiliary activity is
appropriate and that transparency of operations should
be a guiding principle. At the same time, the
Committee felt certain types of transactions should be
protected, that donor records such as wills, estate
plans, trust, annuities, and other financial and
personal information should remain confidential to
avoid an unwarranted invasion of personal privacy, and
that proprietary terms in vendor contracts also needed
to be confidential in order to maintain an auxiliary's
ability to negotiate favorable terms.

The Committee recommended, among other things, that
the chancellor determine whether the Public Records
Act offers sufficient protection of vendor contract
provisions and that the trustees sponsor legislation
clarifying disclosure rules for auxiliary activities
to ensure that responses to public requests could be
accommodated without compromising the confidentiality
of donors, volunteers, or the proprietary terms of
financial instruments.

5) Sufficient privacy protections ? The CPRA was
implemented to ensure access to records of public




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agencies. Arguably, it was not designed for disclosure
by fund raising entities. According to the UC, while
the CPRA provides that certain records meeting
specified criteria are exempt from disclosure, the
vast majority of an auxiliary's documents would be
subject to disclosure. Both the UC and CSU report that
prospective donors often have discussions with
foundation representatives long before they opt to
support the university. These discussions may reveal
certain aspects of their personal finances, personal
and family medical history or other personal details
that are their impetus for possibly donating.

The CPRA specifically exempts certain records, if such
disclosure would constitute an unwarranted invasion of
personal privacy. In addition, this bill would limit
disclosure of information obtained during solicitation
if it has potential economic value, and prohibits
disclosure of name, address, or phone number of those
requesting anonymity. It is unclear whether these
provisions sufficiently ensure the privacy of certain
donor information. The committee may wish to consider
the following questions:

Given the nature of philanthropic giving and
the broad range of information collected by
fundraising auxiliaries, is it clear at what
point disclosure of personal information is
unwarranted?

Would a CPRA request compel the disclosure
of information that could reveal the donor's
identity, such as names of family members, donor
affiliations, a donor's philanthropic and
investment activities, donor employment?

Does the CPRA ensure protection of any
documents or correspondence related to financial
holdings, investments or medical conditions?
Should this type of information be made available
as part of a CPRA request?

Does the language limiting information to
that gathered and kept as part of a solicitation
protect against the potential disclosure of this
type of information?




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Do the bill's provisions ensure that the UC
and CSU can assure donors/volunteers that their
personal information will remain private?

Do the bill provisions go beyond the level
of disclosure necessary in order to achieve
accountability and transparency?

1) Impact to student and university services . The UC and
CSU assert that the provisions of this bill would
impact the willingness of individuals to donate or
volunteer, based upon concerns about privacy. The
level of giving received by both systems is
significant and funds a number of student and
university services and programs. The UC reports that
gifts to the campus foundations exceed $500 million
annually and, when combined with gifts to the
University, over $1.3 billion was received in 2010. Of
this funding $103 million was provided for student
support, $430 million for research and $467 million to
individual departments. In addition to supporting
campus programs, over $4 million was provided for
University operated multi-campus research, outreach
and public service programs, including, MESA, COSMOS,
the Puente Project, and the Education Abroad Program,
among others.

The CSU reports that in 2008-09, there was over $1.2
billion in revenue and expenses associated with their
auxiliaries with most coming from sponsored research,
philanthropic gifts, and fee for service activities
such as food services and bookstores. As noted in
comment #3, the CSU relies on auxiliaries for an
extensive array of student and university service
related functions. The CSU notes that the significant
and continued reduction in state support of the
university has caused the CSU to focus greater energy
in building a strong base of supporters to provide
additional fiscal support to the institution.

2) Double referral . This bill was previously heard by
the Senate Judiciary Committee where it passed by a
vote of 4-1. In addition, the Senate Appropriations
Committee has indicated that SB 8 raises fiscal issues
of interest and has requested that the Senate Rules




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Committee re-refer the bill to the Senate
Appropriations Committee.

3) Prior legislation .

a) SB 330 (2010) redefined "local agency" and
"state agency" to include auxiliary organizations
of a CSU, the CCC, or the UC, for purposes of the
California Public Records Act (CPRA). Other
provisions of SB 330 were substantively similar
to those of this bill. SB 330 was vetoed by
GovernorSchwarzenegger, who's veto message read,
in pertinent part:

While the bill attempts to provide a veil of
protection for donors requesting anonymity, as
crafted, it will not provide sufficient
protection for many who rightfully deserve a
level of privacy as part of their giving. Often
times, these generous private citizen donors do
not want to be in the glare of publicity, and I
cannot support a bill that makes it more
difficult for our public universities to raise
private funds to maintain the quality educational
experience our students deserve, and parents
expect, when they send their children to the
University of California and California State
University systems.

b) SB 218 (Yee, 2009) would have expanded the
definition of "state agency" for purposes of CPRA
to include UC, CSU, and CCC Board of Governor's
auxiliary organizations and expanded the
definition of "local agency" for purposes of CPRA
to include CCC district auxiliary organizations.
SB 218 was also vetoed by Governor
Schwarzenegger, whose veto message read, in
pertinent part:

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




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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.

SUPPORT

California State University Employees' Union
California Taxpayers Association
California Teachers Association
California Federation of Teachers
Pacific Media Workers Guild

OPPOSITION

California State University
University of California