Johnston: CSU foundations' doings should be public record

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When the application window for the Fall 2010 semester in the California State University system opened on Oct. 1, high school seniors from all over the country -- including the Johansen senior in my home -- were ready to send off their paperwork for a shot to get in.

As a result of recent statewide budget cuts, multiple warnings (pages and pages of bold, red type and disclaimers) prefaced the actual student application.

The fact that many of the burdens of the state financial crisis are being transferred to students through higher fees, class reductions and reduced enrollment we understand. We don't like it, but few other solutions have been identified.

What I am having a harder time understanding is Gov. Schwarzenegger's recent veto of Senate Bill 218, legislation intended to make transparent the funding practices of higher-education foundations.

These foundations -- often nonprofits whose funding is donor-supported and controlled by campus presidents and boards -- are hidden from view and not subject to the California Public Records Act. Essentially, millions of dollars are available as discretionary slush funds without any public oversight.

Earlier this year it was discovered that the Sonoma State University Academic Foundation had loaned $1.25 million to a former foundation board member.

The loan was one of more than two dozen made by the foundation to individuals and businesses in the late '90s and early part of this decade.

Apart from being a former board member, the recipient is also the largest single landowner in Sonoma County, with properties valued at more than $65 million; he is also on the verge of bankruptcy and has told the foundation he can't make his interest payments.

At the least, the foundation is expecting to lose $250,000 in interest on the deal. It could very well lose the entire $1.25 million. As reported in the Santa Rosa Press Democrat, that will mean that scholarships will be reduced for the 2010-11 school year at Sonoma State, as will campus events and specific areas of study.

It also has been reported that a CSU, Sacramento, foundation spent $27,000 on a kitchen remodel in a house purchased by the university president. According to The Sacramento Bee, University Enterprises also provided the president with more than $200,000 in personal loans at a low interest rate.

In the late 1990s a request by The Fresno Bee for information regarding funding sources and benefits offered to build a new stadium at CSU, Fresno, wound up in the state Supreme Court. In its ruling the court essentially said that the foundations fell outside of the California Public Records Act and that it was the Legislature's job to fix it.

This year, Sen. Leland Yee, D-San Francisco, authored Senate Bill 218, and it passed through both houses with only a single dissenting vote.

Perhaps the most disappointing element to his veto is that the governor has proclaimed publicly on numerous occasions his belief in the transparency of government. To his credit, his actions in this arena have largely followed suit. He has supported numerous open-government initiatives, even going so far as to open his official daily calendar to public review.

With this veto, however, the governor gave these foundations a chance to submerge their financial operations back into the murky abyss. No doubt he was lobbied heavily by donors trying to protect their anonymity (which the bill had provided) and by foundation management nervous about the effect that public oversight might have on future donations.

Personally, I would think twice about donating to a university foundation if I thought the money was refurbishing an administrator's kitchen instead of providing student scholarships.

The decision to veto SB 218 was clear evidence that lobbying against the public's right to know is alive and well -- and, in this case, rewarded -- in the governor's office.

Johnston, The Bee's publisher and president, can be reached at ejohnston@modbee.com or at 578-2090.