Editor’s note: Tim O’keefe’s title was incorrectly stated as the Pas-Ledge Chair of the CFA his role at CFA is the Pac-Leg.
El Corral Bookstore may soon have to open its financial records, Campus Dining will have to share its kitchen secrets and University Graphic Systems will have to stop screening its information.
This fall, state legislators will vote on a bill that would force the Cal Poly Corporation and the Cal Poly Foundation to disclose expenditures they currently keep under wraps.
Senate Bill 218 would expand the California Public Records Act to include university auxiliary organizations, which are secondary bodies that benefit a university. The Cal Poly Corporation and foundation are auxiliary organizations categorized as nonprofit organizations.
The bill, introduced and endorsed by a bipartisan committee in the California Senate, would require the corporation to show how it spends the money it receives from various avenues including grants and donors.
Many of the corporation’s executive members have expressed apprehension about the bill, which will likely be passed in the next school year and instated in January.
“We’re just concerned about people dissecting what we’re doing, how we’re doing and how that’s going to impact the services that we provide for the campus,” said Bonnie Murphy, executive director of the Cal Poly Corporation, which earns profits from El Corral Bookstore, Campus Dining, University Graphics Systems, Swanton Pacific Ranch, Cal Poly Chocolates, the meat shop and other agricultural revenue outlets.
The corporation “provides a service for the university where any reserves that (it) gets at the end of the year are set aside to improve the operations, to maintain the operations, and so that we’re in a position that if we have to renovate or rebuild, those funds go back into that,” Murphy said. “It’s all a cycle; none of the money is taken out other than the service we provide for the university.”
Sen. Leland Yee (D – San Francisco), who authored the bill, aims to increase transparency among university auxiliary organizations, according to his chief of staff, Adam Keigwin. The senator has introduced several bills meant to regulate California higher education, Keigwin said, adding that these organizations take advantage of the their public status for tax reasons but do not want to disclose information that other public entities must.
Yee was inspired to introduce the bill after learning of denials of public records requests at state universities. At Sacramento State University, the student newspaper tried to determine the amount that the university bookstore was marking up books.
Another case centered around the Fresno Bee when it was denied access to information about how much was paid for the luxury boxes at the football stadium at Fresno State University. Keigwin called it a quid pro quo relationship between the donors and the organization that runs the stadium.
A recent request to view the Cal Poly Corporation’s investment portfolio as well as unedited tax returns was met with confusion. A representative did not know anything of records requests and after assuring reporters the corporation did not “do” requests they were referred to legal counsel.
Starr Lee, Cal Poly Corporation’s legal counsel, denied requests for the investment portfolio and referred reporters to an online nonprofit information database for the complete tax forms, which at the time were incomplete.
Opponents to the bill argue that the time-consuming process of granting public requests to view university auxiliary organization records would place an undue burden on those organizations.
“It’s not the contracts with the university that are an issue,” said Lee, who sat in on Murphy’s interview with reporters. “It’s when people want to start picking apart the transactional data. It’s the time and effort you have to spend and then dealing with people who don’t understand the complexity of the business.”
The bill would also put the corporation at a disadvantage in competing with off-campus, for-profit businesses, Murphy said. “We do want to make sure that we are taking care of our students on campus.”
Supporters of the bill discount these concerns.
“I would say the impact in terms of hurting is going to be minimal, but in terms of aggravating them, they’ll be very angry,” said Tim O’Keefe, professor emeritus and Pac-Leg at Cal Poly California Faculty Association, a union that represents 23,000 professors, lecturers, librarians, counselors and coaches in the California State University system.
The bill will revoke the corporation’s current immunity to public question about their financial activity, O’Keefe said. Exposing the magnitude of money the corporation receives each year might make donors think twice about giving money to a program that already obtains so much, he added.
“It’s going to make it much more difficult for (the corporation) to actually say they don’t have enough money because it’s going to be out there in public for everyone to see,” O’Keefe said. “So it could result in some drop in donations, I suspect. But, people who want to give to the university are going to give anyway.”
Giving the public access to corporation records is particularly important when the university is facing a budget crisis, said Cal Poly CFA President Richard Saenz. “It seems to me that since they deal with a lot of student funds, their transactions should be more transparent and meet the same level other agencies have to meet,” he said.
The Cal Poly Corporation is “an arm of Cal Poly and students have the right to know where their money is going, Saenz said. “Even though they don’t deal in state money, they deal in student money, money associated with enterprises on campus and I think, in particular in times like this, people want to know where their money is going. How much goes to athletics? How much does the bookstore make and where does it go?”
Their nonprofit status affords the foundation and the corporation certain privileges, he said.
“I think in return they owe the people they serve information on what goes on,” Saenz said. “It is a two-way street.”
The existence of these two separate auxiliary groups dates back to 2006, when Cal Poly Foundation changed its name to the Cal Poly Corporation, upon which another nonprofit organization called the Cal Poly Foundation was formed.
The two organizations are legally able to achieve different results for the university. The foundation exists to generate and receive money such as grants and donations for the university, while the corporation is contracted to manage this money and to provide other financial services.
Murphy described the split as an executive decision made by Cal Poly President Warren Baker. “It was a business decision by the university,” she said, “to have a philanthropic arm for the university as well as a separate arm that manages all the other types of services that we manage. They basically split those based on the fact that they wanted a focus on donor relations and making sure there is one department that focused on working with donors and fundraising for the university to make sure the university has funds for scholarships, buildings and projects.”
The change in the operations appears to be minimal as both organizations are mainly housed in the same building — under the corporation title — and seem to perform some of the same duties on paper.
According to business professor Christopher Perello, however, a corporation and foundation, with respect to education, have different definitions and specific restrictions. The existence of both allows for each organization to pick up after the other.
Finance professor Earl Keller said the split might have been protection for the foundation in case of a change in the tax code for the profit earning organizations within the corporation.
If it passes, the bill will apply to both organizations.
Megan Hassler is a journalism freshman and a Mustang Daily copy editor. Tim Miller is a journalism junior and a Mustang Daily copy editor. Anieca Ayler is a journalism sophomore.