Nonprofit Newswire | Charges of Co-mingling at California University System

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August 25, 2010; Source: Los Angeles Times | Amid the controversy last June about how much Cal State Stanislaus promised former Alaska Governor and GOP vice presidential candidate Sarah Palin to deliver a fundraising talk at the university was the fact that the private foundation writing the check did not have to publicly disclose the amount she was paid.

As private institutions, foundations that primarily support universities aren’t subject to the state’s open record laws, though a bill requiring that awaits Governor Arnold Schwarzenegger’s signature. Now the transparency question is flaring again following a faculty group investigation that found that California State University (CSU) officials are improperly mixing public funds with other money in accounts that belong to nonprofit campus foundations. Because nonprofit foundations don’t yet have to comply with California’s open record laws, mixing public and private dollars in private accounts could be illegal.

University officials have been tight lipped when asked about this before. The Los Angeles Times reports that at least one legislator had previously warned CSU officials that if the practice was occurring, it must stop. According to State Sen. Leland Yee, CSU lobbyists had previously testified before the state assembly that no co-mingling was taking place. However, minutes of discussions by Cal State officials, available on its website, show its chief financial officer saying the opposite. The May 18 minutes quote Benjamin Quillian: “There continue to be findings from the internal auditors that some campuses have monies held inappropriately by auxiliary organizations . . . Developing a policy related to this has been more difficult than anticipated.”

Lillian Taiz, president of the faculty organization, that completed the review of CSU’s fiscal management, said the minutes show CSU “admitting to co-mingling money, taxpayer money and private donations when for all this time, they have stood firm that this is not going on.” She adds, “There needs to be some probing and digging into what is going on at these campuses.” Quillian claims he only became aware of the practice six months ago and it’s not widespread and is inadvertent. Good luck to him and others in the CSU system making that claim stick.—Bruce Trachtenberg