The Buck Stops With California State University Chancellor Charles B. Reed


Posted on 01 September 2010

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By Lillian Taiz
California Faculty Association

Just under two weeks ago our CFA staff, while searching for financial information on the CSU Chancellor's website, stumbled across minutes of meetings involving the top financial leaders of the California State University.

We were shocked to find that these minutes record comments by top executives of the CSU saying that auditors have found inappropriate co-mingling of taxpayer dollars with private donations and other business revenues inside the university’s 90 affiliated auxiliary organizations.

These auxiliary organizations are connected to the California State University’s 23 campuses and Chancellor’s Office. They hold a great deal of money, about 20 percent of the CSU’s funds equaling about $1.6 billion.

Even though they do business and handle money that has a large impact on the life of the California State University, these so-called auxiliary organizations to the CSU are not subject to our state’s Public Records law.  

Therefore, they do not have to respond to public records requests, whether from us in the California Faculty Association, from members of the news media, or even from the State Auditor.

We have studied these minutes and produced a special report based on them. The report, the financial executives' meeting minutes on which it is based, and other interesting related documents are on the CFA web site at www.calfac.org

These are the main points we observed in these meeting minutes.

1 - Top ranking CSU executives responsible for the university's financial management have been aware of the inappropriate co-mingling of funds in auxiliaries at least since March of this year.

2 - Executives in the CSU Chancellor’s Office and on the campuses are uncertain exactly how much of the funds in these often secretive auxiliaries are actually taxpayer dollars.

3 - We have been told again and again that all the money inside these foundations and other auxiliaries are private dollars.  Now we see that is not true.

4 - Top ranking CSU executives are motivated to solve this mismanagement of funds because of a state legislative audit of the University of California now underway.  They are worried that a similar audit will be applied to them.

5 - These same executives have been attempting to get legislation that would eliminate audits of CSU campus financial statements.  Ironically, it is these very audits that revealed the wrongful co-mingling of funds.

6 - Even while they are aware of these problems inside the auxiliaries, CSU officials are fighting tooth and nail to stop legislation that would bring greater transparency, openness and public scrutiny to the foundations and other auxiliaries.  They are lobbying hard, at great expense, against SB 330, a bill that would apply California’s Public Records Act to these organizations.

CFA believes that several steps must be taken.

First and foremost, the buck stops with CSU Chancellor Charles B. Reed.  The CSU needs him to embrace transparency, and it needs him to ensure the CSU is managed to the highest levels of competency and ethical standards.

The leaders of the state university need to be examples for our students, in their deeds as well as their words. The chancellor should manage his administration using the highest standards of behavior and management.

As a practical matter, CFA calls for the return of all state funds to university accounts immediately.

Also, we believe we need immediate adoption of SB 330 into law, thereby closing the loophole that shrouds the operations of our public university auxiliary organizations.

Finally, we believe it is time for an investigation by the state legislature's Joint Legislative Audit Committee.  JLAC need to instruct the State Auditor to conduct an audit of the CSU, to determine the causes and scope of the misclassification of state funds entrusted to CSU executives.

Related news links of interest:

CBS 13 in Sacramento (video)

http://www.cbs13.com/video/?id=76964@kovr.dayport.com

San Francisco Chronicle (article)

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/08/25/MNQ91F164E.DTL

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Lillian Taiz is a professor of History at CSU Los Angeles and President of the California Faculty Association (CFA). CFA is the labor union representing 23,000 faculty members, coaches, counselors and librarians working in the CSU system.

Where is the Board of Regents? It is supposed to be in charge.They also allowed administrators to set their own salaries for years until the SF CHRON blew the whistle. Then the Regents claimed they didn't know.

Representatives from HSU’s Associated Students will be collecting bucks from students on Monday, Feb. 27 from 11 a.m. to 1 p.m. on the U.C. Quad. But they’re not looking for “bucks” bearing George Washington’s image—instead the student government representatives are raising awareness of California’s recent budget cuts to higher education.