The recent debate centering around CSU Stanislaus’ decision to bring former Alaskan Governor, Sarah Palin, to campus to speak has not only generated interest in California’s law concerning non-profits, but also how every other state approaches the dilemma. The situation brings to light, not only the problem of public corporations hiding records within private non-profits but also the disparities and inconsistencies within the case law surrounding the subject.
To briefly review the facts, Palin was asked by the Stanislaus Foundation to speak at a University fundraiser. The Stanislaus Foundation, a private corporation whose sole goal is to raise and invest funds for the university, is managing the event. Currently under California law, University Foundations are exempt from public records request, despite their heavy involvement in public activities. To read more about the facts, see our article, Palin’s speech calls into question California’s law on non-profits To read more about California’s Law, see Private agency, public dollars-California
While the Governor of California and the University Foundations have argued that the release of investment records would have a “chilling effect” on the Foundations abilities to raise money, the claim is simply unfounded. The reality is that the California ruling is out of date and inconsistent with FOIA trends across the country for dealing with private agencies who function in the place of public bodies. First and foremost, the California law and case history already include in the definition of public body organizations who 1.)receive public funds and are controlled by public bodies and 2.) were created by public bodies to serve a public function. These particular definitions are fairly in line with the rest of the country. However, how an organization like the Stanislaus Foundation could finds its way around these definitions is beyond my understanding.
While the current exemption is found in California State University, Fresno Assn., Inc. v. Superior Court (2001), this ruling is based on an ill founded justification. The court acknowledged only two instances of a foundation being considered a public body, Ohio and Louisiana, and ignored rulings in Arkansas, and South Carolina. Since then a major ruling in Michigan has concurred with this policy of openness as well as a decision in Nevada to include University Foundations directly in the definition of public body, see: Private Agencies-Public Dollars, Nevada. While the court in Fresno Association claimed that these cases were based on different laws, they did not provide a clear justification for exempting the Association under the California law.
In addition, the Stanislaus Foundation as it currently functions would fall within the definitions of public body from numerous states. Senator Yee, the main proponent of legislation intended to alter the law to include public bodies, alleges that the foundation uses University facilities, is staffed by University employees, and the head of its board is the president of the University. While the university foundation is self funded, it does invest large amounts of money into the university. Currently 13 states (including Arkansas, Nevada and South Carolina which have already been mentioned) only require that a private agency perform a public function to be considered a public body, while 2 additional states feel that a private agency which is controlled by a public body is subject to the records act. In addition, 3 other states consider private corporations who both perform a public function and are controlled by public bodies as public bodies under their records law. That makes at least 18 states that should consider University Foundations like the Stanislaus Foundation subject to the public records law. This doesn’t even account for factors like the creation of the foundation, or if it in fact receives public funds through either free rent or free public employees(for an excellent discussion on this see Weston v. Carolina Research and Development Foundation).
While, it appears that University Foundations have slid through the the cracks of the law up until now, because they were apparently not created by public bodies and are not considered to be publicly funded(both questionable claims), the legislature and the courts need to act in order to bring them under the law. Clearly, the passage of a bill last year (vetoed by the Governor) to bring them into line indicates the strong intention of the legislature to include these foundations. Further, legislatures and courts across the country have developed legal practices so as to specifically include these organizations within their definition of public body. If the current bill fails again, the courts need to reconsider their decision and take into account the legislatures actions with past bills and this national legal history. They need to recognize that these private university foundations function in public capacities and have become strongholds for hiding public records from tax paying citizens and the media. A move towards openness would not only improve the public records law, but also enable more efficient and transparent universities, which can be carefully regulated by the tax paying citizens that support them.
To read more about our research on laws affecting private agencies, please see Private agency, public dollars