The CSU and Management by Kleptocracy

CSU Stanislaus and one of its auxiliary foundations have been in the news of late for their hiring of Sarah Palin to speak at a fundraiser, as well as for their refusal to tell the public how much she is being paid for this speaking engagement. State Senator Leland Yee, a longtime critic of CSU management policies, last year authored a bill which would have placed the documents of such state university auxiliary organizations under the purview of the California Public Records Act. This bill was passed by the California Legislature and was poised to ensure that the public could inspect documents such as the Palin-Stanislaus contract and thus bring transparency to the operations of the CSU.

Seems fairly reasonable. Such auxiliary organizations operate on state facilities and not infrequently with the assistance of state employees in one capacity or another. They raise funds on behalf of and in the name of the state, commonly promising scholarship assistance, enhanced instructional materials and discipline-specific necessities that the state, in its current financial state, claims to be unable to afford. It stands to reason that they can do this job much more effectively when the public is able to independently confirm that such funds being raised are, indeed, being spent on those things instead of on hookers, booze and RNC-style social activities.

We do not know how much Stanislaus' auxiliary organization is paying Palin, though it is common knowledge that she commands up to $100,000 per speaking engagement. We don't know how much the state qua the CSU Stanislaus auxiliary organization is paying her because they refuse to say... and because we, the paying public, are refused access to the auxiliary's financial documents. And that is because California Governor Arnold Schwarzeneggar refused to sign Leland Yee's bill. He also vetoed another of Yee's bills, one that would have prohibited CSU & UC management pay increases in the sorts of difficult financial times that see student enrollment caps, tuition increases, and massive layoffs of such frontline rank and file employees as part-time lecturers in favor of bringing back retired professors who cost the state much more than the laid-off part-timers. Oh, and did I mention that a bill to protect UC whistleblowers also got Schwarzeneggared?

And thus do the wheels on the kleptocracy bus turn round and round... Except that this time, Yee has requested -- and received -- the investigatory powers of the California Attorney General and current gubernatorial candidate Jerry Brown. Critics of his involvement point out that auxiliaries are audited and surely any corruption that may exist is the exception and not the rule.

Except that it's really the other way around, and Yee knows it. The UC and CSU operate under an invasive and subsequently pervasive management culture of kleptocracy that hides its dirty deeds behind the skirts of its auxiliary organizations and with the protection of our governor; their daily operations are no longer a question of what is right and what is wrong, but rather what can they get away with:

• At Sonoma State, a $1.25 million loan was issued by an auxiliary foundation to one of its former foundation board members two days after he resigned. He has since defaulted, leaving less money in the foundation’s endowment for scholarships and other more important causes.

• At Fresno State, a no-bid managing contract was given to a foundation member for a theatre complex in which he held a financial interest(!). In addition, the Fresno Bee newspaper was denied information in 2001, specifically concerning the identity of individuals and companies that received luxury suites at the Save Mart Center arena. The denial resulted in CSU v. Superior Court (McClatchy Company), in which the Court opined that although it recognized university auxiliaries ought to be covered by the CPRA and that its ruling was counter to the obvious legislative intent of the CPRA, the rewriting of the statute was a legislative responsibility.

• At San Francisco City College, a campus executive was indicted for using San Francisco City College Foundation money for personal and political purposes.

• At San Jose/Evergreen Community College, the Chancellor was found to have engaged in lavish travel and other examples of financial impropriety that prompted her resignation. Since local community college campus auxiliaries are already subject to the CPRA, these instances of waste and abuse have lead to the parties being held to account.

• Sacramento State President Alexander Gonzalez recently acknowledged his campus is being investigated by the Attorney General in relation to inappropriate expenditures of campus auxiliary money, including $200,000 to remodel President Gonzalez’ kitchen in 2007. Additionally at Sacramento State, $6.3 million of public funds was transferred to University Enterprises Inc., a campus auxiliary, to backfill losses from a property acquisition.

• Campus leadership at Cal Poly San Luis Obispo appears to be under the influence of a well-heeled donor. In October, Cal Poly eliminated a guest lecture at the request of executives from the Harris Ranch Beef Company, who threatened to withhold $500,000 in support for a new campus meat-processing center. Emails recently obtained by the San Luis Obispo Tribune also found that Harris Ranch may have also forced the resignation of a faculty member who taught a course on sustainable farming. Harris officials are now requesting a meeting with Cal Poly administrators to determine whether or not they will continue with their donation. (SOURCE: Senator Yee).

• Remember Sac State's President Gonzalez' $200,000 kitchen remodel? Not his first interesting encounter with public finances... The California State Auditor's report found what it termed "questionable reimbursements of relocation costs" for Gonzalez when the new president relocated from CSU, San Marcos, to Sacramento in August 2003, including $65,000 in closing costs, $19,000 for moving expenses, $27,000 for remodeling the president's kitchen (there's that damned kitchen again... what is he, a 5-star chef?!), and $233,000 in loans, at a 1.697 percent interest rate, to cover escrow costs and mortgage payments. The California State Auditor's report described these as "questionable reimbursements of relocation costs" that occurred during a period in which compensation for top CSU executives had grown 25 percent over the previous five years, while faculty salaries had risen a mere 5.6 percent. (SOURCE.)

• A CSU campus foundation gave more than $6,000 to a new athletic coach in San Diego to pay his tax liability in connection with his move to California. (San Francisco Chronicle)

• A former CSU management employee received a total of $102,000 over nearly seven years without performing any services for the university - an arrangement approved by the chancellor. (San Francisco Chronicle)

• An assistant vice chancellor for information technology services was provided $15,947 for entertainment expenses in 2006-2007. (San Francisco Chronicle) Nonprofit campus foundations, whose spending and fundraising activities are often shielded from public view, provided some of these payments. Other payments came out of the university's general fund or special accounts. (San Francisco Chronicle) For this and the two above findings, the San Francisco Chronicle reported that CSU Board Chair Roberta Achtenberg was generally unapologetic about perceived abuse. (SOURCE: San Francisco Chronicle, reporting on a California State Auditor report).

• A 2006 State Auditor's Report on CSU Fullerton and its operations found that, Cal State Fullerton's business operations were rife with mismanagement and waste, including an instance in which husband and wife administrators oversaw millions of dollars in spending involving a corporation he owned stock in... "waste and abuse," poor record-keeping, shoddy business practices and financial mismanagement. The audit found that employees feared retaliation if they reported waste, fraud or abuse... The university has a budget of more than $230 million and a history of fiscal problems. A 1999 audit accused the university of mismanaging funds, spending scholarship money on meals, entertainment and carwashes and circumventing hiring and contracting procedures to give work to friends. A 2001 report found thousands of dollars were inappropriately spent on items such as wedding and baby showers, a retirement dinner and sympathy flowers, according to the Los Angeles Times. Incidentally, in one of these cases, I knew one of the glorified fundraiser employees of the CSU Fullerton Foundation. When the State Auditor was brought in, Foundation employees were requested to meet with them and answer their questions. CSU Fullerton's President refused to speak with them, but my acquaintance did as she was requested to do. For this, she was fired, a termination she only learned about the day campus police abruptly showed up in her office, gave her 20 minutes to clear out her desk, and escorted her off campus grounds. Your public dollars proudly at "work," covering up corruption.

And this is only the stuff that somehow became public; one can only imagine how much corruption goes on free and clear of public scrutiny. When questioned by Yee and others regarding the Palin deal, Stanislaus officials claimed that they had "no relevant documents". Clearly, however, they did, and it speaks volumes that, getting wind of Yee's solicitation of the Attorney General, Stanislaus officials decided to sidestep the public finding anything else out about the Palin deal by furtively getting together on their furlough day to shred all documents associated with the engagement. They did this on your dime. And the incompetent fools couldn't even get that right -- several pages of the contract were deposited in campus dumpsters intact, only to be discovered by students who had heard rumors of the planned document destruction party. Pity those students: The CSU isn't kind to whistleblowers of any kind.

Back to Rancho Kleptocracy... why is it standard operating procedure in the CSU? While the current conservative element is pleased with the state pouring more money into prisons than into higher education, proclaiming that higher education is not an entitlement, the real firmly-held sense of entitlement seems to be ensconced in CSU management, whose members are among the highest-paid public employees in the state. Consider CSU Fullerton, for example. Its president, Milton A. Gordon, makes in excess of $300,000 per year. Why so much? The traditional argument favoring such exorbitantly-high pay for CSU presidents is that they need this level of public largesse because of the high cost of housing in California. And anyone who's ever tried to buy a house can likely vouch for the high cost of housing in California. But it makes absolutely no sense to pay Gordon an obscene salary -- which included increases this year as tuition went up and his own employees were laid off -- for housing costs when in fact he lives rent and mortgage-free in a $3.5 million dollar mansion given to the state. Oh, and the President's Assistant also gets to live there, similarly rent-free. Donated by the wealthy Orange County Chapman family with the stipulation that it be used to house the CSUF President and be maintained at the public's expense (this was done just before Gordon was hired... hmmmm.....), one must sympathize with the blogger who points out that:

It would have been nice if the Chapmans would have sold the property out-right and used the proceeds for a scholarship endowment. The money would go to those who need it the most.

But, of course, that's not what the CSU is about anymore; it's about over-paid public "servants" who have zero interest in public service, fleecing its paying public, and trashing what little remains of the state's higher education system; completely and utterly indifferent to the financial crisis it not only faces but perpetuates. Even now CSU Fullerton is casting its eyes on expensive rental property in hideously expensive Irvine because it made the poor choice of accepting a short-term lease of lands on the former El Toro Marine Air Corps Station to construct classroom facilities that the campus knew it would be introducing to the wrecking ball within the decade. That swoosh! sound you hear is CSUF flushing an untold number of public dollars down the proverbial toilet and, this, at the same time that it couldn't find the financial or other means for nearly an entire semester to restore running water to its complex of Engineering buildings at the main campus. But, hey -- fire code compliance is for wimps, not CSU executives who, I might add, do not lack running water like engineering students did or hot running water, which CSU Fullerton's computer science faculty, staff and students have never had.

This is the Twilight Zone occupied by CSU management: they may talk the talk and publicly bemoan cutbacks to education, but when you're not paying your own mortgage, when you're not constantly faced with looming layoffs that are picking off your colleagues around you like flies, when you're not faced with up to 33% increases in tuition every other year, and your well-apportioned office is nice and toasty in the winter, cool in the summer, and your toilets all flush, it's easy to look down on all the little people who are facing these things.

CSU management is worried about being able to continue hiring their friends to do next to nothing; CSU faculty and staff are worried about having a job period, and CSU students are worried that they may never get a job if they are unable graduate due to class cuts and tuition increases while the auxiliary organizations that promise to raise scholarship funds for them are instead remodeling campus president's kitchens and giving low interest loans to people who don't really need them.

Regrettably, the CSU, and CSU Fullerton, in particular have a long, ignominious history of incompetence and corruption. I've written previously how another CSU Fullerton President did the incomprehensible in passing on hosting the U.S. Presidential Library it had spent a decade and more courting... So that the campus could get the City of Fullerton and the Marriott Corporation to build a football stadium for one of the worst teams in the nation and, like other university athletic programs around the nation, not only didn't it make the campus any money but, indeed, sucked away funding from other areas of campus life (in CSUF's case, they twisted the arm of student government and employed the dubious accounting practice of kiting). Year after year after year. It's worth noting that, time and again, the California Faculty Association and the California State Student Association (umbrella group for all student government auxiliary organizations in the CSU) came together to jointly request that the CSU Trustees audit intercollegiate athletics system-wide, and, that, each time, CSU management resolutely refused to do so.

Much of the CSU's financial shenanigans take place within their auxiliary foundations, whose budgets control up to 20% of the university's funding. Athletics usually has theirs, the campus bookstore monopolies typically controlled by another... They control vast segments of student and other life on campus, dictating whether and who can hold coffee sales and other fundraisers. As a student many years ago, I and other students were threatened with legal action by our campus foundation over our plans to operate a used textbook co-op. A planned community Seder sponsored by a student organization and free to the public was told what it could and couldn't offer to the public (matzo ball soup was okay, any other chicken and they would shut down the club's campus celebration). These groups see absolutely nothing wrong with giving jobs to their friends and below-market loans to people who make so much that they surely should qualify for a real legit loan on their own merits, while they threaten hapless student organizations who are using the university a a social learning lab to learn something about public service.

As a CSU student, for a good decade or more, I was also heavily involved in student government. CSU student government entities are in fact CSU auxiliary foundations but, unlike the ones noted above, are specifically subject to transparency in operations and documents as state agencies. Still, what I saw during that period, how student governments and their multi-million dollar budgets were abused and misused, was enough to give me some insights into why state auxiliaries with even less public oversight go even more awry. I saw signed legal contracts for services be unconscionably delayed or go unpaid altogether simply to punish students who made complaints about CSU management. I watched as supposedly credible accounting firms signed-off on quite possibly illegal accounting practices to favor intercollegiate athletics and its ever-present financial black hole. I received credible evidence indicating that the state employee manager of student government funds might well be operating a tax preparation business on the side, on state property, during his working hours, and possibly giving himself loans of student funds. When a student group took these concerns to the university president, said university president saw to it that the concerns were never investigated. When those same students requested the assistance of whatever bozo was then attorney general, said attorney general declined to investigate, stating that, in essence, the CSU was free to police itself. I think we can see what a good idea that has turned out to be.

These quasi-public/quasi-private (depending upon which suits them at the moment) organizations possess too much power and control too much of our public institutions' budgets to be able to have the convenience of picking and choosing which information is good for public consumption: it is all necessary for public consumption! And complete transparency regarding these organizations' finances and operating procedures is necessary to restore the CSU to sanity and its former glory.









http://www.calnews.com/badcal.htm