A public university cannot operate without an auxiliary, non-profit "enterprise" foundation as an arm. A separate structure is necessary to receive donations, administer grants, and to operate off-state-budget enterprises such as student housing and dining.*
Wading deep into the CSU-LA foundation's tax returns and the expense vouchers of a few CSU presidents, CBS (LA) investigative reporter David Goldsten highlighted money spent at fancy restaurants, exclusive clubs and private homes ("CSU Administrators Spend Hundreds Of Thousands In Donated Money On Parties, Alcohol").
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| leading by example: CEO pays own hotel bill |
The CBS report features a number of students with predictable reactions; those interviewed do not see it as fair and proper - money donated for education being used for wining and dining. One student said, "this is a low income university ... a lot of students who come here come from low income families and low income communities."
Among other expenses highlighted in the report:
- $3000 spent on an American Express gift card at CSU-LA, sent as a gift to the retiring president of CSU Fullerton
- a kitchen remodel at the home of the CSU Northridge president (reminiscent of "CSU Kitchengate Sacramento")
- membership dues and catering charges at an "exclusive" San Bernardino country club
- and food and liquor expenses for receptions at the "Manor House" home of Cal Poly Pomona President Michael Ortiz
Interviewed on camera, an unabashed Ortiz said: "I really need to point out that alcohol is only one of the beverages we serve."
Ortiz continued: "We would not spend state money on the same things we spend foundation money on ... (Alcohol) would not be something that we we'd use state money for."
Ethics consultant Robert Stern (former general counsel for the Fair Political Practices Commission) responded: ""I think they should be using it as if it were tax money."
Stern said "I don't think they should be saying 'Okay, well, because this is all private money that's coming in, we can spend it as we choose'."
Chancellor Tim White defended the practice of indulging donors and dismissed the suggestion that executives benefit. "It's hard work," the Chancellor said, "hard work to build relationships over time."
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| Chancellor Tim White (video link) |
Referring to any extravagance involved and whether it is necessary to secure donations, the Chancellor reflected, saying: "I think people expect the normal hospitality. I mean these people that are wealthy live at a lifestyle of being taken ... of comfortable living."
The CSU auxiliary foundations are dark warrens of off-budget accounts controlled by various executives on campus. Funds developed by "enterprises" (e.g., centers, institutes and programs) can be significant and largely for discretionary use.
The institution profits (adding to discretionary accounts) by charging as much as 38% for "indirect costs" on grants and other funds, as they are spent or paid out.
The institution profits (adding to discretionary accounts) by charging as much as 38% for "indirect costs" on grants and other funds, as they are spent or paid out.
As previously reported at the CSU-Independent Observer, enterprise accounts at CSU Sacramento enable the Engineering College to pay extra effort wages to two salaried professors. In just the first nine months of this year, one earned more than $97,000 in extra hourly wages, and the other claimed more than $100,000 (on top of salary).
The CSU faculty labor agreement (Article 36) allows professors to earn extra, but only 25%. The Chancellor's it-is-hard-work rule allows for much more.
A few years ago in a recorded statement, a Sacramento State executive described an enterprise account he controlled saying: "it's a general fund raising account for the college ... a slush fund for the Dean."
The CBS investigation describes CSU as an institution in which talk of slush funds may be part of the culture and where tasting the lifestyle of comfortable living is part of the executive entitlement.
*Note: this article includes editorial opinion.
