Posted on Mon, Aug. 30, 2010

Cal Poly officials say a clear delineation exists between how private and public money is accounted for after a California State University official said that improper mixing of funds is taking place at CSU campuses.

CSU Chief Financial Officer Benjamin Quillian said that the funds have become co-mingled and difficult to track, according to a recent Sacramento Bee report.

But Larry Kelley, Cal Poly’s vice president of administration and finance, said the university follows “the set of regulations that we’re required to adhere to (by state law). There’s a clear line.”

Private foundations at CSU campuses — often referred to as auxiliary organizations — control more than $1 billion and aren’t subject to disclosures under the California Public Records Act because they technically operate as organizations outside the university.

The role of auxiliaries includes supporting university programs and activities and investing money to grow endowments for campuses.

Quillian reportedly made the comments at a May meeting of the university’s top business officials.

The comments were cited in a report by the California Faculty Association, the CSU’s professors union.

Union leaders have called for an open disclosure of auxiliary financial records and cited the refusal by the CSU Stanislaus Foundation to reveal the details of a recent speaking contract for Sarah Palin, the former Alaska governor who is now considered a possible presidential contender for the GOP in 2012.

A judge recently ordered the $75,000 for Palin’s 40-minute speech to be released after a court battle.

The faculty union supports Senate Bill 330 by Sen. Leland Yee of San Francisco, which would change the California Public Records Act to include auxiliary organizations at the University of California and the CSU.

Yee’s bill allows the names of donors who give money to the auxiliaries to be kept confidential.

CSU spokesman Mike Uhlenkamp said Quillian’s comments were taken out of context and simply meant to address the issue of moving auxiliary funds over to the CSU fund in a more timely manner.

An example could be an auxiliary at a CSU that operates a campus football game and uses campus police for security. Such a group should pay for state-funded policing service in a timely manner.

Cal Poly’s auxiliary organizations include a foundation that handles an endowment of more than

$100 million, generated mostly from donations.

Kelley said auxiliaries also include Cal Poly centers and institutes, such as the College of Agriculture’s Dairy Products Technology Center and the Coastal Resources Institute.

Each has its own set of directors who oversee the organizations’ finances.

Kelley said an advantage of using an auxiliary over state money is that they have looser regulations about how to invest and grow funds for such uses as student scholarships and academic projects.

Kelley also said the auxiliaries allow the university to sell items such as agricultural products in a simpler way that doesn’t involve a more complicated sales process, including competitive bidding.

Kelley said the CSU’s internal auditer, Larry Mandel, disagrees with how university centers and institutions fall under the auxiliaries instead of the state’s financial oversight.

“But I think it’s important to note the difference between opinion and what’s allowed,” Kelley said, adding that Cal Poly is following regulations.