How universities spend money has become a major topic of concern for students, faculty, staff, and taxpayers within the state of California due to the recent budget crisis.

Senator Leland Yee (D-San Francisco) is attempting to bring a greater sense of transparency and accountability to California's public institutions of higher education with Senate Bill 330 and Senate Bill 650.

On Jan 28 the California State Senate approved Sen. Yee's bills, which were vetoed last year by Governor Arnold Schwarzenneger. Sen. Yee was motivated to modify the bills and push for their passage by recent evidence of fraud found within the University of California and California State University systems.

"Twenty percent of the CSU budget is operated by auxiliary organizations, out of the public view," said Adam Keigwin, Chief of Staff for Sen. Yee. "Regardless of what the auxiliary organization does, it should be made public."

The percent of the budget controlled by auxiliary organizations totals over a billion dollars, some of it coming from fees paid by students.

Senate Bill 330 would make the financial information of auxiliary organizations at the UCs and CSUs available by request to anyone through the California Public Records Act. There are five auxiliary organizations currently at SF State, including the Associated Students, Inc. (ASI), the San Francisco State University Student Center, and the SF State Foundation.

The importance of opening the books of auxiliary organizations, according to Keigwin, is to hold universities accountable for how they are managing money.

"Students have a lot invested in the auxiliaries," John Travis, Chair of the California Faculty Association's (CFA) Political Action and Legislation Committee, said.

According to Travis, the CFA, who is co-sponsoring SB330, is concerned with how auxiliary organizations spend and manage money they receive, as this money could be loaned back to the university to cover budget issues.

"Money comes into a big pot. When you can put more money into the pot you have more options," Travis said.

Gov. Schwarzenneger vetoed SB330 last year because he felt revealing the activities or identities of private donors might hinder their future support. Keigwin disagrees and feels the bill will give donors a sense of trust in auxiliary organizations.

"Donors are saying they are not going to continue support, as they don't know how money is being spent," Keigwin said.

However, Sen. Yee altered the bill this year making the disclosure of anonymous donors exempt unless they receive something valued at over $500 in exchange for their services or gift.

Opponents of SB330, which include the CSU and SF State President Robert A. Corrigan, don't see Sen. Yee's modification as a solution and are concerned with how the disclosure of donors will affect the University.

Lee Blitch, Vice President for University Advancement at SF State, is concerned that hindering donations to the University will hurt students.

"This is especially concerning to SF State, where the vast majority of our endowments, 75 percent, are specifically for student scholarships," said Blitch.

The CSU opposes SB330 although they are "committed to maintaining transparency and accountability for all auxiliaries," Erik Fallis, CSU spokesperson, said.

According to Fallis, the bill will end up costing universities money by having to process requests for information and will not provide the public with any information that is not already available.

"The bill's real impact will be to redirect limited resources at a time when our university is receiving less state funding," Fallis said.

Eloise McQuown, SF State librarian and member of the CFA's Political Action and Legislation Committee, said he is primarily concerned with the SF State Foundation as many are in the dark about what it is doing.

"When we don't know what is going on it is pretty hard to determine if there is a problem," McQuown said. "And if there isn't, why is there such opposition [to the bill]?"

The SF State Foundation handles donations given to the University, investing the money in various ways. According to Blitch, who also serves as the SF State Foundation President, the Foundation's investments are managed by "a contracted investment management firm," with a portfolio consisting of "equities, fixed income, alternate strategies, and cash."

Per the Foundation's Endowment Policy, the payout rate for endowments is four percent.

"Distribution payouts are transferred to the endowment account's corresponding spending account for either scholarships or campus programs according to the donor's intent when the endowment was established," said Blitch.

However, 71 of the Foundation's 114 permanent endowments are currently underwater, meaning the overall balance is less than the total of all donations originally made to the endowment, due to investment losses.

"Unfortunately, poor economic and market conditions nationwide had an unfavorable impact on endowments this past fiscal year," said Blitch. "San Francisco State fared better than most endowments of our size ... SF State lost 12.15 percent, while ...endowments of similar size lost an average of 18.5 percent."

The CSU also opposes SB650, which would provide university employees at both the UC and CSU the same legal protections as other state employees when they report waste, fraud, and abuse within the university.

"All CSU employees are already fully protected for whistleblower complaints," said Ellen Griffin, Director of University Communications at San Francisco State.

The bill also would enable employees to seek damages in court if the University has reached or failed to reach a decision within an established time frame. The CSU says this could end up costing universities.

"This law would only create incentives for these matters to go to court, with an estimated cost per case of $50,000," said Fallis.

Keigwin disagrees and says SB650 will ensure employees hold universities accountable.

"I can tell you right now employees at the UC and CSU don't feel protected to report waste, abuse and fraud, so they often don't," Keigwin said.

Both bills still need approval by the governor before they become law and are expected to hit the governor's desk in the spring.