Colleges duck public records law via corporations

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The business of Florida’s 12 public universities is supposed to be public like any other state agency. Salaries, contracts, policies and other university business records are supposed to be subject to Florida’s expansive Sunshine Law, which mandates that most government actions be open to scrutiny.

But that’s not always happening. The universities are getting around Florida’s public records law through dozens of private corporations that have been created over the years to oversee everything from athletic programs to dorm construction to salaries. Under state law, these university corporations don’t have to make public the same records their parent universities must provide, though the corporations perform tasks once done by school employees and act on the universities’ behalf.

The lack of disclosure makes it difficult for Floridians to know clearly how businesses that are acting on behalf of their taxpayer-supported universities are spending money.

While claiming exemption from public records law, the university corporations have recently embraced another Florida law that says government agencies are liable for only $200,000 if they lose a lawsuit, no matter how much a jury awards. That happened recently after a jury ordered that the private corporation that oversees the University of Central Florida‘s athletic teams pay $10 million in a negligence lawsuit that stemmed from a football player’s death during practice. The corporation argued successfully that it is only responsible for $200,000.

The university corporations are trying to have it both ways, said Stacy Blank, a Tampa attorney representing the family of Ereck Plancher, the player who collapsed and died during a 2008 preseason workout.

“They operate free of any of the restrictions imposed on the state universities until it’s beneficial for them to claim public status,” Blanks said. “Then they say, ‘Whoa, whoa, whoa. We are an agency, an instrumentality of the state.'”

Similar corporations have been created at public universities across the United States, but state courts have reached different conclusions on whether they are subject to public record laws. Courts in California, Louisiana and West Virginia have ruled that the corporations aren’t public agencies and don’t need to respond to public records requests, while the Ohio Supreme Court found that a university corporation acted as a function of government and was subject to the state’s public records law.

The Associated Press recently requested records on staff salaries, donors and contracts from more than 30 of Florida’s biggest university corporations. Not one corporation — also known as university direct-support organizations, or DSOs — provided information for all three requests.

Fourteen corporations denied all three requests and all rejected at least one. Two, the FAMU Foundation and Florida International University Athletics Finance Corp., didn’t respond to the requests.

When the AP followed up by phone with Harold Bower, who runs the FAMU Foundation, he said the group that raises money for Florida A&M University was “not responding because we are not subject to the Sunshine Law.”

The Plancher family’s lawsuit will be taken up by the Florida Supreme Court this fall. Its decision could determine whether the university corporations will be able to keep some of the legal protections of a state agency that an appellate court granted them in the Plancher case.

Eleven public universities filed a friend of the court brief in the case, arguing that the university corporations should be granted the same legal right of sovereign immunity given state agencies. In their brief, the universities said the case had “fundamental implications for the future of Florida’s State University System.”

The purpose of sovereign immunity is to protect the decision-making process of government officials, and to prevent government treasuries from being drained by lawsuits.

“DSOs are clearly performing public functions and acting as instrumentalities of the state,” UCF Vice President Grant Heston said in an email. “The fact that the Legislature chooses to grant confidentially to some of their records does not change that status. “

Plancher’s family and others argue that as a private entity, the university corporations shouldn’t be given the same rights as a state agency. The Florida Supreme Court took up the Plancher case after the University of Central Florida Athletics Association and its insurer convinced an appellate that the corporation functioned “primarily as an instrumentality of UCF.”

UCF’s former athletic director, Keith Tribble, put it bluntly in a deposition, saying that privatizing the athletic program allowed it to hire coaches and other employees “without having it, you know, be public.”

The university corporations, which have been around for more than a quarter century, pay for and carry out some of the key functions of university life.

The UCF Convocation Corporation owns and operates dorms and the arena where the University of Central Florida basketball team plays. The FGCU Financing Corporation has designed and built dorms, the student union and bookstore for Florida Gulf Coast University. The USF Financing Corporation maintains the property and builds facilities at the University of South Florida. A large number of the corporations pay the salaries of athletic department staffers, who work for the corporations, not the universities. Many corporations also finance department chairs, scholarships and research.

Some of these corporations also control vast sums of money. The University of Florida Foundation, alone, had more than $1.7 billion in net assets at the end of fiscal year 2013, while the Florida State University Foundation had more than $500 million in net assets.

“It’s walking like government, it’s talking like government, it’s flapping its authority like government, and so it ought to take on some of the responsibilities and transparency of government,” Florida Senate President Don Gaetz said. “In being a de facto arm of government, it ought to be transparent and ought to be subject to the public record and opening meeting laws.”

Last year, Gaetz tried to introduce legislative reforms to make the university corporations more transparent, as part of a series of reforms for other corporations that work on behalf of state agencies. “The opposition to including them was strong and fierce” from other lawmakers and leaders in higher education, he said.

“It wasn’t just, ‘Hey Don, this is going to be a tough one,'” Gaetz said. “It was, ‘This bill will not move one inch.'”

When asked why the corporations shouldn’t be subject to the same open records laws as universities, Andy Miller, chief executive of the Seminole Boosters, said in an email, “We do not make laws.”

“We do not pay salaries of state employees and our employees are not state employees,” said Miller, whose university corporation raises money for Florida State University’s athletic program. “We contribute to the building of facilities but the process is controlled by the state.”

It is often hard to figure out where the universities end and the university corporations start. Several of the corporations are staffed with university employees, and the corporations’ chief operating officers report to university presidents, who in turn are required to serve on the boards of the corporations that support their schools.

Many of the corporations even had their affiliated university’s public affairs officers respond to the AP’s records requests.

While the corporations’ records are exempt from public disclosure, they don’t operate in a complete black box. The corporations hold open board meetings and some list their staffers on their websites, albeit without salaries. They must list their highest-paid employees on their tax forms. Both the FAMU Foundation and the FAMU Rattler Boosters put donor information in their annual reports.

The corporations must submit annual financial statements to their parent school’s board of trustees and the Board of Governors, the governing board of Florida’s public universities. The Board of Governors displays the financial reports on its website, but they are at least two years old. The corporations also must provide at any time any records requested by the Board of Governors or the parent university. A spokeswoman for the Board of Governors, Brittany Davis, said she wasn’t aware of the board asking for additional information from a corporation in the past year.

Board members of university corporations often aren’t accustomed to outside scrutiny. On a recent telephone board meeting for the University of Central Florida Research Foundation, board members acted surprised that a reporter was listening in and repeatedly said to each other, “An Associated Press reporter is on this call.”

If the Florida Supreme Court upholds sovereign immunity for the university corporations, Gaetz said he will try to make the case for further transparency, despite last session’s fierce opposition. He said he would make a distinction between corporations that just raise money and those that conduct operational tasks, like building facilities and acquiring land for universities.

“If we’re going to have open government, if the public is going to have the right to see what our government is doing, then we can’t use some other entity as a beard of government,” Gaetz said. “We’re going to keep bumping into this issue. It’s not going to go away.”

Republished with permission of the Associated Press.