September 2009
This Chronicle edition describes how President Arminana, with support from top A&F officials, transformed the Sonoma State University Academic
Foundation from an academic support center into a bank surreptitiously used to advance the Green Music Center and other development follies. It goes on to describe ways the administration has used the Foundation and other campus auxiliaries to systematically shift resources and take on a staggering amount of debt.
Returning faculty faced impossible choices this August. They struggled to implement the furlough and its industrial timekeeping requirements, while debating responsibilities to students, self, and union. But these will be short-lived problems: in the Spring the WASC committee will have come and gone; most lecturers will be fired; faculty workloads will be greatly increased; and more “innovative” ways will be found to cut costs and move funds from teaching to the
Green Music Center (GMC) and other development priorities.
Some faculty continue to consider cooperation with the administration as the way to save the educational mission and deride those asking hard questions as uncivil or worse. Meanwhile the administration openly plans horrific changes to the educational landscape at SSU, taking advantage of the budget crisis to re-engineer SSU and masking the fiscal crisis their actions have created on this campus. Neither distance learning nor conglomerating departments will save money; both require sustained investment and planning. But both do diminish the role of faculty.
Should faculty trust those who brought us the GMC and Carinalli loans to revamp the educational side while in crisis mode? Chronicle XII takes a closer look at the Foundation in anticipation of Governor Schwarzenegger signing SB 218, legislation that will require public access to Foundation records and of Carinalli’s bankruptcy filing that will involve SSU in a messy, public scandal. The CFO has offered on numerous occasions over the past two years to host a Town Hall on the SSU Foundation. Now is the time to schedule that event.
Chronicle Recap
The Chronicle is a group effort that originated as a quest to understand events leading to the demise of the California Institute on Human Services (CIHS) and the role of SSU’s top administrators in this process. Chronicle I through VII dealt primarily with these issues and are posted on the Academic Senate webpage ( http://www.sonoma.edu/Senate/AdHoc/Ad-
Hocmaterials.html
).
Next we began to examine the interfaces between Administration & Finance (A&F) and other campus programs and found disturbingly similar patterns of administrative abuse and questionable funding cross-subsides. We found that the ever-increasing debt associated with the
GMC and other campus developments has sunk one academic and student-oriented program after another, including Extended Education and the Student Union. We found that assessments move
General Fund money from academic programs to A&F, where it disappears into debt service and development. We found that the Foundation has paid miserly endowment returns in great years
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and none in bad ones, but still finds discretionary money for the President. For example, despite the recent well-publicized decline in investments and the CFO’s statement that programs relying on Foundation distributions would need to look elsewhere, the Foundation Board still distributed
$450,000 to the University President for discretionary use in March 2009.
We asked hard questions in Chronicle VIII through XI that remain unanswered .
We noticed that once the Chronicle tackled the Foundation, the Chronicle no longer found a home on the Senate webpage. We don’t know why, but wonder if this was due to some pressure from the administration. (Look to see if this new installment gets posted.)
This edition of the Chronicle will expose how the President has used the SSU Foundation as a veiled savings and checking account to fund the GMC at the expense of academic programs. It will show how A&F essentially took over the Foundation by transitioning its employees to state positions and by diverting its mission. We will explore what benefits the Foundation has brought to SSU, what and who have benefited, and what these benefits cost. This is not an easy document to read. It contains a lot of detailed information meant to create a record of the ills that have befallen SSU due to decisions made by the Arminana administration.
The Early Days
The Foundation was established in 1974 as an auxiliary organization of the CSU, its mission to support faculty research through developing grants, contracts, and donations from the private sector. By design, the SSU Foundation and the University were separate entities with their own employees and their own requirements. The Foundation directly employed grant managers and accountants to help faculty secure and manage awards, development staff to seek scholarship and endowment funds, and grant workers. The Foundation also covered internal cash flow at no charge. The Foundation, in short, supported a wide range of programs related to faculty research and student support.
When Ruben Arminana arrived at SSU in 1992 and made physical development a top priority, he redefined Foundation activities as non-endowment (grant and contracts, G&C) and endowment or fundraising activities. As the endowments grew, this split came under intense scrutiny. Under
Arminana’s chairmanship, the Foundation Board became concerned that potential liability associated with managing G&C operations “endangered” the endowment. In 1995 the Board decided to transition G&C out of the Foundation and to focus on “pure development.” By the dawn of 2000, the Foundation had essentially no employees, A&F supplied G&C and
Foundation administration; the Foundation was no longer a separate, semi-independent entity working for the benefit of faculty and students. The negative ramifications of this decision continue to this day. SSU is one of a very few CSUs that manage all of their G&C on the
University-side or that run a Foundation with no employees. And no one has dared ask whether a separate Foundation with its own employees provided a safer place for endowments. SSU never replaced the faculty development role of the Foundation, seeking “pure,” physical development instead.
SSU Shell Game: Watch the Moving Pea
In hindsight, it is apparent that the administration moved G&C from the Foundation because this allowed them to implement a creative set of chargebacks that have richly underwritten the
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President’s wishes. For example, while the Foundation no longer employed G&C workers and had few projects, the G&C program still supplied $507,973 to the Foundation for undisclosed services between 2000 and 2004 (CFO handout: Grants and Contracts Utilization of Indirect
Cost Revenue 2000-2001 through 2005-2006). G&C financed Foundation development operations and provided discretionary funds for the President’s use. Meanwhile, G&C distributions to the Schools dwindled, as the G&C program’s returns somehow never met A&F’s
“needs” to manage it. In 2003 there were no endowment fund distributions to programs; nevertheless, the Foundation transferred $35,000 to the SSU President and $10,000 to the
Provost for “public relations” and an undisclosed sum to A&F for G&C administration (SSUAF minutes, 6-03, pg. 5).
Another example of how the shell game worked: Once A&F began to house the G&C program, cash flow became a problem. The Foundation, which had formerly provided cash flow at no cost, now provided these funds at high interest rates. In FY 05-06, the program paid over $400,000 at
8% interest for working capital.
G&C, the formerly non-endowment side of the Foundation that supported faculty research, had been demoted to the position of debtor and unwilling benefactor to the Foundation—doubly charged for cash flow and undefined services.
Miserable Endowment Returns
The SSU Foundation is a legally separate tax-exempt unit of SSU that acts primarily as a fundraising organization to supplement available resources. The University President must approve Foundation Board members. The Foundation accepts contributions from individuals and entities to fund a variety of projects from scholarships to faculty positions to capital projects. The use of gifts can be restricted or unrestricted as to purpose and timing; some funds are to be expended immediately, others are to be invested in perpetuity.
The Foundation is comprised of four fund pools: Current, Endowment, Special Investment, and
Charitable Remainder Trust. Endowments consist of money or other assets for which the donor has specified that the principal may not be expended. The Foundation invests these endowments and provides annual income to undertake the activities for which the endowments were created.
Scholarships are the best example of the use of endowment funds. A $10,000 endowment in memory of a relative should generate a $400 student scholarship each year in perpetuity in the relative’s name assuming a 4% return.
Many factors hinder an understanding of how funds are moved within the Foundation and between the Foundation and SSU. Endowment distributions are made at the beginning of each
Fall semester based on earnings of the previous calendar year. Scholarships are then awarded for the following academic year. For example, earnings at December 2009 will be distributed in
September 2010 for scholarships in 2011. Foundation audits occur by fiscal year; distributions by academic year. This makes any discussion of Foundation assets and distributions confusing and gives the administration a place to hide the real numbers. In addition, the minutes of Foundation
Board meetings are confusing, incomplete, and contradictory, and the audited financial statement list is incomplete with changing modes of presentation.
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SSU removed pre-2002 Foundation minutes from its website after the Press Democrat broke the
Carninalli loan scandal. This makes it difficult to draw definitive conclusions regarding how the
Foundation changed after it lost G&C and all its employees, as well as how it changed its spending practices. It is abundantly clear, however, that endowment distributions for scholarships and academic programs declined following the takeover of the Foundation by A&F.
The returns discussed and presented on Table 1 are our best estimate of what transpired.
In the good old days, Foundation policy called for distributing “5% of the individual endowment’s 3-year rolling average pooled market value.” The goal was a minimum annual distribution of 6%. Returns for 1999 and 2000, distributed in the following years, beat this goal and appear to have been over 7%. A&F’s takeover of the Foundation coincided with the stock market collapse. The Foundation did not make distributions from endowments in 2003 and made reduced distributions in 2002 and 2004, although they sought direct donations for scholarships and programs during this period, which compensated and covered the true losses. In 2004 the endowment distribution according to Foundation Policy should have been $850,000 based on
December 31, 2003 data; instead the Foundation distributed $305,000, keeping back $77,200 as a reserve (SSUAF minutes, 3-04, pg. 3; 9 -04, pg. 4). In that year, the Dow Jones and S&P both posted gains above 25%, while the Foundation paid out 1.6%.
Table 1: Historic Returns by Year (in %)
Arithmetic Mean
Geometric Mean invested
Year
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
10 yr Total Return per $
30-yr
fixed rate
7.44
8.05
6.97
6.54
5.83
5.84
5.87
6.41
6.34
6.03
6.53
6.53
0.88
10-yr treasury
5.65
6.03
5.02
4.61
4.01
4.27
4.29
4.80
4.63
3.66
4.70
4.69
0.58
Lehman
US Aggregate
-0.82
11.63
8.44
10.26
4.10
4.43
2.34
4.33
6.97
5.30
5.70
5.64
0.73
SSU
Endowments
7.5
7.6
3.0
0
1.6
4
3.7
3.4
3.6
0
3.44
3.41
0.40
Notes: Foundation endowments paid out in September of the following year.
The Geometric mean is the best measure of annualized return realized for each asset class, taking compounding into account.
Larry Furukawa-Schlereth, the new Chief Operating Officer of the Foundation, met with the
Deans in 2005 and persuaded them to agree to predictable returns approaching 4% instead of the old, unpredictable rolling average. Returns were made in September 2005, but we have been unable to determine the rate. With the stock market revival, the September 2006 distribution was around 3.7% for 05-06 based on fund balance at 1-31-06 (SSUAF minutes, 6-06, pg. 2, 3); the endowment return on investments was 10.02% (SSUAF minutes, 3-07, pg. 4). September 2007
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saw a distribution of only around 3.4% (SSUAF minutes, 6-07, pg. 3) on an investment return of
18.5% (SSUAF minutes, 12-07, pg. 3). While in September 2008, the distribution rose to 3.6%
(SSUAF minutes, 6-08, pg. 5) based on unstated returns. Between June and December 2008,
Foundation investments decreased by ca. $20 million due to a drop in market value and transfers of funds to cover GMC construction (SSUAF minutes, 12-08).
Despite the CFO’s promises of a low, but predictable 4% endowment distribution in good and bad years and a number of reportedly very good years for Foundation investments, no distributions will be made in 2009 and probably none in 2010. What happened to the reserves promised by the lower return? Were they spent on other projects or were they placed in risky investments or both? Did an increasingly desperate President bully the Foundation Board into bad decisions? Any answer to these questions requires an understanding of the Foundation’s investment policy.
The following table presents available Foundation Financial Data from audited financial statements. Net assets do not include assets needed to cover current liabilities or long-term debt related to the GMC and the Charitable Remainder Trusts. Endowments are reported as
“restricted-nonexpendable” due to “externally imposed conditions” that require the Foundation to retain “them in perpetuity.” “Restricted, expendable” includes donations and revenue available for spending on scholarships, debt service, and programs that receive direct donations, primarily the GMC. Unrestricted represents revenue and investment income whose “use is designated by management or the Board of Directors of the Foundation” (Foundation audit 9-17-08, pg. 6); that is, money that can be spent or reinvested depending upon University needs as determined by the
Board under the guidance of the President.
Table 2 demonstrates that while Endowments have remained stagnant since 2004, the
Unrestricted assets have grown, providing a source of funds for campus development in lieu of scholarships and programs that, as a reserve, they were designed to do.
What happened to the $7 million available as of June 30, 2008?
Table 2: Foundation Net Assets
June 2003 June 2004 June 2005 June 2006 June 2007 June 2008
Townhouses $1,169,959 $1,133,786 $1,099,371 $1,064,905 $1,036,767
Endowment $21,540,978 $25,438,536 $26,382,786 $27,375,602 $29,265,420 $29,064,636
Restricted $16,567,260 $21,032,893 $24,838,921 $26,192,518 $28,805,152 $19,535,449
Unrestricted $267,339 $181,121 $2,530,323 $4,465,244 $9,000,280 $7,008,757
Net Assets $38,375,577 $47,822,509 $54,885,816 $59,132,735 $68,135,757 $56,664,569
After the Foundation’s venture went underwater during the stock market downturn accompanying the new century, the investment policy took a more conservative approach with less emphasis on stocks and mutual funds. The Foundation briefly specialized in notes to local real-estate investors. But with the loss of income from G&C projects and the growing development needs of the GMC, the Foundation moved increasingly back into mutual funds as demonstrated by Table 3.
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Table 3: Foundation Investments
Notes
June 2003 June 2004 June 2005 June 2006 June 2007 June 2008
$11,002,888 $10,856,805 $9,862,836 $9,680,016 $7,366,287 $7,190,901
Mutual funds $11,891,855 $35,193,957 $20,056,648 $22,883,439 $28,427,566 $32,407,157
Stocks $8,344,337 $641,993 $685,331 $723,743 $625,938
Fixed income
Real estate
Other
Total
$2,105,493
$41,634 $42,734
$992,881
$884,585
$43,900
$25,765,400
$884,584
$5,045,103
$8,374,473
$884,584
$5,046,365
$985,361
$884,584
$50,900
$31,280,714 $49,198,989 $32,482,843 $64,943,873 $50,823,018 $42,144,841
Notes: The $5,000,000 in Other for 2006 and 2007 is the demand deposit to cover G&C cash flow. 2005 on Real
Estate is land for the GMC.
The stock market can post spectacular gains, but it can also cause devastating losses. In April
2008 the Foundation revised its Investment Policy to a higher risk strategy that included greater asset allocation to International Equity and Alternatives (e.g., Hedged Equity and Real Estate) to achieve a higher projected median return. Under the Allocation Planning Model, known to
SSU’s investment broker the Common Fund as the “Monte Carlo Simulation,” only 11% of funds were invested in Fixed Income, with the remainder in Equities (SSUAF minutes, 4-08).
As in Monte Carlo, they gambled and lost. The modest income promised to endowees could have been achieved by any number of more modest, less risky investment strategies as indicated by the 10-year returns on Table 1 for mortgages, treasury bills, and bonds. Aggregate stock market returns over the same 10-year period resulted in only minor losses. The minimum long-term total return objective for the Foundation portfolio is inflation plus 5% (SSUAF audit 2008, pg. 15).
With the low inflation of recent years, this return was easily possible.
We suggest that the recent aggressive investment strategy pursued by the Arminana administration sought to increase unrestricted funds (the difference between the 4% distributed and the 10%+ earned), so that this money could be allocated as discretionary and used to fund the GMC or other pet projects.
Following the second stock market downturn of the decade and within days of the Press
Democrat report that Clem Carinalli had stopped making payments on his real estate loans, the
Foundation revised its Investment Policy (SSUAF minutes, 6-09). This new revision provides greater leeway in how the funds can be invested. They now define “risk” as “failing to achieve the Foundation’s policy objectives,” and the Foundation Board members are now “ultimately responsible for the investments.” The Policy also added a new section titled “other factors on spending” that permits the Foundation “to spend as much of the Pooled Endowment—including principal or income, …--as the institution deems prudent” http://www.sonoma.edu/afd/fnd/af_invest_policy_revised.pdf
; http://www.sonoma.edu/afd/fnd/InvestPolicy_Rev.20090619.pdf
).
Does SSU intend to use Endowment principal during the current financial crisis? Will the use be for academic programs or the GMC?
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Charitable Remainder Trusts and Real Estate
A Charitable Remainder Trust (CRT) allows donors “to transfer assets…into a trust that provides
… a fixed percentage income. When the trust terminates, the remaining principal reverts to
Sonoma State University” (SSU Development webpage). In June 2003 the Foundation had CRT assets of $9,199,922 invested in notes receivable with annual interest rates of 8% to 12% with final maturities from August 2003 through October 2013. The 2003 Foundation audit reclassified over $7 million of Net Assets to “Other liabilities” to record the restricted nature of the funds and their liability (SSUAF audit 2003, pg. 21).
Between 1994 and 2003, the Foundation made 23 private loans worth more than $18 million to local landowners. By 2003 more than half of the Foundation’s investment portfolio and all of the
CRT endowment was in these loans. Seven went to Clem Carinalli, real-estate developer and owner of a local mortgage company. His mortgage company arranged for another eight loans.
Carinalli resigned his place on the Foundation Board two days before he received the first loan.
In spring of 2009, Carinalli had two loans outstanding: one for $1.25 million and the second for
$232,500. Due to the economic downturn, he became unable to repay $165 million owed creditors. He paid back the smaller loan to the Foundation and was making arrangements to give it possession of the land behind the larger loan when creditors forced him into bankruptcy. The
Foundation may now have to return the smaller loan repayment and wait in line with other creditors for the courts to restructure his debt ( Press Democrat : 1, 29 July 2009; 18, 25
September 2009; Arminana email to all employees: 4 August 2009).
CRT is one of four Foundation investment pools, but audits no longer separate CRT assets. In
June 2008 CRT had a current liability of $614,857 and a long-term liability of $3,460,937
(SSUAF audit 2008, pg. 27). The Foundation expects to lose $153,000 ( Press Democrat : 18
September 2009) in interest on the Carinalli loans this year. It could take years to untangle the
Foundation’s interests from those of Carinalli’s 600 other creditors in what “will probably be one of the most awkward things in Santa Rosa’s history” (
Press Democrat : 25 September 2009).
Unlike scholarships and academic programs, CRT recipients must be paid a fixed income regardless of Foundation losses.
How will the Foundation make the promised payments to CRT beneficiaries? If it does make these payments, will anything be left to support scholarships? And what happens when a
“remainder” is realized? Does it go to support scholarships or other academically related investments? Probably not.
In FY 07-08, when one CRT terminated, the Foundation immediately transferred the entire remainder, $1.8 million, to the GMC (SSUAF audit 2008, pg. 4, 8). In Spring 2009, the
Foundation settled a long-standing lawsuit regarding a CRT and received about $450,000 as an initial distribution. The Foundation Board voted to designate these funds for discretionary use by the President (SSUAF minutes, 3-09, pg. 5-6), despite having already decided not to pay any endowment returns in the upcoming year.
When the Foundation rewrote its Investment Policy in June 2009, it changed its responsibility to these trusts, deleting the phrase “for the sole benefit of beneficiaries.” In light of this and the well-publicized Foundation losses, it is unlikely that new donors will select this option. And it is
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clear that these trusts provided just another source of unrestricted funds for the President’s wish list.
Spector of the GMC
Much has been written about the Green Music Center. It has burdened SSU for a decade and will continue to do so until most of us are long gone. While California is clearly in a sorry financial state, the GMC is at the center of SSU’s monetary woes. The administration funnels every spare penny and many needed dollars into this sinkhole that just keeps growing. University managers had worked $2 million in hours on the GMC as of July 2007 ( SF Chronicle 7-10-07) and probably an additional $2 million as of today. In FY 06-07 over $500,000 in State Lottery funds paid wages on a GMC still in the planning stages. Well over $1 million a year move from campus auxiliaries to GMC debt service. In some years Foundation payments for debt service exceed those for student scholarships by one-third. And while other areas, particularly teaching, have suffered hiring freezes for years, Development continues to hire more managers and employ outside agents in hopes of attracting donors. The Foundation now charges a 5%
“reinvestment fee” on new donations to fund their operations. As this is more than a year’s return, the gift’s value actually depreciates in the first year. We suspect A&F is planning to hire staff for the Hospitality Center after the President bullied the Enterprise Board into refusing to authorize Enterprise profits to fund classes. And reportedly a high-priced “decorator,” who may be a familiar face to some on campus, has been retained for the GMC.
On April Fools’ Day 2004, the Foundation convened a “special meeting” and its Board passed a resolution authorizing the “issuance of revenue notes and the execution and delivery of related agreements” for the GMC. At this time, President Ruben Arminana served as Board Chair, Steve
Wilson as Vice President and Chief Operating Officer; SSU CFO Larry Furukawa-Schlereth attended as a guest to explain the relationship between the CSU, SSU, and Foundation Board
(SSUAF minutes, 4-04).
On December 7, 2004, Larry Furukawa-Schlereth became the Foundation’s VP and Chief
Operating Officer, requiring a resolution to delegate him the authority to act on behalf of the
Board “in the conduct of contractual and fiscal affairs” (SSUAF minutes, 12-7-04, pg 5). Two weeks later, the Foundation had a second “special meeting” and passed a second resolution to authorize the Foundation to issue Revenue Notes in the amount of $13 million and gave
Furukawa-Schlereth as COO the authority to make it so (SSUAF minutes, 12-21-04).
SSUAF issued the Series 2005 Notes at a rate of 3% per annum to mature on March 1, 2009. The money was invested at the Bank of New York Trust Company in money market and bond holdings. In 2008 the GMC conservative investments gained approximately $1 million, while the risky endowment investments lost approximately the same amount (SSUAF audit 2008, pg. 6).
While the Foundation balance sheets and the CFO may indicate that these numbers cancel each other out, they do not. GMC earnings go to the GMC only, while Endowment pool earnings over
3-4% become unrestricted and discretionary and the losses come out of their respective programs.
The GMC is now a $120 million project according to the CFO and $20 million short of completion (SSUAF minutes, 6-08, pg. 2). The 2008 financial statement lists the total project
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cost to be $87 million, of which approximately half ($43 million) would come from the
Foundation. As of June 30, 2008, the total transferred from the Foundation to SSU for GMC construction was $21.7 million, of which $21 million came from funds invested with the Bank of
New York. In March 2009 the Foundation paid off the $13 million in bonds. It appears that the entire $20 million for completion must be raised by the Foundation under impossible circumstances. And once the money is raised it will take two years, according to the campus architect, to finish the project.
Originally sold to the campus as a revenue source, the GMC will need subsidies from SSU indefinitely. A year ago the Press Democrat (25 August 2007) projected the short fall at over
$1.1 million year. The CFO now tells us that these funds will come from instruction ($500,000) and endowments/fund-raising. The GMC will require a $20 million endowment to operate even with a large subsidy from the General Fund. The GMC’s cost to SSU grows geometrically as the years go by.
Something’s Fishy
The Foundation under A&F has drifted ethically. A Chancellor’s Office audit in 2006 found that
Board members had not signed conflict of interest statements since 2004, and that “unrealized gains and losses were not recorded on an individual endowment fund basis.” In light of recent events, these are serious mistakes.
We have read literally hundreds of pages of audits and minutes to provide the summary presented here. The administration’s efforts to obscure public records made our task difficult and we may have made some errors in our analysis. We feel confident, however, that the general thrust of our findings are correct. We want to be clear that we do not think that the SSU administration has done anything illegal, but we firmly believe that they have acted recklessly and not in the best interests of this institution.
The game clearly has been to move restricted and General Fund monies to unrestricted monies.
The administration does this through rent, chargebacks, assessments, underpayment, salary savings, and saddling those campus programs with access to unrestricted funds with debt service for other programs.
Salazar Hall is an example of this maneuver. When renovations on Salazar came in above the available state funds in 2005, SSU Enterprises took a loan from the Foundation for ca. $6 million; this loan was recently renegotiated for a 30-year term @ 7% interest. SSU in turn pays
Enterprises $987,000 annually to lease the space. SSU also pays Enterprises $275,750 a year for the vacant, “future” site of faculty/staff housing and the Foundation $99,000 for the GMC ground space (SSU audit 2007, pg 26). Enterprises and the Foundation are probably the two largest campus sources of unreserved funds; funds to be used at the President’s discretion, which could but do not go to teaching classes. In another context this might be called money laundering, but as long as we all sit on campus committees that approve these transactions either understanding the implications or not, it is probably acceptable and will continue.
In their defense of the Carinalli loans, Patricia McNeill and CFO Schlereth wrote of the
“transparency” of SSU’s business practices. In business, “transparency” means the “lack of
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hidden agendas and conditions, accompanied by the availability of full information required for collaboration, cooperation, and collective decision making.” The word also has another meaning:
“seen through or invisible.” The latter seems the better fit at SSU. The administration hides what it chooses, shares what it wants, provides misinformation to harm, exaggerates to create apprehension, and often pretends to be a savior by partially bailing out those adrift due to crises it has induced. How many times have we heard that the CFO was able to “find” funds to calm the tempest de jour?
A Call for Action
The Foundation is but one of many campus programs that lost its independence and resources to
A&F. (SSU Enterprises, which gifted $1.5 million to the GMC in 07-08, is another notable example.) Now is not the time to trust or to wait further verification that the administration is acting without regard for shared governance. Now more than ever, campus resources outside of the General Fund must be used to support teaching and learning and not unrelated, grandiose physical development. The future is now.
WASC is visiting next week and the campus appears united in wanting to make a good impression and attain the longest accreditation possible. We suggest this is a mistake. Without
WASC oversight, the administration probably would have ignored the Senate’s no-confidence and audit resolutions entirely. The recent positive changes relate directly to WASC. Once relieved of this burden, the administration will continue to bankrupt and re-engineer the campus.
Action is needed to reinstate the primacy of the University’s academic mission. We leave it to the Senate to decide how to achieve this goal, but offer several suggestions:

Request the CFO hold an immediate Town Hall on the Foundation using a moderated forum with questions prepared by the Senate.

Request the CFO hold an immediate Town Hall on the Budget that includes the GMC. It is time for the administration to share how they plan to finish, open, and run this facility with available funds. Release the GMC Business Plan to the campus community. Release or commission a Hospitality Center Business Plan. Revise these plans if recent events have rendered them obsolete.

Insist that all budget talks for FY 10-11 are truly transparent and include all funding sources and all expenses and liabilities.

Ask that WASC give the shortest period possible before next accreditation.
 Renew the Faculty’s vote of no confidence for the President, adding the CFO to the resolution.

Pass a resolution asking the State Controller to review the manner in which SSU auxiliary corporations have been used to support campus development activity.
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