The Public Eye

CSU presidents can avoid disclosing personal financial details

Former CSUS President Alexander Gonzalez
Former CSUS President Alexander Gonzalez Andrew Seng

President Alexander Gonzalez checked only one box on his personal economic disclosure forms for 11 of his 12 years at Sacramento State: “No reportable interests on any schedule.”

Gonzalez, who was paid $370,000 as university president in 2014, claimed no outside income, no investments, no real property and no loans or gifts on the statement required of every government employee or elected official, except in 2014 when he attended a luncheon event valued at $234.72.

But Gonzalez received a total of $123,750 to serve on the board of directors for Sutter Health between 2007 and 2011, according to records found by The Sacramento Bee. He also purchased three Sacramento properties during his California State University, Sacramento tenure.

Gonzalez followed the requirements, based on how state officials described them this week.

Although most CSU employees must file state disclosure forms, called statements of economic interest, they only must report items that fall into specific categories designated by the university. Even then, they are only required to do so if they believe the income could pose a conflict of interest, said Carrie Reith, university counsel for the personnel department of the Office of the Chancellor.

There are 17 different categories of economic interest related to real property, investments and business positions. Presidents are generally required only to report income from about seven categories, while the custodial supervisor and the vice president of university advancement, for example, only have to report in one category.

Presidents from different universities may be required to report different types of economic interest, Reith said.

“There are different reporting standards for different people and different entities,” said Trish Mayer of the Fair Political Practices Commission, the state’s political watchdog agency. Mayer said that legislators and government officials have stricter guidelines than others who are public workers.

Institutions generally look at state law and their own codes of ethics to decide who has to file a disclosure form, Mayer said. “We have to rely on the university to follow the guidance of the law.”

Mayer said the state has hundreds of different categories and requirements.

The Bee is examining disclosure forms after discovering that UC Davis Chancellor Linda P.B. Katehi accepted a board position paying $70,000 annually with restricted stock funds from DeVry Education Group. She stepped down from that board, but received additional criticism when The Bee reported that she had previously earned $420,000 on the board of textbook publisher John Wiley & Sons.

She has since apologized and donated $200,000 of her stock proceeds to scholarships.

The Katehi board positions have prompted the Legislature to begin exploring all outside pay for state university executives. The Assembly budget subcommittee overseeing education finance and the Assembly Higher Education Committee have scheduled a joint hearing on April 4 to examine the issue.

Ed Howard, senior counsel for the Center for Public Interest Law, called for more consistent rules.

“It makes no sense for the person who might have the conflict of interest to have the sole discretion whether to disclose a conflict of interest,” Howard said. “We really do need to know with complete transparency how much these people are earning in their moonlighting jobs and how much time they are spending on it.”

CSUS President Robert Nelsen checked the “no reportable interests” box and left the rest blank when he filed his first statement of economic interest two weeks after he assumed the job from Gonzalez in July.

Of the disclosure forms filed by 25 California State University presidents in 2013 and 2014, 12 checked the “no reportable interests” box both years and 17 of the presidents checked the box at least one of those years. Five presidents submitted their stock holdings, while two presidents listed income from board seats and a smattering of others outlined gifts like show tickets and luncheon invitations.

A review of the economic interest forms of UC chancellors shows more robust reporting than done by CSU leaders, with most reporting investments, real property and outside compensation. The University of California instituted a requirement in 2010 that all top executives gain permission for outside work from the president.

California State University officials have been working with the FPPC to narrow the categories that must be disclosed, Reith said. She doesn’t expect this will mean an increase or decrease in reporting of economic interests, only that the new categories will be more accurately assigned to employees and the forms will be more user-friendly.

That’s not transparent enough, Howard said of the system. “When the president of Cal State Sacramento talks about health care, it’s fair to know he’s been paid over $20,000 by Sutter Health. And when Chancellor Katehi talks about the cost of textbooks being reasonable, it’s fair to know she has been paid by a textbook company.”

Since 2013, California State University has required its top executives to seek approval for all outside employment within 30 days of accepting a job. Presidents must have all paid corporate board seats approved by the chancellor of the university system.

California State University limits the seats to two, while University of California executives can sit on three boards.

Gonzalez had no outside employment for 2014 and 2015, according to Sacramento State officials. Nelsen hasn’t been at the job long enough to file a form, but district officials report he has no outside employment.

Only two presidents – Leroy Morishita of CSU East Bay and Tomás Morales of CSU San Bernardino – held paid board seats this school year. Morishita donated the $16,000 he earned as a board member of the JA Health Benefits Trust. Morales earned $12,000 attending four board meetings by phone with United Health Group of New York, according to information from California State University.

Diana Lambert: 916-321-1090, @dianalambert