SECTIONS 72670-72682 - California Statutes

EDUCATION CODE

SECTION 72670-72682

72670. The governing board of a community college district may
establish auxiliary organizations for the purpose of providing
supportive services and specialized programs for the general benefit
of its college or colleges. As used in this article, "auxiliary
organization" may include, but is not limited to, the following
entities:
(a) Any entity in which any official of a community college
district participates as a director as part of his or her official
position.
(b) Any entity formed or operating pursuant to Article 4
(commencing with Section 76060) of Chapter 1 of Part 47.
(c) Any entity which operates a commercial service for the benefit
of a community college or district on a campus or other property of
the district.
(d) Any entity whose governing instrument provides in substance
both of the following:
(1) Its purpose is to promote or assist a community college or
district, or to receive gifts, property and funds to be used for the
benefit of the community college or district or any person or
organization having an official relationship therewith.
(2) Any of its directors, governors, or trustees are either
appointed or nominated by, or subject to, the approval of the
governing board of the district, an official of the district, or
selected, ex officio, from the membership of the student body or the
faculty or the governing board or the administrative staff of the
district.
(e) Any entity which is designated as an auxiliary organization by
the district governing board.

72670.5. (a) The Board of Governors of the California Community
Colleges may establish auxiliary organizations for the purpose of
providing supportive services and specialized programs for the
general benefit of the mission of the California Community Colleges.
(b) As used in this article:
(1) "Auxiliary organization" may include, but is not limited to,
the following entities:
(A) Any entity whose governing instrument provides in substance
both of the following:
(i) That its purpose is to promote or assist the Board of
Governors of the California Community Colleges, or to receive gifts,
property, and funds to be used for the benefit of the Board of
Governors of the California Community Colleges or any person or
organization having an official relationship therewith.
(ii) That any of its directors, governors, or trustees are either
appointed or nominated by, or subject to, the approval of the Board
of Governors of the California Community Colleges or an official of
the California Community Colleges, or selected, ex officio, from the
membership of the Board of Governors or the administrative staff of
the California Community Colleges.
(B) Any entity which, exclusive of the foregoing subdivisions of
this section, is designated as an auxiliary organization by the Board
of Governors of the California Community Colleges.
(2) "District governing board" includes the Board of Governors of
the California Community Colleges, unless the context requires
otherwise.
(c) Any agreement between the Board of Governors of the California
Community Colleges and an auxiliary organization established
pursuant to this section shall provide for full reimbursement from
the auxiliary organization to the Board of Governors of the
California Community Colleges for any services performed by the
employees of the board under the direction of, or on behalf of, the
auxiliary organization.

72671. An auxiliary organization may enter into a joint powers
agreement with any federal, state, or local governmental entity
pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of
Division 7 of Title 1 of the Government Code.

72672. (a) A certified public accountant shall be selected by each
auxiliary organization described in Section 72670. Upon being
notified of the certified public accountant selected by an auxiliary
organization, the district shall forward the applicable auditing and
reporting procedures to the selected certified public accountant. In
accordance with procedures prescribed by the Board of Governors of
the California Community Colleges, such certified public accountant
shall annually audit any and all community college auxiliary funds.
The auxiliary organizations shall contract for and receive such audit
annually, and shall submit such audit to the district governing
board and to the board of governors. Auxiliary organizations shall
annually publish an audited statement of their financial condition
which shall be disseminated as widely as feasible and be available to
any person on request. When an auxiliary organization primarily
serves a single community college of the district, publication in the
campus student newspaper shall be deemed compliance with this
requirement. When an auxiliary organization serves the district
governing board, distribution of the published audited statement of
its financial condition at a regularly scheduled meeting of the
district governing board shall be deemed compliance with this
requirement.
(b) When an auxiliary organization primarily serves a single
community college of the district, the president of that community
college, and when an auxiliary organization primarily serves a
district, the superintendent of the district, shall be responsible
for ascertaining that all expenditures are in accordance with
policies of the district governing board, the propriety of all
expenditures, and the integrity of the financial reporting made by
auxiliary organization.
(c) The purposes and operations of an auxiliary organization shall
be conducted in conformity with general regulations established by
the board of governors and with implementing regulations which shall
be established by each district governing board prior to the
establishment of an auxiliary organization. The implementing
regulations established by a district shall be submitted to, and
approved by, the chancellor's office prior to the recognition of an
auxiliary organization by that district. At such time as a district
may recognize an auxiliary organization, it shall submit a copy of
the articles of incorporation, bylaws, or other governing instruments
of the auxiliary organization to the chancellor's office. The
accounting procedures of such auxiliary organizations shall be
comparable to those that govern the auxiliary organizations
established under Chapter 7 (commencing with Section 89900) of Part
55. The regulations shall include provisions requiring the governing
board of each auxiliary organization to provide salaries, working
conditions and benefits for the full-time employees of each auxiliary
organization which are comparable to those provided district
employees performing similar services; provided, however, that the
regulations may permit retirement benefits, or permanent status
benefits, or both, to be withheld from temporary and executive
employees of each auxiliary organization. For the purposes of this
subdivision, a "temporary employee" is (1) an employee employed for a
research project, workshop, institute, or other special project
funded by any grant, contract, or gift; or (2) an employee whose
contract of employment is for a fixed term not exceeding three years.
For the purposes of this subdivision, an "executive employee" is any
management employee with responsibility for the development and
execution of auxiliary organization policy and includes, but is not
limited to, general managers, business managers, directors, and
similar positions. For those full-time employees whose duties are not
comparable to classes in the district, the salaries established
shall be at least equal to the salaries prevailing in other
educational institutions in the area or commercial operations of like
nature.
(d) Retirement benefits may be provided by other than the Public
Employees' Retirement System. A contract for participation in the
Public Employees' Retirement System in accordance with the terms and
conditions of the public employees' retirement law shall be deemed to
satisfy fully the requirements of subdivision (c) with respect to
retirement.
Notwithstanding subdivision (c), the regulations established by
the district governing board may exempt the board of directors of any
newly created auxiliary organization from the requirement of
providing retirement benefits for a period not to exceed three years
from the date that the auxiliary organization is established.

72673. Student body organizations not formed or operating pursuant
to Article 4 (commencing with Section 76060) of Chapter 1 of Part 47;
student or faculty societies, social clubs, fraternities, and
sororities; and alumni associations shall be exempt from the
provisions of this article, unless any such organization, society,
club, fraternity, sorority, or association has been established as an
auxiliary organization pursuant to the provisions of this article.
This section shall not be construed to alter or limit the powers
of the district governing board to establish rules and regulations
governing organizations which maintain an official relationship with
a college or district or which uses the name or facilities of the
college or district.

72674. Each auxiliary organization formed pursuant to this article,
shall have a board of directors composed, both as to size and
categories of membership, in accordance with regulations established
by the district governing board.
Each board of directors shall, during each fiscal year, hold at
least one business meeting each quarter. The board of directors shall
have the benefit of the advice and counsel of at least one attorney
admitted to practice law in this state and at least one licensed
certified public accountant. Neither the attorney at law nor the
certified public accountant need be members of the board of
directors.
No auxiliary organization shall accept any grant, contract,
bequest, trust, or gift, unless it is so conditioned that it may be
used only for purposes consistent with policies of the district
governing board.
Each board of directors of an auxiliary organization shall conduct
its business in public meetings in accordance with the provisions of
Chapter 9 (commencing with Section 54950) of Part 1 of the
Government Code.

72675. (a) The board of directors of an auxiliary organization
shall approve all expenditures and fund appropriations.
Appropriations of funds for use outside of the normal business
operations of the auxiliary organization shall be approved in
accordance with district policy and regulations by an officer
designated by the district governing board.
(b) The district governing board, in accordance with regulations
of the Board of Governors of the California Community Colleges, shall
do all of the following:
(1) Institute a standard systemwide accounting and reporting
system for businesslike management of the operation of these
auxiliary organizations.
(2) Implement financial standards that will ensure the fiscal
viability of these various auxiliary organizations. The standards
shall include proper provision for professional management, adequate
working capital, adequate reserve funds for current operations and
capital replacements, and adequate provisions for new business
requirements.
(3) Institute procedures to ensure that transactions of the
auxiliary organizations are within the educational mission of the
district.
(4) Develop policies for the appropriation of funds derived from
indirect cost payments not required to implement paragraph (2). Uses
of these funds shall be regularly reported to the district governing
board.

72676. Operations of commercial services on a campus, such as a
food service or bookstore, or such commercial services as may be
provided in a student union, shall, when operated by an auxiliary
organization, be self-supporting.
Any surplus funds from commercial operations shall be used for
such purposes as are consistent with regulations of the district
governing board.

72677. No member of the board of directors of an auxiliary
organization shall be financially interested in any contract or other
transaction entered into by the board of which he or she is a
member. Any contract or transaction entered into in violation of this
section is void.

72678. No contract or other transaction entered into by the board
of directors of an auxiliary organization is void under the
provisions of Section 72677; nor shall any member of such board be
disqualified or deemed guilty of misconduct in office under such
provisions, if both of the following conditions are met:
(a) The fact of such financial interest is disclosed or known to
the board of directors and noted in the minutes, and the board
thereafter authorizes, approves, or ratifies the contract or
transaction in good faith by a vote sufficient for the purpose
without counting the vote or votes of such financially interested
member or members.
(b) The contract or transaction is just and reasonable as to the
auxiliary organization at the time it is authorized or approved.

72679. The provisions of Section 72678 shall not be applicable if
any of the following conditions are met:
(a) The contract or transaction is between an auxiliary
organization and a member of the board of directors of that auxiliary
organization.
(b) The contract or transaction is between an auxiliary
organization and a partnership or unincorporated association of which
any member of the governing board of that auxiliary organization is
a partner or in which he or she is the owner or holder, directly or
indirectly, of a proprietorship interest.
(c) The contract or transaction is between an auxiliary
organization and a corporation in which any member of the board of
directors of that auxiliary organization is the owner or holder,
directly or indirectly, of 5 percent or more of the outstanding
common stock.
(d) A member of the board of directors of an auxiliary
organization is interested in a contract or transaction within the
meaning of Section 72677, and without first disclosing such interest
to the governing board at a public meeting of the board, influences
or attempts to influence another member or members of the board to
enter into the contract or transaction.

72680. It is unlawful for any person to utilize any information,
not a matter of public record, which is received by the person by
reason of his or her membership on the board of directors of an
auxiliary organization, for personal pecuniary gain, regardless of
whether he or she is or is not a member of the board at the time such
gain is realized.

72682. An auxiliary organization that was in existence on August
31, 1980, shall continue to operate under Article 6 (commencing with
Section 72670) of Chapter 6 of Part 45, as it read immediately prior
to August 30, 1980, until the time, if any, that the organization is
recognized pursuant to this article.