SECTIONS 89900-89912 - California Statutes

EDUCATION CODE

SECTION 89900-89912

89900. (a) A certified public accountant shall be selected by each
auxiliary organization described in Section 89901. The office of the
chancellor, in cooperation with the Department of Finance, shall
develop and forward the applicable auditing and reporting procedures
to each auxiliary organization for distribution to the selected
certified public accountant. In accordance with procedures prescribed
by the chancellor, the certified public accountant shall annually
audit any and all state university auxiliary funds. The auxiliary
organizations shall contract for and receive the audit annually, and
shall submit the audit to the trustees. Auxiliary organizations shall
annually publish an audited statement of their financial condition,
which statement shall be disseminated as widely as feasible and be
available to any person on request. In the case of an auxiliary
organization primarily serving a single campus of the California
State University, publication in the campus student newspaper shall
be deemed compliance with this requirement. In the case of an
auxiliary organization serving the Trustees of the California State
University, distribution of the published audited statement of its
financial condition at a regularly scheduled meeting of the trustees
shall be deemed compliance with this requirement.
(b) In the case of an auxiliary organization primarily serving a
single campus of the California State University, the president of
that state university shall be responsible for ascertaining that all
expenditures are in accordance with policies of the trustees, the
propriety of all expenditures, and the integrity of the financial
reporting, made by auxiliary organizations.
(c) The operation of auxiliary organizations shall be conducted in
conformity with regulations established by the trustees. 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 that are comparable to those provided California State
University employees performing similar services. However, the
regulations may permit retirement benefits or permanent status
benefits, or both, to be withheld from temporary and executive
employees of each auxiliary organization. In addition, the
regulations may exempt from the requirement of providing retirement
benefits any auxiliary organization that is funded primarily by
mandatory student fees collected by the trustees. For the purposes of
this subdivision, a temporary employee is (a) an employee employed
for a research project, workshop, institute, or other special project
funded by any grant, contract or gift; or (b) 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 the
like. For purposes of this subdivision, "full-time employee" means a
person who is employed in a permanent position for 40 hours per week
or for the required number of hours of a particular work shift,
whichever is the lesser. Persons employed on a temporary,
intermittent, irregular time base, or on a limited term basis are not
"full-time employees," unless those employees are engaged on a
continuing 10-month or academic year basis and are employed for 40
hours per week or for the required number of hours of a particular
work shift, whichever is the lesser. For those full-time employees
whose duties are not comparable to classes in California State
University employment, 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. This requirement
shall apply to full-time employees of auxiliary organizations even if
there are no California State University employees performing
similar services.
(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 anything in subdivision (c) to the contrary, the
regulations established by the trustees may exempt the governing
board 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.

89901. As used in this article, the term "auxiliary organization"
includes the following entities:
(a) Any entity in which any official of the California State
University participates as a director as part of his or her official
position.
(b) Any entity formed or operating pursuant to Article 1
(commencing with Section 89300) of Chapter 3.
(c) Any entity which operates a commercial service for the benefit
of a campus of the California State University on a campus or other
property of the California State University.
(d) Any entity whose governing instrument provides in substance
both of the following:
(1) That its purpose is to promote or assist any campus of the
California State University, or to receive gifts, property, and funds
to be used for the benefit of such campus or any person or
organization having an official relationship therewith.
(2) That any of its directors, governors, or trustees are either
appointed or nominated by, or subject to, the approval of an official
of any campus of the California State University, or selected, ex
officio, from the membership of the student body or the faculty or
the administrative staff of campus.
(e) Any entity whose governing instrument provides in substance
both of the following:
(1) That its purpose is to promote or assist the trustees of the
California State University, or to receive gifts, property, and funds
to be used for the benefit of the trustees of the California State
University or any person or organization having an official
relationship therewith.
(2) That any of its directors, governors, or trustees are either
appointed or nominated by, or subject to, the approval of the
trustees or an official of the California State University, or
selected, ex officio, from the membership of the trustees or the
administrative staff of the California State University.
(f) Any entity which, exclusive of the foregoing subdivisions of
this section, is designated as an auxiliary organization by the
trustees.

89902. This article shall not apply to any student body
organization not formed or operating pursuant to Article 1
(commencing with Section 89300) of Chapter 3 nor to any student or
faculty society, social club, fraternity, or sorority, nor to any
alumni association, whether officially recognized as a campus
organization or not, unless it is described in Section 89901.
This section shall not be construed to alter or limit the powers
of the trustees to establish rules and regulations governing
organizations which maintain an official relationship with any campus
of the California State University or which use the name or
facilities of the campus.

89903. (a) (1) 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 Trustees of the California State University.
(2) If, in any fiscal year, a majority of the funding of the
auxiliary organization is received from student fees collected on a
campus or systemwide, at least a majority of the board of directors
of that auxiliary organization shall consist of California State
University students with full voting privileges on that board. This
paragraph shall only be applicable to effectuate a change in the
membership of a board of directors of an auxiliary organization if
the trustees determine that there is no legal or contractual barrier
to changing the governing structure of that organization. In the
event that the trustees determine that there is a legal or
contractual barrier to changing the governing structure of an
auxiliary organization, information relating to that determination
shall be reported, in a timely manner, to that auxiliary organization
and any affected student body organization.
(b) Each governing board shall, during each fiscal year, hold at
least one business meeting in accordance with Article 2 (commencing
with Section 89920). The board 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.
(c) 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 trustees.

89904. All expenditures and fund appropriations of auxiliary
organizations described in Section 89903 shall be approved by the
governing board of the auxiliary organization. Appropriations of
funds for use outside of the normal business operations of the
auxiliary organization shall be approved in accordance with trustee
policy and regulations by an officer designated by the trustees.
The trustees in consultation with the Department of Finance and
the governing boards of the various auxiliary organizations described
in Section 89903, on or before the beginning of the 1970-1971 fiscal
year, shall:
(a) Institute a standard systemwide accounting and reporting
system for businesslike management of the operation of such auxiliary
organizations.
(b) Implement financial standards which will assure the fiscal
viability of such various auxiliary organizations. Such 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.
(c) Institute procedures to assure that transactions of the
auxiliary organizations are within the educational mission of the
state colleges.
(d) Develop policies for the appropriation of funds derived from
indirect cost payments not required to implement subdivision (b).
Uses of such funds shall be regularly reported to the trustees.

89904.5. The trustees shall, by July 1, 1983, develop and implement
guidelines to ensure that auxiliary organizations classified as
foundations for sponsored programs, workshops, and institutes
maintain fiscal viability. These guidelines shall specify how
reimbursement received by a foundation for indirect costs in
connection with the performance of grants or contracts which exceeds
the indirect costs actually incurred by the foundation for those
grants or contracts shall be divided between the foundation and the
campus of the California State University which the foundation
serves, in a manner consistent with the educational mission of the
university.

89904.6. The trustees shall, by July 1, 1983, develop and implement
guidelines to ensure that auxiliary organizations classified as
foundations for sponsored programs, workshops, and institutes, expend
discretionary funds in a manner consistent with the educational
mission of the university.

89905. Operations of commercial services on a campus of the
California State University, such as a food service or bookstore, or
any commercial services that may be provided in a state university
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 trustees.

89905.5. (a) No auxiliary organization operating a commercial
service on the California State University, Chico, campus shall
discontinue that commercial service without providing the campus with
adequate notice of its intent to discontinue the service, and the
opportunity to continue the service through another means.
(b) No commercial service operated by an auxiliary organization on
the California State University, Chico, campus or any aspect of the
management of the commercial services shall be taken over by the
Trustees of the California State University, the Chancellor of the
California State University, the president of a campus of the
California State University, or another auxiliary organization unless
all of the following conditions are met:
(1) The entity seeking to assume all or part of the management of
the commercial service has demonstrated that the commercial service
has substantial programmatic or financial difficulties.
(2) The governing board of the auxiliary organization currently
operating the commercial service has been provided adequate
opportunity to respond to the concerns demonstrated pursuant to
paragraph (1).
(3) The governing board of the entity seeking to assume all or
part of the management of the commercial service has approved the
assumption of the new programmatic or financial responsibility.
(4) The auxiliary organization currently operating the commercial
service has been provided adequate compensation for any losses,
including, but not limited to, property, inventory, services, or
employees directly resulting from the assumption of all or part of
the operation of the commercial service by the entity.
(c) If an entity assumes responsibility for commercial services
pursuant to subdivision (b), the entity shall be established as an
official California State University auxiliary organization operating
separate from, but related to, the university of service so as to
protect the state from all possible liability associated with the
operation of commercial services.

89906. No member of the governing board of an auxiliary
organization shall be financially interested in any contract or other
transaction entered into by the board of which he is a member, and
any contract or transaction entered into in violation of this section
is void.

89907. No contract or other transaction entered into by the
governing board of an auxiliary organization is void under the
provisions of Section 89906, nor shall any member of such board be
disqualified or deemed guilty of misconduct in office under said
provisions, if the circumstances specified in the following
subdivisions exist:
(a) The fact of such financial interest is disclosed or known to
the governing board and noted in the minutes, and the governing 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, and
(b) The contract or transaction is just and reasonable as to the
auxiliary organization at the time it is authorized or approved.

89908. The provisions of Section 89907 shall not be applicable if
the circumstances specified in any of the following subdivisions
exist:
(a) The contract or transaction is between an auxiliary
organization and a member of the governing board 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 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 governing
board 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 governing board of an auxiliary organization
is interested in a contract or transaction within the meaning of
Section 89906, 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.

89909. It is unlawful for any person to utilize any information,
not a matter of public record, which is received by him by reason of
his membership on the governing board of an auxiliary organization,
for personal pecuniary gain, regardless of whether he is or is not a
member of the governing board at the time such gain is realized.

89911. Any construction project located on property of the
California State University that is performed pursuant to a contract
entered into or awarded by an auxiliary organization and funded in
whole or in part by public funds is subject to the California State
University Contract Law (Chapter 2.5 (commencing with Section 10700)
of Part 2 of Division 2 of the Public Contract Code).

89912. All bonds, notes, borrowings, or other evidences of
indebtedness of an auxiliary organization and interest thereon or
income therefrom are exempt from all taxation in the state other than
estate and generation skipping transfer taxes.