On shaky ground - Page 3

Did City College use its foundation to launder public funds for political purposes?
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Holmes added that many colleges use their supporters for donations.

Judy Iannaccone, a spokesperson for the Rancho Santiago Community College District in Orange County, which helped raise $13,600 for the 2006 election, said they did so by forwarding the names of potential donors to the coalition, which allowed the school to remain impartial.

"The money was absolutely not from the general fund," Iannaccone told us.

Colleges and universities commonly form nonprofit foundations to raise money on their behalf from alumni and other supporters, like the behemoth $1.1 billion endowment of the UCSF Foundation, which encourages and administers private giving to the medical school and health-related research of the University of California-San Francisco.

City College's foundation is considerably smaller. It had $22 million in net assets at the end of the 2007 fiscal year, according to district documents, and describes itself in an audit as a discrete component of the school. The foundation gives out hundreds of relatively small scholarships to students every year, some worth up to $3,000, but most for smaller amounts of between $250 and $500.

The foundation also maintains a separate board of directors that, like many higher-education foundations, contains top officials from the school itself, like Chancellor Day and Vice Chancellor Goldstein.

Most of the foundation's other directors, however, are simply civic leaders who support City College's mission but don't work for the district and aren't affiliated directly with Day's administration.

The two entities are still close enough that the district handles bookkeeping for the foundation and shares its employees. For instance, the audit shows that the foundation's finances — including its political contributions — were often prepared by City College's chief administrative services officer, the title carried by Stephen Herman, who was implicated in the first round of illegal diversions made public last year.

"People literally thought that the college was obligated to make a contribution to this statewide campaign and that meant funds that would otherwise be under the college's control could be eligible for a donation," Vice Chancellor Goldstein told us. "But, of course, that's incorrect."

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