Pennsylvania ruling sheds sunlight on university donations — and possibly much more

The East Stroudsburg University Foundation is staffed entirely by university employees. Its sole purpose is to raise money for the university’s operations. It defines itself as a “component unit” of ESU, and its financial statements are reported along with those of the university. So how can the foundation claim to be exempt from the same public disclosure requirements that apply to the rest of the university?

It can’t, says a Pennsylvania appeals court.

In a significant victory for transparency, the Commonwealth Court of Pennsylvania ruled 6-0 on May 24 that records disclosing how much the ESU Foundation raised, and minutes of foundation board meetings where university fundraising was discussed, must be disclosed under Pennsylvania’s Right-to-Know Law. (Donors’ identities, however, can be removed from the records under a special donor confidentiality exception in the statute.)

The Pocono Record and its reporter Dan Berrett requested the records as part of a long-running investigation into the workings of the foundation, which has been plagued by scandals that led to the ouster of its director in October 2008.

The ruling in East Stroudsburg University Foundation v. Office of Open Records, authored by Judge Dan Pellegrini, says the foundation is subject to the open-records law because the university, a government agency, contracts with the foundation to perform a governmental function. The appeals court rejected ESU’s argument that only contractors performing “essential” government functions are subject to the disclosure law.

Judge Pelligrini’s opinion broadly asserts that “all contracts that governmental entities enter into with private contractors necessarily carry out a ‘governmental function’ – because the government always acts as the government.” That strongly suggests that many other records existing in a zone of legal uncertainty — such as records kept by private vendors providing services to government agencies — are also now subject to the Right-to-Know Law, which should make for a round of enlightening open-records requests.

However, that portion of the Pelligrini opinion got only three of the court’s six votes, meaning it may not hold up in a subsequent challenge. Three of the judges — while agreeing that the Record was entitled to the documents — reached that conclusion for a different reason. They believed that the strong ties between the foundation and ESU actually rendered it a part of the agency, so the contractual relationship was not a decisive factor. If their rationale prevails, then the ruling’s impact will be much more limited and may not apply to a vendor that is truly separate from the university (i.e., not administered by someone carrying the rank of university vice president, as the foundation is).

Regardless of how it may apply in other contexts, the ruling is meaningful in adding Pennsylvania to a growing list of states — including Colorado, Nevada, California, Florida, Iowa, Kentucky, Michigan, Ohio and South Carolina — that recognize a right of public access to the dealings of universities’ fund-raising machinery. Access to this information is not a matter of mere voyeurism. While it is interesting to see who donates how much, it is more important still to know how that money is being spent to further (or sometimes not to further) public purposes.

Laws and court rulings opening the door to foundations, however, are useful only if journalists get informed about their right of access and take advantage of it. Pennsylvanians are fortunate that the Record cared enough to undertake the costly legal battle to pry open that door.