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AG audit questions college president's kitchen renovation

Sac State President Alexander Gonzalez Daniel McKoyCSU Sacramento President Alexander Gonzalez

Renovations made to CSU Sacramento President Alexander Gonzalez’s kitchen, paid for by the university’s charitable auxiliary organization, personally benefited Gonzalez and "created an appearance of impropriety," according to an audit by Attorney General Jerry Brown’s office.

The audit looked into three transactions by University Enterprises Inc., CSU Sacramento's nonprofit auxiliary organization. The transactions included the purchase of a $27,615 commercial grade stove for Gonzalez's kitchen; a 2003 low-interest home loan made to Gonzalez upon taking the position of president; and a controversial $35.3 million purchase of a former California State Teachers' Retirement System building that could end up costing CSU Sacramento millions of dollars.

Two of the transactions – the three-year home loan, which Gonzalez paid back with interest, and the CalSTRS building purchase – were found to be in compliance with law, and were made for the "benefit of Sacramento State University," Brown's office said.

But the 2005 renovation of Gonzalez's kitchen found to "inure to the benefit of a private individual (President Gonzalez), and therefore was not a transaction that fell within UEI’s charitable purposes."

The audit noted that 35 university-related events had been held at Gonzalez's home. It also noted the stove was installed to comply with the health and safety code for safe preparation and handling while hosting university-related events.

Still, the purchase “created an appearance of impropriety, which UEI had a duty to avoid.”

Gonzalez, who became CSU Sacramento president in 2003, has been chairman of the board of directors at UEI since 2004.

Gloria Moraga, associate vice president of public affairs at CSU Sacramento, described kitchen renovation as "a health and safety code decision made for the benefit of the university. UEI complied with the audit and we are viewing the matter as closed."

The attorney general’s office recommended UEI avoid similar actions in the future, but would not look into the matter any further because Gonzalez's personal benefit from the the stove "appears to be de minimus," and would be used for future university-related events.

In April, the Los Angeles Times looked at Gonzalez's deal with CalSTRS as an example of administrators who "have tapped funds meant for classrooms and students to cover some extraordinary costs: losses on ill-timed real estate deals, loans to high-ranking officials and an ambitious construction project." Jack Dolan wrote:

At CSU Sacramento, administrators used general fund money to cover an investment that went bad.

University Enterprises Inc., an independent foundation affiliated with the school, paid more than $35 million raised from private donors to buy a commercial office building near campus in 2007.** Administrators said they planned to hold classes in half of the building’s 188,000 square feet and lease the rest to generate revenue.

Then the real estate bubble burst.

... President Alexander Gonzalez said he paid $5.6 million last year to prevent the foundation from falling into foreclosure on it.

The money came from the school’s general fund – a combination of student fees and tax dollars – which is more commonly used to pay professors’ salaries, utility bills and the other day-to-day costs of educating students.

Steve Boilard, director of higher education for the state’s nonpartisan legislative analyst’s office, told the L.A. Times that the deal "does kind of look like a gift of public money to the foundation."

Gonzalez defended the transaction by saying the building won’t be a drain on school finances once the real estate market picks up. “This is just a stopgap,” Gonzalez told the Times. “The purchase of the building is still a very, very good deal.”

**UEI makes its money from campus-related businesses rather than private donors.

A version of this story first appeared in The State Hornet.

Filed under: Higher Ed, Daily Report

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