California Watch

Every college in the country has a foundation – a nonprofit set up to raise money for the alma mater.

Typically, it works hand-in-glove with the college president, identifying worthy campus projects and stroking wealthy alumni to fund them.

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Then there’s the Foundation of City College of San Francisco, an affiliate of the 110,000-student community college whose former chancellor is awaiting trial, along with two aides, on felony charges of misappropriating college funds.

As freelance writer Stephanie Rice reports in the San Francisco Examiner, the foundation recently insisted on severing all financial ties with the college it was set up to serve.

In essence, it said that donors won’t give to the foundation if they think college administrators can get their hands on the money.

And so, at a time when the college is reeling from state budget cuts, administrators have no input at all on how – or whether – any of the foundation’s $16 million in endowment can be used to help. Control of an additional $3 million is still unresolved,

The scandal at City College became public with an exposé in the San Francisco Chronicle.

The newspaper reported that in 2005, college officials illegally spent taxpayers’ money on political donations to a city campaign for a $246.3 million college bond measure.San Francisco District Attorney Kamala Harris ordered an investigation.

Last year, former Chancellor Philip Day and two aides, Stephen Herman and James Blomquist, were charged with felonies, accused of conspiring to use public funds for political donations and other banned expenditures. In addition to misusing donations to the bond campaign, Day was accused of illegally steering college money into a secret slush fund that he set up at the foundation.

To create the “chancellor’s discretionary fund,” Day diverted $35,000 owed to the college by vendors, court records show. Over the years, he spent the money on alcohol at parties he hosted, on his dues at the City Club of San Francisco (an $1,800 perk) and to pay parking tickets of wealthy alumni.

At one point, Day allegedly funneled another $28,000 in college money to the foundation. Then he spent it on on political donations to a 2006 statewide bond measure that benefited community colleges.

Day and the other men have pleaded not guilty.

In letters last year, foundation President Haig Mardikian told college administrators the alleged improprieties involving the foundation occurred because the college was “too involved in foundation affairs,” as the Examiner put it.

Perhaps the foundation should have seen the scandal coming.  As the Chronicle reported, In 2005, three foundation trustees – including Montgomery Securities founder Will Weinstein – quit to protest what they called the “questionably ethical and probably illegal” process by which Day had awarded a contract for a college coffee bar.

Weinstein said Day had urged him to interest Berkeley-based Peet’s in the project, which was to provide job training for students and income for the college. Then, at the last minute, he inexplicably awarded it to another vendor called Bean Scene.

According to court records, soon after the contract was signed, Day told the vendor to make a lease payment not to the college, but to the political committee supporting the city bond measure – another alleged diversion of public funds.