News

SUNY’s many affiliates revealed

3
SUNY’s many affiliates revealed

The State University of New York, “the largest comprehensive system of postsecondary education in the country,” now serves 600,000 students each year, Chancellor Nancy Zimpher told the state legislature at a budget hearing in January. The sprawling network, Zimpher explained, includes “30 community colleges, 29 state-operated institutions, 5 statutory campuses, 3 teaching hospitals, and many university-wide programs and activities.”

These figures are striking, but incomplete. Since last fall, when federal and state corruption charges were brought against former SUNY Polytechnic Institute president Alain Kaloyeros—who is alleged to have steered lucrative development contracts awarded by two opaque, SUNY-affiliated nonprofits to certain preferred companies—the university’s use of nonprofit affiliates has come under increasing scrutiny. (Kaloyeros has pleaded not guilty.) The state comptroller’s office has promoted a bill, “The New York State Procurement Integrity Act of 2017,” that would restore its oversight of SUNY contracts and require “that SUNY’s use of any non-profit corporation be for academic objects or purposes only,” among other reforms.

For its part, SUNY rejects the notion “that what happened at SUNY Poly could have been prevented if the Comptroller’s authority to pre-approve all SUNY procurements had not been reduced to only those totaling more than $250,000 in 2011,” spokesperson Casey Vattimo said in November. While she expressed support for reforms introduced by Empire State Development for Fort Schuyler Management Corporation, the SUNY-affiliated nonprofit that figures in the federal complaint, Vattimo argued that the diminution of the comptroller’s role “continues to benefit our campuses and students today,” and cited a generally favorable 2014 audit by the comptroller to support this position.

Whatever procurement reforms, if any, are eventually adopted, a rather fundamental question has seemingly gone unanswered amid the debate: How many of these SUNY-linked affiliates are there?

About 200, a master list recently obtained by The Alt through a state Freedom of Information Law (FOIL) request shows. The spreadsheet, maintained by the university controller’s office “to track financial statements reported by affiliates,” according to a SUNY spokesperson, reveals a varied assemblage of campus offshoots, some small or near-defunct—Fighting Tigers Booster Club, Inc., a subsidiary of the SUNY Cobleskill College Foundation, is marked “dissolution not finalized”—and others, like the aforesaid Fort Schuyler Management Corporation, that are responsible for many millions of public dollars.

Appearing in the multi-tabbed document are campus-related foundations and their affiliates, auxiliary services corporations and their affiliates, alumni associations, student government associations, clinical practice management plans, and “Other Related Entities” (we will explain).

Foundations—the schools’ fundraising apparati—are likely the most widely known form of SUNY affiliate. But it may come as a surprise to learn that many have affiliates of their own. The University at Buffalo Foundation, for instance, has seven—UBF Student-Faculty Housing Corporation, UBF Corporation, FNUB Inc., University at Buffalo Foundation Incubator Inc., UB Foundation Activities, UB Foundation Services Inc., and Buffalo 2020 Development Corporation. Six of these were included in the foundation’s most recent independent audit (omitting Buffalo 2020, which is partly controlled by the Research Foundation for SUNY), but all must file separate annual financial statements with the Internal Revenue Service.

Auxiliary services corporations are authorized by the university to provide an array of amenities, so long as “students and faculty/staff have a significant interest in the quality and price” of those provided. ASCs may also have affiliates; Morrisville State College’s ASC has five.

Over two dozen affiliates appearing in the spreadsheet are structured as limited liability companies (LLCs). Asked in an email why it was necessary for the university to maintain more than one LLC, spokesperson Holly Liapis replied, “Each LLC is established for a particular purpose.”

For instance: SUNY Cobleskill’s auxiliary services corporation controls CADS, LLC d/b/a Coby’s, which itself is related to an off-campus café.

There are a dozen “Other Related Entities,” among them SUNY Korea, Friends of Neuberger Museum of Art, and Upstate Properties Development. Guidelines state that OREs can be created “to support a specific need of a campus or to provide a direct benefit to the campus or [SUNY] as a whole which need or benefit cannot be provided by a Campus-Related Entity (Alumni Association, Auxiliary Services Corporation or Foundation) or an Affiliate of a Campus-Related Entity.”

Asked in an email to provide an example of how an ORE performed a function that one of the other types of affiliates could not, spokesperson Holly Liapis replied, “There are 11 [OREs], which you have through your FOIL request. A campus may propose to create an [ORE] for various standalone properties, for example, a museum.”

The ORE guidelines, which did not exist until last year, were established upon the recommendation of a SUNY task force on affiliates, which also found “that more specificity was needed” in alumni association and auxiliary services corporation guidelines “with respect to financial responsibility, accountability, transparency and oversight.” Amendments were subsequently adopted to that end.

John Kaehny, executive director of Reinvent Albany, a government watchdog group, said that while there are likely no big “revelations” in the spreadsheet, the very fact that The Alt needed to obtain the information through a FOIL request—and that a comparable list cannot be found on SUNY’s central website—speaks to larger issues of transparency and accountability at the vast institution.

The Alt had also submitted FOIL requests to the comptroller’s office and to the attorney general’s office seeking similar documents pertaining to state- and specifically SUNY-affiliated nonprofits. The comptroller’s office said it did not possess such records.

The attorney general’s office said it could not “locate the records you seek, if they exist, on the basis of the information you have provided, because our records are not coded or maintained by the particulars of your request. Despite the fact that it is specific, your request is not consistent with the Department’s record-keeping system.”

Kaehny said the spreadsheet should also be considered in relation to the growth of nonprofits in the state over the last fifty or more years. “Charities are completely out of control [in New York],” he said. “The diversity and the size of them dwarf the regulation and the oversight.”

In late 2011, a committee convened by Attorney General Eric Schneiderman reported that nonprofits had become “a key economic engine for New York,” employing “1,246,916 paid workers in 2010,” or “18.1 percent of the state’s total private workforce.”

“In this regard,” the report continued, “New York is distinct from the nation at large and from neighboring states, where nonprofits employ smaller percentages of the workforce. New York’s nonprofits also generate more revenue than their counterparts in other states.”

Kaehny believes the state attorney general’s charities bureau, which oversees this terrain, “struggles” to keep tabs on nonprofits and is over-reliant on complaints to drive investigations.

Presented with this critique, the attorney general’s office responded that, among other uses of analytics, it examines datasets drawn from federal filings and other sources “to determine common links” between “problem organizations,” like common addresses, auditors, or consultants. The office also highlighted Schneiderman’s Nonprofit Revitalization Act of 2013, which passed after the issuance of the above-cited report. The bill streamlined various process-related matters in nonprofit leadership structures and added certain accountability measures.

“Not only did the Attorney General spearhead the biggest overhaul of our non-profit laws in over 40 years, which enhanced the office’s ability to conduct oversight and compliance monitoring of the state’s nonprofit sector, the Charities Bureau uses data and analytic techniques in support of its regulatory and enforcement actions,” spokesperson Doug Cohen said in an email. “Data contained in systems available to the Attorney General, including proprietary analytics used on IRS 990 filings, have been used to identify charities appropriate for regulatory intervention, to help ensure organizations are in compliance with the law.”

The office later confirmed it has several dozen ongoing enforcement investigations encompassing hundreds of charitable organizations.

But even the most assiduous prosecutors are not omniscient. There were more than 31,000 nonprofits operating in New York in 2012, according to U.S. Bureau of Labor statistics. Kaehny likened their present accountability to that of public authorities prior to legislative reforms implemented in the mid- to late-aughts.

Sometimes described as collectively constituting a “shadow government,” public authorities are essentially arms of government free from debt limits and other provisions that circumscribe the activities of local and state governments. Their boards, pursuant to bylaws, often include government officials.

New York has more than 1,000 public authorities, which together spent almost $67 billion, employed over 166,000 people, and carried debt worth over $267 billion in their most recently reported fiscal years, according to the state comptroller’s office. (To complicate matters, or perhaps to reinforce the comparison: some nonprofits—like local development corporations, or LDCs—are also public authorities.)

The Authorities Budget Office, created about a decade ago, now monitors nearly 600 state and local public authorities, according to its most recent annual report, and posts machine-readable datasets online culled from authority reports. This sort of codified oversight and transparency, according to Kaehny, makes it easier for researchers, watchdogs, and the general public to make “apples-to-apples comparisons” of authority expenditures and revenues.

Currently, to conduct a similar kind of analysis of many of SUNY’s affiliates, one would first need to download each entity’s most recently filed IRS Form 990 (Foundation Center, ProPublica, and GuideStar maintain databases of the public documents). By the time they are accessible, nonprofit filings can seem quite dated. According to the Foundation Center, “the total lag time between the end of [an organization’s] fiscal year and the point when its IRS filing is publicly available can be anywhere from 12 to 18 months.”

How much money do SUNY’s affiliates control in total? Does SUNY watch them closely enough? Are there too many? These questions were put to SUNY spokesperson Holly Liapis.

“I would just reiterate that The State University of New York is continually reviewing its guidelines and policies with respect to financial responsibility, accountability, transparency and oversight,” she wrote, referring The Alt to SUNY policy on affiliates. “Any changes are reviewed and approved by the Board of Trustees and available to the public, as you found. SUNY has established clear guidance with respect to [OREs], now totaling 11, and has direct oversight to ensure compliance.”

The Alt advised Liapis that she did not specifically address our questions.

“That’s all I have to say on this topic,” the spokesperson responded.

Review the spreadsheet of SUNY affiliates here.

3 Reader Responses

Leave a Reply

Your email address will not be published. Required fields are marked *


*

More In News