Request By:
Mr. Charles Whitehead
President, Board of Trustees
Kentucky State University Foundation, Inc.
Frankfort, Kentucky 40601
Opinion
Opinion By: FREDERIC J. COWAN, ATTORNEY GENERAL; GERALD R GERHARD, ASSISTANT ATTORNEY GENERAL
By letter of October 10, 1989, Karen Herzog, a staff writer for the Frankfort State Journal, has appealed your October 6, 1989 denial of her request to inspect certain records of the KSU Foundation, Inc.
FINDINGS IN BRIEF
The Kentucky State University Foundation, Inc., is a recognized fund-raising "instrumentality" of Kentucky State University, and is thus an "agency thereof," within the meaning of KRS 61.870(1). Accordingly, the Kentucky State University Foundation, Inc., failed to act consistent with Open Records provisions in denying inspection of its records on the ground it was not a public agency.
FACTUAL BACKGROUND
As indicated by letters of August 4th and 5th, 1989, to Chuck Lambert, Executive Secretary, KSU Foundation, Inc., Karen Herzog, a staff writer for the Frankfort State Journel, asked for a copy of a detailed two-year audit of the KSU Foundation, and to be provided access to (1) Foundation records for all travel expenses paid for by the Foundation for University employees, including University employees traveling on Foundation business, during the past five years, and (2) all Foundation records for entertainment expenses paid for by the foundation during the past five years.
By letter of October 6, 1989, on Kentucky State University letterhead, you responded, in substance and in part, that you were in receipt of Ms. Herzog's requests. You indicated:
Please be advised that the Kentucky State University Foundation, Incorporated is not a public agency as defined under KRS 61.870(1).
Therefore, the Kentucky State University Foundation, Incorporated is outside the scope of the Kentucky Open Records Law and denies your request.
You signed the letter as President of the Board of Trustees of the Kentucky State University Foundation, Inc.
OPINION OF THE ATTORNEY GENERAL
KRS 61.880(2) provides in part for the Attorney General to, upon request of one denied inspection of public records, issue a written opinion stating whether an agency " . . . acted consistent with provisions of KRS 61.870 to 61.884."
Denial of inspection of the records of the Kentucky State University Foundation, Inc., was based upon the claim that the Foundation is not a public agency within the meaning of KRS 61.870(1). Thus the question for determination here is whether that assertion is correct.
We believe it is not. Discussion follows.
KRS 61.870(1) provides:
"Public agency" means every state or local officer, state department, division, bureau, board, commission and authority; every legislative board, commission, committee and officer; every county and city governing body, council, school district board, special district board, municipal corporation, court or judicial agency, and any board, department, commission, committee, subcommittee, ad hoc committee, council or agency thereof ; and any other body which is created by state or local authority in any branch of government or which derives at least twenty-five percent (25%) of its funds from state or local authority;
[Emphasis added].
Words used in statutes are to be defined in accordance with common and everyday meanings. See KRS 446.015. In our view, "agency," in common and everyday meaning, means "instrumentality. " It might also be noted that, as used in KRS 61.870(1), the phrase "or agency thereof" is a phrase of expansion, not limitation. The phrase follows the listing of the more common agency types, such as, "department," "division," and "board," etc.
Kentucky State University is unquestionably a public agency. The Kentucky State University Foundation, Inc. is generally recognized as a fund-raising vehicle or instrmentality of the University, and is therefore, an "angency thereof," within the meaning of KRS 61.870(1).
A number of facts buttress this conclusion.
The Foundation is located at the University. Its records are in the possession of the Univeristy in accordance with the By-laws of the Foundation. The University oversees and administers the Foundation. Key Officers of the Foundation are employees of the University.
The Kentucky State University Foundation, Inc., is the successor to the Kentucky State College Fund, Inc., established in 1968. When the then "Fund" was established, its members were, as indicated by the Articles of Incorporation, the President of the Kentucky State College, the Chairman and Vice Chairman of the College's Board of Regents, and the President of the College's Alumni Assiciation. The purpose of the then "Fund" was described at Section 2.1 as being:
. . . to receive contributions, gifts, grants, devises, or bequests of real or personal property or both from individuals, foundations, partnerships, associations, government bodies, and public or private corporations, and to maintain, use and apply such property and the income therefrom, . . . exclusively for the benefit of Kentucky State College; . . . .
That purpose remains substantially the same today. The name of the corporation was changed in 1973 to the current Kentucky State University Foundation, Inc.
When the Fund was created in 1968, its principal office was given as being at Kentucky State College. The agent for process was designated as the President of Kentucky state College. This circumstance is substantially the same today. The foundation's corporate annual report for the year ended June 30, 1989, filed with the Secretary of State, indicates the process agent of the now Kentucky State University Foundation, Inc., as being the individual who is the Interim President of Kentucky State University, showing an address of Kentucky State University. The principal office address of the foundation is shown as being "Ky. State University."
The current Articles of Incorporation of the Foundation, as amended (filed September 21, 1984) sought to declare:
4.1 The principal office of the Foundation shall be at Kentucky state University, Frankfort, Kentucky 40601.
4.2 The resident agent for service of process shall be that person who holds the office of President of Kentucky State University.
Such statements were "lined through," apparently because such declaration could only be effective upon a "Statement Change" form.
Section 7.2 of the current Articles of Incorporation of the Foundation, directs, in part, that the Board of Trustees of the Foundation shall elect "a treasurer and an executive secretary who shall be suitably qualified employees of Kentucky State University ."[Emphasis added.]
Section 7.3 of the current Articles directs, in part, that the Board of Trustees [of the Foundation] "shall make an annual report to the Board of Regents of Kentucky State University."
The By-Laws of the Foundation indicate, in part:
4.1 The Executive Secretary shall be elected from among suitably qualified employees of Kentucky State University nominated by the President of the University.
5.1 . . . The disbursements of funds from the Foundation shall be under the authority of the Executive Committee, which shall determine that such disbursements are exclusively for purposes of Kentucky State University certified by the President of the University.
5.4 . . . Objects of all capital funds solicitations shall be determined in consultation with the President of the University and be approved by the Board of Regents of the University. The Capital Funds Committee shall be appointed by the President of the Foundation after consultation with the President of the University.
6.1 Complete records of the Foundation's activities shall be maintained by the Foundation in the Office of Development, Kentucky State University, Frankfort, Kentucky 40601.
The Minutes of the April 19, 1989 meeting of the University's Board of Regents indicate in part:
Chairman Nunn . . . continued that his concern also involved the University Foundation as some of its funds had been spent for items or in ways that warrant the gathering of more information . . . . Upon an inquiry by Regent Lansing as to whether the audit was to be of the entire University or the Foundation or both, Chairman Nunn responded that the review was to be of the Foundation and of the entire University, if necessary.
It was moved by Regent Nunn and seconded by Regent Moore that the Board of Regents . . . proceed to hire [an] auditing firm to review and audit University records and also to audit the records of the University Foundation . The motion passed unanimously.
[Emphasis added.]
The Minutes of the May 23, 1989, meeting of the University's Board of Regents indicate in part:
Chairman Nunn informed those in attendance that the Board had made a decision to sever its legal relationship with the KSU Foundation Board of Trustees.
Because of the unexpectedness of this request, Chairman Nunn spoke with L. Rogers Wells, Jr., Secretary of Finance, and a representative of the Governor's Office and (sic) who have verbally agreed that they would make arrangements to pay for that audit [the audit of the KSU Foundation, Inc.] so the Foundation would not have to bear the expense.
[Emphasis added.]
It is clear from these points that the Kentucky State University Foundation, Inc., is not an entirely private entity merely based at Kentucky State University. The Foundation is quite clearly actively administered, directed, and overseen by the University.
Further, the Foundation is required by statute to give a periodic financial accounting to the state itself. It must report its receipts and expenditures, etc., to the state investment commission.
KRS 42.540 provides, in substance and in part, that:
. . . every nonprofit fiduciary holding funds for the benefit of any form of state organization including but not limited to . . . Kentucky State University, . . . shall make a report according to generally accepted accounting principles of all money received and disbursed during each fiscal year, on or before the 15th of July, showing receipts, expenditures, depositories, rates of interest paid by depositories, investments, and rates of return in investments to the state investment commission. Such fiduciaries include, but are not limited to . . . Kentucky State University Foundation.
We believe that from any perspective, whether it be from that of the University, the Foundation, the Executive Branch, or the Legislature, the Kentucky State University Foundation, Inc., is a public agency. This is particularly so regarding inspection of its records under Open Records provisions. The public oversight (e.g., KRS 42.540, supra) and the character of the University's involvement with the Foundation attest to such fact.
The Foundation cannot hide its records behind the shield that it is not a "public agency. " The Kentucky State University Foundation, Inc., should recognize that by virtue of the requirements contained in its own Articles of Incorporation and By-laws, and by virtue of KRS 42.540, that it is subject to oversight by both the University and the State, as is the case with any other public agency. So too is the Foundation subject to the scrutiny of its records by the people and the press. KRS 61.870(1); KRS 61.872.
We believe you incorrectly concluded that the Kentucky State University Foundation, Inc., is not a public agency within the meaning of KRS 61.870(1). In denying inspection of the records of a public agency on such ground, you failed to act consistent with KRS 61.870 to 61.884.
You should promptly make arrangements with Ms. Herzog for her inspection of the records she has requested. If inspection of any records of the Foundation is denied, KRS 61.880 must be followed in such regard.
You may have a right, pursuant to KRS 61.880(5), to appeal the findings of this opinion.
As required by statute, a copy of this opinion is being sent to Ms. Karen Herzog.