Gannon v. Board of Regents
| Decision Date | 04 February 2005 |
| Docket Number | No. 03-1658.,03-1658. |
| Citation | 692 N.W.2d 31 |
| Parties | Mark GANNON and Arlen Nichols, Appellants, v. BOARD OF REGENTS OF the STATE of Iowa; Gregory S. Nichols, Executive Director, Board of Regents of the State of Iowa; Iowa State University Foundation; Peg Armstrong-Gustafson, Interim President and Chief Executive Officer, Iowa State University Foundation, Appellees. |
| Court | Iowa Supreme Court |
Thomas D. Hanson of Hanson, Bjork & Russell, L.L.P., Des Moines, for appellants.
Mark McCormick and Christopher M. Miller of Belin Lamson McCormick Zumbach Flynn, P.C., Des Moines, for appellees Iowa State University Foundation and Armstrong-Gustafson.
George A. Carroll, Assistant Attorney General, for appellees Board of Regents and Nichols.
In this appeal, we are asked to decide whether a government body may outsource one of its core functions to a private corporation, making that part of its operation nongovernmental and not subject to public scrutiny. We hold the Iowa State University Foundation, a recipient of such outsourcing, is performing a government function, and therefore its records are subject to disclosure. Because the district court found the Foundation was not performing a government function and in doing so granted the Foundation's motion for summary judgment, we reverse and remand for a trial on the merits.
The present dispute concerns the access the public has to the records of the Iowa State University Foundation under the Iowa Freedom of Information Act. The petitioners, Mark Gannon and Arlen Nichols, are citizens and taxpayers of Iowa who want to open up the Foundation's records for the public to see.
In the event this request was denied, the petitioners asked the Board to tell them the reason for doing so and the Board's administrative appeal procedure, if any.
The Board of Regents refused the petitioners' requests. The Board told the petitioners the Foundation was a private corporation it did not create or oversee. Although the petitioners and the Board exchanged further correspondence, the Board refused the bulk of the petitioners' requests.
In May 2002, the petitioners wrote a letter to the executive director of the ISU Foundation requesting to inspect a substantial amount of the Foundation's records.2 The petitioners did not want to see any confidential records.3See Iowa Code § 22.7 (2001) (). The Foundation replied that the petitioners' requested date for inspection was not acceptable, mailed the petitioners a copy of its tax returns for the previous three fiscal years, and stated it was considering the petitioners' request and would respond as soon as possible. Although the Foundation provided a limited amount of the requested information in the ensuing weeks, it did not seek an injunction to restrain the petitioners' examination of the materials it did not provide. See id. § 22.8.
In August 2002, the petitioners filed a petition for a writ of mandamus in the district court pursuant to the Iowa Freedom of Information Act against the Board of Regents, the Foundation, and two of their executive officers. See id. § 22.5. The petitioners alleged the Foundation possessed "public records" it had refused to disclose. They presented two theories. First, the petitioners claimed the Foundation was a "government body" and its records were public records subject to disclosure. In the alternative, the petitioners argued the Foundation was at the very least a "fiduciary" or "other third party" with records relating to the investment of public funds in its custody. The petitioners asked the court to issue a writ of mandamus directing the respondents to produce the requested records, an injunction to prevent further violations of the Act, statutory damages, and attorney fees. See id. § 22.10 (civil enforcement).
During discovery, the petitioners learned the following about the Foundation and its predecessors:
1. The Iowa State College Foundation
In 1958, the Iowa Board of Regents granted Iowa State College (now Iowa State University) President James Hilton the authority to establish the "Iowa State College Foundation." The ISCF was duly incorporated as a private not-for-profit corporation. The ISCF's articles of incorporation stated its purpose was "to accept, hold, administer, invest and disperse for educational and scientific purposes" funds "to educational and scientific institutions." Upon dissolution, all corporate assets were to become the property of the State of Iowa on the condition they be held "for the perpetual use of [the College]." The ISCF's Board of Directors was divided into four classes. The first class consisted of the President of the College and the President of the Board of Regents.
2. The Iowa State University Achievement Foundation
In 1980, an entity then known as the "Iowa State University Foundation" and the Iowa State University Alumni Association incorporated the "Iowa State University Achievement Foundation." The stated objects and purposes of the ISUAF were to promote the welfare of ISU faculty, students, and alumni and "[t]o accept, hold, administer, invest, and disperse for educational and scientific purposes gifts, grants, bequests, and devises ... exclusively for the benefit of [ISU] and its students." Upon dissolution of the ISUAF, its assets were to be transferred to an organization whose objects and purposes were the same as its own or directly to the State of Iowa "for the exclusive use and benefit of [ISU]."
3. The Iowa State University Foundation
In 1988, the ISUAF changed its name to the "Iowa State University Foundation," the same moniker as one of its incorporators. At the time of the filing of this action, the Foundation operated under its "Third Amended and Restated Articles of Incorporation." As stated in the Articles, the object of the Foundation is to promote the welfare of ISU faculty, students, and alumni and to identify, cultivate, and solicit donors for the exclusive benefit of ISU. The Foundation will "accept, hold, administer, invest, and disperse for educational and scientific purposes gifts, grants, bequests, and devises ... exclusively for the benefit of [ISU]." Upon dissolution, the Foundation's assets are to be transferred to an organization whose objects and purposes are the same as its own or directly to the State of Iowa for the exclusive benefit of ISU.
Like the ISCF before it, the Foundation's Board of Directors is divided into four classes. The first class consists of three members. One member is required to be the President of ISU. In addition to the designated seat of the President, two other members of the Foundation's Board happen to be affiliated with ISU or the Board of Regents.
The Board of Directors is responsible for deciding whether to accept or reject gifts to the Foundation. The Board of Directors has delegated this responsibility to a Gift Acceptance Committee in accordance with a gift acceptance policy. One member of the Committee is an ISU faculty representative chosen in consultation with the ISU Faculty Senate. The policy gives guidance to Foundation employees regarding the acceptance of prospective gifts. For example, the Foundation requires gifts of "significant risk" (e.g., gifts of real property) be documented with a "written understanding" between the donor, the Foundation, and ISU before the Foundation will accept them.
Historically the Foundation was staffed with ISU employees and located on the ISU campus. In October 2001, however, the Board of Regents Office recommended the Board of Regents approve an agreement between ISU and the Foundation. The Board Office noted that pursuant to this agreement ISU would "lease" its employees to the Foundation until the Foundation could arrange its own financial compensation package for them.
The service agreement does not specify how much ISU must compensate the Foundation for its services. In 2002, ISU agreed to pay the Foundation $750,000 annually. The Foundation presently employs its own personnel — 85 full-time employees and 150 part-time employees. In 2001, the Foundation also purchased a facility off-campus for its headquarters with ISU Foundation funds. Today the ISU Foundation styles itself not as a part of ISU but rather as a wholly independent and private not-for-profit corporation organized to raise and manage private gift support for the exclusive benefit of ISU. The Foundation conducts a variety of comprehensive fundraising-related services for ISU, including telemarketing, direct mail, coordinated capital campaigns, donor solicitation and identification, investment and securities management, database management, gift receipting, estate planning and structuring, and planned giving consultation regarding the tax implications of wills, trusts, and life insurance.
The Foundation manages two types of funds for ISU. The first category consists of funds donated to ISU that ISU then transfers to the...
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