Government cannot hide records by outsourcing duties, state high court rules

• A private foundation that contracted to fund raise for a public university must release its records, the Iowa Supreme Court has ruled.

Feb. 14, 2005 — The financial records of the quasi-private University of Iowa Foundation are subject to state open records laws because the government may not outsource its functions to “secret its doings from the public,” the Iowa Supreme Court ruled Feb. 4.

The foundation, a not-for-profit corporation, is contracted with the University of Iowa to manage its fund-raising operations. It handles about $234 million in university money, though it is explicitly labeled an “independent contractor.”

Two citizens, Mark Gannon and Arlen Nichols, first requested the foundation’s financial records in 2001. After the university’s Board of Regents refused the records request by claiming that it did not oversee the quasi-private foundation, Gannon and Nichols requested the documents directly from the foundation in 2002.

When that request was denied, Gannon and Nichols sued the boards of the university and the foundation. The trial court dismissed most of their claims in 2003, but the requesters appealed to the Iowa Supreme Court with help from financial backers to help pay legal costs.

The Supreme Court reversed the dismissal, relying on an argument that the trial court addressed superficially: outsourcing. The unanimous opinion, written by Justice Michael J. Streit, relied on a provision of the Iowa Freedom of Information Act: “A government body shall not prevent the examination or copying of a public record by contracting with a nongovernment body to perform any of its duties or functions.”

Streit rejected the university’s and foundation’s argument that the provision did not apply to the fund-raising contract because fund raising is not a vital function of the university.

“Successful fund raising and management is a very important, if not vital, function of the modern university and an integral part of its continuing viability,” the court countered. Streit wrote that “ISU students and the legislature would certainly be surprised to learn that [raising money] was not a government function” if university money were to suddenly dry up.

The court also ruled that whether the contract between the university and the foundation was motivated by a desire to circumvent open records law was irrelevant.

(Gannon v. Board of Regents of the State of Iowa; Media Counsel: Thomas D. Hanson, Bjork & Russell; Des Moines, Iowa) — RL

© 2005 The Reporters Committee for Freedom of the Press

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