Amended in Senate June 19, 2013

Amended in Assembly April 30, 2013

Amended in Assembly April 15, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 382

Introduced by Assembly Member Mullin

February 14, 2013

An act to amend begin delete Sections 54956.81 and end delete begin insert Section end insert 54957.5 of the Government Code, relating to state and local government.

LEGISLATIVE COUNSEL’S DIGEST

AB 382, as amended, Mullin. State and local government: alternative investments: public access.

Existing law, the California Public Records Act, requires state agencies and local agencies to make public records available for inspection, subject to specified criteria, and with specified exceptions. Existing law excludes from disclosure records of public investment funds regarding alternative investments, as defined, unless the information has already been publicly released by the keeper of the information. Existing law defines an alternative investment to mean an investment in a private equity fund, venture fund, hedge fund, or absolute return fund.

Existing law, the Ralph M. Brown Act, requires the meetings of the legislative body of a local agency to be conducted openly and publicly, with specified exceptions. begin insert Existing law makes agendas of public meetings and other writings distributed to the members of the governing board disclosable public records, with certain exceptions. end insert Existing law authorizes the legislative body of a local agency that invests pension funds to hold a meeting in closed session to consider the purchase or sale of particular, specific pension fund investments.

This bill would begin delete further authorize the legislative body of a local agency that invests pension funds to hold a meeting in closed session to consider information related to alternative investments and alternative investment vehicles, as specified end delete begin insert include prescribed documents dealing with alternative investments within the exceptions to the requirement for disclosure of documents related to public meetings end insert .

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

begin delete

SECTION 1.  

Section 54956.81 of the Government Code is
amended to read:

54956.81.  

Notwithstanding any other provision of this chapter,
a legislative body of a local agency that invests pension funds may
hold a closed session to consider the purchase or sale of particular,
specific pension fund investments or the information set forth in
subdivision (a) of Section 6254.26. All investment transaction
decisions made during the closed session shall be made by rollcall
vote entered into the minutes of the closed session as provided in
subdivision (a) of Section 54957.2.

end delete

begin delete SEC. 2. end delete
begin insert SECTION 1. end insert   

Section 54957.5 of the Government Code is
amended to read:

54957.5.  

(a) Notwithstanding Section 6255 or any other law,
agendas of public meetings and any other writings, when
distributed to all, or a majority of all, of the members of a
legislative body of a local agency by any person in connection
with a matter subject to discussion or consideration at an open
meeting of the body, are disclosable public records under the
California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1), and shall be made available
upon request without delay. However, this section shall not include
any writing exempt from public disclosure under Section 6253.5,
6254, 6254.3, 6254.7, 6254.15, 6254.16, 6254.22, or 6254.26.

(b) (1) If a writing that is a public record under subdivision (a),
and that relates to an agenda item for an open session of a regular
meeting of the legislative body of a local agency, is distributed
less than 72 hours prior to that meeting, the writing shall be made
available for public inspection pursuant to paragraph (2) at the
time the writing is distributed to all, or a majority of all, of the
members of the body.

(2)  A local agency shall make any writing described in
paragraph (1) available for public inspection at a public office or
location that the agency shall designate for this purpose. Each local
agency shall list the address of this office or location on the agendas
for all meetings of the legislative body of that agency. The local
agency also may post the writing on the local agency’s Internet
Web site in a position and manner that makes it clear that the
writing relates to an agenda item for an upcoming meeting.

(3) This subdivision shall become operative on July 1, 2008.

(c) Writings that are public records under subdivision (a) and
that are distributed during a public meeting shall be made available
for public inspection at the meeting if prepared by the local agency
or a member of its legislative body, or after the meeting if prepared
by some other person. These writings shall be made available in
appropriate alternative formats upon request by a person with a
disability, as required by Section 202 of the Americans with
Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal
rules and regulations adopted in implementation thereof.

(d) This chapter shall not be construed to prevent the legislative
body of a local agency from charging a fee or deposit for a copy
of a public record pursuant to Section 6253, except that a surcharge
shall not be imposed on persons with disabilities in violation of
Section 202 of the Americans with Disabilities Act of 1990 (42
U.S.C. Sec. 12132), and the federal rules and regulations adopted
in implementation thereof.

(e) This section shall not be construed to limit or delay the
public’s right to inspect or obtain a copy of any record required to
be disclosed under the requirements of the California Public
Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1).This chapter shall not be construed to require
a legislative body of a local agency to place any paid advertisement
or any other paid notice in any publication.

begin delete SEC. 3. end delete
begin insert SEC. 2. end insert   

The Legislature finds and declares that begin delete Sections 1 and end delete
begin delete 2 end delete begin insert Section 1 end insert of this act, which begin delete amend Sections 54956.81 and end delete begin insert amends
Section end insert 54957.5 of the Government Code, begin delete impose end delete begin insert imposes end insert a
limitation on the public’s right of access to the meetings of public
bodies or the writings of public officials and agencies within the
meaning of Section 3 of Article I of the California Constitution.
Pursuant to that constitutional provision, the Legislature makes
the following findings to demonstrate the interest protected by this
limitation and the need for protecting that interest:

It is in the public interest to ensure that disclosure requirements
in the Ralph M. Brown Act are consistent with those in the
begin insert California end insert Public Records Act. begin delete When Section 6254.26 was added
to the Government Code, the following findings were made, which
are applicable with equal force to this measure: end delete

begin delete

(a) Access to information concerning the conduct of the people’s
business is a fundamental and necessary right of every person in
this state pursuant to subdivision (b) of Section 3 of Article I of
the California Constitution and Section 6250 of the Government
Code. The public has a paramount interest in knowing how public
money is spent and invested.

(b) Public pension and retirement systems and public
endowments and foundations have a fiduciary duty to invest the
assets of these funds with care, skill, prudence, and diligence. This
fiduciary duty includes diversifying the investment of assets in a
manner so as to minimize the risk of loss and maximize the rate
of return. Investment in high performing alternative investments
is a component of diversifying the pension assets and maximizing
the rate of return.

(c) At the same time, a certain narrow class of public
investments, alternative investments, involves some information
that historically has been kept confidential because confidentiality
is essential to their success. The disclosure of certain information
pertaining to alternative investments could be harmful to generating
sustainable and profitable rates of return for the investments of the
pension or retirement system and of the public endowment or
foundation. Public pension systems desire to invest a portion of
their portfolio in alternative investments to boost return.

(d) Following recent litigation seeking to require public pension
funds and retirement systems and public endowments or
foundations to disclose certain information about alternative
investments, the funds risk being excluded from participation in
certain alternative investments. Exclusion from investing pension
or retirement system assets in alternative investments may impose
substantial costs on state public pension funds and the public
employees who are their beneficiaries.

(e) It is the intent of this legislation to balance the public’s right
of access to information and the ability of public pension funds to
continue to invest in alternative investment funds. It is also the
intent of this legislation to allow the public to monitor the
performance of public investments; for public bodies to avoid
payment of excessive fees to private individuals or companies;
and for the public to be able to know the principals involved in
management of alternative investment funds in which public
investment funds have invested so that conflicts of interest on the
part of public officials can be avoided. This legislation is not
intended to reverse the general presumption of access and openness
of the California Public Records Act and subdivision (b) of Section
3 of Article I of the California Constitution.

(f) It is not the intent of this legislation to overrule or invalidate
any court orders in or stipulated resolutions of prior litigation
relating to any public entity’s obligation to disclose information
about its alternative investments to narrow the information
disclosed as a result of those decisions, or in any other way to
apply retroactively. It is, rather, the intent of this legislation to
establish predictability about what should and should not be
disclosed regarding private equity funds so that public pension
funds will be able to continue to invest in private equity funds.

end delete