BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 382 HEARING: 6/26/13
AUTHOR: Mullin FISCAL: No
VERSION: 6/19/13 TAX LEVY: No
CONSULTANT: Ewing
OPEN MEETINGS AND RETIREMENT SYSTEM INVESTMENTS
Conforms the Brown Act with the Public Records Act with
regard to the confidentiality of proprietary investment
information.
Background and Existing Law
The Ralph M. Brown Act and the California Public Records
Act establish standards for the open and public operations
of the legislative boards of local agencies and the records
maintained by those agencies.
The Ralph M. Brown Act requires the meetings of local
governments' legislative bodies to be "open and public,"
thereby ensuring people's access to information so they may
retain control over the public agencies that serve them.
Private discussions among a majority of a legislative body
are prohibited, unless expressly authorized by the Brown
Act. Legislative bodies can meet in closed sessions only
for specified reasons, including:
Discussions with legal counsel on pending
litigation or liability claims;
Threats to public buildings or access to public
services;
Public employee personnel issues;
Conferences with the body's representative on labor
negotiations;
A conference with real property negotiators;
Discussions of multi-jurisdictional drug cases;
District hospital peer reviews, quality assurance
committees, or reports involving trade secrets; and
License or permit determinations for those with
criminal records.
Local officials must place a closed meeting item on an
AB 382 -- 6/19/13 -- Page 2
agenda and cite their statutory authority to meet behind
closed doors. They must report on any action taken in
closed session and provide the vote of every elected member
present.
The Brown Act authorizes any person to seek court action to
stop or prevent violations and provides a "safe harbor"
provision that clarifies that if local agencies
substantially comply with notice requirements, as
specified, they will not be found in violation of those
requirements.
The Brown Act also specifies that agendas of public
meetings and any other writings, when distributed to all
members of a local legislative body in connection with a
matter subject to discussion at an open meeting, are public
records, subject to disclosure and must be made available
upon request.
In 2004, the Legislature authorized local boards to meet in
closed session to consider the purchase or sale of specific
pension fund investments (AB 2234, Committee on Public
Employees, Retirement and Social Security).
Like the Brown Act, the California Public Records Act
directs, with specified exceptions, that public records be
open to inspection and that every person has the right to
inspect any public record. Public records are defined to
include any writing containing information relating to the
conduct of the public's business prepared, owned, used, or
retained by any state or local agency.
Among the exceptions to public disclosure, are records
regarding "alternative investments," in which public
investment funds invest. Alternative investments are
defined as investment in a private equity fund, venture
fund, hedge fund, or absolute return fund. State law
defines alternative investment vehicle as a limited
partnership, limited liability company, or similar legal
structure through which the public investment fund invests
in portfolio companies.
Records not subject to disclosure are:
Due diligence materials that are proprietary to the
public investment fund or the alternative investment
vehicle.
AB 382 -- 6/19/13 -- Page 3
Quarterly and annual financial statements of
alternative investment vehicles.
Meeting materials of alternative investment
vehicles.
Records containing information regarding the
portfolio positions in which alternative investment
funds invest.
Capital call and distribution notices.
Alternative investment agreements and all related
documents.
The California Public Records Act does not exempt other
information relating to alternative investments, including
dollar amounts committed, cash contributions, distributions
received, net internal rates of return and related
information that is not considered proprietary (SB 439,
Simitian, 2005).
Similarly, state law exempts from disclosure "trade
secrets," (AB 1381, Bagley, 1968), which includes
information deriving independent economic value from not
being generally known to the public or others who can
obtain economic value from its disclosure or use (SB 2053,
Killea, 1994).
Some local officials want to clarify that materials
distributed to the members of a local legislative body
during an open meeting are not subject to disclosure, under
the Brown Act, because they are exempt from disclosure
under the California Public Records Act and under trade
secrets provisions.
Proposed Law
Assembly Bill 382 amends the Brown Act to clarify that
proprietary information relating to alternative
investments, currently exempt from disclosure under the
California Public Records Act, is not subject to disclosure
under the Brown Act.
State Revenue Impact
No estimate.
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Comments
1. Purpose of the bill . Assembly Bill 382 clarifies the
Brown Act's treatment of proprietary documents relating to
alternative investments, exempting them from public
disclosure. AB 382 makes the Brown Act consistent with the
California Public Records Act, and statutes regarding
"trade secrets," which provide an exception to the
disclosure of limited proprietary information.
2. Open is open, closed is closed . The Brown Act provides
clear guidance on the limited circumstances under which
local agencies can meet behind closed doors. The Brown Act
also is clear that materials distributed in open session,
relating to a matter of discussion, are subject to public
disclosure. The Brown Act already protects documents
distributed only in closed session. AB 382 blurs the line
between open and closed by exempting from public disclosure
documents distributed in open session.
Assembly Actions
Assembly Judiciary Committee 9-1
Assembly Local Government 8-0
Assembly Floor 67-2
Support and Opposition (6/20/13)
Support : Los Angeles County Employees Retirement
Association; Retired Employees of Los Angeles County; State
Association of County Retirement Systems.
Opposition : Unknown.