Amended in Senate April 16, 2015

Amended in Senate April 6, 2015

Senate Bill No. 574

Introduced by Senator Pan

(Coauthor: Senator Cannella)

February 26, 2015

An act to amend Section begin delete 6254.26 end delete begin insert 92032 end insert of the begin delete Government end delete begin insert Education end insert Code, relating to begin delete public records. end delete begin insert postsecondary education. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 574, as amended, Pan. begin delete Public records: public investment funds: disclosure. end delete begin insert University of California: regent meetings: closed meetings. end insert

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Existing law generally requires meetings of the Regents of the University of California to be conducted in accordance with the Bagley-Keene Open Meeting Act, unless otherwise provided. Existing law further authorizes the Regents of the University of California to conduct closed sessions to discuss specified matters, including, among others, matters involving the purchase or sale of investments for endowment and pension funds.

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This bill would specify that the provisions authorizing the regents to conduct a closed meeting to discuss matters involving the purchase of sale of investments for endowment and pension funds do not apply to investments in a private equity fund, venture fund, hedge fund, or absolute return fund unless the regents have received from the fund, and disclosed to the public, certain information set forth in specified provisions of the California Public Records Act.

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Existing law, the California Public Records Act, requires state and local agencies to make public records, as defined, available for inspection, subject to specified criteria, and with specified exceptions. Existing law excludes from disclosure specified records of public investment funds regarding alternative investments, as defined, unless the information in the records has already been publicly released by the keeper of the information. Notwithstanding this exclusion, existing law provides that certain types of information contained in records regarding alternative investments in which public investment funds invest are subject to disclosure under the act, and provides that the information is not to be considered a trade secret exempt from disclosure.

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This bill would also subject records with those types of information regarding alternative investments that are in the constructive possession of, or are otherwise accessible or obtainable by, a public investment fund to disclosure under the act and require a public investment fund to obtain and disclose those records.

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By increasing the duties of local public investment funds, this bill would impose a state-mandated local program.

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The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose.

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This bill would make legislative findings to that effect.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete yes end delete begin insert no end insert .

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

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begin insert SECTION 1. end insert   

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begin insert Section 92032 of the end insert begin insert Education Code end insert begin insert is amended
to read: end insert

92032.  

Notwithstanding Article 9 (commencing with Section
11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the
Government Code:

(a) The Regents of the University of California, as occasioned
by necessity, may hold special meetings. The regents shall give
public notice for these meetings. This notice shall be given by
means of a notice hand delivered or mailed to each newspaper of
general circulation and television or radio station that has requested
notice in writing, so that the notice may be published or broadcast
at least 72 hours before the time of the meeting. The notice shall
specify the time, place, and agenda of the special meeting. The
regents shall not consider any business not included in the agenda
portion of the notice. Failure to comply with this subdivision shall
not be excused by the fact that no action was taken at the special
meeting.

(b) The Regents of the University of California may conduct
closed sessions when they meet to consider or discuss any of the
following matters:

(1) Matters affecting national security.

(2) The conferring of honorary degrees or other honors or
commemorations.

(3) Matters involving gifts, devises, and bequests.

(4)  begin insert (A) end insert begin insert   end insert Matters involving the purchase or sale of investments
for endowment and pension funds.

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(B) This paragraph shall not apply to investments in a private
equity fund, venture fund, hedge fund, or absolute return fund,
unless the regents have received from the fund, and disclosed to
the public, the information specified in subdivision (b) of Section
6254.26 of the Government Code.

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(5) Matters involving litigation, when discussion in open session
concerning those matters would adversely affect, or be detrimental
to, the public interest.

(6) The acquisition or disposition of property, if discussion of
these matters in open session could adversely affect the regents’
ability to acquire or dispose of the property on the terms and
conditions they deem to be in the best public interest.

(7) (A) Matters concerning the appointment, employment,
performance, compensation, or dismissal of university officers or
employees, excluding individual regents other than the president
of the university.

(B) (i) Action taken by a committee of the regents, and final
action by the full board of regents, on a proposal for the
compensation package of the following executive officers shall
occur in an open session of each of those bodies, and shall include
a disclosure of the compensation package and rationale for the
action:

(I) The President of the University of California.

(II) The chancellor of an individual campus.

(III) A vice president.

(IV) The treasurer or the assistant treasurer.

(V) The general counsel.

(VI) The regents’ secretary.

(ii) Members of the public shall be afforded the opportunity to
address the committee and full board on the proposal during or
before consideration of the action item.

(C) Discussion by a committee of the regents of, and action on,
an executive compensation program or policy, and any final action
by the full board of regents on that program or policy, shall occur
in open session of each of those bodies.

(D) Compensation for the principal officers of the regents and
the officers of the university shall include salary, benefits,
perquisites, severance payments (except those made in connection
with a dismissal or a litigation settlement), retirement benefits, or
any other form of compensation.

(8) Matters relating to complaints or charges brought against
university officers or employees, excluding individual regents
other than the president of the university, unless the officer or
employee requests a public hearing.

(c) While a witness is being examined during any open or closed
session, any or all other witnesses in the investigation may be
excluded from the proceedings by the regents.

(d) Committees of the regents may conduct closed sessions on
Medi-Cal contract negotiations.

(e) The nominating committee of the regents may conduct closed
sessions held for the purpose of proposing officers of the board
and members of the board’s various committees.

(f) Committees of the regents may conduct closed sessions held
for the purpose of proposing a student regent.

(g) The regents shall not be required to give public notice of
meetings of special search or selection committees held for the
purpose of conducting interviews for university officer positions.

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SECTION 1.  

Section 6254.26 of the Government Code is
amended to read:

6254.26.  

(a) Notwithstanding any provision of this chapter or
other law, the following records regarding alternative investments
in which public investment funds invest shall not be subject to
disclosure pursuant to this chapter, unless the information has
already been publicly released by the keeper of the information:

(1) Due diligence materials that are proprietary to the public
investment fund or the alternative investment vehicle.

(2) Quarterly and annual financial statements of alternative
investment vehicles.

(3) Meeting materials of alternative investment vehicles.

(4) Records containing information regarding the portfolio
positions in which alternative investment funds invest.

(5) Capital call and distribution notices.

(6) Alternative investment agreements and all related documents.

(b) Notwithstanding subdivision (a), the following information
contained in records described in subdivision (a) regarding
alternative investments in which public investment funds invest
shall be subject to disclosure, shall be obtained and disclosed by
a public investment fund pursuant to this chapter, and shall not be
considered a trade secret exempt from disclosure:

(1) The name, address, and vintage year of each alternative
investment vehicle.

(2) The dollar amount of the commitment made to each
alternative investment vehicle by the public investment fund since
inception.

(3) The dollar amount of cash contributions made by the public
investment fund to each alternative investment vehicle since
inception.

(4) The dollar amount, on a fiscal yearend basis, of cash
distributions received by the public investment fund from each
alternative investment vehicle.

(5) The dollar amount, on a fiscal yearend basis, of cash
distributions received by the public investment fund plus remaining
value of partnership assets attributable to the public investment
fund’s investment in each alternative investment vehicle.

(6) The net internal rate of return of each alternative investment
vehicle since inception.

(7) The investment multiple of each alternative investment
vehicle since inception.

(8) The dollar amount of the total management fees and costs
paid on an annual fiscal yearend basis, by the public investment
fund to each alternative investment vehicle.

(9) The dollar amount of cash profit received by public
investment funds from each alternative investment vehicle on a
fiscal year-end basis.

(c) For purposes of this section, the following definitions shall
apply:

(1) “Alternative investment” means an investment in a private
equity fund, venture fund, hedge fund, or absolute return fund.

(2) “Alternative investment vehicle” means the limited
partnership, limited liability company, or similar legal structure
through which the public investment fund invests in portfolio
companies.

(3) “Portfolio positions” means individual portfolio investments
made by the alternative investment vehicles.

(4) “Public investment fund” means any public pension or
retirement system, and any public endowment or foundation.

(5) “Records” includes public records described in Section 6252
and records relating to the conduct of the public’s business that
are in the constructive possession of, or otherwise accessible or
obtainable by, a public investment fund.

SEC. 2.  

The Legislature finds and declares that Section 1 of
this act, which amends Section 6254.26 of the Government Code,
furthers, within the meaning of paragraph (7) of subdivision (b)
of Section 3 of Article I of the California Constitution, the purposes
of that constitutional section as it relates to the right of public
access to the meetings of local public bodies or the writings of
local public officials and local agencies. Pursuant to paragraph (7)
of subdivision (b) of Section 3 of Article I of the California
Constitution, the Legislature makes the following findings:

Increased information about the performance of alternative
investments collected by local agencies, that could be leveraged
by the public to more efficiently access and better monitor the
investment performance of an agency’s portfolio, would be made
available to the public under the act in furtherence of the purpose
of Section 3 of Article I of the California Constitution.

SEC. 3.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district under this act would result from a legislative mandate that
is within the scope of paragraph (7) of subdivision (b) of Section
3 of Article I of the California Constitution.

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