First Amendment and open government news
Vol. 14, No. 41, December 13, 2004
Beverly Kees, 1941-2004
(CFAC 12/12/04) -- The California journalism and First Amendment communities lost a dear friend on Friday with the tragic death of Beverly Kees. Beverly was struck by a truck, and killed instantly, while crossing a street in San Francisco. At the time of the accident she was, characteristically, assisting a neighbor by walking her pet dog.
Beverly was a professor of journalism at San Francisco State University. A former executive editor of the Fresno Bee, she was projects manager for the Freedom Forum, a national foundation that promotes journalism education, and past president of the norther California chapter of the Society of Professional Journalists.
Beverly was a good friend to CFAC as well, most recently giving endless hours in planning and organizing CFAC's two-day conference in October on government secrecy. CFAC President Dick Rogers recalled her "patiently sitting behind the counter registering attendees as the rest of us were inside, listening to panels and otherwise enjoying the benefits of her planning and good ideas. It was just one small example of her willingness to pitch in."
Beverly will be greatly missed.
San Francisco
Chronicle: Obituary for Beverly Kees
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FIRST AMENDMENT AND OPEN GOVERNMENT NEWS
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CalPERS settles CFAC law suit over $200 million in fees paid annually to VC firms; Pension discloses, for first time, fees paid to each firm and profits received from each firm.
(CFAC 12/12/04) -- The California Public Employees' Retirement System
(CalPERS) publicly disclosed Monday, for the first time, the management
fees it pays to individual venture capital, hedge, and other private equity
funds in which CalPERS invests. The disclosure resulted from CalPERS'
settlement of a law suit brought by CFAC last September.
The documents reveal millions of dollars in management fees paid to venture
funds which, according to press reports, are affiliated with individuals
who made campaign contributions to CalPERS board members.
The information disclosed by CalPERS covers the period 2001 through 2003.
CalPERS also agreed to disclose management fee information for 2004 and
2005 as part of a settlement of the lawsuit brought by CFAC.
The documents show that CalPERS, the nation's largest public pension fund,
pays just over $200 million per year in management fees to 416 private
equity funds in which CalPERS has already invested $13.5 billion, and
to which it has committed to invest $21.1 billion. The documents, for
the first time, show which firms received the hefty management fees, and
how much they received.
In 2003, the last year for which information is available, the biggest
fee, $8.1 million, was paid to Lombard/Pacific Partners, in which CalPERS
has invested $347 million since 1995. Twelve private equity funds were
paid management fees of over $3 million a piece in 2003.
Among the fee recipients are three funds of Yucaipa Companies.
According to several press reports, the funds' head, Ron Burkle, has
made political campaign contributions to State Treasurer Phil Angelides,
who sits on CalPERS' board. Another board member, former San Francisco
mayor Willie Brown, has done work for Burkle, according to press reports.
The CalPERS documents show the Yucaipa funds were paid $8.7 million in
management fees in 2003, or 17.3% of capital invested. Two of the three
Yucaipa funds have negative rates of return.
Other CalPERS funds with political connections to members of the CalPERS
board are New Mountain Partners, which was paid a management fee of $1.4
million in 2003, and Reliant Equity Partners, which was paid a management
fee of $1.1 million. According to press reports, New Mountain's founder,
Steve Klinsky, has contributed to Angelides' campaign. An adviser to one
of New Mountain's managing partners helped raise money for Angelides and
also contributed to the campaign of state Controller Steve Westly,
another member of CalPERS' board, according to press reports.
CalPERS last week also disclosed -- for the first time -- documents showing
its profits, on a fund-by-fund, year-by-year basis, dating back to 1999,
from its venture capital investments. CalPERS previously had disclosed
only cumulative profits in private equity funds.
Using the newly disclosed information, one can estimate the value of the
venture capital funds' share of CalPERS' realized profits. In general,
CalPERS and the funds split gains on an 80%-20% basis (that is, the funds,
as a performance incentive, have a 20% "carried interest" in
CalPERS' investments). This means that the funds' share of CalPERS' realized
profits totaled approximately $770 million from 1999 through 2003 -- in
addition to annual management fees.
In connection with the settlement, CalPERS revealed that, with few exceptions,
it does not have records showing the actual profits that Individual venture
capital firms have paid themselves from profits attributable to CalPERS'
profits. A sworn declaration to that effect was incorporated into the
parties' settlement agreement.
In initially denying CFAC's public records requests, CalPERS had argued that its fee and profit information were trade secrets. CalPERS also argued that disclosure of the information was blocked by the VC firms' partnership agreements -- nearly all of which contain nondisclosure and confidentiality provisions -- and that the best VC firms would refuse to do business with CalPERS if their fees were made public.
CFAC argued in its legal pleadings that much of the information on VC firms' fees had already been reported in the financial press -- in many cases, with the cooperation of the firms' general partners. CFAC also argued that the firms' fees and profits were not competitively sensitive information, but merely a source of embarrassment to the firms.
As part of the settlement, CalPERS agreed to pay CFAC's legal fees. CFAC's lead counsel in the case was Karl Olson, a partner at San Francisco's Levy, Ram & Olson. Also representing CFAC were Judy Alexander of Winn & Alexander in Capitola and Erica L. Craven of Levy, Ram & Olson. The same attorneys had also successfully sued CalPERS in 2002 to obtain venture capital performance information, and also won court rulings in 2003 against the University of California forcing UC to disclose venture capital rates of return.
Links:
Below are major news articles on CalPERS' settlement:
New York
Times
The Wall
Street Journal
Los
Angeles Times
Sacramento
Bee
San
Jose Mercury-News
Reuters
Associated
Press
Bloomberg
News
Oakland pay records won by Contra Costa Times in PRA suit show out-of-control expenses for overtime. Problem worst among police and firefighters.
By Peter Scheer
(CFAC 12/13/04) -- Now we know why Oakland's municipal unions were so opposed to the city's releasing the names and salaries of all employees making more than $100,000 a year.
The Contra Costa Times last week reported on the records it received after successfully suing Oakland to force it to comply with the Public Records Act. The information was eye-opening, to say the least:
811 city employees earned over $100,000 from July 2003 to June 2004, due mainly to heavy overtime pay. In the police and fire departments, where most of the high-paid employees are concentrated, over 34% of all employees made $100,000-plus, including Fire Battalion Chief Edward J. Kilmartin IV, who took home $230,400 with a base salary of $128,300, and Police Sgt. Larry Krupp, who earned $181,728 on a base salary was $91,225.
Add in the value of health insurance and pension benefits that private sector employees can only dream of, and it's clear that being a police officer or fire fighter in Oakland is a sweet deal indeed. And this in a city that is nearly broke and whose school system is in bankruptcy.
Overtime pay on this lavish a scale can only be explained on the basis of gross mismanagement. If the city truly needs as many employee-hours as it's paying for, it should hire more employees, contract out functions that needn't be performed by city employees (just one example: web site maintenance, for which the city's "webmaster" was paid $187,386, including overtime), or both.
The newly disclosed salary information vindicates the Contra Costa Times' decision NOT to settle for a more limited disclosure that would have shown each individual's earnings and department -- but without employee names. Using employee names, for example, reporters will be able to determine how much of a role cronyism plays a role in overtime pay.
Hopefully, reporters will also look into whether Oakland has been defrauded by a scheme to manipulate overtime to increase pension payments to employees who are close to retirement. In such a scheme, junior employees in the police or fire departments conspire with others to call in sick, so that more senior employees, who will have to cover for them, receive disproportionate overtime pay.
Because pension benefits are often pegged to an employee's income in the last years of service, the rigged overtime boosts pension benefits. Employees who engage in this fraud are unjustly enriched both with excess overtime pay and also with inflated pension payments in their retirement. Taxpayers are doubly screwed.
Here is Contra Costa Times' own story on the pay records.
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CFAC HOTLINE Q & A
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The Hotline is CFAC's online legal information service. Questions from reporters, government officials, civic activists and the occasional crackpot are answered by media law specialists at the national law firm of Piper Rudnick, CFAC's general counsel.
Juvenile mother competency hearing
Q: In Juvenile Court, a competency hearing is being held for a young girl accused of abandoning her baby. The district attorney's office has charged her with attempted murder and felony child abandonment.
Under WIC 676, the public should be allowed into the criminal proceedings. However, the DA's office said the criminal proceedings have been suspended during the competency hearing. The judge has barred all media from the hearing and imposed a gag order on the defense and prosecution. The DA's office said the media has been barred because the topic of the hearing is the juvenile's medical history and mental health and she is entitled to privacy.
This being the case, is there any way I can get access to the hearings?
A: There is case law in California holding that Welfare & Institutions Code §676 does apply to competency hearings, so, under that statute, the proceedings in this case should be open unless the prosecution or the juvenile's attorneys filed a motion to close the hearing and the judge - supposedly after giving the media time to object - finds a sufficiently compelling justification for closing the hearing. Typically, the grounds being asserted for closure here - medical history and mental health - would not justify closing the entire competency hearing.
Unfortunately, it is not unusual that a court and the parties fail to follow the proper procedures before closing a hearing. When that happens, the most common recourse is to file a motion to open the hearings and, if appropriate, unseal the records (and, in this case, perhaps also move to lift the gag order, although that can involve slightly different issues). We have filed motions like this in the past and they can be (but are not always) successful in convincing the judge to open the hearings.
California college and university records
Q: Are the campus police records of California public colleges and universities open under the public records act? Can requests be submitted through the mail?
A: It appears that the various public universities and colleges in California are all subject to the Public Records Act. What follows are authorities addressing that issue for each category of institution:
(1) University of California: In AFSCME v. Regents, 80 Cal. App. 3d 913 (1978) and Coalition of University Employees v. Regents, 2003 WL 22717384 (Super. Ct. Ala. Cty 2003), the courts assume w/out discussion that the University of California is subject to the PRA.
(2) California State University: In California State University v. Superior Court, 90 Cal. App. 4th 810, 830 (2001), the court assumes w/out discussing that California State University, Fresno is a state agency ("we presume the University does not challenge its status as a state agency.")
(3) California Community Colleges: A Community College District is a "local agency" for the purposes of the California Public Records Act. See Gov't Code § 54951; 75 Ops. Cal Att'y Gen. 143; 66 Ops. Cal. Att'y Gen. 252 (1983).
That said, you should be aware that the Public Records Act includes an
exemption for investigatory records that is quite broad and often used
to deny access to police reports. See Gov. Code sec. 6254.7. This provision
does require, however, that the agency provide basic information about
an incident even if it does not provide the actual report. You can review
the text of the provision on CFAC's website at cfac.org. You will also
find a sample Public Records Act request letter there which you are welcome
to use
as a model for your request. You may submit your request through the mail
or in person (in writing or orally); the Act does not restrict the method
of submission.
Good luck.
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MORE FIRST AMENDMENT AND OPEN GOVERNMENT NEWS
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San
Diego Union-Tribune:
Frye to head panel promoting open government
New York
Times:
Judges Skeptical of First Amendment Protection for Reporters in C.I.A.
Leak Inquiry
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ANNOUNCEMENT
SUNSHINE/FIRST AMENDMENT AWARDS
Do you know of someone in Northern California who has made a significant contribution in behalf of the First Amendment and/or freedom of information? If so, the Society of Professional Journalists, Northern California chapter's Freedom of Information Committee wants to hear from you. The committee is seeking nominations for its James Madison Award given annually to persons and organizations that have advanced the FA/FOI causes. The awards will be presented at a dinner in San Francisco in mid-March. Nomination deadline is Wednesday, Dec. 1.
For additional information or submit nominees, contact committee co-chair
David Greene, 510-208-7744, dgreene@thefirstamendment.org.
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MORE CFAC IN THE NEWS
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San
Francisco Chronicle:
Slew of journalists under legal siege for not revealing sources
If you have suggestions for items to be included in CFAC's weekly Flash,
please e-mail them to Peter Scheer