Q: How does a member of the public know if matters taken up in the closed session portion of a meeting of a state body qualify under relevant law to be so classified? Do we have to take the agency’s word for it? At meeting this year of a committee of CalPERS pension fund, many topics that for years have been taken up in open meetings were moved to the closed meetings. This is an abrupt change. Prior to the meeting, when asked about the change in the agenda, a representative of CalPERS responded that:
“One of the key questions we ask when determining if an item can be discussed in open vs closed session Investment Committee discussions is this: will discussing the information in a public setting tip our hand to competitors in the market and allow them to front-run our trades? The size of the Fund makes it an appetizing target for frontrunning, to the detriment of the System. If we announce our intentions in the open, it is easy for anyone in the market to position their funds to capture some or all of the returns we’re targeting, since almost any of them can move faster than our large fund.
“Our Chief Investment Officer and his team will be discussing specific strategies they are proposing that the Board adopt going forward, in pursuit of the 7% return we need to fund pension benefits (Items 4a, 4b, 4c). These strategies require a level of detail that, if discussed in open session, could very well result in a lower final return for us. The additional items in closed session (5a-h and 6) cascade off of the discussions of item 4a, b, c, and are therefore also more appropriate for closed session. The basis for this is found in the Bagley-Keene Open Meeting Act (see Gov. Code, sec. 11120 and following.)”
This sounds good, but (a) it’s a huge break from how the items were handled in the past and (b) it comes at a time when CalPERS has made other changes that make it less transparent. Do I just have to take CalPERS’ word for it?
A: The Bagley-Keene Act requires that state bodies send notice of their meetings to any person who has requested it, and post the notice online, at least 10 days before any meeting. Cal. Gov. Code § 11125(a). The notice must include a specific agenda for the meeting containing “a brief description of the items of business to be transacted or discussed in either open or closed session.” Cal. Gov. Code § 11125(b). Such descriptions “generally need not exceed 20 words.” Id. For items to be discussed in closed session, “A description of an item to be transacted or discussed in closed session shall include a citation of the specific statutory authority under which a closed session is being held.” Id.
Here, in advance of any meeting, CalPERS should identify on the agenda the matter(s) it will discuss in closed session and the specific statutory authority it is invoking to hold a closed session. The brief general description, coupled with the citation to a particular exemption, should help you determine the nature what is being discussed in closed session.
The Act further states that during a meeting, “Prior to holding any closed session, the state body shall disclose, in an open meeting, the general nature of the item or items to be discussed in the closed session. The disclosure may take the form of a reference to the item or items as they are listed by number or letter on the agenda.” Cal. Gov. Code § 11126.3(a). This verbal announcement at the meeting itself might also provide you with an idea of what CalPERS is discussing in closed session.
Note that the Act permits state bodies that invest “retirement, pension, or endowment funds” to hold closed sessions when considering investment decisions. Cal. Gov. Code § 11126(c)(16). You might expect CalPERS to cite this exemption in its agenda.
More information about the Bagley-Keene Act can be found at the First Amendment Coalition’s website here.
Bryan Cave Leighton Paisner LLP is general counsel for the First Amendment Coalition and responds to FAC hotline inquiries. In responding to these inquiries, we can give general information regarding open government and speech issues but cannot provide specific legal advice or representation. No attorney-client relationship has been formed by way of this response.