California public pension ruling could have broader implications

An an important California legal case touching on secrecy in public employee pension programs, an appellate court has ruled for government transparency and openness, and against efforts to withhold information about taxpayer-financed pension plans. California decisions are frequently precursors to judicial decisions elsewhere in the United States.

The case was Sacramento County Employees Retirement System vs. the Superior Court of Sacramento County. The Sacramento Bee newspaper and many other advocates of openness in government record-keeping were categorized as “real parties of interest” in the case.

The basis of the decision lay in the California Public Records Act’s explicit provisions: “Access to information concerning the conduct of the people's business is a fundamental and necessary right of every person in this state."

The appellate court ruled pension programs should be open to those who pay the bills and cover the costs – taxpayers. In doing so, the court rejected the broad arguments for secrecy made on behalf of the county employee retirement system (SCERS).

The court explicitly rejected the attempt of the public employee system to withhold information from the Sacramento Bee, concluding in relevant part: “The petition for writ of mandate is denied. The stay previously issued by this court is vacated. SCERS shall pay the Bee’s ‘costs and reasonable attorney fees’ in an amount to be determined by the trial court.”

In the course of analysis, the California court rejected a total of four different arguments for keeping the public pension information private. In some cases, the court’s conclusions were blunt, including in this phrase: “public pensions are not private information.” Later, the court stressed, “a public pension is deferred public compensation.”

The court noted that “SCERS emphasizes that a portion of each pension stems from member contributions or investment returns, and the actual amount is derived from many individual factors, such as longevity of service and purchased service credits. But SCERS’s Chief Executive Officer declared that most of each pension was public money or investment returns, which would include returns on public money, and SCERS conceded in the trial court that the taxpayer must back public pensions in case of investment failure.”

The court specifically rejected a “catchall exception” to disclosure of public information.

The court unanimous decision noted SCERS “asserts that publication of individual pensions will harm retirees by exposing them to public hostility, particularly during their ‘golden years[.]’ In SCERS’s laudable zeal to protect its members, SCERS edges in the direction of ‘unsupportable age-based stereotyping.’

As for the assertion that disclosing public pension information could bring public criticism on individual recipients, the California court reflected, “Most people will understand that if a pension seems too generous, it is likely the responsibility of the public agency granting the pension, not the worker earning it under the prescribed formula. Thus, although some neighbors or others may become envious upon learning of a particular pension, the fact of such pension would not necessarily expose the member to public shame or abuse.”

As for possible danger to individual retirees, including law enforcement officers, the court reflected, “SCERS has not demonstrated that releasing individual pension information will pose serious danger to its members. Although unrealized threats must be considered in weighing the public interest in nondisclosure, speculative threats must not.”

The analysis continued, “SCERS does not contend its members have varying claims to privacy. Nor do the amici curiae describe any reason for protecting a special class of county retirees. They rest their claim to individual notice on the assumption that individual pensions are personal, confidential, information. But we have already held to the contrary.”

The lower court noted that the California state Supreme Court has previously “rejected a claim that disclosing public salaries required consideration of each employee’s privacy interests, noting that no evidence had been presented justifying such an approach. … In contrast, … a colorable claim was made that undercover peace officers would face special danger if their information was revealed, and a hearing was ordered to consider that claim.”

That latter sentence fragment was virtually the only portion of the opinion that sided with advocates of public pension secrecy in even narrow construction of precedents and statutes.

The ruling was consistent with arguments advanced by the Pacific Legal Foundation, which worked in conjunction with the Fullerton Association of Concerned Taxpayers.

While county pensions were the case’s focus, PLF said in a recent email to supporters that “the implications for taxpayer rights and government transparency extend to pensions at the state and local levels as well.”

The controversy began when Sacramento Bee and the First Amendment Coalition made a request for the names of county pension recipients.

Officials with the public retirement system claimed retirement records were an exception to the rules for openness. The Third district appeals court slapped down that contention in the 3-0 ruling.

As sketched in a summary of PLF’s “amicus curiae” brief, the group’s legal argument “stressed the strong public interest in making the requested information available to the taxpayers who have to foot the bill for government pensions.  The court agreed.  It noted that the cause of pension reform was at issue.  Without having the names of pension recipients, it is difficult if not impossible for researchers and investigative journalists to find out how any particular pension amount was arrived at - e.g., did it reflect the recipient's salary or were formulas used to inflate it?”

The Sacramento Business Journal quoted PLF’s statement applauding the decision:

"This an important ruling because it comes down on the side of sunshine over shadows in the operation of government. By rejecting dubious proposed exceptions to the legal and constitutional mandate for open government, the decision is a big win for the integrity of the California Public Records Act.  That law must be jealously safeguarded, because it ensures taxpayers' right to know how their tax dollars are spent."

As a result of the recent ruling, the pension system was required to turn over the records requested, and to pay attorneys’ fees for the Bee and its allies in the First Amendment Coalition.