It is deeply disturbing that a public agency — whose compliance with state transparency laws is found by the Kentucky Auditor of Public Accounts to fall “drastically short” — concludes its response to the auditor’s examination with the statement that it “compl[ies] with all governing statutes to the extent possible.”
This is how the Kentucky Retirement Systems responded to Auditor Mike Harmon’s special examination. Make no mistake: It is an admission of noncompliance. External forces, the statement suggests, prevent it from fully complying.
Those external forces are the investment managers who, KRS unapologetically acknowledges, determine the extent to which it complies with state law. They — and not KRS — decide what the public is permitted to know about their fees and investment contracts.
The open records law places the burden on the KRS to critically analyze the investment managers’ proposed redactions and to determine if those redactions are legally defensible.
The standard is the same under the open records law and SB 2. Unless KRS independently concludes that information designated confidential by the investment managers qualifies for protection under KRS 61.878(1)(c)1., KRS has a legal obligation to make fees and contracts accessible under the open records law and to post fees and contracts on its website under SB 2.
It is the same analysis applied any time a private entity does business with a public agency.
I do not know when, where or how the notion first emerged that the private entity “must determine what information to redact” and that the agency “cannot be the legal arbitrator of what should, and should not be, redacted.” But that view is contrary to 40-plus years of open records analysis. KRS is, in fact and in law, the “legal arbitrator” even at the risk of litigation.
I do, however, know that 16-ORD-273 does not support KRS’ position as it claims. At best, that decision recognizes that KRS met its burden of proving that investment strategies contained in KKR Prisma’s contract 1) were confidentially disclosed, 2) are generally recognized as confidential or proprietary, and 3) would give competitors of KKR Prisma an unfair commercial advantage if disclosed
The open records decision flatly rejects redaction of all other “claimed categories of ‘other proprietary information.’” “We find,” the attorney general concludes, “that KRS’s burden of proof under KRS 61.880(2)(c) has been met only as to the information pertaining to KKR Prisma’s investment strategy.”
It goes on to state that “the mere existence of a confidentiality agreement between KRS and KKR Prisma does not render the partnership agreement entirely exempt from the open records act.”
16-ORD-273 does not support KRS’s strained construction of the open records law that would improperly shift responsibility from the public agency statutorily assigned that duty to a private investment manager.
Heaven help us if this construction of the open records law ever finds approval with the attorney general or the courts. or otherwise gains traction. Can you imagine if all such records access decisions involving private entities were left to those entities?
As for KRS’ attempt to distinguish contracts executed before the passage of SB 2 in 2017 and contracts executed after 2017, this is a false dichotomy.
The open records law was enacted in 1976. It applied to contracts executed before and after 2017. SB 2 mandated posting of the contracts and fees after 2017 but did not distinguish between pre- and post-2017 contracts. “All contracts or offerings for services, goods, or property purchased or utilized by the system” must, perforce, be posted.
KRS’ defense that “it is impossible to get the required permission from managers, general partners, and all of the limited partners to let us post what are otherwise confidential contracts” in place prior to 2017 is premised on this false dichotomy.
On and before the effective date of SB 2, investment managers, general partners and limited partners knew they were contracting with a state governed by a robust open records law and should have known that they could not evade the law by entering into a confidentiality agreement with the state.
It is no exaggeration to state that KRS has abdicated it statutory duties under the open records law and SB 2. Nothing, certainly not 16-ORD-273 or threats of litigation from its investment managers (real or imagined), can excuse it from full compliance with governing transparency statutes.
Amye Bensenhaver is a retired assistant attorney general, open government advocate and blogger for the University of Kentucky Scripps Howard First Amendment Center. She recently helped establish the Kentucky Open Government Coalition. Her email address is firstname.lastname@example.org.