PD Editorial: Pension bill would bury bad decisions
Published: Friday, March 1, 2013 at 7:00 p.m.
Last Modified: Friday, March 1, 2013 at 11:54 a.m.
For many people, and many businesses, the best antidote for a mistake is to confront it, understand the cause and avoid repeating it.
Other common responses include ignoring a mistake, or hiding it and hoping no one notices.
That last and least attractive approach seems to be favored by some of California's public employee pension funds.
You might get that idea (we did) from Assembly Bill 382, legislation introduced on behalf of the State Association of County Retirement Systems, the lobbying arm for the 26 public employee pension funds managed by California counties, including Sonoma.
AB 382 would overturn a San Francisco Superior Court judge's ruling that the public is entitled to review certain information pertaining to real estate investments made with pension funds. Judge Charlotte Woolard's ruling came in a case involving a $100 million investment of state pension funds in a failed real estate project in East Palo Alto.
At issue wasn't the amount of the loss but how the California Public Employees Retirement System came to invest pension money in the spectacularly unsuccessful project.
Releasing that information allows for independent examinations of the decision-making process, creating an opportunity for the public, including outside experts, to recommend changes and strategies that could safeguard public money in the future. In other words, releasing the information allows for routine public oversight.
Without it, the public may never know if some advisers recommended against a bad investment or whether an investment was made when a private partner was verging on bankruptcy, as Karl Olson, the lawyer who filed the East Palo Alto lawsuit, told the Sacramento Bee.
CalPERS has taken no position on AB 382, the Bee reported. The bill was introduced by Assemblyman Kevin Mullin, D-South San Francisco, who said it strikes a balance between open government and protecting public investments from competitive disadvantage.
That same argument was used eight years ago to justify a state law that denies public access to a wide range of information about public investments in hedge funds, venture capital funds and private equity funds.
Mullins' bill would add real estate deals to the list of investments exempt from disclosure.
In addition to pension funds, the University of California has investments that fall under the exemption from the public records act.
In effect, taxpayers are being told to trust pension funds and other public agencies to handle billions of dollars wisely and to do so without answering too many questions from the public, watchdog groups or the news media. But then pay the price when they fail?
We prefer the approach that President Ronald Reagan recommended for arms control: trust but verify. AB 382 threatens the public's ability to verify. This bill doesn't deserve to get out of committee.
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