In April 2012, the Des Moines Register requested emails and expense records from the University of Iowa Foundation pursuant to Iowa’s Public Records Law. The University of Iowa Foundation promptly denied the request, stating that the law does not apply to the Foundation as a private, nonprofit entity.

The refusal of the Foundation and its own categorization of itself as a “private, nonprofit” entity sparks some debate over how to characterize certain outlier entities. Specifically, the University of Iowa Foundation aims to advance the University of Iowa and fulfill the aspirations of those it serves through maximizing fundraising, enhancing the culture of philanthropy on campus, and strengthening the development of the UI leadership. The foundation maintains $1.1 billion in assets to benefit the University of Iowa, and donated a total of $213,994,660 in combined private gift support

The Nitty Gritty

Why do these details matter? In Iowa, they matter because of a 2005 Supreme Court case, Gannon v. Board of Regents et.al, which determined that even private, nonprofit corporations that operate as a foundation that solicits and manages private gifts for the exclusive benefit of a public university performs a government function by virtue of its service agreement with the university, and its records are “public records.”

Similarly, that case dealt with a records request from the Iowa State University Foundation. The Iowa Supreme Court found that because the fundraising activities unmistakably advanced the goals of the university, the foundation was performing a basic government function.

Whether the state will require the disclosure of University of Iowa Foundation records is questionable, specifically due to the form and content of the request made in this case, and because the Iowa law provides certain exceptions to the rule. However, the incidences of records requests from organizations that may or may not be “government bodies” may have far-reaching consequences outside of Iowa.

The Bigger Picture

Moving forward, courts in every state will begin grappling with determinations of what is and what is not a government body, therefore subject to public records laws. State legislators may preempt the courts and legislate what will qualify organizations as government bodies. Or, as in Iowa, courts may decided that the substance of the entity, what it does on a day to day basis, is more important that the form it takes (i.e. a private, nonprofit foundation).
Either way, it is crucial that we recognize the consequences of the potentially far-reaching implications of these decisions. Certainly, we do not want states’ public records laws to infringe on the private sphere. Additionally, we do not want to create a system that allows taxpayer-funded organizations to fall between the cracks of disclosure laws. 

Facebook, a social networking site launched in February 2004, released a new transparency policy yesterday that includes multiple document resources, as well as a video explaining new and old practices. As we marvel at the responsive, comprehensive steps the social networking site is taking to increase transparency, the government’s inability to mimic those initiatives is glaring.

The impetus for the improvement at Facebook is threefold. Facebook Europe is headquartered in Dublin, Ireland, and is regulated by the Office of the Irish Data Protection Commissioner. Last year, the IDPC audited Facebook’s data privacy practices; the results are available publicly. As part of the audit, the IDPC asked that Facebook clarify and expand upon their data use practices by Spring 2012. Executives also emphasized that because Facebook is using so many new products, including Timeline, the site requires more disclosure to better inform over 900 million active users. Most importantly, users demanded more transparency.

All transparency initiative documents are made available on Facebook, including a red line of the data use policy, transparency terms, and the “cookies” hub. These databases include comprehensive section-by-section analysis of the changes and improvements. Most importantly, Facebook is seeking comments from users and are attempting to reply to and incorporate many users’ suggestions.

Why Facebook is winning

The 2010 U.S. Census reported the population of the United States at 313.5 million people, approximately 600 million less than members than Facebook, yet Americans are still clamoring for more transparency in government and Facebook users worldwide seem satisfied.

In the eight years since the launch of Facebook, the site has expanded to include extensive site upgrades, accommodated skyrocketing numbers of new users, incorporated new features including voice and video calling, and is arguably worth $100 billion.

Granted, the U.S. federal government works with a much larger budget and must have a physical, as well as virtual presence, but state governments make an excellent comparison to Facebook as far as budget, even though Facebook users grossly outnumber the population of every state in the nation. So why does Facebook excel in transparency when the states do not?

Both entities deal with external regulatory agencies, internal regulation, and customer satisfaction, yet Facebook seems much more responsive and proactive. Facebook has international compliance agencies regulating content; federal, state, and local governments have“sunshine legislation” providing that government-related documents and activities are made completely open to the public and the press. Regulation alone is insufficient, just as regulation alone is not enough to compel Facebook to change their practices. At the heart of the problem is accountability.

Accountability: Demanding change

While Facebook eagerly changes to meet the demands of their customers to ensure continued use of the social networking site, oppositely, the government knows that no matter what, citizens must use their services because there is no market alternative. To this end, it is crucial for Americans to become activists, encouraging and pushing government to better accommodate the need for transparency, because they are not going to do it alone.

Since we don’t have the option to opt out, we must opt-in headstrong. It is the responsibility of Americans to encourage the government to purposefully and anticipatorily cause the release of information rather than simply responding to requests for information. Encouraging proactive disclosure will ensure that people possess all the knowledge and information necessary to hold their governments accountable. In doing so, maybe our governments will one day be as responsive as the Facebook we know and love.

State pension fund accountability and transparency is often decided through court decisions. Here’s a look at what’s going on throughout the country.

ALABAMA

·         Filed 6.17.11 Tonya Denson and members of the Alabama Retirement System v. the Retirement System of Alabama

o   ISSUE: Whether Retirement Systems of Alabama executives improperly invested billions of dollars in public employees’ retirement funds over 15 years by earning lower-than-average returns in violation of the “Prudent Man Rule,” dictating that investments must be consistent with those a prudent man acting in a like capacity would make.

o   PENDINGin Circuit Court

ARIZONA

·         Filed 8.11.11 Katie Barnes, et al. v. Arizona State Retirement System

o   ISSUE: Whether HB 2264 may constitutionally require public employee contribution increases, effectively implementing a 50/50 contribution between employees and employers.

o   HOLDING: The Maricopa County Superior Court held that the law changing the contribution scheme of pension unconstitutional as a violation of the contractual relationship between the state and its employees, and thus a violation of the state constitution and statutes.

ARKANSAS

·         Filed 2.11.12 Arkansas Teacher Retirement System v. State Street Corporation

o   ISSUE: Whether State Street Bank violated Massachusetts law in maintaining an foreign exchange practice by inflating foreign exchange purchasing rates and deflating foreign exchange rates when selling currency, affecting the investments of the ATRS pension funds.

§  Class action

o   PENDING in District Court for the District of Massachusetts; Oral arguments scheduled February 24, 2012.

CALIFORNIA

·         1997, the California Court of Appeals rules that the Governor could not delay payments to the pension system to balance the budget, because it violated the state employees’ contractual right to an actuarially sound retirement system.

·         Held 03.06.12 Civil Service Commission Hearing

o   Jeffrey Baker, a county investment officer, calculated risk beyond allowable limits in two sectors of the $8 billion San Diego County pension fund, and was terminated for releasing the information outside the protocols of the San Diego County Employees Retirement Association, a firing upheld by the Commission on March 6, 2012. Baker responded to the ruling by saying he planned to take his allegedly illegal firing to superior court.

COLORADO

·         Filed approximately March, 2011 Justus et al v. the state of Colorado and PERA

o   ISSUE: Whether SB 1 is unconstitutional because it impairs retirees’ contractual rights to receive pension benefits as the level promised when employees retired or became eligible to do so.

§  SB 1legislated that the COLA will drop to the lower of 2% or indexed based on the Consumer Price Index for Urban Wage Earners (CPI-W). COLA could drop to zero if PERA experiences a negative investment return year.

o   The dismissal of the case by a Denver District Court on June 29, 2011 was based on the legally distinguishable contractual right to the base PERA benefits, as opposed to the non-contractual right to specific COLA benefits.

o   March 24, 2012, plaintiffs announced intent to appealthe June 29^th dismissal of the case, based on their original legal claims that settled law by the Colorado Supreme Court clearly determined that COLA is part of retiree’s contractual rights.

CONNECTICUT

·         Settled 9.20.04 Office of Connecticut Attorney General: Pension Fund Settlement

o   FACTS: Then-Attorney General Richard Blumenthal sued Forstmann Little & Co. for losing $125 million in state pension funds by making investments that were not consistent with its contract with the state.

o   HOLDING:On July 1, 2004, a Connecticut Superior jury found that the investment firm repeatedly breached its contract with the state, violated fiduciary duty and acted with gross negligence, in bad faith or with willful misconduct. The jury did not award monetary damages.

o   SETTLEMENT:FL&C agreed to pay the Connecticut Pension Fund $15 million to resolve all issue in the lawsuit and agreed to return to the pension fund $1.2 million that was withheld from the state to cover legal expenses stemming from the suit.

FLORIDA

·         Filed 6.30.11 George Williams et al., v. Dept. Mgmt. Services and Florida Retirement System

o   ISSUE: Whether the legislature requiring a 3 percent contribution to the state pension system is a violation of contractual and/or collective-bargaining rights.

§  The lawsuit centers, in part, around a 1974 law that halted employee contributions to the retirement system; the law also dictates that the rights of the retirement system are contractual in nature and cannot be altered in any way.

o   HOLDING: March 6, 2012, the Circuit Court for the Second Judicial Circuit in and for Leon County, Florida, GRANTED the Motion for Summary Judgmentby Plaintiffs, holding that portions of Senate Bill 2100 imposing a 3% mandatory employee contribution and eliminating COLA for future services are unconstitutional as applied to individuals who were members of the FRS prior to July 1, 2011 and defendants are permanently enjoined from implementing these provisions as to such individuals.

IDAHO

·         Filed 9.30.11 Idaho Education Association v. the state of Idaho and C.L. Butch Otter, Gov.

o   ISSUE: Whether SB 1108 violated the state Constitution when it effectively impaired existing and contractual obligations to teachers, specifically the IEA, by repealing the Early Retirement Incentive Program for public school educators (a means of curbing collective bargaining).

o   HOLDING: Idaho District Judge Hansen ceded that the law caused substantial contractual impairments, but that the Constitution allows for such action when it serves a key public purpose. The state has a significant and legitimate public purpose in imposing the regulation as a means of promoting efficiency and accountability within the public school system. The IEA will appeal.

o   APPEALED April 27, 2011: IEA filed appeal for declaratory judgment and injunctive relief. See complaint.

ILLINOIS

·         Filed in January, 2005 Board of Education of Chicago v. Public School Teachers’ Pension & Retirement Fund

o   ISSUE: Whether the Board of Education violated its legal duty under the Illinois Pension Code submitting a contribution that was $40,635,883.26 short of the requirement with unilateral authority.

o   PENDING

§  Currently in a procedural battle over whether the Board must redraft its complaint to name all 3,400 teachers as defendants, in the process having to find and serve each one with a copy of the suit. (10.12.11)

KENTUCKY

·         Filed 6.19.08 Kentucky Retirement Systems, et. Al v. Equal Employment Opportunity Commission

o   ISSUE: Whether using age as a factor in a retirement plan “arbitrary,” rendering the plan discriminatory on its face in violation of the Age Discrimination in Employment Act?

o   HOLDING:The Supreme Court of the United States held in a 5-4 decision that the Kentucky system does not discriminate against workers who become disabled after becoming eligible for retirement based on age. The differences in treatment were not motivated by age but rather by pension status.

LOUISIANA

·         Released 03.28.12 Louisiana Legislative Auditor Pension Report

o   The reportconsiders the likelihood of litigation resulting from the proposed legislation affecting public pension benefits in Louisiana, specifically: 1) increasing the minimum retirement age, 2) increasing employee contributions, 3) increasing the number of years used to calculate final employee average compensation, and 4) the merger of two independent public retirement systems.

MAINE

·         Filed 2.13.12 Maine Association of Retirees v. Maine Public Employee Retirement System

o   ISSUE: Whether the legislature may constitutionally eliminate retired state employees’ and public school teachers’ COLA for three years and thereafter reduce the adjustments to 3 percent on the first $20,000 of a retiree’s pension.

§  Prior to the change, the retirement system was authorized to grant COLA of up to 4 percent a year.

o   PENDINGin Maine District Court

MICHIGAN

·         Filed 4.18.11 General Retirement System of Detroit v. the State of Michigan

o   ISSUE: Whether the Local Government and School District Fiscal Accountability Act (the “Act”) Public Act 4may constitutionally and unilaterally require the municipal government to transfer the assets of the local retirement system to another retirement system for any reason under certain circumstances.

§  Filed in U.S. District Court

o   PENDING in U.S. District Court Eastern District of Michigan Southern Division

MINNESOTA

·         Filed 6.30.11 Swanson v. PERA

o   ISSUE: Whether the MN legislature has the authority to amend the pension statutory formula used to calculate and adjust future pension benefits. HOLDING: The Ramsey County District Court rejected the suit, backing the Legislature’s policy-making authority, emphasizing that “statutes are not contracts” absent plain and unambiguous terms that show intent to contract.”

NEW HAMPSHIRE

·         2.3.12 Professional Firefighters of New Hampshire, et al. v. state of New Hampshire

o   ISSUE: Whether the legislature may withdraw more from the paychecks of veteran public employees to support pension reform.

o   HOLDING: Merrimack County Superior Court held that it is illegal for the legislature to increase contributions for all employees who had worked for at least 10 years. The ruling declared legal the Legislature’s ability to affect new hires, including raising the retirement age and reducing their ability to pad future pension amounts. At this point, it unclear whether the Attorney General will appeal.

NEW JERSEY

·         Filed 10.18.11 Paul DePascale v. State of New Jersey

o   ISSUE: Whether the state may constitutionally compel judges to pay more toward pension and health benefits as a deduction that comes directly from their salaries.

o   HOLDING: Mercer County Superior Court held that the salary diminishment is unconstitutional, as it is not a tax imposed on all citizens of the state of NJ, but a legislative action in contravention to the Constitution. Specially, the Judge also noted that while NJ may be facing difficult economic conditions, it cannot justify violating the portion of Constitution that does not allow judges’ salaries to be reduced during their term.

·         Filed 7.2.11 New Jersey Education Association et al. v. state of New Jersey & Chris Christie

o   ISSUE: Whether the NJ legislature impermissibly impaired the obligation of contracts and the right to due process by reducing pension benefits through the suspension of pension adjustments (COLA), increasing contribution of active employees, and increasing contributions of employees with fewer than 20 years of service to pay for medical benefits in retirement.

o   2.20.12

§  NJEA filed a brief arguing that the case belongs in U.S. District Court, rather than Superior Court, citing that because pensions are paid out of the state’s pension fund and not out of the state treasury, the federal court can hear the matter as a violation of the Constitution and contractual rights. No judgment has been rendered as of 2.27.12.

o   HOLDINGMarch 5, 2012, Defendant’s Motion to Dismiss for lack of subject matter jurisdiction is granted. The U.S. District Court New Jersey finds that the court is without subject matter jurisdiction because the Plaintiffs’ claims are barred by the Eleventh Amendment, there is no contractual right to any of the disputed items (therefore Contracts Clause claims are dismissed, Due Process claims must be dismissed because they cannot survive rational basis review, and the Plaintiffs’ Takings Clause claims must be dismissed because no protectable property interest in dispute items.

NEW YORK

·         1993, the New York Court of Appeals ruled that lawmakers violated the state constitution by trying to change the way government pension fund contributions were calculated. The new method would have been less expensive for NY, but would have damaged the pension fund’s fundamental soundness.

OHIO & NEW YORK

·         Filed 7.21.10 In re BP, PLC Securities Litigation

o   ISSUE: Whether British Petroleum (“BP”) and its executives made fraudulent statements about the company’s safety measures and about the extent of the Gulf of Mexico spill, leading to losses in the states’ retirement systems between $181 -$229.4 million in aggregate BP stock.

§  Ohio Public Employees Retirement System loss: $71.3 billion

§  New York State Common Retirement Fund loss: $132.6 billion

§  Ohio State Teachers Retirement System loss: $60.9 billion

§  Ohio Police & Fire Pension Fund loss: $10.1 billion

§  Ohio School Employees Retirement System loss: $9.6 billion

o   PENDINGin Texas Southern District Court

o   GRANTED MOTION TO DISMISS: On March 30, 2012, U.S. District Court for the Southern District of Texas granted BP’s motion to dismissthe ERISA stock drop class action lawsuit against BP. The Judge did leave open the possibility that the plaintiffs may refile and adequately allege that the defendants made misrepresentations while acting in a fiduciary capacity and failed to properly monitor other fiduciaries.

SOUTH DAKOTA

·         Ruling 4.12.12 South Dakota Retirement System v. State of South Dakota

o   ISSUE: Whether the South Dakota Legislature violated the contract between the state and the SDRS when it trimmed the COLA increase for retirees’ in the state’s public pension plan.

o   HOLDING: Circuit Court Judge Mark Barnett held that the Legislature has the constitutional authority to alter COLA benefits, because there is not a contract guaranteeing unchanged COLA benefits.

TENNESSEE

·         Filed 8.10.11 In re Nortel Networks Corp. ERISA Litigation

o   ISSUE:  In a 401k/ESOP class action suit, whether Nortel Network Corp. violated fiduciary duties owed under ERISA to pension plan participants.

o   SETTLEMENT: Related documents available here, although specific details of settlement are not available in full.

VIRGINIA

·         Filed 08.11.11 Commonwealth of Virginia v. The Bank of New York Mellon Corporation

o   ISSUE: Whether BNY Mellon made false claims and statements in violation of the Virginia Fraud Against Taxpayers Act, resulting in harm suffered by the Commonwealth of Virginia, the Virginia Retirement System Fund, the Fairfax County and Fairfax County Retirement System Funds and the Arlington County and Arlington County Employees Retirement System Fund.

§  Virginia asked the court for $120 million plus interest in damages, based on $40 million of actual damages and treble damages.

o   GRANTED MOTION TO DISMISS: BNY won dismissal of VA’s lawsuit claiming that the bank defrauded state pension funds through foreign-currency transactions. Fairfax County Circuit Judge Terrence Ney dismissedthe complaint, saying that the plaintiffs could not proceed under the Virginia Fraud Against Taxpayers Act, which requires the submission of a claim for payment that didn’t occur in this case.

WASHINGTON

·         Filed 10.12.11 Washington Federation of State Employees v. State of Washington & Governor Christine Gregoire

o   ISSUE: Whether the legislature violated constitutional rights of equal protection and freedom from contract impairment when it ended automatic COLA raises for retirees in two of the Washington’s older pension plans in HB 2021. The bill also raised the minimum benefit for older retirees, if they meet certain service and years requirements.

o   PENDINGin Superior Court of Washington for Thurston County

·         1972, the Washington State Supreme Court found that the Governor violated the Contracts Clause of the Constitution when he tried to withhold government contributions to the retirement system.

ADDITIONAL RESOURCES

Resource: Protection of Past and Future Accruals

Resource: Wikipension

Resource: Courts and Public Pension Change

Resource: Unfunded Pension Obligations and Chapter 9 Remedy

Generally, American law does not allow the recovery of attorney fees from opposing parties unless a contract or statute authorizes such an award.
In the case of public records suits, however, attorneys’ fees are often awarded on both the federal and state levels. To facilitate government disclosure and accountability, and to encourage potential plaintiffs to file suit when they believe the government is unlawfully withholding certain information, the U.S. Congress amended the 1974 Freedom of Information Act (FOIA) to allow the courts to award reasonable attorney fees and other litigation costs to prevailing parties in challenges against government agencies.

An analysis of the fifty states and the District of Columbia revealed that all but four states—Alabama, Alaska, South Dakota, and Wyoming—have provisions specifically addressing attorney fee recovery in public records cases. In all four states that do not specifically address attorney fee awards, awards are nonetheless recoverable.

Interestingly, a Mississippi provision directly addresses attorneys’ fees in public records cases, assesses a discretionary fine against the losing party, in addition to reimbursement of expenses. Specifically, the provision provides that any person who “shall willfully and knowingly deny to any person access to any public record which is not exempt” shall be liable for a penalty up to $100 plus “all reasonable expenses incurred by such person bringing the lawsuit.” § 25-61-15.
Although some states provide for mandatory fee awards, the courts have wide latitude in determining the amount and scope of the awards. Some states include reasonable expenses incurred in litigation, in addition to attorneys’ fees, while others specifically state—South Dakota—that only nominal expenses may be awarded.

What this means for the citizen activist? First, the possibility of the recovering attorneys’ fees is available in every state, but take caution in relying solely on the award to cover the very high costs of litigation, because it is conceivable that you may not win your case and therefore the fees, or that you may win, but not recuperate all fees. Second, keep in mind that many states have not yet had the opportunity to decide whether pro se litigants can recover fees, even when they prevail. Federal courts are still grappling with the issue, but generally tend to rule against an award of fees to a pro se litigant.

Your best bet? If a potential litigant has exhausted every other avenue of disclosure (repeated requests, amended requests, administrative appeals) and is confident that the information is lawfully available, contact public interest firms to see whether they might have an interest in pursuing the case on your behalf. The firm absorbs the cost and the agency will recognize the seriousness of your request and may even release the records to avoid litigation.
Either way, the most cost-effective means to recovering records is to work with your government agency and carefully research the laws in your state to determine whether the agency has the right to refuse disclosure. If not, litigation may be your last recourse. 

Taking aim at his most likely opponent, President Obama tweeted about a report released last week in the Washington Post suggesting that Mitt Romney manipulated federal ethics laws to limit disclosure of his assets, albeit legally. As the race gains momentum, the candidates’ will both take full advantage of the opportunity to dissect their opponent’s ethics, including their willingness to fully disclose their personal wealth and campaign financing. At issue here is a federal law proscribing public disclosure, but each state in the nation also has guidelines for disclosure, transparency, and oversight as well.
Passed by the 95^th U.S. Congress, the 1978 Ethics in Government Act was a reaction to the Nixon Watergate scandal and Saturday Night Massacre. It created mandatory, public disclosure of the financial and employment history of public officials and their immediate family, and created restrictions on lobbying efforts by public officials for a set period after leaving public office. It also proscribed the formation of an oversight body, the Independent Counsel, tasked with investigating government officials. 
But a number of states beat the federal government to the punch. Prior to the Watergate scandal, state legislatures recognized the importance of oversight bodies and strict disclosure rules. As a result, the formation of ethics committees and ethics commissions began to spring up in many of the states. In fact, twenty-one states formed oversight committees and/or commissions prior to the 1978 Act, imposing similar accountability standards on public officials.
All 50 states have ethics committees, whose members are state legislators. Ethics committee members oversee the actions of each other, an internal check on compliance with ethics statutes, but cannot stretch beyond the legislature.
Ethics commissions provide external oversight over state employees and legislators by citizens and public officials appointed by the government or elected by the people. Twenty-four states forbid public officials from serving on ethics commissions. Arguably the more reliable oversight body of the two, ethics commissions are present in only 41 states; commissions in Michigan, North Carolina, Ohio, and South Carolina do not have authority over legislators. In the nine states that do not have commissions—Arizona, Idaho, New Mexico, North Dakota, South Dakota, Vermont, Virginia and Wyoming—oversight is only internal. Oppositely, seven states—Alaska, Washington, Illinois, Indiana, Kentucky, New York and New Jersey—have more than one oversight commission.
Oversight at each level is a necessary component to ensuring accountability, transparency, and compliance. Ensuring federal and state internal and external oversight allows members of the public to protect their own rights, as well as the rights of others. Citizens should have the ability to know what their public officials are doing, and the government should provide an open door for feedback. Representation works best when it is transparent and multi-directional.