Opinion
Opinion By: Jack Conway, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
This matter having been presented to the Attorney General in an open records appeal, and the Attorney General being sufficiently advised, we find that because The Council of State Governments is not a public agency as defined in KRS 61.870(1)(a) through (k), or the newly enacted Senate Bill 88, its records are not public records within the meaning of KRS 61.870(2). CSG therefore cannot be said to have violated the Act in the disposition of Courier-Journal reporter Stephenie A. Steitzer's June 2, 2010, request for financial and operational records.
In response to Ms. Steitzer's thirteen part request for records that included CSG's budgets, annual reports, audits, Form 990's, and records relating to its current and most recent past executive directors, CSG's Executive Director and CEO David Adkins explained that CSG "is a not for profit corporation headquartered in Kentucky" that "is not subject to the Kentucky Open Records Act." Nevertheless, he agreed to provide Ms. Steitzer with a recent report to CSG's executive committee, CSG's most recent IRS Form 990, and CSG's most recent financial audit. Additionally, he extended an invitation to Ms. Steitzer to engage in "further dialogue" for the purpose of facilitating additional disclosure.
Shortly thereafter, The Courier-Journal initiated this appeal asserting that "CSG is a public agency under KRS 61.870(1)." In support, The Courier cited a June 25, 2003, letter to the U.S. Department of Labor in which CSG requested an advisory opinion "that the status of [the Kentucky Employees Retirement System] as a 'governmental plan' within the meaning of section 3(32) and section 4(b)(a) of Title 1 of ERISA would not be adversely affected if employees of CSG were permitted to participate in KERS." The Courier cited a number of statements in that letter in which CSG "claims that it is a state agency of the Commonwealth." These included the statement that "the Commonwealth of Kentucky shares a unique relationship with CSG and has consistently treated CSG as a 'joint agency' of the Commonwealth in the specific language of its contractual obligations with CSG and in the manner of its relationship with CSG," the statement that the Kentucky Finance and Administration Cabinet "treats CSG as an agency of state government for purposes of entering Memoranda of Agreement without the necessity of competitive bidding, a practice that would be impossible but for the Commonwealth's recognition of CSG as a 'joint agency' of the Commonwealth," and the statement that "the Commonwealth has treated CSG as a 'joint agency' created by and of the Commonwealth" in relation to leases into which the parties entered from 1976 to the present. These benefits, The Courier maintains, are only available to CSG "because of CSG's status as a state agency. "
Additionally, The Courier observes, "CSG receives significant financial support from the Commonwealth" including "$ 90,000 in annual dues to CSG," "$ 70,000 annually to CSG" from the Legislative Research Commission, and an exemption from Kentucky sales tax. In sum, The Courier asserts, "CSG cannot be allowed to receive all of these benefits as a state agency while denying its status as a state agency when it comes to public accountability. " For this reason, The Courier argues that CSG "fits squarely in the definition of 'public agency' " found at KRS 61.870(1)(b) and 61.870(1)(f) which provide, respectively:
(1) "Public agency" means:
Because it derives multiple benefits from the state, The Courier reasons, CSG "must be recognized as a state authority" pursuant to KRS 61.870(1)(b). Because the state "has created CSG's state agency status by conferring numerous public benefits upon CSG which are only legally available to state agencies, " The Courier further reasons, it must be treated as a state agency created by the Commonwealth pursuant to KRS 61.870(1)(f). Accordingly, The Courier concluded, the requested records are "undeniably public records under KRS 61.870(2)."
In supplemental correspondence directed to this office, CSG refutes The Courier's arguments. Acknowledging that it occupies a "unique position in the work it performs," but denying that it is a public agency within the meaning of KRS 61.870(1), CSG emphasizes that it is a national private, unincorporated, non-profit organization founded in 1933 "to facilitate the exchange of ideas between elected officials from all three branches of government in all the U.S. states and territories. " Continuing, CSG addresses the 2003 letter to the U.S. Department of Labor, upon which The Courier relies, explaining:
In that 2003 correspondence, it is noted that 11 states identify CSG as a "joint governmental agency. " Nowhere in the 2003 correspondence does CSG assert that it is a state agency. "Joint governmental agency" was a term arrived at during the creation of CSG in the 1930's without reference to any individual state or that state's statutes. Since that time, it has been utilized to illustrate the coordination and cooperative spirit which CSG works to foster among the member states. It should be noted that even among those states that refer to CSG as a "joint governmental agency" by statute, none have found that term to rise to the level of making CSG subject to their state's open records laws.
It is an unresolved issue as to whether "joint governmental agency" in this context is synonymous with "public agency" as defined in KRS 61.870(1). However, it is unnecessary to decide that issue as Kentucky is not one of the 11 states that identify CSG as a joint governmental agency in statute or regulation. The 2003 correspondence goes on to note that in both KRS 7.110(3) and KRS 8.010(2), Kentucky's Interstate Cooperation Commission is instructed to "carry forward the participation" in CSG. However, a state's participation with an organization does not trigger "public agency" status. Nowhere in the definition of "public agency" under KRS 61.870(1) is participation by a state agency with an otherwise private organization used as a determining factor for deciding whether an organization is a "public agency. "
With reference to CSG's participation in the Kentucky Employee Retirement System, CSG states that it sought the 2003 advisory opinion:
because of the unique nature of CSG. CSG employees are not state employees and are not paid through the state treasury. Rather, as an unincorporated non-profit, CSG provides services to Kentucky as well as all other dues paying member states and territories. If CSG was a state agency, it would not have been necessary to seek an advisory opinion from the Department of Labor. Ultimately, the Department of Labor advised, in Advisory Opinion 2003-12A (See Advisory Opinion 2003-12A, attached hereto as Exhibit 1), that participation in a state plan by CSG employees located in the Lexington office was permissible based upon previous advisory opinions allowing participation by similar organizations like the National Association of Insurance Commissioners and the Federation of Tax Administrators in similar plans (U.S. Department of Labor Advisory Opinions 81-82A and 83-24A respectively.) Neither of those organizations has been found to be a public agency based upon their participation in a retirement plan.
Continuing, CSG disputes its status as a public agency based on the existence of leases and Memoranda of Agreement with the state, asserting that neither legal relationship triggers public agency status.
Turning to The Courier's argument that CSG receives financial support from Kentucky, CSG observes:
This information would only be relevant in an analysis of KRS 61.870(1)(h) which requires that a "public agency" must derive "at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds."
CSG identifies its total expenditures in Kentucky for fiscal years 2009 and 2010 as $ 9,834,808.20 and $ 9,264,734.22, respectively, and the total amount derived from state or local authorities in Kentucky is $ 330,743.72 in 2009 and $ 300,514.72 in 2010. 1 In each year, CSG concludes, this was "well under the 25% threshold required by KRS 61.870(1)(h) in order to be considered a public agency. " 2
Finally, CSG disputes The Courier's characterization of it as a state "authority" pursuant to KRS 61.870(1)(b). Noting that the dictionary defines the term "authority" as "delegated power," CSG asserts that "Kentucky has not, through statute or regulation, delegated any of its powers to CSG." Nor, CSG maintains, it is a public agency within the meaning of KRS 61.870(1)(f) because it was not established or created, and is not controlled, by a Kentucky agency. Instead, CSG concludes, it "is a unique national organization that works with all member states and territories. " We find CSG's arguments wholly persuasive.
A cursory review of the definition of "public agency" found at KRS 61.870(1)(a) through (k) confirms CSG's position. CSG originated in 1933 not as a department, division, bureau, board, commission, or authority 3 of Kentucky state or local government, but as a national organization serving the three branches of government in the several states and territories. It is not a legislative body but an "advocate for the interests of the states in Washington, D.C." 4 It is not affiliated, in any fashion, with counties, cities, school districts, or special districts, and although it serves the three branches of government, including the judicial, it is not a state or local court or judicial agency. It does not owe its existence to state or local statute, executive order, ordinance, resolution, or other legislative act, and is not a "body created by state or local authority in any branch of government." The voluminous financial records which it provided to this office for in camera inspection pursuant to KRS 61.880(2)(c) 5 verify that it derives far less than twenty-five percent of the funds it expends in Kentucky from state or local authority. Its governing body is not appointed by a public agency subject to Kentucky's Open Records Act, and the fact that it receives certain benefits from the state owing to its decision to headquarter in Lexington, Kentucky 6 does not confer public agency status upon it even if those benefits "are only legally available to state agencies. " 7 To suggest that CSG is a board, commission, committee, or subcommittee of a public agency subject to Kentucky's Open Records Act, or an interagency body of two or more public agencies subject to Kentucky's Open Records Act, is to seriously diminish its national role, and is ultimately erroneous. Because CSG is not a "public agency" within the meaning of KRS 61.870(1)(a) through (k), its records are not "public records" pursuant to KRS 61.870(2) and therefore not subject to public scrutiny.
Significantly, in the 2010 Regular Session of the Kentucky General Assembly, Representative Arnold Simpson pre-filed a bill aimed at including "any body that participates in one (1) of the state-administered retirement systems" in the definition of "public agency" found at KRS 61.870(1). 8 It was widely understood that HB 126 was prompted by the recognized need for financial accountability among quasi-governmental bodies following the disclosure of financial improprieties at the Kentucky League of Cities, and the Kentucky Association of Counties, both participants in state-administered retirement systems. HB 26 stalled in committee. SB 88, which shifted the focus from participation in a state-administered retirement system to the composition of the entity's governing body, was ultimately enacted into law. That bill, which took effect on July 15, 2010, amends Chapter 65 of the Kentucky Revised Statutes, rather than Chapter 61, by creating a new section defining a "public entity" subject to inter alia, the Open Records and Open Meetings Acts, as "any organization that represents a statewide association of local governments where the majority of the governing body is composed of mayors, county judge/executives, or other local elected officials," and whose membership includes any combination of cities, counties, charter counties, urban counties, consolidated local governments, and unified local governments. SB 88 also defines "affiliated organization" as "an incorporated or unincorporated organization staffed, managed, or administered by a public entity. "
Unlike KLC and KACo, CSG does not represent a statewide association of local governments, its governing body is not composed of local elected officials, and it is not staffed, managed, or administered by a public entity. Neither the Kentucky Open Records nor the Kentucky Open Meetings Acts extend to it by virtue of its participation in the Kentucky Employees Retirement System as they might have had HB 26 been enacted. Accordingly, we find that however compelling the arguments supporting CSG's public accountability through records access may be, the law simply does not support these arguments.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.
Jon L. FleischakerJason Mosely
Footnotes
Footnotes
1 The financial figures CSG originally provided were based on the Attorney General's interpretation of KRS 61.870(1)(h) prior to 09-ORD-033. In that decision, the Attorney General modified his interpretation of KRS 61.870(1)(h) to "effectively analyze what percentage of state or local authority funds the 'body' expended in the Commonwealth," rather than what percentage of its total budget was derived from state or local authority funds. Upon request, CSG provided ample financial documentation demonstrating that significantly less than 25% of its total expenditures in Kentucky were derived from state or local authority funds.
2 CSG acknowledges that because its 2010 fiscal year ended only twelve days before the requested financial records were due in this office, those records were incomplete since "the final payroll for FY10 had not run and CSG would continue to receive invoices for accounts payable during FY 10 for seven more days."
3 Webster's New World Dictionary defines the term "authority" as "a government agency that administers a project," such as a housing authority, an airport authority, an arena authority, an industrial development authority, or a riverport authority. In nearly all cases with which the Attorney General has dealt in an open records context, the government agency administering the project is denominated an authority. The term is not, as The Courier suggests, a generic designation for an entity that derives benefits from the state.
4 http://www.csg.org/about/default.aspx ("A Message from the Executive Director").
5 Unlike other entities disputing their status as public agencies pursuant to KRS 61.870(1)(h), CSG expended considerable effort in compiling records responsive to our KRS 61.880(2)(c) request. Compare 09-ORD-033.
6 CSG maintains regional offices in the east, midwest, west, and south, as well as an office in Washington, D.C.
7 It is not our duty under KRS 61.880(2) to assess the propriety of the Commonwealth's conduct in this regard.
8 HB 26.