I submitted a substantial volume of comments on 11/22/99. I won't go over each of those. Instead, I'd like to identify technical violations in the rulemaking, the major substantive arguments, and go over my suggested amendments.
Technical Violations of the Rulemaking
In the Initial Statement of Reasons for the rulemaking, CalPERS notes "the proposed amendment is necessary to apply the policy that candidate statements should be a brief biographical description of the candidate's education and background."
That statement appears to refer to a previously adopted policy regarding the need for candidate statements to be limited to education and background. However, no such policy is included in the studies relied on section which follows in the Initial Statement of Reasons. Therefore, CalPERS has failed to meet the requirement of Government Code section 11346.2(b)(3) that the initial statement of reasons include any such document relied on.
In addition, CalPERS failed to properly address the necessity standard specified in section 10, Title 1 of the California Administrative Procedure Act (APA). That section requires information explaining why each of the three individual provisions is necessary.
"When the explanation is based upon policies, conclusions, speculation or conjecture, the rulemaking record must include, in addition, supporting facts, studies, expert opinion, or other information."
I see no such supporting information in the rulemaking record regarding the provision to eliminate the prohibition against misleading statements.
It should also be noted that the updated final statement of reasons for the 1998 rulemaking (Attachment 16) explains the necessity for excluding misleading remarks as possibly leading to "an inaccurate conclusion or misjudgment" by voters. Yet the current initial statement of reasons argues that misleading remarks are necessary "to apply the policy that candidate statements should be a brief, biographical description of the candidate's education and background." It appears that in the intervening year, the Board has concluded it is impossible for candidates to describe their education and background without including misleading remarks. I doubt that is your intention.
On page 3 of my 11/22/99 comments, I indicate CalPERS failed to include the staff discussion of Clark v Burleigh (1992) in the Initial Statement of Reasons. Instead of going out with a new 45 day notice, as I suggested, CalPERS included this information in its public hearing notice which was sent to a limited number of people.
However, sections 44 and 45, Title 1, CCR, require that any such report relied on must be sent to mentioned in a notice sent to each of those commenting on the regulations. CalPERS is out of compliance with this requirement with regard to many of those who submitted comments after the initial comment period was closed and is certainly out of compliance with that section with regard to the comments from several dozen individuals which I am turning in today with my testimony. I've got a list of attachments to my written comments, which I have provided to your assistant. I've labeled these comments attachment 18.
I know CalPERS has argued that it is not bound by the requirements of the APA but the courts have found otherwise. It is these procedural requirements which guarantee the public will at least be able to understand the facts which the Board relies on in amending the rules. Without such information, the public would never be able to judge the basis for the Board's actions or hold it accountable.
Substantive Arguments Against the Rulemaking
In its decision to adopt the three proposed amendments, the Board relied, in part, on a staff analysis of the California Supreme Court case of Clark v Burleigh. In that case, candidate statements were limited to 200 words (not 150) and could not refer to the background or qualifications of other candidates. Unlike the proposed regulations, they were not prohibited from discussing their own platform. The court found that the statute limiting candidate statements for local judges was not an effort to suppress the speaker's view because, as I quote near the bottom of page 3 in my written comments, "there is neither claim nor evidence that the Legislature was so motivated when it adopted section 10012.1."
In contrast to that case, the proposed regulations appear to have been specifically designed to suppress views, which some Board members oppose. See for example, the transcript of the 5/18/99 BPAC meeting (Attachment 3). At the top of page 211, Dr. Crist objects to the ability of candidates to disclose the fact that other candidates have accepted gifts from CalPERS contractors and on the bottom of page 213 Mr. Valdes says, "Mr. McRitchie, you are the reason that this whole item is up here."
It is clear from such statements in the record that the motivation for these proposed regulations may be much different than that of the Legislature in passing rules concerning candidate statements for judges.
Second, in the case of Clark v Burleigh, the Supreme Court found that the law restricts only one channel of communication with voters. They go on to mention several of the other channels which remain open to candidates for local judicial office:
- Advertisements or interviews in local newspapers
- Local radio and television
- Direct mailings to the community
- Neighborhood distribution of handbills
- Personal appearances at local functions
Clearly, the law was specifically designed for local, not statewide elections, such as those of CalPERS where press coverage is unlikely because only a small portion of any geographic community can vote in the elections. Judges have access to voting lists but CalPERS has refused to grant such lists to its own candidates. Therefore, direct mailing for most candidates is impossible, even if they could afford the expense.
Of course, incumbents often receive favorable coverage during elections from CalPERS itself. See attachment 6. For example, CalPERS included a front-page interview with the incumbent, which extended for 3 pages in its CalPERS Employer News, released during height of fall 1998 election campaign. Unfortunately, I have never seen this type of coverage extended to a non-incumbent.
In summary, the one avenue open to all candidates is the candidate statement. It is of critical importance that candidates be able to contrast their positions and records against those of other candidates. I do not see the necessity of including "inherently misleading" remarks. I would argue the very act of voting in favor of the proposed regulation may be a violation of Section 17, Article XVI of the California Constitution which requires Board members to put their duty to the System's participants and their beneficiaries above any other duty.
Suggested Amendments
My suggested amendments are presented starting on page 6 of my written comments. First, I would propose to expand the number of words allowed in candidate statement to 200. This would conform to the minimum requirements of section 13307 of the Elections Code, which allows for between 200 and 400 words, as authorized by the governing body of the local agency. Such a change would lead to a more informed electorate and better alignment between the goals and values of members and their elected representatives.
Secondly, I call for language to clarify that candidates cannot request changes to their candidate statements. When I ran for the Board in 1998 I was of that understanding. In the 1997 election, for example, several candidates had requested changes, such as capitalizing words or changing a comma (,) to a hyphen (-). See attachments 7-9. Candidates were told such changes would not be made, even for incumbents. However, when an incumbent submitted extensive changes to his statement in order to rebut my own, his changes were accepted. See attachment 10.
In her declaration to the panel which she appointed to determine if she had broken regulations (see attachment 14, top of page 5), CalPERS General Counsel indicated that she allowed the incumbent's changes, in part, because "the First Amendment applies to political speech."
Let me reiterate, prior to 1998 candidates were denied requests to even capitalize a letter but when an incumbent wanted to make major changes (compare attachments 4 and 5), those changes were accepted because to do so would deny him his First Amendment rights. Yet, in their report to the BPAC committee considering this rulemaking, legal counsel advised that First Amendment rights do not apply to the candidate statements because such statements are provided in a nonpublic forum.
The proposed amendment would attempt to put an end to this obvious flip-flop pattern of favoritism by clarifying that candidates cannot initiate changes to their statements. Errors and omissions by candidates would be required to stand and would provide additional information to the voters concerning the candidate's attention to detail. Statements would still be subject to verification as to being truthful and not misleading.
A second suggested change in section 554.4 would simply clarify that the Election Coordinator can request verification of the truthfulness of remarks presented as facts, not opinions.
My suggested changes to section 554.6 address the problem that board members can currently be elected by a tiny minority of those voting. In 1993, for example, one of the winners received less that 5.5% of the vote. I included the 1997 election results as attachment 15 in error and would now like to substitute copies of the referenced 1993 election results as attachment 19. To avoid holding an expensive runoff election, I suggest instituting an instant runoff provision, similar to that used in Australia and Ireland. Under such systems, voters rank candidates. Votes going to the lowest candidate are reallocated to other candidates by voter preference until one candidate receives a majority.
Another amendment I would now suggest, not included in my written comments, would be to designate the at large positions as A and B. This change would facilitate the ability of candidates to choose whom to run against. For example, they may believe one at-large board member is doing a fine job but the other is not. In addition, it will simplify the ranking of candidates by an electorate using the instant runoff provisions already mentioned.
Another election regulation in need of revision is section 554.9 regarding protests. The majority of my suggested amendments are designed to move decision-making authority for reviewing protests from the Board's General Counsel to the Attorney General. Of course, this amendment assumes the Board can enter into a long-term interagency agreement with the Attorney General.
Under current regulations, the Board's General Counsel has a potential conflict of interest. For example, in 1998 the incumbent sat on the committee responsible for reviewing and recommending changes to the General Counsel's reimbursement. As already mentioned, the General Counsel approved the incumbent's changes. My suggested amendments would relieve the General Counsel from that currently awkward position. Under my proposal, the Attorney General would determine if the rules were broken, not the General Counsel or a panel appointed by her.
Lastly, I would suggest changing the standard of evidence required to overturn an election. Under the current rules an election can be overturned only upon a finding that Board adopted election procedures were not followed and the election outcome would have been different. While the 1998 protest panel, for example, appeared willing to label the incumbent's change to his statement a "technical violation" of section 554.4 (see attachment 17, middle of page 9), they believed it was not a "substantial violation" because the "slight adjustments" were "unlikely to be deemed significant by more than a handful of voters, even assuming the candidate statements were widely read."
Let's assume, for the sake of illustration, that the panel had made different findings. Let's say they found the changes significant and that candidate statements were actually widely read and relied on, as the incumbent appeared to believe in his thank you note (Attachment 10). Even in this instance, as the protest panel admits at the bottom of page 9 of their findings, they could not have granted the protest because the rules require the protestor to prove that election results would have been different. The panel's conclusion "might have been different had there been evidence, for example, of massive illegal voting, of gross misrepresentations, or of large scale voter exclusion."
Under the current regulations then, no violation of the rules, no matter how egregious, can lead to tossing out the election results unless the protestor can demonstrate the results would have been different.
What if General Counsel conspired to allow an incumbent to change their statement to address specific issues raised by another candidate after the legal deadline had passed? What if the incumbent was clearly favored in CalPERS publications? What if the Chief Executive Officer of CalPERS publicly denounced the incumbent's challenger for expressing his opinion? (See attachment 20, a letter from James Burton to the editor of Pensions & Investments magazine) In this case the courts vindicated my position but the damage to my personal reputation had already occurred. As we have already witnessed, nothing in current rules prevents the level of such abuses from escalating dramatically.
CalPERS staff can take any action to favor an incumbent, short of outright ballot fraud, with little risk if they believe the incumbent lacks the financial resources to litigate the matter in state court. My proposed amendment would change the second standard in section 554.9 from would have been different to may have been different. This would allow the Attorney General to grant a protest where substantial violations of Board-adopted rules have occurred and where the election outcome may have been changed as a result of those violations.
Closing
In closing, I've already pointed out that, as documented in the transcript from the 5/18/99 BPAC meeting, at least one Board member sees my actions as generating the necessity for this rulemaking. While this rulemaking provides an additional barrier to any future campaign I might choose to wage for a Board position, it presents a much more formidable barrier to others.
Although your proposed rule prohibits references to other candidates and to issues of general concern to the membership, it allows candidate's to describe their personal background and it now would allow candidates to include misleading remarks. Think about it. I have already publicly raised the issues some of you don't want raised:
- Personal bankruptcy,
- Sitting on up to nine private investment boards
- Accepting gifts from CalPERS contractors,
- Authorizing expenditures of $750 each for office coat racks.
I can document that I have raised these issues and many many more. In fact, they form a good portion of my personal background over the last several years. Of course, under your rules incumbents could include issues of general concern from their own backgrounds as well.
Who gets hurt? Obviously the members who get cut off from a primary source of information. The proposed rules also hurt the chances of candidates who do not have a public record on CalPERS issues. I can't imagine that's the Board's intent. Please, don't risk creation of what the Sacramento Bee called a permanent board: "unaccountable, untouchable and isolated from its members." (Attachment 21)
My suggested changes would provide members with more information, put a stop to flip flop policies favoring incumbents, ensure those elected to the Board reflect the preferences of voters, and move the resolution of protests to a neutral party. Lastly, they would help to ensure that the theoretical impossibility of accurately measuring the impact of rule violations would not mean the rules could be freely abused. Substantial violation of the rules, which can impact the outcome, should have consequences.
2/15/00
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