Friday, October 3, 2014

NYC Law Department

I have previously written about the inherent conflict of interest in the NYC Law Department. You would think that the lawyers at the Law Department represent the citizens of New York City and their best interests. You would also think that full disclosure is in the best interest of the citizens on New York City.

On September 21, 2014 NY Times published an article about a scandal at the NYC Department of Corrections concerning a falsification of official records in 2011. In 2012, when the fraud was discovered by DOC investigators, the Corrections Commissioner chose to radically alter the investigatos' report by erasing all damaging information relating to the roles of the two senior DOC managers involved. She had previously promoted those managers.

The following is a quote from that article:

The audit’s authors said that the testimony of both Mr. Clemons and Mr. Gumusdere pointed to a “complete abdication” of their obligations as managers, recommending that both be demoted “based on their admitted lack of attention to critical duties and responsibilities of jail management.”

Then Ms. Schriro intervened. After consulting with the department’s legal counsel, and being told she had the authority to alter the report, she ordered the reference to demotion removed, Ms. Schriro said. She also directed the investigative division to remove large portions of the most critical material involving Mr. Clemons and Mr. Gumusdere, including the statement that “it defies logic to think that they could have concluded that the number of fights RNDC reported during these months was accurate.”


In February 2013, as part of their civil rights investigation, the federal authorities made a detailed request to the city for documents related to the use of force by guards on teenage inmates and violence between the adolescents. The request included “all” documents related to audits and reviews to assess the accuracy and integrity of reporting on such incidents, including, but not limited to, “working papers and any other documents reflecting findings or recommendations,” according to one person who was told of the request.

A city Law Department official said on Friday that the first version of the report was not produced in response to the original federal requests because it was treated as a draft and seen as privileged. Last week, the United States attorney’s office specifically requested it from the city, and the current corporation counsel, Zachary W. Carter, decided that it should be turned over — and it was, the official said.

It is clear that the Law Department under the Bloomberg administration withheld significant evidence from federal authorities who were investigating serious allegations about activities at the NYC Department of Corrections during the Bloomberg administration. The reason given, that the original audit with specific supporting details was a draft and privileged, is what you might expect from a lawyer in private practice. The citizens of New York City, however, are entitled to have their attorneys represent their best interests and not the Commissioner of Corrections or city hall.

The current Corporation Counsel, a former US Attorney in the Eastern District, has now turned over the "privileged" report to the federal authorities.

As a general principal the public has a right to see everything that our government does as outlined in our freedom of information laws. The attorney at the Department of Corrections who signed off on the altered report and the lawyers at the Law Department who labeled the report as privileged should be fired for incorrect legal decisions. And we all know that what they did should be considered illegal.

Friday, September 12, 2014

Recycled Garbage

In June of this year the executive director of NYCERS, Diane D’Alessandro, appointed Diane Bratcher as deputy director of communications for the agency. The position had become vacant when the former director had left to work in the mayor’s office. His annual salary was $150K. I strongly suspect there was no posting for this position.

At the time of this appointment, Bratcher had been working for eleven months as an associate staff analyst at HRA. The hiring salary for new ASA’s is $59,536.

As background, Bratcher graduated from college in 1974. For the next eight years she seems to have been unemployed. In 1982 Bratcher started working for the Interfaith Center for Corporate Responsibility. She worked there until May, 2002. A month later she was hired by the NYC Finance Commissioner, Martha Stack, as an assistant with a salary of $95K.

Three months later in September, Stark was appointed by Mayor Bloomberg as as the chair of the NYCERS Board of Trustees. At that point Stark made Bratcher the director of the pension unit at Finance, replacing another woman who was a veteran city attorney who had worked for many years at both the Finance pension unit and the NYC Law Department.

For the next seven years Bratcher functioned as a submissive assistant to Stark. I make this comment based on my observations of their interactions at NYCERS board meetings from 2002 to 2005.

It has been established by the NYC Department of Investigation that Stark was slicing through numerous female employees during her seven years as the Finance Commissioner among other transgressions. According to several Finance employees Stark’s escapades were common knowledge within the agency. It is reasonable to conclude that Bratcher was also aware of this sexual activity by her boss, Stark.

In March 2005, Stark as chair of the NYCERS Board of Trustees fired me as the NYCERS executive director because I was involved with a woman on the NYCERS staff. We have since been married. My wife, fortunately or unfortunately, still works at NYCERS.

In October 2005, Stark and the other trustees appointed D’Alessandro as the new NYCERS executive director. Bratcher was actively involved with this appointment.

In April 2009, Bloomberg accepted Stark’s resignation and ordered an investigation into her activity at Finance including her predatory actions with respect to female employees.

All three women, D’Alessandro, Stark, and Bratcher, are long time politically active gay women.

In January 2011, Bratcher left Finance. Her salary at that time was $125,847. Assuming she had joined NYCERS, she was eligible for an annual pension of approximately $18,200 but not health insurance.

In May 2012, Bratcher started working at the UN Principles for Responsible Investment. She lasted there until April 2013. She started working at HRA in July 2013. I strongly suspect that she rejoined NYCERS because of opportunity to significantly increase her pension and gain health insurance coverage in retirement.

Assuming that D’Alessandro gave Bratcher the salary of the former deputy director of $150,000, a significant increase over the ASA salary, Bratcher will be able to increase her future pension by at least an additional $2,100 for every year she works at NYCERS. She will also be eligible for retirement health insurance by the end of this year.

In 2006 I observed Bratcher being deposed during a libel suit I filed against Stark and the NYCERS Board of Trustees. It is common practice for people to lie when testifying during a deposition. They conclude that there is no evidence to contradict what they say. Usually they are correct. But it is truly punishing when evidence is produced during the testimony that proves that the person being deposed has just lied.

The following is a portion of Bratcher’s December 13, 2006 deposition:

Q. Your testimony is Murphy tells the trustees that the DOI report is inaccurate. He had the relationship with Browne, but the DOI report is inaccurate, right?

A. Right.

Q. He wants an opportunity to correct the DOI report. You're saying he says nonetheless, he is going to retire?

A. Yes.

Q. Unconditionally?

A. Unconditionally.

Q. He is just going to retire?

A. Yes.

MS. CARROLL: Mark this document as Bratcher Exhibit 5. It is numbered N 0040. (Bratcher Exhibit 5, N 0040, marked for identification, as of this date.)

Q. After Murphy made his statement to the board, he left the room and then there was executive session again?

A. Yes.

Q. It is a fact, is it not, that because Murphy had not agreed to retire, that the board voted that Murphy had to go; isn't that what happened?

A. No .

Q. Would you look at N 00040. Do you see the second paragraph?

A. Yes.

Q. This is from you to Llembellis. Who is Llembellis?

A. Llembellis at that time was counsel to The Bronx borough president and his representative to the NYCERS board of trustees.

Q. You prepared this E-mail and sent it to Llembellis telling her what occurred at the NYCERS meeting?

A. Yes.

Q. The second sentence of the second paragraph, everybody else voted that John had to go and empowered Martha to negotiate that with him. You wrote that?

A. Yes.

Q. You wrote it on March 11, 2005, the day after the meeting?

A. Yes.

Q. It was accurate when you wrote it, wasn't it?

A. Not accurate.

Q. Are you in the habit of writing inaccurate memos, Ms. Bratcher?

MR. MARKS: Objection to the form.

A. I am not in the habit of –

Q. No, you're not. In fact, you're a very capable assistant, aren't you?

A. I think so.

Q. When you do things, they are very carefully crafted, like your analytical summary, aren't they?

MR. MARKS: Objection to the form.

A. Sometimes, usually.

Q. One could think this document, Stark 2, was done by a lawyer it is so direct and on the money as to the issues, right?

MR. MARKS: Are you trying to pay her a nice compliment or ask her a question?

Q. This statement when you wrote it was true and accurate because you don't write inaccurate and untrue statements, do you, Ms. Bratcher?

A. It was inaccurate. No vote was taken.

Q. Is there any reason why you would mis-inform Ms. Llembellis as to what occurred at the trustee meeting?

MR. MARKS: Objection to the form.

A. I didn't mis-inform her.

Q. I am asking you, is there any reason why you would mis-inform Ms. Llembellis and tell her that everybody else voted that John had to go and empowered Martha to negotiate that with him; is there any reason why?

A. No reason.

Q. The Earl who abstains on the decision, who is that?

A. Earl Brown, E A R L.

Q. By abstaining, that means he didn't vote?

A. What happened -- you want me to answer what happened?

Q. It says here, Earl ended up abstaining on the decision. My question to you is, Earl was a trustee at the meeting?

A. Yes.

Q. That is what you're intending to advise Llembellis about?

A. Right.


Tuesday, May 13, 2014

Emerging Manger Circus and the NYC Pension Funds

Three weeks ago Scott Stringer issued a press release saying that he was going to recommend that the NYC pensions funds dump another $1B into the emerging managers circus.

For the record in FY-2013 NYCERS had $818.25M invested in US equities run by emerging managers. NYCERS paid them $4.41M in FY-2013. That is 50 basis points (50 BP's).

During the same year NYCERS had $4.39B invested in a Russell 3000 index fund run by Blackrock. NYCERS paid them $161,565 in FY-2013. That is .4 basis points (.4 BP's).

The emerging managers had the following returns:

  1. one year: 22.63%
  2. three years: 18.34%
  3. five years : 6.84%

Blackrock had the following returns:

  1. one year: 21.37%
  2. three years: 18.58%
  3. five years : 7.24%

I don't think I have to say more except that the trustees in their infinite wisdom terminated Blackrock in FY-2014. You can't make this stuff up.

Thursday, February 20, 2014

Requesting Info for 10 Year Cutoff for Tier 4 Members

One of my original postings in 2009 was about the cutoff of Tier 4 members 3% required contributions after earning ten years of credited service. This benefit was granted by Chapter 110 of the Laws of 2000.

Operationally, this statutory change required NYCERS to monitor the accumulation of service of Tier 4 members who join NYCERS after 2000. Because of Tier 6, members who join after April 1, 2012 are no longer entitled to the 10 year cutoff. New members, who transfer or restore prior memberships with start dates before the April 1, 2012 date, still qualify.

To support this service tracking requirement, I had the IT division develop a Tier 4 required contribution system to augment the service history system that was already in place. You can see the service history file on the NYCERS web site when you sign on to your account.

The required contribution system was developed after the web site was implemented in 2003. Unfortunately, I was not able to migrate it to the web site before I was terminated in March of 2005. Nine years later and it is still not on the web site.

In light of this, I recommend that all Tier 4 members request a copy of their required contribution workup so that they aware of any shortages in their account. It is especially relevant to members who have not reached their 10 year cutoff and are 1) purchasing military or prior service or 2) transferring or restoring other memberships. The workup will allow them to see whether they have crossed the 10 year threshold or how close they are to it. They will then be able to know when the 3% contributions should stop.

In addition to the required contribution workup, all members should request a copy of their annuity account history. This is another valuable file that should be on the NYCERS web site but has never made it there. It outlines by year the deposits, withdrawals, interest earned, and closing balances for each member's contribution account.

Monday, January 27, 2014

How Asset Allocation Can Have a Huge Impact on Returns

I recently posted a chart detailing the investment performance at NYCERS over the last 14 years. I contrasted NYCER's actual returns with the market returns for a simple index(stocks)/core(bonds) portfolio. In both cases the asset allocation was an "aggressive" 70% for stocks and a 30% for bonds.

The comparision showed a large shortfall between actual and market strategies. NYCERS actual asset value as of 6/30/2013 was $47.2B. The market value was $58.2B.

Since then I have done some further analysis using different asset allocations. The results were truly startling. Higher stock allocations are assumed to be riskier but offer higher potential returns. Stated another way an 50%(stock)/50%(bond) allocation should have produced lower returns but less volatility. The numbers tell another story all together.

In a snap shot, the list below shows the 6/30/2013 closing balances for the market index/core strategy over the last 14 years using different asset allocations:

  • 80%/20% : $53.2B
  • 70%/30% : $58.2B
  • 60%/40% : $62.9B
  • 50%/50% : $67.6B
  • 40%/60% : $72.3B
  • 30%/70% : $76.9B
  • 20%/80% : $81.5B

This experience is definitely tied into the last 14 years. Experts might question whether my simulations are refined enough. It is, however, clear to me that traditional thinking about calculating the efficient frontier curve is seriously flawed.

Over time NYCERS has scaled up its stock allocation. In 1985 it was at 30%. By 1990 it was at 50%. By 1995, NYCERS had shifted up to a 70%/30% position trying to catch the updraft of 1990's stock market. Since then NYCERS has never changed from this general allocation.

Not only have the trustees made very bad specific investment decisions over the last 14 years, they seriously misjudged the overall market.

No trustee could have been expected to push for 30%/70% asset allocation in 2002 but a 50%/50% position was well within the accepted range of prudent behavior. It would also have been much more successful. I light of the national pension crisis, we need to be more focused on the part that pension trustees have directly played in that crisis.

Blaming the benefit structure alone will miss the full extent of the disease. There are some who want the patient to die but we, as a society and a successful economy, will be far worse off without a healthy pension system in the United States.

This is a more detailed chart of NYCERS's actual June 30 closing balances and the simulated closing balances for the 70%/30% vs 50%/50% allocations over the last 14 years.

NYCERS - Actual Returns and Index/Core Returns (70%/30% vs. 50%/50%) from 2000 to 2013

Fiscal Year Actual Close Balance Actual Rate of Return Index/Core Return (70%/30%) Index/Core Return (50%/50%) Index/Core Close Balance (70%/30%) Index/Core Close Balance (50%/50%)
1999 $41.9B % % % $ $
2000 $42.8B 3.14% 5.52% 5.22% $43.8B $43.7B
2001 $38.1B -11.86% -7.58% -2.09% $40.0B $42.2B
2002 $32.8B -11.44% -10.82% -5.25% $34.8B $39.1B
2003 $31.5B 0.62% 2.36% 4.96% $34.0B $39.4B
2004 $34.2B 12.71% 12.08% 8.75% $36.8B $41.6B
2005 $35.5B 6.30% 5.56% 6.31% $38.1B $43.4B
2006 $37.3B 7.10% 4.23% 2.63% $39.0B $43.8B
2007 $42.5B 13.03% 14.75% 12.34% $45.2B $49.7B
2008 $39.7B -7.32% -8.10% -3.59% $41.9B $48.3B
2009 $31.9B -20.46% -17.50% -10.39% $35.0B $43.7B
2010 $35.4B 10.68% 11.63% 11.30% $39.3B $48.9B
2011 $42,4B 19.39% 20.94% 16.14% $47.8B $57.0B
2012 $42.7B -1.14% 5.01% 6.25% $51.0B $61.4B
2013 $47.2B 8.81% 12.26% 8.49% $58.2B $67.6B

Wednesday, January 15, 2014

It's not just New York City!

It is not just the NYC pension funds that have lost their way with alternative investments. It has spread throughout the country as you can see from this story about North Carolina.

Open Meetings Law - Advisory Opinion - 2005

Listed below is an advisory opinion letter from the NYS Department of State to the Wall Street Journal concerning access to the five NYC pension board meetings and to certain documents of the pension funds.

State of New York
Department of State
Committee on Open Government

One Commerce Plaza
99 Washington Ave.
Albany, New York 12231
(518) 474-2518
Fax (518) 474-1927

January 31, 2005

The staff of the Committee on Open Government is authorized to issue advisory opinions. The ensuing staff advisory opinion is based solely upon the facts presented in your correspondence.


I have received your letter in which you questioned the propriety of certain executive sessions held by the boards of New York City’s five pension funds, as well as denials of access to their records.

According to your letter, five separate pension funds have been established for categories of City employees, their holdings are valued at approximately 83 billion dollars, and they are known collectively as the New York City Retirement System. Each board is independent, but each relies on the office of the City Comptroller for oversight of asset management and staff support.

Having attended meetings of the boards of the three largest funds on various occasions, you indicated that reviews of a fund’s investment performance generally occur in public and that you are given a copy of a "flash report", a one page summary. Often, however, discussions involve "quarterly reports or particular investment classes", and you are excluded from them. Executive sessions have also been held to discuss "a 12 month plan", "investment advisor updates", quarterly reports on "private equity" and real estate, "investment policy", emerging markets, compliance with ethics laws, a selection process for investment counsel, a "post-trade" analysis, and a status report on "large cap growth."

Additionally, in response to a request for a report on the performance of a particular fund, you were told that the report was "privileged." A request for a copy of an investment policy adopted during an executive session was denied, and you were told that you should obtain it from the Comptroller’s office. In another instance, after the Board provided authority to enter negotiations with two private equity consultants, your request for their names was rejected based on a contention that disclosure "could impair the ability of the City Comptroller’s office to negotiate terms of [a] deal and actually place the investment."

In this regard, I offer the following comments.

First, the Open Meetings Law is based on a presumption of openness. Stated differently, meetings of public bodies must be conducted open to the public, except to the extent that an executive session may properly be conducted in accordance with paragraphs (a) through (h) of §105(1). Consequently, a public body, such as the boards that are the subject of your correspondence, cannot enter into an executive session to discuss the subjects of their choice. From my perspective, the grounds for entry into executive session are based on the need to avoid some sort of harm that would arise by means of public discussion, and that is so with respect to the basis for entry into executive session to which you referred and which is pertinent to several of the matters that you described.

Specifically, §105(1)(h) of the Open Meetings Law permits a public body to enter into executive session to discuss:
"the proposed acquisition, sale or lease of real property or the proposed acquisition of securities, or sale or exchange of securities held by such public body, but only when publicity would substantially affect the value thereof."

In my opinion, the language quoted above, like the other grounds for entry into executive session, is based on the principle that public business must be discussed in public unless public discussion would in some way be damaging, either to an individual, for example, a business enterprise or to a government in terms of its capacity to perform its functions appropriately and in the best interest of the public. It is clear that §105(1)(h) does not permit public bodies to conduct executive sessions to discuss all matters that may relate to the acquisition, sale or exchange of securities; only to the extent that publicity would "substantially affect the value of the property" can that provision validly be asserted.

When the boards at issue focus on a particular enterprise and consider whether to purchase or sell securities associated with that enterprise, because they purchase and sell securities involving a great deal of money, public discussion could have a significant effect on the value of the securities. If the effect of a public discussion would result in a substantial change in the price of securities considered for acquisition or sale, I believe that an executive session could properly be held. In those circumstances, a board would be focusing on a particular security or securities, and its discussion would involve prospective action. From my perspective, §105(1)(h) may be invoked in instances in which the discussion focuses on particular purchases or sales yet to be made. Discussions regarding past purchases or sales would not appear to "substantially affect" the value of securities. As you are well aware, there are circumstances too numerous to count or identify that deal with the strengths and weaknesses, both actual and predicted, of entities that are the subjects of the purchase and sale of securities. That being so, unless a discussion by a board involves particular entities, as opposed to sectors, it is doubtful in my view that it can be justifiably be contended that publicity would "substantially" affect the value of securities

Moreover, the five funds, although large, are among thousands of institutional purchasers and sellers of securities. That being so, discussions by the boards of the funds involving their policy, pertaining to certain sectors, i.e., emerging markets or large cap companies, updates regarding previous transactions, or "post-trade" analyses would appear to have perhaps minimal or perhaps no effect on the value of securities. If that is so, §105(1)(h), in my view, could not be asserted as a basis for consideration in executive session.

I point out that a different ground for entry into executive session might apply in the context of the functions of the boards. Section 105(1)(f) authorizes public bodies to enter into executive session to discuss:
"the medical, financial, credit or employment history of a particular person or corporation, or matters leading to the appointment, employment, promotion, demotion, discipline, suspension, dismissal or removal of a particular person or corporation."

Insofar as a board discusses the "financial history" of a particular corporation, for example, I believe that §105(1)(f) could properly be cited as a basis for conducting an executive session.

With respect to your efforts in obtaining records, the Freedom of Information Law is pertinent. In brief, that statute is based upon a presumption of access. Stated differently, all records of an agency are available, except to the extent that records or portions thereof fall within one or more grounds for denial appearing in §87(2)(a) through (i) of the Law. Further, the Court of Appeals, the state’s highest court, confirmed its general view of the intent of the Freedom of Information Law in Gould v. New York City Police Department [87 NY 2d 267 (1996)], stating that:

"To ensure maximum access to government records, the 'exemptions are to be narrowly construed, with the burden resting on the agency to demonstrate that the requested material indeed qualifies for exemption' (Matter of Hanig v. State of New York Dept. of Motor Vehicles, 79 N.Y.2d 106, 109, 580 N.Y.S.2d 715, 588 N.E.2d 750 see, Public Officers Law § 89[4][b]). As this Court has stated, '[o]nly where the material requested falls squarely within the ambit of one of these statutory exemptions may disclosure be withheld' (Matter of Fink v. Lefkowitz, 47 N.Y.2d, 567, 571, 419 N.Y.S.2d 467, 393 N.E.2d 463)" (id., 275).

There is nothing in the Freedom of Information Law that authorizes a person or agency to claim, promise or engage in an agreement conferring confidentiality or a "privilege" absent a statutory authority to do so. The Court of Appeals has held that a request for, a claim or a promise of confidentiality is all but meaningless; unless one or more of the grounds for denial appearing in the Freedom of Information Law may appropriately be asserted, the record sought must be made available. In Washington Post v. Insurance Department [61 NY2d 557 (1984)], the controversy involved a claim of confidentiality with respect to records prepared by corporate boards furnished voluntarily to a state agency. The Court of Appeals reversed a finding that the documents were not "records" subject to the Freedom of Information Law, thereby rejecting a claim that the documents "were the private property of the intervenors, voluntarily put in the respondents' 'custody' for convenience under a promise of confidentiality" (id., 564). Moreover, it was determined that:
"Respondent’s long-standing promise of confidentiality to the intervenors is irrelevant to whether the requested documents fit within the Legislature’s definition of ‘records’ under FOIL. The definition does not exclude or make any reference to information labeled as ‘confidential’ by the agency; confidentiality is relevant only when determining whether the record or a portion of it is exempt (see Matter of John P. v Whalen, 54 NY2d 89, 96; Matter of Fink v Lefkowitz, 47 NY2d 567, 571-572, supra; Church of Scientology v State of New York, 61 AD2d 942, 942-943, affd 46 NY2d 906; Matter of Belth v Insurance Dept., 95 Misc 2d 18, 19-20). Nor is it relevant that the documents originated outside the government...Such a factor is not mentioned or implied in the statutory definition of records or in the statement of purpose..." (id., 565-566).

The Open Meetings and Freedom of Information Laws frequently relate to one another, as in the case of matters involving access to minutes of executive sessions. The Open Meetings Law contains direction concerning minutes of meetings and provides what might be viewed as minimum requirements pertaining to their contents. Specifically, §106 states that:

"1. Minutes shall be taken at all open meetings of a public body which shall consist of a record or summary of all motions, proposals, resolutions and any other matter formally voted upon and the vote thereon.

2. Minutes shall be taken at executive sessions of any action that is taken by formal vote which shall consist of a record or summary of the final determination of such action, and the date and vote thereon; provided, however, that such summary need not include any matter which is not required to be made public by the freedom of information law as added by article six of this chapter.

3. Minutes of meetings of all public bodies shall be available to the public in accordance with the provisions of the freedom of information law within two weeks from the date of such meetings except that minutes taken pursuant to subdivision two hereof shall be available to the public within one week from the date of the executive session."

In view of the foregoing, as a general rule, a public body may take action during a properly convened executive session [see Open Meetings Law, §105(1)]. If action is taken during an executive session, minutes reflective of the action, the date and the vote must generally be recorded in minutes pursuant to §106(2) of the Law. If no action is taken, there is no requirement that minutes of the executive session be prepared.

It is noted that minutes of executive sessions need not include information that may be withheld under the Freedom of Information Law. From my perspective, when a public body makes a final determination during an executive session, that determination will, in most instances, be public. For example, although a discussion to hire or fire a particular employee could clearly be discussed during an executive session [see Open Meetings Law, §105(1)(f), a determination to hire or fire that person would be recorded in minutes and would be available to the public under the Freedom of Information Law. On other hand, if a public body votes to initiate a disciplinary proceeding against a public employee, minutes reflective of its action would not have include reference to or identify the person, for the Freedom of Information Law authorizes an agency to withhold records to the extent that disclosure would result in an unwarranted personal privacy [see Freedom of Information Law, §87(2)(b)].

As indicated earlier, you referred to an executive session during which a board conferred authority to enter into negotiations with certain private equity consultants. When you requested the names of the consulting firms, the request was denied on the ground that disclosure would "impair the ability" of the City Comptroller to negotiate in an optimal manner. The provision in the Freedom of Information Law upon which the board appears to have relied, §87(2)(c), permits an agency to deny access to records to the extent that disclosure "would impair present or imminent contract awards or collective bargaining negotiations." The key word in that provision in my opinion is "impair", and the question under that provision involves whether or the extent to which disclosure would "impair" the process by diminishing the ability of the government to reach an optimal agreement on behalf of the taxpayers. That a contract has not been signed or ratified, in my view, is not determinative of rights of access or, conversely, an agency's ability to deny access to records. Rather, I believe that consideration of the effects of disclosure is the primary factor in determining the extent to which §87(2)(c) may justifiably be asserted.

As I understand its application, §87(2)(c) generally encompasses situations in which an agency or a party to negotiations maintains records that have not been made available to others. For example, if an agency seeking bids or proposals has received a number of bids, but the deadline for their submission has not been reached, premature disclosure for the bids to another possible submitter might provide that person or firm with an unfair advantage vis a vis those who already submitted bids. Further, disclosure of the identities of bidders or the number of bidders might enable another potential bidder to tailor his bid in a manner that provides him with an unfair advantage in the bidding process. In such a situation, harm or "impairment" would likely be the result, and the records could justifiably be denied. However, after the deadline for submission of bids or proposals are available after a contract has been awarded, and that, in view of the requirements of the Freedom of Information Law, "the successful bidder had no reasonable expectation of not having its bid open to the public" [Contracting Plumbers Cooperative Restoration Corp. v. Ameruso, 105 Misc. 2d 951, 430 NYS 2d 196, 198 (1980)]. Similarly, if an agency is involved in collective bargaining negotiations with a public employee union, and the union requests records reflective of the agency's strategy, the items that it considers to be important or otherwise, its estimates and projections, it is likely that disclosure to the union would place the agency at an unfair disadvantage at the bargaining table and, therefore, that disclosure would "impair" negotiating the process.

I point out that the Court of Appeals sustained the assertion of §87(2)(c) in a case that did not clearly involve "contract awards" or collective bargaining negotiations. In Murray v. Troy Urban Renewal Agency [56 NY2d 888 (1982)], the issue pertained to real property transactions where appraisals in possession of an agency were requested prior to the consummation of a transaction. Because premature disclosure would have enabled the public to know the prices the agency sought, thereby potentially precluding the agency from receiving optimal prices, the agency's denial was upheld [see Murray v. Troy Urban Renewal Agency, 56 NY 2d 888 (1982)].

If there is no possibility that other consulting firms may be involved in the negotiations, it is difficult to envision how disclosure of the names of the two firms would "impair" the ability of a fund to reach an optimal agreement. This is not to suggest that other records involved in negotiations might not justifiably be withheld, but rather that the names of the two firms with which authority has been conferred to negotiate should be disclosed, unless there is justification for claiming that disclosure would impair a fund’s ability to reach an optimal agreement on behalf of its members.

In an effort to enhance understanding of open government laws, copies of this opinion will be forwarded to the boards to which you referred.

I hope that I have been of assistance.

Robert J. Freeman
Executive Director


cc: Board of Education
Fire Department
NYC Employees
Police Pension Fund
Teachers’ Retirement Board