Colorado Plan Backs Data Secrets Law

February 17, 2004 ( - With direct parallels to a similar legal tug of war in California over the same issue, Colorado's state pension plan has released details about its venture-capital investments for the first time.

While Golden State officials fought efforts to lift the veil off of their venture capital holdings in court and ultimately lost, Colorado representatives agreed to a public records data release. But they are, at the same time, backing legislative efforts to expand state government’s right to keep secret private equity and private debt transactions, the Rocky Mountain News reported.

The Colorado Public Employees’ Retirement Association (PERA), is behind a bill from Senator Norma Anderson that says information regarding investments in private equity, private debt and timber “may be kept confidential until the transaction is completed, if it is determined by the (PERA) board that disclosure of such information would jeopardize the value of the investment.”

Anderson, in testimony before the state’s Senate Finance Committee, said the measure gives these PERA investments the same type of confidentiality provisions that other PERA investments have under state law.

The debate comes at a time when PERA faces an unfunded liability that totaled more than $4 billion at the end of 2002. PERA’s finances are under particular scrutiny as the pension plan seeks legislative approval to hike employer contribution rates by a total of three percentage points over the next six years. That would put the employer contribution level at more than 13%.

As have their counterparts in other states, both Anderson, in her testimony to the Senate Finance Committee, and PERA Government Relations Director Rob Gray, in his reports to the PERA board, have argued that venture capitalists will shut out PERA as an investor if the information is not kept secret.

But state Treasurer Mike Coffman argues that PERA’s underfunding is bad enough to justify the plan’s pending merger with the Denver Public Schools Retirement System. The plan should be subject to more intense scrutiny, said Coffman, also a PERA board member.

“While I am sympathetic to their financial interest in keeping alternative investments confidential, I believe that as a public entity, the people of Colorado’s right to know trumps PERA’s desire for confidentiality.”

In California, San Jose Mercury News reporter Matt Marshall pressed the California Public Employees’ Retirement System (CalPERS), to continue to release information of its venture-capital investing once the market turned sour in 2001. After CalPERS refused, the Mercury News sued the pension plan. Within two months, CalPERS relented (See  CalPERS to Go Public With Private Equity Info ), but the regents of the University of California took the matter to the California Supreme Court before losing (See  UC Losses Venture Capital Disclosure Court Battle ).

In Colorado, the information came without the same level of legal wrangling, according to the Rocky Mountain News. A News reporter attended a PERA board meeting in November where legislative director Gray said PERA would back the private-information bill because the venture-capital information was something “the public doesn’t need to know.”

The News followed up with an Open Records Act request for performance details for each PERA venture-capital holding. By December 30, PERA provided the News with a list of all its venture-capital investments and their returns since a $5 million commitment to the Colorado-based Centennial Fund in 1982. The  list was posted on the PERA Web site in early January.