Honorable (Ret.) Winslow Christian 2335 Hyde Street San Francisco, CA 94109 Fax: 530.288.3665 Halvor Melom, Principal Deputy County Counsel Office of the County Counsel 648 Kenneth Hahn Hall of Administration 500 West Temple Street Los Angeles, CA 90012 Fax: 213.626.2105 November 8, 1998 VIA FAX, FOLLOWED BY MAIL Dear Justice Christian and Mr. Melom: This is an addendum to my formal protest letter of October 20, 1998, under the provisions of section 554.9 of Title 2, California Code of Regulations (CCR), concerning the current election for the state member representative on the CalPERS Board of Administration and the apparent favoritism shown the incumbent, William D. Crist. I realize the time may not be "ripe" for a determination, since the rule requires that such protests be filed within ten working days of the mailing of certified election results. However, there may be other provisions which I am not aware of which allow some discretion. It seems to me that waiting until the election is over is problematic, since it may tempt the panel to guess. Did the violation have no result or did Mr. Crist's tally double? Such speculation could be avoided if the election were invalidated prior to the vote count. If you decide to wait and to require that no formal action be taken until after certification of the election, I hope you will use this time to establish procedures for receiving and considering arguments and allegations. I respectfully request that such procedures facilitate distribution of all materials and testimony and that opportunities be provided for rebuttal. The proceedings should facilitate collection of information from all parties involved. Enclosed please find copies of letters to three of last year's candidates, and their supporting correspondence, which illustrate how CalPERS policy has been interpreted prior to the exception granted in July of this year to Mr. Crist. The three letters are as follows: July 24, 1997 letter to Mr. Favila denies his request to include his E-mail address "since it was not an error and it was not shown in your original candidate statement." change some words to all capital letters, with the same reason given. July 24, 1997 letter to Ms. Zachary denies her request to replace the word "personal" with the word "direct" capitalize words replace "5.3" years with "5+" years. Most relevant to your decision is a July 21, 1997 letter to Marion Isom from Mr. Koester, one of three CalPERS staff to whom Mr. Crist addressed his July 20, 1998 thank you letter. Both Mr. Crist and Ms. Isom sought to make what Mr. Koester terms "editorial" changes. However, Mr. Koester denied Ms. Isom's request last year, noting: As Maria Pereira, Board Elections Manager, mentioned to you on July 15, 1997, we are only making changes due to errors. Since the changes you submitted were editorial in nature, we will not be making the changes you requested...we do not provide any special privileges nor accommodations for any person, including our Board incumbents. We denied requests from other candidates for editorial changes, and to be consistent, we must deny your request for editorial changes. Mr. Koester goes on to indicate, "we will be re-writing the letter to make sure the same misunderstanding does not occur in the future." So that you can review how instructions have evolved, I have enclosed a copy of last year's letter of July 11, 1997 from Mr. Koester to Ms. Zachary. Similar letters were sent to all the other candidates last year. True to the commitment expressed to Ms. Isom, Mr. Koester did make improvements this year to clarify the instructions. For example, the July 11, 1997 letter refers to corrections: any questions or comments regarding the proposed text or ballot designation should be directed to Judy Daggao..no later than noon, July 15, 1997, firm. After that date, our elections staff will make no further corrections in the text and designations due to necessary printing deadlines. This year's July 13, 1998 letter to candidate's (I understand you have the copy included with my original protest.) uses underlining to emphasize that corrections are limited to "errors or omissions" and to emphasize the finality of the deadline. Check the statement information for errors or omissions. No other changes will be made in the text...Any errors or omissions and questions or comments regarding the proposed text or ballot designation should be directed to Judy Daggao, CalPERS?s Election Coordinator, ....no later that noon, this Friday, July 1998, firm. After that date, no further corrections will be made in the test and designations, due to necessary printing deadlines. Previous to this year's exception, CalPERS has consistently denied requests for changes to the "editorial" content of candidate statements, unless the candidate was changing words back to those previously submitted. Ms. Zachary, for example, was allowed to use the word "great," but not the word "direct," to replace the word "personal," since she had used the word "great" originally. However, neither she nor the other candidates were allowed to add anything even as insignificant as a new hyphen (-) or to delete anything even as insignificant as a comma (,). CalPERS staff firmly denied such requests, indicating they could not provide such "special privileges" for even "our Board incumbents." This year, after clarifying the instructions to reduce misunderstandings, CalPERS staff claim the instructions are "vague" and can be interpreted to allow Mr. Crist not only add and delete whole sentences but to change the writing style and format of his entire statement. There have been no changes in regulations since last year's election which impact a candidate's ability to change to their statement subsequent to the deadline for initial submission. However, you should be aware that CalPERS has attempted to claim total exemption from the Administrative Procedure Act on the basis of Article 16, section 17 of the state constitution. This argument was rejected by Judge Cecily Bond (Superior Court, Sacramento) on September 17, 1998, in deciding Connell v CalPERS. CalPERS continues to invoke its argument of exemption for other policies which have not been taken to court, such as rules requiring reporting of gifts from contractors (BD-98-03). However, I unaware of even new "underground" regulations (see Government Code, sections 11340.5 and 11425.50) which provide any basis for the new found flexibility, allowing candidate initiated changes to campaign statements. Kayla Gillan's memo of October 9th to the Board (I understand you have a copy) indicates that Mr. Crist called her on July 17th and that she made the decision to allow Mr. Crist to change his statement. However, Mr. Crist's thank you memo of July 20th is addressed to Ms. Gillan, Mr. Koester and Mr. Burton. This implies they were all involved in the decision. Mr. Burton may be able to plead ignorance, but surely Ms. Gillan was aware of section 554.4, Title 2, CCR prohibiting candidates from changing or even withdrawing their statements after the submission deadline. Mr. Koester was clearly aware of previous practice, given his letter of July 21, 1997 to Marion Isom and his efforts to clarify instructions this year. Despite Mr. Koester's expression in July 1997 that "we do not provide any special privileges nor accommodations for any person, including our Board incumbents," that is exactly what has occurred this year. Mr. Crist was allowed to change his statement. I believe if the parties involved in making this decision are questioned under oath and penalty of perjury, we would find the new interpretation of the regulations was influenced by Mr. Crist's position as President of the Board. If Mr. Crist used his influence as President for private advantage, that would be a violation of section 558, Title 2, CCR which provides a penalty of up to and including removal from office. If evidence of such abuse is found, disqualification of Mr. Crist on that basis would certainly be one acceptable remedy to the current situation. Another suggested remedy, not dependent on such a finding, would be for CalPERS to print new ballot booklets to be mailed to all state and university employees. The booklet should explain the circumstances which necessitate a second ballot (violation of section 554.4 by Mr. Crist and CalPERS staff). Candidate statements included in the ballot booklet should be limited to those approved prior to Mr. Crist's memo dated July 20, 1998. I make one additional observation for your consideration. In reviewing the corrections that were made last year (none of which were editorial changes), I found no evidence that such changes were initiated after the deadline of noon, July 15, 1997. Mr. Crist's changes were all editorial. However, even if they had been true corrections, they should not have been allowed after the deadline. An analogy here would be communications to bidders which cite "firm" deadlines. Would a bidder be granted an extension without providing notice to competing bidders? I doubt it. Yet, in the case of the CalPERS elections, notice was not provided to other candidates of the two and a half day extension granted Mr. Crist, or of the unexpected waiver of section 554.4. CalPERS should not be allowed to provide special privileges to board candidates, any more than they should grant favors giving one competitive bidder an advantage over another. I hope Board members will recognize the potential conflict of interest that is involved when, under section 20099 of the Government Code, the Board delegates authority to the executive officer to conduct elections but the law reserves to the Board the authority to review and ratify or reverse all acts of the executive officer. I hope Board members will join me in seeking legislation to move responsibility for conducting Board elections to an impartial neutral party, such as the Secretary of State. The clearest way to begin avoiding favoritism to incumbents is to ensure they have no direct authority over those administering the elections. If you need further information, please contact me during office hours at 916-327-1194 or at my home number, 916-452-5338. For your reference, my FAX number is 916-657-3369. Sincerely, Jim McRitchie CalPERS Board Candidate Enclosures cc: Members, Board of Administration Contact: jm@perswatch.net