Opinion
Opinion By: Andy Beshear,Attorney General;James M. Herrick,Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether Child Development Center of the Bluegrass, Inc. ("CDC"), violated the Kentucky Open Records Act by denying Dr. Lachin Hatemi's November 28, 2015, request for a list of its donors and contributors since 2009; promissory notes between CDC and Kentucky Medical Services Foundation, Inc. ("KMSF"); and minutes of all meetings of CDC's Board of Directors since 2009. For the reasons stated below, we find that CDC is not a public agency within the meaning of the Open Records Act and therefore is not subject to the Act.
CDC was founded in 1957 as a nonprofit organization called "United Cerebral Palsy of the Blue Grass, Inc." It provides therapy and child care services for pre-kindergarten children, including but not limited to special-needs children. In 2012, CDC relocated its child care operations to a facility on Alumni Drive in Lexington pursuant to an agreement with KMSF, which Dr. Hatemi and CDC respectively describe as a "joint venture" and a "cooperative project." It is this relationship with KMSF which Dr. Hatemi believes has reconstituted CDC as a "public agency" within the meaning of KRS 61.870(1), in light of our decision in 15-ORD-205 that KMSF was a public agency pursuant to KRS 61.870(1)(h). 1
Dr. Hatemi invokes three subsections of KRS 61.870(1) in attempting to bring CDC within the definition of "public agency" :
(h) Any body which, within any fiscal year, derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds[;]
(i) Any entity where the majority of its governing body is appointed by a public agency as defined [elsewhere in] this subsection; by a member or employee of such a public agency; or by any combination thereof;
(j) Any board, commission, committee, subcommittee, ad hoc committee, advisory committee, council, or agency, except for a committee of a hospital medical staff, established, created, and controlled by a public agency as defined [elsewhere in] this subsection[.]
Dr. Hatemi supports his argument under KRS 61.870(1)(h) by pointing out that KMSF spent $ 2,717,001 to construct a building that "CDC currently operates without paying rent," and that the same amount appears as an asset on CDC's 2012 tax return as "Advance for Building Construction." CDC replies that the item on its tax return "does not reflect a transfer of funds from KMSF or any other public agency, but rather reflects the amount of private funds that CDC contributed as its share of construction costs for the Alumni Drive facility." (Emphasis added.) Furthermore, we concluded in 13-ORD-105 that the term "state or local authority funds" as used in KRS 61.870(1)(h) does not include "the receipt of services, use of facilities, sharing of employees, or other non-monetary benefits from a public agency, " but only actual monetary transfers. Thus, the rent-free use of a building to which KMSF contributed funds would not constitute the receipt of funds from KMSF, even had the construction not been half financed by CDC.
The question, therefore, is whether CDC derives 25% or more of the funds expended by it in Kentucky from state or local authority funds. CDC has provided an affidavit from accountant Roger M. Bean, who acts as volunteer Treasurer for its Board of Directors. Mr. Bean avers that, while KMSF does provide some income to CDC, "at no time has CDC received more than twenty-five percent (25%) of its annual Kentucky expenditures from KMSF, or any public agency, or any combination of public agencies." Accordingly, we do not find CDC to be a public agency under KRS 61.870(1)(h).
We next consider Dr. Hatemi's argument under subsection (1)(i) that a majority of CDC's governing body is appointed by a public agency or a member or employee thereof. The argument appears to be entirely based on the fact that in November 2011 an agreement between CDC and KMSF created a joint "Operations Committee" to manage the operation of the Alumni Drive facility and the program there, as well as possible similar programs to be established in the future. As demonstrated by CDC's "Restated By-laws," however, this Operations Committee has not replaced the corporation's Board of Directors as the governing body of CDC. Members of the Board of Directors serve staggered terms and new members are elected by the existing members, not appointed by a public agency or a member or employee of a public agency. Officers of CDC are elected by the Board of Directors. There is no suggestion, as in 15-ORD-205, that KMSF has any influence over the bylaws or constitution of CDC. Moreover, either CDC or KMSF is capable of terminating the 2011 agreement, which further shows that CDC has not surrendered its separate existence by cooperating with KMSF in this manner.
Even if the Operations Committee could somehow be considered the governing body of CDC, however, the 2011 agreement creates a four-member committee, two members appointed by CDC and two by KMSF. Half of the committee's membership would not constitute a "majority" as provided by KRS 61.870(1)(h) . Therefore, this subsection does not apply.
Lastly, under KRS 61.870(1)(j), Dr. Hatemi claims that CDC is "established, created, and controlled by a public agency. " This is essentially the same argument he makes under subsection (1)(i), that the joint formation of the Operations Committee has placed CDC under the control of KMSF and the University of Kentucky. As explained above, CDC itself is not controlled by KMSF, and control over operation of the Alumni Drive facility is shared equally between CDC and KMSF. Yet, even if Dr. Hatemi could show that CDC is "controlled" by a public agency, there is nothing to indicate that CDC was "established" or "created" by a public agency. Accordingly, we find that CDC is not a "public agency" as defined in KRS 61.870(1)(h), (i), or (j), and thus is not subject to the Open Records Act.
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.
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