In April 2019, Lynne Bussey requested a variety of records from the Community Action Agency of Butte County (CAA). CAA is an organization dedicated to alleviating the effects of poverty. CAA declined to provide the records, stating that California law did not require the requested records to be maintained and that CAA was not subject to the California Public Records Act (CPRA). Bussey thereafter sued in superior court to compel CAA to give her the records. The superior court sided with Bussey and directed CAA to produce the records. CAA appealed.
The California Court of Appeal considered whether a nonprofit, nongovernmental entity like CAA was subject to the CPRA. The Court of Appeal developed a four-factor test to evaluate such entities and eventually held that CAA was not subject to the CPRA.
In making this determination, the Court of Appeal examined the reach of the CPRA. The CPRA expressly applies to cities, counties, school districts, municipal corporations, districts, political subdivisions, and, among other entities, “other local public agenc[ies]”. Earlier versions of the CPRA also extended its reach to nonprofits. The Court of Appeal noted that the definition of the local agency was changed in 1998 to only apply to nonprofits that are legislative bodies of a local agency. The definition was changed again in 2002 so as remove the reference to “nonprofit” and replace it with “entity” to ensure that for-profit entities that were still legislative bodies of local agencies would not be able to circumvent the CPRA.
The Court of Appeal concluded that these changes reflected a desire to include a very limited universe of local nongovernmental entities within the CPRA’s coverage. The Court of Appeal held that “other local public agenc[ies]” would be limited to governmental entities. At the same time, the Court of Appeal acknowledged that a nonprofit entity may be a governmental entity and thus an “other local public agency” if the nonprofit operates as a local public entity.
The Court of Appeal developed a four-factor test to determine if a nonprofit entity is operating as a local public entity.
The first factor inquires whether the nonprofit entity performs a core government function. Here, the Court of Appeal decided that poverty alleviation is “not a core government function that cannot be delegated to the private sector.” The first factor weighed against CAA’s inclusion in CPRA coverage.
The second factor reviews the extent to which the government funds the nonprofit’s activities. The Court of Appeal found that because public funding amounted to $3.5 million of the CAA’s $5.6 million annual total expenses, most of CAA’s funding was attributable to public sources. Therefore, the second factor weighed in favor of CAA’s inclusion in CPRA coverage.
The third factor evaluates the extent to which the government is involved in the nonprofit’s day-to-day activities. Here, the Court of Appeal found that nothing in the record indicated the government was involved in the day-to-day activities of CAA. The Court could not make a determination of this factor’s weight.
Finally, the fourth factor asks whether the nonprofit entity was created by the government. Here, private individuals incorporated CAA. But, Bussey showed that the CAA website acknowledged it was created by the Board of Supervisors of Butte County. The Court of Appeal could not make a determination of this factor.
The Court of Appeal stated that because only one of the four factors in this matter weighed in favor of including the CAA in the CPRA statutory scheme, the CAA is not a governmental entity and is therefore excluded from coverage by the CPRA.
Community Action Agency of Butte County v. Superior Ct. of Butte County, 79 Cal. App. 5th 221 (2022).
Note:
This case conveys a new, important, four-factor test that nonprofits can use to evaluate whether they are subject to the CPRA. This case also serves as a reminder for public agencies to carefully evaluate these four factors before creating a nonprofit entity. An evaluation of these four factors will allow a public agency to either avoid or ensure CPRA coverage.