Kathleen King, CEO of the Healthier Kids Foundation, makes a handsome living on taxpayer-funded grants and received a 30 percent raise last year. In a small measure of sanity, she won’t receive a public pension to boot.
In an 9-2 ruling last week, the board of the state’s public employee retirement system, CalPERS, denied King’s appeal. She and the Santa Clara County Health Authority (SCCHA) argued that the nonprofit exec should be eligible for a state pension—despite not having worked for a public agency.
King’s own arguments were used against her in the decision.
Three years ago, the Healthier Kids Foundation—then known as the Santa Clara Family Health Foundation—sued the SCCHA to prevent the release of emails that San Jose Inside had requested through the Public Records Act.
At the time, King’s organization shared office space with the SCCHA, and its records were maintained on a county-controlled server.
In a sworn affidavit from the 2013 case, King and her attorney argued that the emails should not be released because her foundation and the SCCHA were “entirely separate and independent agencies and the relationship between [them] is purely contractual.”
A judge disagreed, noting that the files were under control of the County of Santa Clara, which could release them, as is required of public records in its possession.
San Jose Inside published a series of articles that showed King and Cindy Chavez, not yet a county supervisor, used the organization’s resources to propel their political careers, as well as fund a campaign to approve a half-billion county sales tax increase that King has since tapped into to boost her salary to a quarter-million dollars per year.
Just a few weeks after the May 2013 court decision, a random CalPERS audit of SCCHA operations found that four employees of King’s foundation were receiving improper pensions, as they were not employees of the county entity.
In a motion filed at the April 20 hearing, CalPERS staff presented King’s own arguments in the public records case to show she did not consider herself a public employee in 2013. With a public pension on the line, however, she switched her tune.
The board’s decision upheld a ruling by an administrative law judge, who agreed that King could not be considered a public employee by any reasonable definition. CalPERS staff argued that allowing King to receive a pension “jeopardizes the tax-exempt status of the CalPERS plan.”
Calls to King and the Healthier Kids Foundation were not returned.
Just three years ago, the SCCHA faced off against King in court over the email release. This time, it took King’s side in the pension dispute, which shows just how much the organization’s leadership has changed since former CEO Elizabeth Darrow stepped down at the end of 2015.
King is now a SCCHA board member, and many of the other trustees are political allies of Supervisor Chavez and organizations she ran (Working Partnerships USA; South Bay Labor Council) before becoming a county supervisor.
King first enrolled in the CalPERS system in 2008, when she was hired to lead the Santa Clara Family Health Foundation. At the time, she reported to the SCCHA. That reporting structure changed in 2009, but King’s CalPERS status continued until her nonprofit renamed itself the Healthier Kids Foundation in 2013, following the San Jose Inside stories and pressure from the similarly named Santa Clara Family Health Plan.
As previously reported, Healthier Kids Foundation appears to have been reimagined to keep King on the taxpayer dole while also helping her remain politically relevant. Other than an annual wine tasting event, the nonprofit raises little in the way of corporate gifts, foundation grants or private donations.
According to its 2012 Form 990, “It does not solicit grant requests, but rather makes grants to organizations that serve the same population as the foundation.” In 2012 it donated $125,000 to the VMC Foundation, whose chief executive officer sits on HKF’s board, to “support Santa Clara Valley health & hospital system.” It followed with $25,000 more to VMCF in 2012 and 2014 for “sponsorship of annual gala.” King’s group also supports Working Partnerships ($20,000 in 2012) and other politically active groups, such as People Acting in Community Together (PACT) and Asian Americans for Community Involvement.
Healthy Kids Foundation spent $1,059,555 on lobbying between 2010 and 2014, according to its disclosure filings, and it contributed $465,000 to fund two tax increase political campaigns, most notably the 2012 Measure A.
The organization lacked a clear mission statement in April 2014, when Chavez and the county Board of Supervisors signed off on giving King’s tiny nonprofit $1,168,200 from the Measure A windfall over two years. The 30 percent salary raise followed.
That money was surplus from Measure A, the county tax initiative that King and Chavez organized in 2012 through the Santa Clara Family Health Foundation.
A review of financial statements the Healthier Kids Foundation filed with the IRS shows that more than 80 percent of the nonprofit’s money comes from government grants, and nearly half of its expenses are staff salaries including King and her $147,000-a-year finance director and co-CEO, Emily Hennessy.
Below is the bulk of the CalPERS board meeting:
This article was updated with additional information in the day following its original posting.