If you're a public school teacher in Kentucky, the state has a message for you: You have no right to know the details of the investments being made with your retirement savings. That was the crux of the declaration issued by state officials to a high school history teacher when he asked to see the terms of the agreements between the Kentucky Teachers’ Retirement System and the Wall Street firms that are managing the system’s money on behalf of him, his colleagues and thousands of retirees.

In rejecting the request from history teacher Randy Wieck, KTRS general counsel Robert Barnes said the terms of the agreements represent “trade secrets” and that disclosing them would provide “an unfair commercial advantage” to the firms’ competitors. 

The denial was the latest case of public officials blocking the release of information about how billions of dollars of public employees’ retirement nest eggs are being invested. Though some of the fine print of the investments has occasionally leaked -- and created an uproar -- the agreements are tightly held in most states and cities. Critics say such secrecy has prevented lawmakers and the public from being able to evaluate the propriety of the increasing fees being paid to private financial firms for pension management services. They also say that the secrecy prevents the public from knowing if the deals comport with rules governing public pension investments.

"The private equity firms feel they have to keep these contract terms secret because if the terms are revealed people would see that they break many state fiduciary laws against excessive risks and excessive fees," said Chris Tobe, a former Kentucky pension trustee who is the author of the book "Kentucky Fried Pensions."

Last month, Illinois officials denied an open records request for information identifying which financial firms are managing that state’s pension money. Like their Kentucky counterparts, Illinois pension officials asserted that the firms’ identities "constitute trade secrets" and argued that publicly releasing the information "would cause competitive harm" to the firms. Illinois’ Freedom of Information Act includes special exemptions for information about Wall Street firms, and the state legislature has in recent weeks been considering proposals that transparency advocates say would further narrow the open-records statute.

The denial from Illinois pension officials followed a decision earlier this year by Rhode Island General Treasurer Gina Raimondo, a Democrat, to reject a newspaper’s open-records request for information about state pension investments. The treasurer's office argued that financial firms have the right to “minimize attention” around their compensation. Last week Raimondo, who is now Rhode Island's governor-elect, held a meeting of the state investment commission in secret to review the state’s $61 million investment in a hedge fund run by Mason Capital.

The investment in question has been a source of political controversy, even before the state reported a big drop in its returns. Critics noted the Mason investment was initiated by Raimondo’s commission just weeks before she was given an Urban Innovator award by the Manhattan Institute -- a prominent conservative think tank on whose board Mason co-founder Kenneth Garschina serves. The Mason investment was part of a larger Raimondo-led push of pension money into alternative investments. The strategy has delivered below-median returns for Rhode Island taxpayers and big fees to the financial industry, which was a key source of campaign contributions to Raimondo's 2014 gubernatorial campaign.

In a recent essay, Steve Judge, president and chief executive of the Private Equity Growth Capital Council, wrote that secrecy is necessary and appropriate to protect the financial industry’s commercial interests.

“The argument that [agreements] should be accessible to the public is akin to demanding that Coca-Cola publish its famous and secret soda recipe,” he wrote. “Like Coke’s secret recipe, [agreements] contain proprietary and commercially sensitive trade secret information that, if disclosed, could undermine a private equity fund’s ability to invest and generate high returns for its limited partners. Overnight, competitors would have access to sensitive information, like the fund’s investment strategy, investment limitations, and key personnel that competitors could use to outbid the fund on a deal or otherwise disadvantage it in competitive negotiations.”

Addressing concerns about high fees raised by previous disclosures of agreements between pension funds and Wall Street firms, Judge asserted that the deals “are entered into by individuals who have a fiduciary duty to act in the best interests of beneficiaries ... so it goes beyond reason to believe that they would enter into any agreement that would violate that duty.”

In Kentucky, the debate over transparency could hit both the state legislature and the courts in the coming months.

Rep. Jim Wayne, a Democrat, is planning to reintroduce his legislation to subject pension investment agreements to procurement statutes that mandate public release of all government contracts. Meanwhile, Wieck, the high school teacher, has filed a class-action lawsuit charging KTRS officials with, among other thing, violating their fiduciary duty to retirees by moving pension money into opaque alternative investments.

Wieck says the underfunded pension system has been unduly investing in these higher-risk alternatives to try to make up for funding gaps, and that state officials were wrong to sign confidentiality agreements with the financial firms. If his lawsuit goes forward, the details of those investments could surface in court, just as they did in a 2010 California case in which a judge ordered the release of similar pension investment documents. In that case, the judge said state pension officials' "assurances of confidentiality cannot convert public records into private records."

"My hope was that the KTRS would voluntarily agree to challenge the secrecy agreements that they have settled for with these firms," Wieck told International Business Times. "Now we are hoping the court will weigh in and make these officials favor the members of KTRS over the secrecy requirements of these financial companies."

Even if legislators and courts in Kentucky and elsewhere press for transparency, events in Iowa suggest that the controversy may continue. There, the private equity firm KKR in October warned state pension officials that if they release information about the fees that Iowa taxpayers are shelling out to Wall Street, the financial industry may respond by effectively prohibiting the state from future private equity investments. 

Then again, with public pension systems representing trillions of dollars of capital -- and therefore billions of dollars of potential fees -- the threat to punish governments for being more transparent may be a bluff.

“The idea that a big public system risks losing access to top-level managers by revealing this information is laughable,” wrote pension analyst Leo Kolivakis. “Public pension funds are by far the biggest investors in private equity and that trend won't change. Private equity firms need public pension funds to grow their assets exponentially, garnering those all-important fees, especially that management fee which they receive no matter how poorly funds perform.”