For City and Town Clerks

For City and Town Clerks
Campaign Finance 101 For City and Town Clerks Arizona Municipal Clerks Association Election Training July 2017 Presented by Cris Meyer City Clerk, City of Phoenix

OVERVIEW Purpose / Content of Outline The Law and Resources
Overview of Clerk Responsibilities Political Committees Registration of Political Committees Contribution Limitations Disclosure in Campaign Literature & Advertisements

OVERVIEW Reporting Contributions & Expenditures
Enforcement of Report Filing Enforcement of Other Campaign Finance Violations Termination of Committees Financial Disclosure

PURPOSE / CONTENT Content Reference Summary
Duties and issues for local filing officers NOT details on contribution & expenditures Offered in SOS Workshops for candidates Reference Summary Reference guide to apply law Only a Summary – does not cover all details Always refer to statutes – references provided

THE LAW – Legal Counsel Important to consult with attorney
Campaign Finance regulation increasingly complex Law and duties unclear in many cases – conflicts exist Legal opinions differ. Know your attorney’s position. Responding to Questions Law is unclear – interpreting is legal advice Filing Officer role – provide information, not advice An opponent or public could challenge your advice Appropriate response - "You need to discuss that with your attorney or campaign advisor."

THE LAW Arizona Constitution, Art VII, Sec 16
“The legislature, at its first session, shall enact a law providing for a general publicity, before and after election, of all campaign contributions to, and expenditures of campaign committees and candidates for public office.”

Arizona Revised Statutes
THE LAW Arizona Revised Statutes Title 16, Chapter 6 Campaign Finance (Article I) § through 938 New Organization Clean Elections (Article II) § through 961 (Not applicable to cities and towns)

THE LAW – New Organization
Arizona Revised Statutes - Title 16, Chapter 6 Campaign Finance (Article I) Article 1 – Definitions, §16-901 Art. 1.1 – Establishment of Committee, § Art. 1.2 – Contributions, § Art. 1.3 – Expenditures, § Art. 1.4 – Reporting and Disclosure, § – 928 Art. 1.5 – Biennial Financial Adjustments, §16-931 Art. 1.6 – Committee Termination, § – 934 Art. 1.7 – Enforcement, § – 938

THE LAW - Resources Arizona Election Law Pamphlet
“Camo” Book, Oct 2016 – Constitution, Titles 16, 19, 38 CAUTION – includes entire old & new Title 16! (p. 624 / p. 719) Attorney General Opinions (not Law) Secretary of State (materials online) Campaign Finance Handbook (Feb 2017) Election Procedures Manual (Law) (latest version 2014) League of Cities and Towns Municipal Election Manual (MEM) Campaign Finance Reports Handbook League General Counsel Opinions

LAW – Purpose & Limits Purpose of Regulation Limitation on Regulation
Public disclosure of contributions & expenditures Protect public contributions from misuse Limit big money influence in candidate races (declining) Limitation on Regulation First Amendment (political speech) Supreme Court decisions – Striking restrictions, upholding disclosure – Exploring when anonymity / non-disclosure is necessary State Response to Decisions – also reducing disclosure

LAW - Enforcement Through Public Disclosure of Information
Public, candidates & media identify issues Voters enforce by casting ballots Filing Officers Enforce Report Filing Ensure that public disclosure occurs Enforce Other CF Violations Determine “reasonable cause” Complaints being used as campaign tactic Increased Clerk Role – Sole authority to initiate!

Clerk Responsibilities
“Filing Officer” for campaign finance documents for your city or town Keep old documents for retention period! ($500 TES) Assign Committee ID numbers & keep Log Must provide Notice of CF laws and Statement of Org to applicants for Initiative, Referendum & Recall petitions (also Title 19 Pamphlet)

Receive Campaign Finance Documents Campaign Financing & Reporting Statement Statement they have read campaign finance law Candidates – with nomination paper (part of form) Committee officers – with registration (in SO form) Committee Registration Documents Statement of Org only ($500 Exemption Repealed) Termination Statements Periodic Reports Contribution & Expenditure Reports Report for No Activity – Check box & summary page

Campaign Finance Docs – Repealed No Activity Statement – Repealed Candidate Annual No Activity Statement – Repealed Candidate Notice of Large Contributions – Repealed Notices of receipt of $1000 or more from a single source within 20 days before election “10K” Notices – Repealed Large contributions / expenditures by Prop & Recall Registrations & Notices of Independent Expenditures by Corporations, LLCs & Labor Orgs – Repealed

Provide Electronic Filing & Posting on Internet Filing officers must provide electronic filing option Online database not required (yet) Comply using fillable pdf forms filed by or upload May comply by opting into State System (Jan 2018?) Who Must Post Documents on Internet? All filing officers Prior to only required if Pop over 2500

Provide Electronic Filing & Posting on Internet What Documents to Post ALL campaign finance statements and reports Statement of Org, Terminations, Reports Posting NOT Required for other documents Financial Disclosure Statements (Yet) (Some Post) Where to Post On city / town site if maintain a site If city town does not have website Probably still may post on League site

Enforce Campaign Finance Reporting Determine Failure to File (on time) Send Failure to File Notices (By within 5 days) Refer to attorney if not filed within 30 days Enforcement of other CF Violations Written complaint from 3rd party now required Only filing officer authorized to initiate investigations If determine “reasonable cause” to believe someone is violating CF law, must notify attorney City / Town Attorney is Enforcement Officer Issues Notices of Violation

Enforce Filing of Registrations & Notices of Independent Expenditures - Repealed Required for Corps, LLCs and Labor Orgs making independent expenditures in candidate elections Must “Register” for each election cycle Must file Notice of Expenditures Clerk must verify whether entity has registered If Not – categorize “unverified” & contact entity

Responsibility Issues
Compliance is ultimately the responsibility of the candidates & committees Law & scope of duties unclear (New law) Interpretation and opinions differ Some actions not required, but are appropriate for the Clerk role and further the purposes of the law E.g. reminders of filing deadlines

Political Committees No general definition applicable to all committees Had definitions for several Types of committees Candidates and the committees they designate Exploratory committee Separate segregated fund (Corps & Labor Orgs) Political party or political organization Groups that circulate a petition for a ballot measure or recall (but not groups that support or oppose measure) Separate test for all other groups

Political Committees New Definition – “Committee” means:
A Candidate Committee A Political Action Committee (PAC) A Political Party Registration of a committee is required if an entity meets the requirements in §16-905

Political Committees Candidate Committee
Candidate must register a committee IF: The candidate receives contributions or makes expenditures (in any combination) of at least $1100 in connection with that candidacy $1100 increases $100 in Jan odd years (2017) Any combination: Receive $550 and spend it! Candidate limited to 1 committee for same office during an election cycle (must combine any old)

Political Committees Political Action Committee
An entity must register as a PAC IF: Entity is organized for the “primary purpose” of influencing an election; and Entity knowingly receives contributions or makes expenditures (in any combination) of at least $1100 in connection with any election during a calendar year “Any combination” of spend / receive $1100 Receive $550 and spend it – required to register $1100 threshold increases $100 in Jan odd years Increased from $1000 in Jan 2017

Political Committees Political Action Committee (Cont)
“Primary purpose” to influence elections Excludes many entities - Chamber, Trade Assn Provision for when it is NOT (501 Charitable orgs) Provision with a presumption of when it IS During a “calendar year” (not an election cycle) Entity can receive or spend $1099 annually ($2198 in an election cycle), even if its primary purpose is influencing elections. and not have to register or report Amount low for state, significant in smaller jurisdictions

Political Committees Political Action Committee (Cont)
Separate Segregated Fund Corporations / Labor orgs cannot contribute to candidates May establish a fund to receive voluntary contributions from employees for making contributions to candidates A Fund must register as a PAC Permitted contributions by Corporation / Labor Org Contributions / expenditures on ballot measures Independent Expenditures in candidate elections Not required to “register” or provide notices of expenditures Instead, IE activity reported on a schedule of a CF report

Political Committees? Specific Situations . . . is it a committee?
A candidate? Individual (not a candidate) acting alone? Corporation that makes independent expenditures supporting a candidate? An entity that files an argument on ballot measure & pays deposit?

Political Committees? Specific Situations . . . is it a committee?
Business / organization involved in a ballot measure? Business or organization that spends more than $1100 to support or oppose a ballot measure? Public utility spending its own money supporting its franchise measure? Religious assembly or institution that spends $2500 influencing an election?

Political Committees - Definition
When to raise question . . . Inquiry about candidacy (always upon 1st contact) Inquiry about making contributions to candidates Inquiry about initiative, referendum or recall (1st contact) Upon filing an argument on a ballot measure (Not for filing argument, but may be other activities) Inquiry about making contributions to influence a ballot measure

Political Committee Registration
When to Register? Within 10 days of qualifying as a committee Not required before engaging in "political activity” Accepting contributions or making expenditures Distributing campaign literature or ads Circulating petitions (Not required by CF law) But, signatures on Initiative and Referendum petitions invalid

Political Committee Registration
How to Register? File Statement of Organization with Filing Officer Stmt Org is now the ONLY registration document $500 Threshold Exemption Statement - Repealed Upon registration, PAC may engage in any lawful activity Not required to establish separate committees for different activities (e.g. circulate petition and support candidates) Not required to identify activities on registration statement Note: A person or entity must track activity and report on first report after qualify as a committee

Candidate Committees Candidate may be chairman and treasurer
Committee name must include candidate name (first or last) Committee name must include office if candidate has committees for multiple offices (2017 fix) Candidate may have only one committee for same office during same election cycle No longer required to designate a committee for each election (Can only have one!) Exploratory Committees - Repealed

Other Political Committees
Chairman & Treasurer must be different people Committee name must identify the "sponsoring" organization, if any Committees registered outside of AZ Unclear if / how register in AZ (Old provision repealed) Probably can register in AZ Unclear if can use money received before register here

Ballot Measure Committees
Most special requirements for committees acting to support or oppose a ballot measure repealed Committee name not required to include: The petition serial number (or Prop number) Whether support or oppose the measure Committees can spend on any measures Now must report activity on ballot measures in campaign finance reports Report must identify the ballot measure to which each transaction relates

Recall Committees Is a Recall committee a ballot measure committee?
AG Opinion: No Recall is not a ballot measure (results in a candidate election, not a Prop on a ballot) A recall committee is a committee to influence a candidate election Contribution limitations would apply to recall committees if not a ballot measure committee Corporate money would also be prohibited

Standing Political Committees
Eligibility to be “Standing” Committee Active in more than 1 jurisdiction (“for 1 yr” repealed) File a Statement of Organization with the SOS and a copy in each jurisdiction in which the committee is active Registration Statement no longer has to be notarized Only SOS assigns ID number Also needs to file copy of amended Stmt of Org in each jurisdiction Files Reports only with the Secretary of State Committees cannot sponsor candidate or other committee

Penalty for Failure to Register
Civil Penalty Presumptive penalty is the amount received or expended while not registered Penalty can be up to 3 times the amount received or expended while not registered if find there is special circumstances

Initiative & Referendum petition sigs invalid? Title 16 Committee registration only required if meet requirements (Primary purpose, exceed $1100) Title 19 Must register when file application for petition (Filing officer cannot accept application without a Stmt Org) Signatures invalid if obtained before committee registered Consult with attorney Registration probably required to circulate petition Title 19 (more specific provision) probably trumps Title 16

Recall petition signatures invalid? Title 19 § repealed & readopted in 2016 Applicant NOT required to file Stmt Org with application Filing officer can accept petition without registration No provision that Recall signatures invalid if obtained before committee registered Title 16 For Recall, required to register a committee if meet requirements in Title 16 (primary purpose, exceed $1100)

Nomination petition signatures? No statute invalidating nomination signatures obtained before registration (only in Title 19 for Init & Ref) Filing officers have no authority to invalidate signatures Registration only required if candidate exceeds $1100 Superior Court decisions Since 2006, Superior Courts have invalidated signatures on nomination petitions if committee not registered No appellate court decision for legal precedent Candidate is no longer defined as a committee Consult with your attorney – probably let Court invalidate

Statement of Organization
Contents Type committee, name, address, website, phone address (must agree to receive all notices) Candidate: Name (first or last) and office sought PAC: Sponsor name or any common nickname Sponsor contact information, including Officers names, address, occupation, employer Statement by Chairman and Treasurer that have read all CF laws (part of form) Designation of financial institutions to hold funds

Statement of Organization
Clerk issues ID number Notarization not required (even for standing) All filing officers must now post copy on Internet Amendments Required for any change in required information Must file within 10 days after change (previously 5) No specific penalty for failure to amend timely

Treasurer Duties Principal officer – has virtually all duties
Authorize all expenditures, keep records Track details of all contributions and expenditures and File Reports Use best efforts to obtain donor info At least 1 documented written or oral attempt Preserve committee records - 2 years Maintain separate segregated bank accounts Personal money, Recall, Corporate / Other contributions Must produce records required to be kept At request of filing or enforcement officer

Contribution Limits Limits apply to contributions to Candidates ONLY!
And possibly Recall committees (AG Opinion) Current Limit: $6350 per election cycle (Jan 2017) Limits increase $100 in Jan of odd years Limits apply to an election cycle, not term office In 2015 and 2016, applied to term office (4 year cycle) Cycle is two years – General (2nd) to General (2nd) Cycle includes the primary and general elections There are two election cycles in a four-year term Candidates can accept up to the limit every two years

Contribution Limits “Election Cycle” – Issue from 2016 Legislation
Cycle start and end dates were on Election Day Prior to 2016, aligned with end of post-election reporting period 2016 General, committees filed 2 reports to split on Election Day HB 2486 (Chap 233) – New definition, §16-901(18) Cycle still 2 years, from General (2nd) Election to General (2nd) Now start and end dates aligned with reporting periods Ends last day of calendar quarter with an election Begins first day of next calendar quarter Also clarifies cycles for Special & Recall Elections For Recall – Cycle from issue serial # to end Recall Contributions for recall can’t be used for other elections

Contribution Limits No Limits on:
Cumulative total amount an individual can give to all candidates Total a candidate can receive from PACs Use of candidate’s own money Foreign Contributions prohibited (Fed law) Includes anything of value (information on opponent)

Contribution Limits Candidate Committees
No limit on amount candidate committees can transfer to other committees for same candidate Exception – City / town candidates can’t transfer to committee for a state office Transfers are contributions – individual donor limits apply Candidate committees can contribute to other political committees (other than candidate) Candidate committee can’t give to other candidates But – if terminating, can contribute surplus to candidates

Contribution Limits Candidate Committee Transfers
A candidate committee can transfer money to other committees for same candidate without limit Exception: City / town candidate committee can’t transfer to a candidate committee for a state office! City / town candidates can transfer to committee for county office (but then cannot transfer for a state office for 2 years) Some city candidates registered a committee for state office and transferred surplus before effective date (no restriction on transfer from a committee for state offices) Not amended in 2017

Contribution Limits “Excess” Contributions – CAN Committee
Candidates can’t knowingly accept more than limit If unknowingly accept an “Excess Contribution” Must refund excess within 60 days; or May reattribute the excess if both apply: The contribution was from an individual; and The contributor authorizes the committee to reattribute the excess to another individual The individual must be a joint account holder on the instrument used to make the contribution

Contribution Limits PAC Contributions Political Party Contributions
Limit for PAC: $6350 Limit for Mega PAC (state qualified): $12,700 (Double) PACs can only contribute to candidates using money received from individuals, partnerships, political committees or political party (not corporations, labor org) Political Party Contributions Political party can’t give to non-partisan candidates (only to “nominees” of a party)

Contribution Limits Corporations and Labor Organizations Prohibited:
Contributions directly to candidate committees Permitted: Contributions to support or oppose ballot measures Contributions to candidates from a segregated fund Funded by voluntary contributions solicited from employees, shareholders, retirees and families of entity and its affiliates Contributions to PACS for Independent Expenditures “Independent Expenditures” for candidates (using corporate money, not contributions)

Expenditures Expenditure Exemptions
New list of items that are not expenditures Use of , Internet activity, or social media message if not paid for by the individual and does not contain a solicitation Value of volunteer services Payments for committee accounting & legal services Others

Expenditures Independent Expenditures
Means an expenditure by a person or committee (not a candidate committee) that: "Expressly advocates" for or against a candidate Not made in cooperation or consultation with the candidate or the candidate’s committee (independent) Evaluating whether expenditure is “Independent” Examples of what is NOT independent in §16-922 Lists factors for determining whether coordination exists Identifies things that are NOT coordination Any person may make independent expenditures

Disclosure for Campaign Lit & Ads
Disclosure Requirements A person (not candidate committee) must disclose in an advertisement or fund raising solicitation: “Paid for by” followed by the name of the person making the expenditure; and Whether the expenditure was authorized by a candidate and the name of the authorizing candidate (if any) PACs also must disclose in advertisements: Names of 3 PACs making the largest contributions to the committee that exceed $20K during election cycle A committee does not have to be registered at time of the expenditure

Disclosure Exceptions Items too small for disclosure to fit (buttons, pins) Social media or text messages sent using SMS Ads placed as a paid link on a website if less than 200 characters and the target website has the disclosure Graphic or picture links on websites if too small and the target website has the disclosure Candidate’s signs paid for by own committee No Exception anymore - Repealed The candidate’s own signs must have disclosures

Size and Legibility Requirements Ad mailed or delivered by hand or electronically Must be “clearly readable” Signs or Billboards – minimum 4% sign height Radio, television and video Specific requirements that combine spoken and print If use acronym or nickname not commonly known Must spell out

Advance Copy of IE Ads to Candidate Repealed Previously required to provide advance copy of independent expenditure ad distributed within 60 days before election to the candidate named within 24 hours of submission for mailing, printing or broadcast

Independent Expenditures by Corp, LLC or Labor Orgs
Registration & Notices of IEs Repealed! Entity not required to file separate “registration” if cumulative expenditures in a city or town exceeds $1,000 Not required to file a “notice” of expenditure each time exceed $1,000 in local races in a city or town Disclosure Entities that make independent expenditures (other than individual or PAC), must file independent expenditure reports (specific schedule in a campaign finance report)

“Dark Money” Campaign expenditures with no disclosure of who made expenditure or the source(s) of money Non-Profit Corporation Issue Has no “income” from operations to make expenditures since all funding is from donations Not required to register a committee – so do not file Reports! Non-profits being formed to make independent expenditures – with no disclosure of source of $$

“Issue Advocacy” Expenditures Use of IE rules by Candidates (and others) Candidate forms a non-profit on specific issue(s) Solicits donations or transfers surplus from campaign committees Makes expenditures for Ads to promote issues and accomplishments on that issue (e.g. anti-tax) Does not mention opponent or solicit vote (not express advocacy or influencing election) Not required to register a committee and report No disclosure of source of funds, and contribution limits do not apply

Reporting Political Committee Contributions & Expenditures
Who must file? All registered committees must file required reports until terminated No $500 Exemption Stmt (Not report) - Repealed What to file? Campaign Finance Report for the reporting period If no activity – must file a report Repealed No Activity Statement Box to check on summary page if no activity Annual No Activity Stmt (candidates) - Repealed

When to file? – PACs and Political Parties If no Election in Quarter: File Quarterly Report Required every quarter every year, not just election yr File “not later than” 15th of next month Reports Due: Jan 15, Apr 15, July 15, Oct 15 Reporting Period Complete thru last day of calendar quarter Jan 1 – Mar 31; Apr 1 – Jun 30; Jul 1 – Sep 30; Oct 1 – Dec 31

When to file? – PACs and Political Party If Election in Quarter: Pre-Election Report File not later than 10 days before election (Sat) Cover 1st day of calendar Qtr thru 17 days before election Post-Election Report File by 15th day after end of calendar Quarter (Same time quarterly report due if no election) Cover 16th day before election thru end of quarter

When to file? – Candidate Committees File ONLY during 4 calendar quarters preceding election 4 quarters preceding 2nd (General/Runoff) election for the office the candidate seeks (e.g. Mar-May or Aug-Nov) If no Election in Qtr: File Quarterly Reports (during year before election) Same filing and reporting dates as PACs 1st report for election must include election cycle to date If Election in Qtr: File Pre and Post Election Reports

Where to file? With filing officer for the jurisdiction File in each jurisdiction committee is registered Unless Standing Political Committee (only SOS) Filing date? Must be filed “no later than” due date Filing date is date of actual receipt in office ( ) Repealed: Cert mail postmark, delivery confirmation date If Due Sat/Sun/Hol – no provision for next business day Office closed on Friday? probably resolves issue. Be Open? Monday OK? (No)

Alternatives to Report None! Both options repealed. No Activity Statements - Repealed Must file report Check box on summary sheet for “No Activity” Only file schedules with activity to report Candidate Annual No Activity Stmt - Repealed

Electronic Reporting All filing officers must provide electronic filing option May comply by opting into State System Not available to cities / towns until 2018 (Jan?) Fee not yet determined. Will include help desk support Annual maintenance fee can begin in Jan 2019, but SOS must notify Clerks of fee by Dec 2017 Other options for electronic filing An online database is not yet required Use fillable pdfs filed by or upload to website Opt into another system - Phoenix or other (Tempe) Develop own system

Content of Reports Requirements in §16-926(B) See CF Handbook of Instructions / Forms Items for some categories require additional info Proposition or Petition Serial Number Candidate named in independent expenditure item Not required to itemize expenditures less than $250 Statute omitted aggregate total of all expenditures less than $250 But SOS included schedule for aggregate total

Report Form Issues Report form includes 62 schedules / 65 pages
33 Receipt Schedules (A-#) 29 Expenditure Schedules (B-#) Do committees have to file blank schedules? No. SOS revised form to add note at bottom of p. 1 No Activity Report Former “No Activity Statement” repealed No separate form - must file a Report (Page 1 only) “No Activity” check box added on last line of page 1

Report Form Issues Need for Additional Pages for a Schedule
Form has only one page per schedule Form cannot generate additional pages Contribution & Expenditure pages have only 5 lines! Problem allowing more pages is pdf format issue Use pdf software (Adobe Pro, Cute pdf) to complete forms, which can generate additional pages for a schedule Fill out page, print, delete data, enter new data, print, repeat Print multiple copies of blank schedules, complete manually

Report Form Issues No Signature on Reports Calculation Errors
Statue requires only certification under penalty of perjury - §16-926(B)(5) Statement to that effect appears at bottom of page 1 Committees frequently questioned – some signed Calculation Errors Fillable pdfs not a good media for auto calculations Intermittent errors occur on Summary Sheets (p. 2-3) Committees should check math and totals Usually can fix by deleting and re-entering data

Report Form Issues Data Columns on Individual Schedules
Many schedules have three columns Amount received or expended Total for reporting period Total amount for election cycle Must complete all columns for each item / donor Committees must calculate by referring to prior reports Manual calculations for multiple contributions from individuals (Statute requires Treasurer to track individual donor totals) Election cycle totals require knowing date cycle began, which may not have coincided with reporting periods! (Fixed HB 2486)

Report Form Issues Cumulative Total Problems on Schedules
Forms require totals for Reporting Period and Election Cycle on last page of most schedules If donors gave more than once in a period or cycle, adding columns gives incorrect total (double counts cumulative totals) SOS direction to only include the latest cumulative total for donors that gave multiple times in the period or cycle Election Cycle totals may not balance with actual totals Occurs if a donor did not give in that reporting period. (If no contribution in period, donor not listed, so cumulative amounts for the cycle are not included on this report)

Report Form Issues Use of “Equity” Column?
Receipt schedules have columns for cash and equity SOS Answer: Use equity column for assets, in-kind contributions and things that are not cash and cannot be spent The equity totals are not carried forward to the Summary Sheet on reports and are not included in committee cash totals

Termination of Committees
Committees may terminate only by filing Termination Statement with the filing officer Treasurer must file and certify that the committee satisfies the conditions for termination Filing officer my reject if it appears requirements are not met After termination, committee need not report and cannot receive contributions or make expenditures

Conditions for Termination Committee either: Has no outstanding debt or obligations; or Debts are more than 5 years old and creditors agreed to discharge debt and the termination Any surplus money has been distributed All contributions / expenditures have been reported May need to file final report with Termination Statement

Committees with Surplus Money Permissible ways to distribute surplus Candidate may transfer to own other campaign Return surplus monies to the contributors Contribute surplus to other committees, including candidate committees, within limits Donate surplus monies to 501(C)(3) charity Repay loans Cannot convert to personal use (or family)

Committees Active in Multiple Jurisdictions May terminate activities in one jurisdiction and remain active in other jurisdictions Standing committees can terminate in some Termination Statement must include additional statement that remaining monies will be used in other jurisdictions (part of form)

All Committees Terminate
Session Law – HB 2297 All committees in existence on Nov 8, 2016 required to terminate by June 30, 2017 If did not, filing officer may terminate or convert to new committee type (Candidate, Party, PAC) Committees can transfer funds to new committee If not required to register, must donate surplus

Termination Requirement Issue
Session Law – HB 2297 (2016) All committees in existence on Nov 8, 2016 required to terminate by June 30, 2017 Reasons for session law (SOS) New registration requirements, fewer committee types Provide address and agree to accept notices New state database (new design / data conversion) If committee does not terminate Filing officer may terminate or “Convert” to new committee type (i.e. Candidate / PAC)

Issues for Filing Officer to Terminate Unknown if committee meets requirements Have surplus, debt, or unreported activity? Filing officer cannot prepare a final report Filing officer cannot distribute any surplus Committees would still need to file a report and certify that conditions satisfied Can filing officer terminate and then enforce failure to file the final report? No provision on enforcing filure to terminate

Issues for Filing Officer to Convert Committee “Convert” not defined – statutorily is Term & Reg Unknown if committee is still required to register Filing officer cannot complete new registration Lacks required info – address, bank, etc Cannot agree for committee to accept notices Possible prior restraint issue to register if entity is no longer required to register as a committee Committee would still need to file new registration If filing officer converts, what is enforced?

If committee failed to terminate by June 30? Administratively terminate on June 30? Treat as suspended and send notice of suspension Enforce failure to file required report (with termination) Administratively “convert” committee on June 30? Enforce filing of new / amended registration form? Enforce filing of final report for Term showing transfer? Which is better if committees never act? City attorneys consensus: Terminate and enforce failure to file report

Enforcement Enforcement Role of Filing Officers Enforce Report Filing
Ensure public disclosure of information Voters use information to decide how to vote Increasing Role Enforcing other violations Determine “reasonable cause” on violations Filing officer now only official authorized to initiate investigation of complaints (11/5/16)

Enforcement – Failure to File
Campaign Finance Reports Committees must file timely and complete reports File in each jurisdiction registered (except Standing) Treasurer must file Candidate also responsible. Unclear for Chairman. Good Cause Defense for failure – Repealed Must file on or before due date or penalties accrue No provisions / defenses for filing after due date

A committee fails to file if it does not file a “timely and complete” report “Timely and complete” not defined or explained Treasurer must certify report is true and correct Report must be filed “no later than” due date (midnight) Filed when actually received by filing officer If due on S/S/H, no provision allowing next business day “Complete as prescribed by Chapter” “Substantially complete” & “Good faith effort” repealed! Suggests all requirements must be met

Duty of filing officer to determine complete? Unclear if any duty or authority Range of Options Review report on its face to verify appears complete, schedules attached (view of most jurisdictions) Audit reports and schedules to find violations If find violations, cannot initiate enforcement action without a 3rd party complaint Consult your attorney Set policy for reviewing reports and apply consistently for all committees

Enforcement - Failure to File Notices
Filing officer must track committees Identify committees required to file and whether filed Maintain Log or database Filing officer must provide Notice of failure In writing: Identifying the late report Describing how fines accrue Describing methods for payment Send by within 5 days after due date Previously within 15 days Business or calendar days? (probably calendar)

Enforcement - Failure to File Notices
Reminder Notices Optional - not required by law Reminder to committees before filing deadline Can send by (SOS, Phoenix and others) Include link to online forms or attach forms Benefits Avoids receiving 1st notice after penalties already due Reduces innocent failures from oversight Avoids criticism for not reminding

Enforcement - Failure to File Penalties
Committees that fail to file timely shall pay penalty $10 per day during first 15 days after due $25 per day for each subsequent day (after 15) Penalty increases to $25 automatically (day 16) Penalties accrue until report is filed No maximum amounts (Previous $450 / $1000) Reports can be filed without payment of the late fees due (cannot refuse or require payment) If committee does not pay, attorney may collect

If committee fails to file within 30 days after due Filing officer may notify the enforcement officer Notice must have been sent to committee to be able to refer to enforcement officer Enforcement officer is city / town attorney

Additional Penalties – Committee Suspension Applies only to PACS & Political Party committees - Not Cand Suspension of PACs If Committee Fails to File 3 Consecutive Reports Send Notice of Intent to Suspend On receipt of notice, committee is temporarily suspended Notice must inform committee it has 30 days to come into compliance If fails to come into compliance within 30 days Filing officer may permanently suspend committee Send Notice to committee by . No further notice required Suspension does not relieve committee of its obligations

Additional Penalty for Candidates Prohibition on Accepting Nomination Petitions Provision in Title 16 sections on filing nomination papers Filing officer cannot accept nomination petitions if candidate is liable for $1,000 or more in fines, penalties, late fees, judgments related to CF Exception - If liability is being appealed Nomination paper for all candidates must include statement that candidate has satisfied any liability (Statement part of form, also applies to write-ins) Scope of duty for filing officers? Not specified Limited to face of candidate’s affidavit? Investigate?

Additional Penalty for Candidates 5 Year Bar – Repealed Previously, a candidate was not eligible to be a candidate for any local or state office for five years after the last failure to file

Enforcement of Violations
Filing Officer is sole public officer authorized to initiate campaign finance investigations Initiate only upon filing of 3rd party complaint Can investigation only in filing officer’s jurisdiction Filing officer can declare conflict of interest Then may refer to another filing officer who agrees to accept the referral (Many anxiously awaiting) Guidelines for Investigations SOS required to establish in Procedure Manual (not yet) Process, standards, timelines

Filing officer must determine if “reasonable cause” exists to believe there is a violation of CF law “Reasonable cause” – not defined No Guidelines or standards yet – SOS Procedures Manual Legal standard intended also unclear Like Motion to Dismiss? If assume alleged facts are true, is there a violation? Reasonable cause? Honest and strong belief person violated (arrest standard) Probable cause? More evidence for finding a violation than against? Evidence needed to decide - filing officers cannot compel

Investigation to determine reasonable cause Must give alleged violator reasonable opportunity to respond No audit or subpoena powers to compel production of documents or attendance of witness May request voluntary production or appearance Treasurer is required to provide records to filing officer

If find reasonable cause - Filing officer shall notify enforcement officer Referral appears mandatory if find reasonable cause City / Town attorney is enforcement officer Enforcement officer Cannot take action without reasonable cause determination and referral from filing officer After referral, is sole and exclusive authority to initiate administrative or judicial enforcement Cannot refer to attorney general or county attorney City / Town attorney has discretion whether to prosecute

After referral from filing officer, Enforcement officer may (discretion): Conduct an investigation using subpoena powers Serve alleged violator with Notice of Violation State with reasonable particularity the nature of the violation Specify the fine or penalty imposed Require compliance within 20 days after date notice issued May not compel a person to register as committee until proceedings and appeals are final Presumptive Penalty – “shall impose” Penalty equal to amount received or spent in violation If find special circumstances, may impose 3 times amount

Enforcement Challenges
Challenges with Enforcement of Violations Increased complexity in CF Regulation First Amendment cases removing restrictions Statutory provisions unclear or conflicting Committees & candidates more comfortable in gray areas CF complaints becoming a campaign strategy Resulting in more complaints of violations Relaxed registration and reporting requirements hinder identification of who is engaging in the activity Independent Expenditure organizations / Non-profits “Issue Advocacy” ads, mailers, Websites, social media, text, robocalls

Enforcement Process - Issues for Municipalities
State & County Government Filing and enforcement officers independently elected Position authorized to enforce against others Municipal Government Clerks & attorneys not independently elected, must initiate enforcement actions against superiors Clerks typically lack necessary legal background and resources to review to make reasonable cause finding Limited authority and no power to compel evidence Actions and findings will be used in campaigns and can affect perception of impartiality in elections

Enforcement Process Options
Potential Solutions for Issues Process established in Election Procedures Manual State level entity to decide Administrative Hearing Officers Commission or Board Refer to other filing officers (must agree)

Financial Disclosure Distinguish from “campaign finance"
Campaign contributions and expenses vs. Candidate’s personal financial information Every city/town had to adopt standards (All did) Electronic filing not required for cities / towns (yet) Who must file? Local public officers (if held office at any time during preceding calendar year) Appointees Candidates

Financial Disclosure When to File? Electronic Filing
Public officers – by January 31 for prior year (Includes year after leave office, unless term ended in January!) Candidates - with nomination papers Appointees - within 60 days of taking office Electronic Filing Filing officer must provide option beginning Jan 1, 2017 In format prescribed by SOS Database not specified – Fillable pdf and comply

Financial Disclosure “Gift” definition amendments (2016)
Excludes travel for official purposes if publicly reported Excludes campaign contributions if publicly reported (CF) May disclose family as “spouse” / “minor child” Penalties for Failure (if “knowing”) Class 1 misdemeanor $50 per day penalty up to $500 Officers can file late report without paying penalties Use Process in to enforce (other CF violations)

Questions / Discussion
Campaign Finance 101 For City and Town Clerks Questions / Discussion

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