For City and Town Clerks

For City and Town Clerks
Campaign Finance 101 For City and Town Clerks AMCA Election Training July 2019 Presented by Cris Meyer City Attorney, City of Phoenix

OVERVIEW The Law and Resources Overview of All Clerk Responsibilities
Political Committees Registration of Political Committees Contribution Limitations

OVERVIEW Disclosure in Campaign Literature & Advertisements
Reporting Contributions & Expenditures Termination of Committees Enforcement of Report Filing Enforcement of Other Violations

CONTENT Duties and issues for local filing officers
NOT details on contribution & expenditures Offered in SOS Workshops for candidates Only a Summary – does not cover all details Always refer to statutes Not legal advice

THE LAW – Legal Counsel Important to consult with your 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 Interpreting unclear law is often 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
Arizona Revised Statutes (ARS) Title 16, Chapter 6 Election Procedures Manual (SOS) Chapter 8 – Campaign Finance

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.”

THE LAW ARS - Title 16, Chapter 6 Campaign Finance (Article I)
§ through §16-938 Clean Elections (Article II) § through §16-961 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, § – 908 Art. 1.2 – Contributions, § – 917 Art. 1.3 – Expenditures, § – 922 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
Gray Book (Oct 2018), 2019 Supplement (Oct) Constitution Title 16 (Elections and Campaign Finance) Title 19 (Initiative, Referendum & Recall) Title 38 (Public Officers) (Filing, Resignation, Vacancy, Financial Disclosure) TIP In Book, line thru sections updated in Supplement

THE LAW - Resources Attorney General Opinions (Advisory, not Law)
Secretary of State (materials online) Election Procedures Manual (Provisions are Law) Must be updated by Dec 31 of odd years (New 2019) Campaign Finance Handbook (2018) 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) U.S. Supreme Court decisions – Striking restrictions on spending, upholding disclosure – Exploring when anonymity / non-disclosure is necessary Arizona has followed Court on spending, but has also reduced disclosure (not required by Court decisions)

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

Summary of 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 provide 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 (No $500 Exemption anymore) Termination Statements Periodic Reports Contribution & Expenditure Reports If No Activity – report! (Summary page, check box)

Electronic Filing Filing officer must provide e-filing option Online database not required (yet) May comply by using fillable pdf forms filed by or upload May comply by opting into State system when available to cities and towns (2021?)

Post CF Documents on Internet Who must Post documents on Internet? ALL filing officers (before 2016, only if Pop over 2500) What Documents must be Posted? ALL campaign finance statements and reports Registrations, Terminations, Reports Posting NOT Required for other documents Financial Disclosure Statements (Yet) (Some Post) Where to Post On city / town web site (all have)

Enforce Campaign Finance Reporting Determine Failure to File (Report filed 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 Attorney issues Notices of Violation

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

Political Committees Definition – “Committee” means:
A Candidate Committee A Political Action Committee (PAC) A Political Party Must register as a committee if meet the requirements in §16-905

Political Committees Candidate Committee - Cities and Towns
New 2018 – HB 2078 A candidate must register a committee IF: The candidate receives contributions or makes expenditures (in any combination) of at least $500 in connection with that candidacy Any combination: Receive $250 and spend it! $500 does NOT increase $100 in Jan odd years Candidate limited to 1 committee for same office during an election cycle

Political Committees Candidate Committees (Except cities/towns)
Candidate must register a committee IF: The candidate receives contributions or makes expenditures (in any combination) of at least $1200 in connection with that candidacy “Any combination” - If receive $600 and spend it! $1200 increases $100 in Jan odd years (2019) Candidate limited to 1 committee for same office during an election cycle

Political Committees Political Action Committee (PAC)
Applies to ALL jurisdictions – including cities/towns 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 $1200 in connection with any election during a calendar year “Any combination” of spend / receive $1200 If receive $600 and spend it – required to register $1200 threshold increases $100 in Jan odd years Increased from $1100 to $1200 in Jan 2019

Political Committees Political Action Committee (Cont)
“Primary purpose” is to influence elections Excludes many entities - Chamber, Trade Assn §16-905(D) provides presumption of when it IS §16-905(E) lists when it is NOT (501 Charitable orgs) During a “calendar year” (not an election cycle) Entity can receive / spend $1199 annually even if its primary purpose is influencing elections, and not have to register or report ($2398 during an election cycle) 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 to use for contributions to candidates A Fund must register as a PAC Permitted contributions by Corp & 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? Business / organization involved in a ballot measure? A person or entity that files an argument on a ballot measure & pays deposit?

Political Committees? Specific Situations . . . is it a committee?
Business or organization whose primary purpose is influencing elections that spends more than $1200 to support or oppose a ballot measure? A person or entity that files an argument on a ballot measure & pays deposit? A public utility spending its own money supporting its franchise measure?

Political Committees - Definition
When to raise question about committee. . . 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 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 No $500 Threshold Exemption Statement Upon registration, PAC may engage in any lawful activity Not required to establish separate committees for different activities (e.g. circulate petition, support candidates) Not required to identify activities on registration statement Note: A person or entity must track all activity and report on its first report after qualifying 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 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) No Exploratory Committees anymore

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 No statute regarding using money received before register in AZ so probably can

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 committee supports or opposes the measure Committees can spend on any measures Committees 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?
Statue unclear, but AG Opinion advises 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 Implications 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 Standing Committees cannot sponsor candidate or other committees

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 there are special circumstances Special circumstances include the severity, extent and willfulness of the violation

Initiative & Referendum petition sigs invalid? Title 16 Committee registration only required if meet requirements (Primary purpose, exceed $1200) 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 your attorney Safest for proponent to register to circulate a petition Title 19 (more specific provision) probably trumps Title 16

Recall petition signatures invalid? Title 16 Only required to register a committee if meet the requirements in Title 16 (primary purpose, exceed $1200 in calendar year) Title 19 Recall different than Init and Ref - § (in 2016) Applicant NOT required to file Stmt Org with application Filing officer can accept petition without registration No provision that Recall signatures are invalid if obtained before committee registered

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 Candidate is not always required to register a committee Registration required if candidate exceeds $500 ($1200) Superior Court decisions Since 2006, Superior Courts have invalidated signatures on nomination petitions if committee was not registered No appellate court decision affirming for legal precedent 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 to SO Required for any change in required information Must file within 10 days after change (previously 5) No specified penalty in law 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 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 (per AG Opinion) Current Limit: $6,450 per election cycle Limits increase $100 in Jan of odd years Limits apply to an election cycle, not the 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” - §16-901(18)
Regular scheduled elections Two year period between General (2nd) Elections Start and end dates aligned with CF reporting periods Ends last day of calendar quarter of the election (Nov or May) Begins first day of next calendar quarter (Jan 1 or July 1) For Fall elections, ends Dec 31 after election, next begins Jan 1 For Spring, ends June 30 after May election, next begins July 1

Contribution Limits “Election Cycle” - §16-901(18)
For Special Election From date election called to last day of calendar quarter when election held For Recall Election From when issue serial # to the end of the “Recall” (Certify insufficient, resignation, or election date) 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 Amount candidate’s own money used Foreign Contributions prohibited (Fed law) Includes anything of value (info about 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 Except – if terminating, can contribute surplus to other candidates

Contribution Limits Candidate Committee Transfers
A candidate committee can transfer money to other committees for the 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) Efforts to amend to remove the restriction in 2018 & 2019 unsuccessful

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 to a different donor if both of the following apply: The contribution was from an individual; and The contributor authorizes the committee to reattribute the excess to another individual The other individual must be a joint account holder on the instrument used to make the contribution

Contribution Limits PAC Contributions Limit for PAC: $6450
Limit for Mega PAC (state qualified): $12,900 (2X) PAC contributions to candidates Only with money received from individuals, partnerships, political committees or political party Not with money from corporations, labor org Political Party Contributions A 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 PACS for Independent Expenditures “Independent Expenditures” for candidates (may use corporate money) Contributions to candidates from a segregated fund Funded by voluntary contributions solicited from employees, shareholders, retirees and families of entity and its affiliates

Expenditures Expenditure Exemptions
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 Committee accounting & legal services Probably applies only if services received as a contribution, not if paid (affects balances of contributions and expenditures) Interest on committee deposits Fees paid by an individual for publicity pamphlet arguments (If paid by a committee, is expenditure) Others in §16-921

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 (other than an individual) 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, if so, the name of the authorizing candidate “Person” Includes entities and associations that are not required to register as a political committee Registration may not be required (Meet committee test?) Registration not required at time of expenditure

Disclosure Requirements (Cont) PACS must disclose “Paid for by” followed by the name of the person making the expenditure; and Whether the expenditure was authorized by a candidate, and if so, the name of the authorizing candidate PACs must also disclose in advertisements: Names of 3 PACs making the largest contributions to the committee that exceed $20K during election cycle

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 The candidate’s own signs must also have disclosures Previously an exception, but exception was repealed

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

Entities that make independent expenditures (other than individual or PAC), must file independent expenditure reports Use specific schedule in the campaign finance report File at time of next CF report Notice No longer a requirement to provide advance copy of an IE Ad to the named candidate

Independent Expenditures by Corp, LLC or Labor Orgs
“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 report Non-profits being formed to make independent expenditures – with no disclosure of source of funds Stronger disclosure requirements approved by Tempe voters (91%) and Phoenix voters (85%)

Independent Expenditures by Corp, LLC or Labor Orgs
“Issue Advocacy” Expenditures Use of IE rules by Candidates (and others) Candidate forms a non-profit on specific issue(s) Solicit donations for a specific issue or transfers surplus from campaign committees Makes expenditures for Ads to promote issues and accomplishments on that issue (e.g. anti-tax) Ad does not mention opponent or solicit vote (so not express advocacy or influencing election) Entity not required to register a committee or 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 committee terminates What to file? Campaign Finance Report for the reporting period If no activity – still must file a report Box to check on summary page if no activity No longer any No Activity Statement

When to file? – PACs and Political Parties If no Election in Quarter: File Quarterly Report - every quarter every year! File “not later than” 15th of next month Reports Due: Jan 15, Apr 15, July 15, Oct 15 If 15th is weekend or holiday, due next business day Reporting Period Report 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 an Election during the Quarter: Pre-Election Report File not later than 10 days before election (Sat) Cover 1st day of 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 If election does not occur, reports not required E.g. all seats filled in first election

When to file? – Candidate Committees File ONLY during 4 calendar quarters preceding an election 4 quarters preceding 2nd (General/Runoff) election for the office the candidate seeks (e.g. Mar/May or Aug/Nov) “For the office” – not all candidates file for every election If No Election in Quarter: File Quarterly Reports (only during year before election) Same filing and reporting dates as PACs 1st report for election must include election cycle to date If Election in Quarter: File Pre and Post Election Reports

Where to file? With filing officer for the jurisdiction File in each jurisdiction committee is registered Except: Standing Political Committee files only with SOS Filing date? Must be filed “no later than” due date Filing date is date of actual receipt in office (or ) Repealed: Cert mail postmark, delivery confirmation date If Due Sat/Sun/Hol – due next business day (SOS EPM) Office closed on Friday? Same as Sat or Holiday? probably resolves most issues

Electronic Reporting All filing officers must provide electronic filing option An online database is not yet required May comply by opting into State System Still not available to cities and towns yet (2021?) SOS cannot charge a fee for jurisdictions to use Will be no cost to cities and towns if opt in Other options for electronic filing 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, but must include in reports Statute omitted aggregate total of all expenditures less than $250 But SOS added a 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 Only file schedules if have information to report on it 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

Termination of Committees
Committees 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 may reject the statement if it appears requirements are not met After termination, committee does not have to file reports 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 the debt and to termination Any surplus money has been distributed All contributions / expenditures have been reported May need to file a final CF report with termination

Distribution of 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 the 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 only in some Termination Statement must include additional statement that remaining monies will be used in other jurisdictions (part of form)

Enforcement Enforcement Role of Filing Officers
Enforce report filing (§16-937) Ensure public disclosure of information Disclosure provides information for voters Enforce other violations (§16-938) Increasing role for filing officers Determine “reasonable cause” for violations Filing officer now only official authorized to initiate investigation of complaints (11/5/16)

Enforcement – Failure to File
Campaign Finance Reports (EPM 8.8.5) Committees must file timely and complete reports File on or before due date or penalties accrue If due on Sat/Sun/Hol, due on next business day (EPM) No “good cause” defense for failure to file timely File in all jurisdictions registered (except Standing) Treasurer responsible for filing Candidate also responsible for candidate committees Law unclear whether Chairman responsible

Enforcement - Failure to File
Filing officer must track committees Identify committees that are required to file PACS – every quarter, every year Candidates – during year prior to election for office All candidates may not be required to file in a year – only file if that office is up for election (staggered) Maintain Log or database Committee type – PAC or CAN For CAN, office sought and next election for office Send reminder notices to committees?

Enforcement - Failure to File
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 For Candidates, even more helpful now than in past Confusion over when required to file (not all same) File only in year prior to an election for that office Avoids receiving 1st notice after penalties already due Reduces innocent failures from oversight Avoids criticism for not reminding

Enforcement – Failure to File
A committee fails to file if it does not file a “timely and complete” report Report must be filed “no later than” due date (midnight) Filing is when actually received by filing officer If due Sat/Sun/Hol, due next business day (EPM) “Complete as prescribed by Chapter” Treasurer must certify report is true and correct Clerk have a duty to determine? Filing officer does not appear to have authority to audit Content issues require a 3rd party complaint What if incomplete on face? E.g. Schedules missing?

Enforcement - Failure to File Notices
Filing officer must provide Notice of failure to file Must send by within 5 days after due date Days means calendar days (EPM 8.8.5) (Before 2016, required to send within 15 days) Send to Treasurer, but may also send to others Not required to send by mail Contents of notice (Form letter) Identifying the late report Explain the penalties and how fines accrue (amounts and fine continues to accrue until filed) Identify acceptable methods of payment

Enforcement - Failure to File Penalties
Committees that fail to file timely shall pay penalty $10 per day during first 15 days after due date $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 (previously $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 the 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 CAN 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 Provided in §16-311, 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 Must be a final order establishing the CF liability 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) Duty of filing officers to verify? Not clear. Limited to face of candidate’s affidavit? Investigate?

Campaign Finance Violations
Enforcement of Other Campaign Finance Violations ARS §16-938 SOS required to provide Enforcement Guidelines in Election Procedures Manual Provided in Section 8.10 of draft 2018 EPM, but never approved SOS advises new EPM will have minimal changes

Enforcement of Other Violations
Enforcement Structure Filing Officer Receives and reviews complaint Makes preliminary “reasonable cause” determination of whether there may be a violation If finds possible violation, refers to enforcement officer Enforcement Officer Performs additional investigation if necessary and makes final determination on whether there is a violation of campaign finance law Issues notice of violation and initiates action to secure compliance or impose penalties

Filing officer is sole public officer authorized to initiate campaign finance investigations All CF violation complaints must begin with filing officer City/Town complaints cannot be filed with AG or County Attorney Complaints cannot be filed in Superior Court Filing officer initiates only upon complaint from 3rd party EXCEPT – filing officer can initiate for failure to file (EPM) Filing officer can declare a conflict of interest For cities and towns, arguably conflict in every case If declare, then may refer to another filing officer who agrees to accept the referral Issue – what if no jurisdiction agrees to accept?

Guidelines for Enforcement Process A.R.S. §16-938 SOS required to establish in Election Procedures Manual (EPM) Guidelines and Procedures governing investigations for all filing officers in state Enforcement Guidelines and Procedures issued in 2018 Election Procedures Manual (Never approved) SOS confirmed 2019 Manual will be essentially same as 2018 Section 8.10 – Enforcement All filing officers and jurisdictions must follow EPM Review EPM with AMCA / League materials Meet with your attorney to review and discuss Prepare templates for required notices, communications

Enforcement Process Summary
Filing Officer – City or Town Clerk A “person” files a written complaint with the filing officer Filing officer reviews complaint for compliance with requirements If complaint does not comply – notify of defects / no action Filing officer completes analysis for actual or perceived conflict If conflict – refer to other filing officer who agrees to accept Filing officer sends notice/copy to respondent (3 bus days) Respondent may file a response Filing officer sends response to complainant (3 bus days) Complainant may then file a reply

Filing Officer – City or Town Clerk (Cont) Filing officer then evaluates to determine whether there is “reasonable cause” to believe a violation occurred Filing officer may dismiss, find reasonable cause, find no RC Reasonable cause finding is not a final decision there was a violation, but only that a violation may have occurred If find reasonable cause – Filing officer issues written reasoned decision with factual analysis Filing officer must refer to enforcement officer (City or Town Attorney)

Enforcement Officer – City or Town Attorney Acts only upon referral from filing officer Enforcement officer completes analysis for actual or perceived conflict of interest If necessary, conducts investigation and compels discovery using existing subpoena powers Makes a final decision on whether a violation occurred Serves a Notice of Violation and / Order of Compliance Presumptive penalty equal to amount received or expended improperly In special circumstances (severity, amount, intent), penalty may be up to 3 times presumptive amount

Enforcement Officer – City or Town Attorney (Cont) If respondent takes corrective action ordered within 20 days, not subject to any fine or monetary penalty If respondent does not take corrective action, enforcement officer provides final notice imposing the penalties Notice must provide the statute violated, explanation of violation, and right to a hearing or to request s settlement conference Respondent may file appeal within 30 days If respondent does not respond or request appeal within 30 days, enforcement officer may file action in Superior Court to enforce the order

Enforcement - Conflicts
The filing officer must conduct a conflict analysis Promptly on receipt of complaint, before sending notices The filing officer “should avoid actual or perceived” conflicts A perceived conflict may exist in cities and towns on all complaints Discuss the review and standards with your attorney Conflict of interest issue in Cities and Towns State & County filing & enforcement officers independently elected City / Town clerks & attorneys not independently elected, taking enforcement actions against superiors Since not independent, actions and findings can affect perception of impartiality in elections Enforcement officer cannot advise filing officers and then enforce Clerks typically lack necessary legal background and resources to review to make reasonable cause finding

Enforcement - Conflicts
If conflict exists, filing officer should refer to a filing officer in another jurisdiction who agrees to accept the referral Must provide notice to complainant and respondent The receiving filing officer has same authority as original filing officer and makes the reasonable cause determination and notifies the original filing officer Original filing officer is bound by the determination of the other filing officer

Enforcement - Complaints
Any “person” may file a complaint with filing officer “Person” as defined in (39) – includes individual, candidate, nominee, committee, corporation, LLC, partnership, labor org, organization, association, etc. Subject of Complaints Include failure to register, comingling of money, violation of contribution limits, unlawful contributions, improper disclosures, failure to file, incomplete / inaccurate reports Must be written ( acceptable) Must include contain full name, mailing address, signature of complainant (even if filed by legal counsel) If filed by legal counsel, communicate with the attorney

Complaints should: Clearly recite the facts that describe a violation of CF law Be as factually specific as possible – names, dates, etc. Clearly identify each person, committee, org or group alleged to have violated CF law Include supporting documentation, if available Include copies of ads, articles, mailers, websites, if any Differentiate statements based on complainant’s personal knowledge from those based on information and belief and identify the sources Sworn affidavits encouraged Be filed as soon as possible after violation occurred (4 yrs)

Filing officer must review the complaint Verify compliance with the requirements for complaints If does not meet criteria, notify the complainant of deficiencies and that no action will be taken on complaint If complaint meets the criteria, filing officer must: Assign a complaint number (Filing officer determines format) (?) Confirm in writing that complaint received Inform complainant that respondent can file a response within 14 days and complainant can file a reply within 7 days thereafter Inform that filing officer will notify complainant when preliminary determination is made

Filing officer may enforce failure to file without a complaint A complaint for failure to file can be dismissed if filing officer initiates enforcement (before or after the complaint is filed) Filing officers can suspend committees for repeated failure to file Filing officer may initiate a complaint based on information provided by law enforcement law agency Sua sponte submissions (self reporting) A person who violates CF law is encouraged to self report violations Submit report to filing officer in writing, identifying and admitting the violation(s), providing facts, documents and explaining how occurred and discovered, and describing corrective action taken If satisfied with the remedial actions taken, filing officer may dismiss the complaint without referral for enforcement If violation is severe, filing officer can refer for enforcement

Enforcement - Briefing
Within 3 bus days of receiving complaint, filing officer must send respondent a notice and copy of complaint Respondent has 14 days to file response, but not required No established format, but guidelines similar to complaint Should address all allegations May be represented by attorney (if so, communicate thru attorney) On request, filing officer may extend deadline 10 days for good cause Normally should be granted. Filing officer must notify complainant. Within 3 bus days of receiving response, send to complainant Complainant has 7 days to file reply, but not required No established format, but cannot raise new issues Filing officer may give up to 14 days to respond, rather than 7, and may extend 10 days on request (normally should be granted)

Enforcement – Filing Officer Decision
Filing officer evaluates complaint After end of briefing period Consider complaint, response, reply, any CF documents on file, and any information in public record Cannot subpoena documents or witnesses Request committee records? (Treasurers must provide) Filing officers have 3 decision options: Dismissal No Reasonable Cause Reasonable Cause

Enforcement – Filing Officer Decision
No deadline for filing officer to reach decision Should keep parties informed of projected decision timetable Priority for addressing complaints Filing officer should generally address complaints in order received, unless one is “high priority” “High priority” if substantial amount involved, high legal complexity, possible knowing or willful intent, potential impact of violation on the election

Enforcement – Dismissal
Does not merit further use of government resources Factors that may be considered Small amount involved or insignificance of alleged violation Vagueness or weakness of evidence Whether alleged violation remedied and not likely to be repeated Violation unintentional If dismissed, filing officer notifies parties Filing officer may send letter to caution or remind respondent regarding future obligations Dismissal is final and not appealable

Enforcement – No Cause No Reasonable Cause finding Examples:
Information available “fails to give rise to a reasonable inference that a violation has occurred” Even if allegations true, would not be a violation of CF law Examples: Evidence demonstrates no violation occurred Allegation is not credible or so vague that further inquiry or investigation is not warranted Complaint fails to describe a violation of CF law Filing officer notifies parties Decision is final and not appealable

Enforcement – Reasonable Cause
Reasonable Cause finding Find reasonable cause to believe a person violated CF law Not a definitive finding that there was a violation Means filing officer believes a violation may have occurred Standard of review – probable cause “There is reasonably trustworthy information and circumstances that would lead a reasonable person to conclude there is a substantial likelihood that the respondent committed a violation” Lower than preponderance of the evidence standard

Enforcement – Reasonable Cause
If find Reasonable Cause Notify parties of decision Filing officer should issue a reasoned decision with a reasonably complete factual and legal analysis Must notify enforcement officer and provide relevant documentation from the case City / Town attorney is enforcement officer If find violation was knowing and intentional Filing officer may also refer to enforcement officer for criminal prosecution

Enforcement – Enforcement Officer
Enforcement officer (City or Town attorney) 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 Must review for potential conflict of interest Should avoid actual or perceived conflicts of interest Should not advise filing officer and then enforce

May conduct investigation (has subpoena powers) Makes final decision on whether a violation occurred May serve Notice of Violation / Order of Compliance State with reasonable particularity nature of the violation Specify the fine or penalty imposed Require compliance within 20 days after notice issued May not compel a person to register as committee until proceedings and appeals are final Order may require respondent to register as a committee If respondent appeals, may not enforce until completion of appeal

Order should include presumptive penalty Presumptive Penalty – “shall impose” Penalty equal to amount received or spent in violation If find special circumstances, may impose 3 times amount Respondent takes corrective action (within 20 days) Respondent not subject to any fine or financial penalty Primary goal of enforcement is compliance and disclosure Enforcement officer should close matter and provide written confirmation

Enforcement – Final Notice
Respondent does not comply (within 20 days) Enforcement officer may provide final notice and impose the fine or financial penalty Final Notice must Identify rule, statute or provision on which decision based Identify with reasonable particularity the reason why corrective action or a fine or penalty was imposed Include description of right to request a hearing Include description of right to request an informal settlement conference If respondent does not request a hearing or appeal After 30 days, enforcement officer may file action in Superior Court to enforce order

Enforcement – Hearing Respondent may request a hearing or appeal
File with enforcement officer within 30 days Enforcement officer must within 5 business days Notify filing officer and other interested persons Request a hearing from Office of Administrative Hearings Administrative Hearing Must be conducted with 60 days Respondent has burden of persuasion of no violation Decision must be issued with 20 days

Enforcement – Final Decision
Enforcement officer issues final determination Within 30 days of hearing officer’s decision May accept, reject or modify hearing officer decision Must provide notice to respondent, filing officer and other interested parties Must notify respondent of right to appeal to Superior Court within 35 days Respondent complies within 35 days Respondent not subject to any fine or financial penalty Enforcement officer closes matter, provides confirmation If no compliance or appeal with 35 days Enforcement officer files in Superior Court to enforce

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

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 yet required for cities / towns 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 January 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)

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