Sie sind auf Seite 1von 84

B I PA R T I S A N C O M M I S S I O N O N T H E P O L I T I C A L R E F O R M AC T O F 1974

Overly Complex and Unduly Burdensome


The Critical Need to Simplify the Political Reform Act

Final Report and Recommendations


cover photo of state capitol by Robert Holmes, CalTour
LETTER FROM THE BIPARTISAN COMMISSION

DEAR GOVERNOR DAVIS, SECRETARY OF STATE JONES,


MEMBERS OF THE LEGISLATURE, MEMBERS OF THE FRAN-
CHISE TAX BOARD, AND THE CHAIRMAN AND MEM-
BERS OF THE FAIR POLITICAL PRACTICES COMMISSION: desire to incur the expenses nec-
essary to comply with the Act,
ical Reform Act—(i) campaign, and (iii) a fear that—even with
lobby, and public official finan- reasonable diligence—full compli-

N early two years ago, as the


25th anniversary of Califor-
nia’s Political Reform Act of 1974
cial interest disclosure, (ii) con-
flicts of interest of public officials,
and (iii) enforcement of the Act.
ance with the Act may be unat-
tainable, therefore exposing the
political participant to possible
was approaching, the Legislature The work product of the monetary liabilities. The Biparti-
and Governor Wilson agreed that Bipartisan Commission is san Commission therefore pro-
a fundamental review of the Polit- embodied in this Report and the poses in this Report a series of
ical Reform Act was in order. accompanying Appendices. An Recommendations that it believes
The result was the passage of Executive Summary of the Report would simplify the Act, lessen the
SB1737 (McPherson) creating the and the Commission’s Recom- expense and burden of compli-
14-member Bipartisan Commis- mendations is included. In sum- ance, and make the enforcement
sion on the Political Reform Act mary, the Bipartisan Commission of the Act more fair and reason-
of 1974. has concluded what may already able.
Over the past 18 months be obvious to many people who It is for these reasons that
the Bipartisan Commission has deal with the Act on a regular the Bipartisan Commission urges
held fourteen public meetings— basis: in its present state the Polit- the Governor, the Legislature,
including Public Hearings held ical Reform Act is overly complex the Secretary of State, the Fran-
throughout California to solicit and unduly burdensome for many chise Tax Board, and the Fair
the public’s input—in order to persons who want to lawfully par- Political Practices Commission to
assess the present state of the ticipate in the political system. seriously consider the Recommen-
Political Reform Act and how The extent of the current dations contained herein for pos-
it might be improved. The problem is such that there is a sible adoption in furtherance of
Bipartisan Commission, with the serious risk that the Act will sub- the purposes of the Political
assistance of the Institute of stantially deter persons from par- Reform Act.
Governmental Studies, also con- ticipating in the political process
ducted extensive research and due to: (i) a lack of understand- Sincerely,
empirical studies relating to the ing of how to comply with the
three principal areas of the Polit- Act, (ii) an inability or lack of
Steven S. Lucas, Chairman

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
COMMISSION MEMBERSHIP

Steven S. Lucas, Chairman


Dale Bonner
Kathy Bowler
Jesse Choper
Jack Crose
Ben Davidian
Dan Lowenstein
Lance Olson
Eileen Padberg
Jim Porter
Curt Pringle
Tony Quinn
Joe Remcho
Ted Weggeland

*A brief biography of each of the Commissioners is included in Chapter 2, pages 16-17.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
ACKNOWLEDGMENTS

THE BIPARTISAN COMMISSION would like to acknowledge the work of the many
people who assisted the Commission. Thousands of hours of volunteer time were provided
to the Bipartisan Commission by many people. Specifically, the Bipartisan Commission
would like to thank the following persons and organizations for their generous assistance
with the Commission’s work:

The Fair Political Practices tant Secretary of State Jeff Uyeda; with the Los Angeles Area Public
Commission, including Chair- former Chief, Management Ser- Meeting.
man Karen Getman, Enforce- vices Division Bob Nishimoto;
ment Division Chief Cy Rickards, Deputy Division Chief, Political San Diego County Supervisor
Technical Assistance Division Reform Division, John Keplinger; Ron Roberts and Deedee Castro,
Chief Carla Wardlow, the FPPC Deborah Davis; Angela Ponciano; Director of Community Out-
Staff, former Chairman James Lisa Kinetz; and Alfie Charles. reach and Policy Advisor for
Hall, former General Counsel Supervisor Roberts, for hosting
Steve Churchwell, and former Senator Bruce McPherson and the San Diego Area Public Meet-
Enforcement Division Chief staff assistant Rick Van Nieuw- ing.
Darryl East. burg.
Tony Miller, who provided timely
The Secretary of State’s Office, The San Francisco Ethics Com- updates on the Commission’s
including Secretary of State Bill mission, including Executive activities to many interested per-
Jones; Undersecretary of State Director Virginia Vida, for help sons.
Rob Lapsley; Chief Counsel Bill with the San Francisco Bay Area
Wood; Division Chief, Political Public Meeting. Stephen Trout, staff of State Sen-
Reform Division, Caren Daniels- ator Ross Johnson, for finding
Meade; Assistant Secretary of The Los Angeles Ethics Commis- meeting rooms for the Sacra-
State Vickie Glaser; Communica- sion, including Executive Direc- mento Public Meetings.
tions Director Beth Miller; Assis- tor Rebecca Avilla, for their help

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
table of contents
REPORT AND RECOMMENDATIONS

1. Executive Summary ...................................................................................................................... 1

2. Background of the Commission............................................................................................... 15

3. Work of the Commission .......................................................................................................... 19

4. Report and Recommendations ................................................................................................. 21

4a. Disclosure Under the Political Reform Act........................................................................ 23

4b. Conflicts of Interest Under the Political Reform Act ...................................................... 34

4c. Enforcement of the Political Reform Act ........................................................................... 40

5. Research Projects ........................................................................................................................ 53

5a. Focus Group Studies ............................................................................................................... 54

5b. Campaign Report Form Experiment................................................................................... 63

5c. FPPC Enforcement Study....................................................................................................... 70

APPENDICES*
Volume I
1. Biographies of Commission Members
2. SB1737 (McPherson), signed into law on September 30, 1998 Chapter 1080 of
the Statutes of 1998

3. SB342 (McPherson), approved as of September 8, 1999 Chapter 365 of the Statutes


of 1999

4. Minutes of the Meetings of the Bipartisan Commission


5. Institute of Governmental Studies Report to the Bipartisan Commission

Volume II
6. Written Comments Submitted By Public; Proposed Recommendations Considered

Questions and comments may be directed to the Bipartisan Commission on the Political Reform Act, c/o Steven S. Lucas,
Chairman, 591 Redwood Highway, No. 4000, Mill Valley, CA 94941 tel. 415.389.6800; e-mail slucas@nmgovlaw.com.

*The Appendices have been placed on file with the Fair Political Practices Commission’s filing officer, located at 428 J Street,
4th Floor, Sacramento, California 95814.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
chapter 1
EXECUTIVE SUMMARY

The Bipartisan Commission


Political Reform Act of 1974 (the has studied the provisions of the
“Bipartisan Commission” or the Political Reform Act both as a
“Commission”) has conducted an matter of viewing the original
OVERVIEW in-depth study and analysis of provisions as they are applied
The Political Reform Act of 1974 these three principal areas of the and implemented over a quarter
(the “Political Reform Act” of the Political Reform Act: (i) cam- century later, but also as a
“Act”) was adopted by a vote of paign, lobby, and public official matter of how the provisions
the People of California over a financial interest disclosure, (ii) and their implementation have
quarter century ago in order to, conflicts of interest of public offi- changed, either by amendment
among other purposes: (i) pro- cials, and (iii) enforcement of the or by regulatory change over the
vide for the full and truthful Act. years. It is clear that the reg-
disclosure of receipts and expen- There is no doubt but that the ulatory changes—the many Fair
ditures in election campaigns, Political Reform Act provides for Political Practices Commission
(ii) provide for the full and truth- extensive disclosure of campaign (“FPPC”) regulations that have
ful disclosure of the assets and and lobby finances and public been adopted and the FPPC
sources of income of public offi- officials’ financial interests, com- advice letter interpretations that
cials which may be materially plex protections against conflicts have been promulgated—account
affected by their official actions,
and require decision-making
The Act’s provisions may be more extensive and far-reaching than
disqualification where appropri- those of any other state, as was certainly the case over 25 years ago
ate, and (iii) provide adequate when the Political Reform Act was adopted by the voters.
enforcement mechanisms for
both public prosecutors and pri- of interest with respect to public for the lion’s share of the changes
vate citizens in order that the Act officials and those financial inter- to the Political Reform Act and
would be vigorously enforced. ests, and elaborate enforcement its implementation.
(See Government Code Sections mechanisms for violations of
81001, 81002.) these provisions. The Act’s provi- The Critical Need to Simplify and Bring
sions may be more extensive and Fairness to the Political Reform Act
The Political Reform Act: Extensive and far-reaching than those of any Based upon its extensive research
Far-Reaching other state, as was certainly the and analysis, the Bipartisan Com-
During the past 18 months, the case over 25 years ago when the mission finds that the Political
Bipartisan Commission on the Political Reform Act was adopted Reform Act should be com-
by the voters . mended for its many and sub-

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 1
use reasonable diligence but
nonetheless violate some of its
provisions.

The Bipartisan Commission


therefore proposes in this Report
a series of Recommendations
with respect to disclosure, con-
flicts of interest, and enforcement
that it believes would, if adopted
in full, provide for a more effi-
cient, effective and fair imple-
mentation of the Political Reform
Act—and the purposes that the
Act serves. These Recommenda-
tions take the form of statutory,
administrative, regulatory, proce-
stantial accomplishments over the a combination of the follow- dural, and clarifying changes.
past quarter of a century, includ- ing factors: (i) a lack of under-
ing principally its system of standing of how to comply Simplification and Fairness as Only a
extensive disclosure of relevant with the Act, (ii) an inability First Step
information necessary to create or lack of desire to incur While the Bipartisan Commis-
an informed electorate and a fair the expenses and/or other sion believes the Recommen-
political process. resources necessary to comply dations discussed below are
Nonetheless, the Bipartisan with the Act, (iii) a fear critically necessary to serve these
Commission also finds: that—even with reasonable dil- purposes of simplification and
• As may be obvious to igence—full compliance with fairness, the Commission also
many who deal with the the Act may be unattainable, believes that this is only the criti-
Act, in its present state the therefore exposing the polit- cal first step of what should be an
Political Reform Act is overly ical participant to possible ongoing process.
complex and unduly burden- monetary liabilities. The endless attempts to fill
some to many persons who • The Political Reform Act every conceivable loophole in the
want to lawfully participate in is in serious need of amend- law, to require disclosure of every
the political system. ments that would simplify the possible financial interest of a
• The extent of the current Act and its implementation, public official (no matter how
problem is such that there is lessen the expense and burden convoluted), and to require dis-
a serious risk that the Act of complying with the Act, qualification from participation
may substantially deter per- and make the enforcement of in governmental decisions in cir-
sons from participating in the the Act more fair and reason- cumstances that are so confusing
political process out of one or able to the many persons who

2 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
RECOMMENDATIONS
Disclosure Under the Political Reform
that lawyers argue for months Act regulated by the Act that they
over the correct application of Recognizing that disclosure is threaten the Act’s effectiveness.
the law, have exacted a toll from the cornerstone of the Political As an example, evidence of
the political process. The Act is Reform Act, the Bipartisan this surfaced in the Bipartisan
largely viewed as a law of “strict Commission devoted substantial Commission’s Public Comment
liability”; that is, violations can energies and resources to its Hearings. At its first Public Hear-
be found no matter how reason- investigation and analysis of this ing, a middle school math teacher
able the diligence of the person subject. The Commission quickly (who is a volunteer PAC treasurer)
attempting to comply with the learned that—due to its complex- took time off from her job and
Act. Simplification and bringing ity—disclosure may also be the called in favors to have her chil-
even greater fairness to the Act Achilles’ heel of the Political dren looked after so that she
are critically necessary steps to Reform Act. could travel over two hours to
furthering the original purposes The Bipartisan Commission— address the Bipartisan Commis-
of the Political Reform Act. through its Focus Groups, its sion. Her compelling testimony
Therefore, in addition to the Campaign Report Form Experi- focused on her recurring anxiety
implementation of the Recom- ment, its Public Comment Hear- over not knowing whether she
mendations contained in this ings, and the work of the is both completing her PAC
Report, the Legislature and the Commissioners—studied and ana- disclosure forms correctly and
FPPC should continue down the lyzed the three primary areas of filing them according to the
road of simplification and fair-
ness, to create a system that
is more readily understandable The Political Reform Act is in serious need of amendments
and better differentiates between that would simplify the Act and its implementation, lessen the
the most egregious violators and expense and burden of complying with the Act, and make the
the ordinary and reasonably dil- enforcement of the Act more fair and reasonable.
igent—but not perfect—political
participant. In this regard, the
Bipartisan Commission has com- disclosure found within the Polit- proper schedule. Her stated fear:
piled all of the hundreds of writ- ical Reform Act: campaign dis- the possibility of enforcement
ten and verbal proposals received closure, public official financial action being taken against her
from the public during its inves- disclosure, and lobby disclosure. for unknowing and unintentional
tigation, many of which might Through its investigation, the violations of the Act that may
be helpful as a next step down Bipartisan Commission found a occur despite her diligent
this road to simplification and broad consensus that the com- attempts to comply with the
fairness. (See Appendix 5.) plexities of the Political Reform Act—or as she jokes with friends,
Act in the area of disclosure so “who will take care of my kids
seriously burden those who are when they lock me up?”

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 3
The Bipartisan Commission
also found direct evidence of tion of some of the First Amend-
the complexity of the Act’s dis- ment intrusions that all political
closure provisions in its Cam- regulations entail. RECOMMENDATION NO. 1
paign Report Form Experiment The Bipartisan Commission Increase FPPC Education Efforts
(see Chapter 5B), wherein both therefore presents these Recom- The Bipartisan Commission rec-
experienced and inexperienced mendations to provide for a more ognizes the critical importance of
persons were asked to diligently efficient and effective implemen- educating persons that have dis-
prepare a campaign report using tation of the Political Reform closure duties under the Political
the instructions provided and Act in order to carry out the Reform Act, as well as other per-
were, without exception, unable original purposes of the Act as sons who are regulated by the
to prepare the report accurately. adopted by the voters of Califor- Act, and that such educational
Because of the broad consen- nia over 25 years ago. The Bipar- activities should be a priority
sus of the need to dramatically tisan Commission believes that of the FPPC. The FPPC should
simplify the disclosure require- these reforms are necessary to have funds adequate to increase
ments, the Bipartisan Commis- ensure that the citizens of Cal- its educational programs for per-
sion proposes herein a series of ifornia are not unduly discour- sons regulated under the Political
Recommendations which would aged from participating in the Reform Act.
eliminate some of the complexity political process due to confusing
inherent in the existing disclosure and unneeded regulatory require- The Need to Adjust Disclosure Thresh-
rules. ments. olds to Account for Inflation
The Commission recognizes The Bipartisan Commission also
that these Recommendations may A Threshold Issue: The Importance of has identified numerous cam-
result in some modest “loss of the FPPC’s Education Efforts paign and public official financial
disclosure” of non-essential infor- As a threshold matter, the Bipar- interest disclosure thresholds that
mation. However, the Bipartisan tisan Commission has addressed are in need of adjustment to
Commission feels strongly that the need for the FPPC to account for inflation. These
the gains resulting from the pro- increase its efforts to educate per- disclosure thresholds have not
posed simplification greatly out- sons regulated by the Political been adjusted for many years,
weigh any loss of disclosure of Reform Act, including specifically and in some instances, much
non-essential items. These gains those with complicated disclosure longer. These thresholds should
include the lessening of the costs requirements under the Act. be adjusted immediately, as well
and other burdens of compliance, Without proper education, wide- as periodically thereafter in order
the creation of consistencies and spread compliance with the Act— to eliminate some of the burden
simplified rules that further the including its many and complex of unnecessary reporting.
users’ understanding and comfort disclosure provisions—cannot be
level with the Act, and the reduc- expected.

4 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
The Elimination of Burdensome and
RECOMMENDATION NO. 5 Unnecessary Disclosure Requirements
RECOMMENDATION NO. 2 Raise Financial InterestDisclosure The Bipartisan Commission has
Raise Committee Qualification Threshold Thresholds also identified several burden-
The Political Reform Act should The thresholds for disclosure some disclosure requirements that
be amended to increase the by public officials of certain provide little or no meaningful
annual threshold for qualification financial information should be disclosure. These unnecessary and
as a recipient committee or inde- increased as follows: costly filing requirements should
pendent expenditure committee • Interests in real prop- be eliminated in their entirety.
from $1,000 to $5,000. erty—$2,000
• Investments—$2,000 RECOMMENDATION NO. 7
RECOMMENDATION NO. 3 • Source of income—$500 Eliminate Unnecessary or Redundant Fil-
Raise Major Donor Qualification Thresh- • Disclosure categories for invest ings
old ments or real property— The threshold for filing supple-
The annual threshold for qualifi- $2,000-$10,000, $10,000-$100,000, mental independent expenditure
cation as a “Major Donor” com- $100,000–$1,000,000, over reports should be raised from
mittee should be raised from $1,000,000 $500 to $1,000. In addition,
$10,000 to $100,000. After the • Disclosure categories for sources the requirement to file a supple-
Secretary of State fully imple- of income—$500-$1,000, mental independent expenditure
ments electronic disclosure and $1,000-$10,000, $10,000-$100,000, report should not be required
creates a data base that permits over $100,000 where the filer already files a regu-
adequate data searches based on lar campaign disclosure report in
contributors, the requirement for RECOMMENDATION NO. 6 the same jurisdiction.
Major Donor committee disclo- Raise Disqualification Threshold
sure should be eliminated. The threshold for acceptance of RECOMMENDATION NO. 8
contributions and disqualification Eliminate Unnecessary “Sub-Vendor”
RECOMMENDATION NO. 4 under Government Code section Reporting
Raise Receipt and Expenditure Reporting 84308 should be raised from $250 The requirement of reporting
Threshold to $500. “sub-vendor” expenditures should
The thresholds for disclosing be eliminated for (i) all sub-
receipts and disbursements on vendor expenditures to petition
campaign reports should be signature gatherers, (ii) all broad-
raised from $100 to $200. cast media sub-vendor expendi-

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 5
purpose committees, primarily
tures, and (iii) all expenditures cial. In addition, and consistant formed committees, and Major
to sub-vendors of under $1,000. with with federal gift rules, the Donor committees—the require-
However, all broadcast media term “gift” should be amended to ments to file “supplemental pre-
sub-vendor expenditures shall be expressly exclude food and bever- election reports” and “odd-year
coded generally by form or cat- ages and incidental expenses pro- quarterly reports” should be elim-
egory of media (either broadcast vided at “widely attended events,” inated in their entirety.
television, cable television, radio, such as conventions, conferences,
or internet) and total amount symposiums, forums, panel dis- Place Burden of Notification on the Gov-
spent per category. cussions, dinners, and receptions. ernment
The Bipartisan Commission feels
RECOMMENDATION NO. 9 Creation of a Simple and Understandable strongly that if the government
Eliminate Unnecessary Travel Schedules Filing Schedule is going to impose a complicated
The requirement should be elimi- The Bipartisan Commission disclosure system on those per-
nated that candidates must pre- believes that it is important sons who are politically active,
pare a travel schedule reflecting that the campaign filing schedule the government should assist in
their in-state travel paid for by should be simplified and stream- the compliance function by noti-
their campaign committees. lined in order to create a better fying filers both of their upcom-
understanding of this critical ing filing obligations and of any
RECOMMENDATION NO. 10 component of the Act and in errors or omissions on the face of
Eliminate Unnecessary Reports of “No order to create certainty for cam- their campaign filings.
Activity” paign filers as to when reports The Bipartisan Commission
Public officials should not be are due (as is the case already for commends the Secretary of State’s
required to file campaign reports lobby filers). office on its current efforts in
in the circumstances in which this regard, and recommends that
they do not maintain a political RECOMMENDATION NO. 12 such efforts be continued and
committee and have not received Create Simple Quarterly Filing Schedule expanded.
any campaign contributions or and Eliminate Other Special Reports
made any campaign expenditures. That Are Not Well Understood RECOMMENDATION NO. 13
The schedule for filing campaign Notify Candidates and Committees of
RECOMMENDATION NO. 11 disclosure reports should be Filing Requirements
Eliminate Unnecessary Reporting of reformed and simplified as fol- The Secretary of State should be
Irrelevant “Gifts” lows. “General purpose commit- required to affirmatively notify
For purposes of public official tees” should be required only to registered state candidates and
financial interest disclosure, the file quarterly campaign reports registered state recipient commit-
Political Reform Act should be (in addition to late contribution tees of their disclosure require-
amended to exclude from the reports) and should not be ments on at least an annual basis.
definition of “gift” sources not required to file pre-election cam-
located in, doing business within, paign reports. In addition, for
planning to do business within, all committees—including general
or having done business within
the jurisdiction of the public offi-

6 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
The quarter century crusade to make certain that not a single potential
or even theoretical conflict of interest exists has created a level of complexity
that is unreasonable and, more fundamentally, counterproductive.

RECOMMENDATION NO. 14
Notify Filers of Errors and Omissions on information is required to be terproductive. The issues faced by
Reports reported if such information is those who must walk through the
The Secretary of State should be not received within 60 days of Political Reform Act’s minefield
required to review all state can- receipt of the contribution. of conflict of interest statutes,
didate and state committee cam- regulations and advice letters are
paign reports upon filing and to Conflicts of Interest Under the Ac t so difficult and unclear that
notify filers of all omissions or The Bipartisan Commission rec- some have simply chosen to
errors observed on the face of ognizes the importance of avoid- leave public service (or to not
the reports. The Secretary of State ing both the appearance and the enter public service in the first
should have funds adequate for actuality of conflicts of interest instance) rather than to risk vio-
this purpose. in governmental decision-making. lating laws they cannot under-
However, a set of conflict of inter- stand and with which they
Put Some Teeth in Rule Requiring est rules which is overly complex cannot fully comply. The Bipar-
Occupation/Employer Disclosure and not readily understandable tisan Commission believes these
The Bipartisan Commission rec- can be a “cure that is worse rules are in need of a massive
ognizes the importance of requir- than the disease.” If the rules of overhaul which must—more than
ing recipient committees to the game are too difficult or too anything else—result in simplifica-
disclose the occupation and complicated for the average citi- tion.
employer information of their zen easily to understand them, The Bipartisan Commission’s
individual contributors. The that citizen may rationally choose study and analysis of the conflict
Commission also recognizes that not to volunteer his or her time of interest provisions, however,
the fact that some committees to public service. Such complex- was substantially limited by two
substantially ignore this require- ity then runs counter to the factors. First, the Bipartisan Com-
ment is of great consternation important purpose of govern- mission recognized both that the
both to the “users” of the reports ment to encourage public partici- FPPC is currently undergoing a
as well as to the other committees pation. far-ranging regulatory overhaul of
who do substantially comply. This This unreasonable level of the conflict of interest provisions
unfairness should be remedied. complexity is present in the Polit- of the Political Reform Act. The
ical Reform Act’s conflict of Bipartisan Commission applauds
RECOMMENDATION NO. 15 interest provisions. The quarter these much-needed efforts to
Return Contributions if NoContributor century crusade to make certain which the Commission defers.
Information that not a single potential or Second, the Bipartisan Commis-
Candidates and committees even theoretical conflict of inter- sion also recognized that given its
should be required to return est exists has created a level of own time constraints and given
contributions from individuals complexity that is unreasonable the perceived focus of the Com-
for whom occupation/employer and, more fundamentally, coun- mission’s enabling legislation on

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 7
Clarify Conflict Rules and Eliminate
issues of disclosure and enforce- Unnecessary Disqualification
ment, the Commission should The Commission feels strongly
devote a greater proportion of its that several of the conflict of
time and efforts on the latter two be consolidated and centralized interest provisions need clarifi-
areas. under the authority of a single cation in order to make the
The Bipartisan Commission body, the FPPC. rules more understandable and
nonetheless identified numerous workable or to eliminate the
reforms which it believes RECOMMENDATION NO. 16 unnecessary and too frequent
would—if implemented—make the Consolidation of State Conflict Codes disqualification of officials from
conflict of interest provisions Under One Agency participating in governmental
under the Act work more effi- All state conflict of interest stat- decisions.
ciently and effectively. The Bipar- utes should be consolidated into
tisan Commission believes that a single code or body of law to RECOMMENDATION NO. 19
these reforms are necessary to be interpreted and enforced con- Clarify Rule of “Reasonable Foresight”
ensure that the original purposes sistently by a single state agency. The element of conflict of interest
of the Political Reform Act are analysis as to whether a financial
carried out without unduly dis- RECOMMENDATION NO. 17 effect is “reasonably foreseeable”
couraging citizens from partici- Centralization of Local Conflict Rules needs to be clarified and made
pating in the political process due Under the FPPC more workable.
to confusing and unneeded reg- All local conflict of interest codes
ulatory requirements. The Bipar- should be centralized and con- RECOMMENDATION NO. 20
tisan Commission believes that solidated under the authority of a Provide Fairness and Eliminate Unneces-
following the conclusion of the single state agency—the FPPC. sary Disqualification—Especially in Case
FPPC’s conflict of interest over- of Landowner Public Officials
haul project, the Legislature or RECOMMENDATION NO. 18 The Political Reform Act’s “mate-
a body it appoints should take Consolidation of Financial Interest Dis- riality” rule and “public gener-
a serious look at the following qualification With Campaign Contribu- ally” exception for conflict of
Recommendations as a means to tion Disqualification interest analysis—particularly as
clarify and simplify this overly Legislation should be enacted they apply to landowner public
complex area of the law. to move Government Code officials who must vote on devel-
Section 84308—concerning dis- opment or rent control related
Consolidation and Centralization of Con- qualification and campaign con- issues—should, after careful study
flict Rules tributions—to Chapter 7 of the and consideration, be amended
The Bipartisan Commission Political Reform Act where the to provide basic fairness and
believes that, for the sake of clar- other conflict of interest provi- to eliminate unreasonable and
ity and consistency in interpreta- sions are located. unnecessary disqualification from
tion, the various state and local participation in governmental
conflict of interest rules should decisions.

8 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
RECOMMENDATION NO. 21
Eliminate Unnecessary Disqualification
for Small Investment Interests RECOMMENDATION NO. 23 ment Study, its Public Comment
After careful study and review, Eliminate “Strict Liability” Concept of Hearings, and the work of the
the Political Reform Act should Conflict Rules Commissioners—developed and
be amended to apply the “public After careful study and review, drafted a Statement of General
generally” exception to situations the Political Reform Act should Enforcement Principles. The
in which the public official owns be amended to expressly include Statement emphasizes the impor-
less than one percent of a busi- a “standard of care” element or tance of distinguishing between
ness entity. defense for public officials who the minor and the most egregious
make a reasonable and good faith violations of the Political Reform
RECOMMENDATION NO. 22 effort to determine whether or Act (as well as those occupying
Allow Public Officials to Vote Against not they may have a conflict the “middle-ground”), and spe-
Their Interests of interest prior to participating cifically calibrating both the
After careful study and review, in a governmental decision (thus enforcement resources and the
the Political Reform Act should moving away from a “strict liabil- fines applied to such violations to
be amended to further simplify ity” standard for conflict of inter- the perceived seriousness of the
the “materiality” standard by est cases). violation. (See Chapter 4C.)
eliminating the “negative effect”
Statement of General Enforcement Prin-
The Bipartisan Commission also recognized the need to ciples
The Bipartisan Commission
move away from the current unfair “strict liability” con-
believes the FPPC should for-
cept of conflict of interest rules in favor of a rule that mally adopt a Statement of
requires reasonable diligence. General Enforcement Principles
which is consistent with the State-
ment set forth in this Report,
rule that would find a conflict Enforcement of the Political Reform Act and that this Statement should
of interest even where the public The Bipartisan Commission be regarded as a guide to struc-
official’s participation in a gov- believes that strong and effective turing and managing the FPPC’s
ernmental decision is against his enforcement of the Political enforcement program as well as
or her financial interests. Reform Act requires that the to disposing of particular cases.
prosecutorial agency conform its
Strict Liability Under the Act Is Inconsis- enforcement activities to sound RECOMMENDATION NO. 24
tent With Basic Fairness and clearly defined enforcement The FPPC Should Adopt and Apply a
The Bipartisan Commission also principles. Statement of General Enforcement Prin-
recognized the need to move away In this regard, the Bipartisan ciples Consistent With This Report
from the current unfair “strict lia- Commission—making use of the The FPPC should formally adopt
bility” concept of conflict of inter- information gleaned from its a Statement of General Enforce-
est rules in favor of a rule that Focus Groups, its FPPC Enforce- ment Principles consistent with
requires reasonable diligence. the views expressed in Chapter

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 9
• In the case of a violation
Central among these reforms that is curable and whose
is the need to protect against the harm to the public would be
4C. Legislation should be passed abuse of the very important pri- substantially avoided if cured,
requiring the FPPC to report in vate attorney general action pro- that the defendant in the
writing to the Legislature each visions contained in the Political action has been notified of
two years as to how the FPPC’s Reform Act. the violation and has failed
enforcement program is carrying to cure it within a reasonable
out its Statement of General RECOMMENDATION NO. 25 time.
Enforcement Principles. Private Attorney General Actions Should
Be Limited to Serious Violations of the RECOMMENDATION NO. 26
Amend Act to Prevent Abuse of the Pri- Act Attorneys Fees Should Be Awarded to
vate Attorney General Provisions Private attorney general actions Respondents Who Successfully Defend
In addition to the Statement should be limited to serious viola- Against a Private Attorney General
of General Enforcement Princi- tions as follows: As a necessary Action
ples, the Bipartisan Commission element for the plaintiff to pre- Judicial decisions creating asym-
also identified numerous reforms vail in any action brought by a metry in the award of attorney’s
which it believes would, if imple- person other than a civil pros- fees between plaintiffs and defen-
mented, make the enforcement of ecutor under Sections 91004 or dants should be legislatively
the Act work more efficient. The 91005 of the Government Code, reversed as follows: Government
Bipartisan Commission believes either of the following must be Code Section 91012 should be
that these reforms are necessary shown: amended to read as follows:
•The court may award to a
plaintiff or defendant, other
than an agency, who prevails
Central among these reforms is the need to protect against
in any action authorized by
the abuse of the very important private attorney general this title his costs of litigation,
action provisions contained in the Political Reform Act. including reasonable attorney’s
fees. On motion of any party,
a court shall require a private
plaintiff to post a bond in
to ensure that the original pur- • That the violation was a reasonable amount at any
poses of the Political Reform Act intentional or that because of stage of the litigation to guar-
are carried out without unduly the political consequences or antee payment of costs.
discouraging citizens from partic- other circumstances the viola- •Criteria used by courts for
ipating in the political process. tion is sufficiently material to determining whether or not
justify an action notwithstand- to award attorney’s fees and
ing the decision of the civil for determining the amount of
prosecutor not to act; or attorney’s fees, under this sec-

10 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
RECOMMENDATION NO. 31
Fines Should Range from $50-$5,000
RECOMMENDATION NO. 29 Depending on the Seriousness of the
tion and under Section 90003, Formal Hearings Should Not Be Required Violation
shall not differentiate between in Order to Dispose of Matters The current maximum fine of
cases in which the plaintiff or Government Code Section 83116 $2,000 that may be levied by
the defendant is the prevailing should be amended to permit the FPPC in administrative pro-
party. informal disposition of cases ceedings should be changed to
without a formal hearing. $50-5,000 per count, depending
RECOMMENDATION NO. 27 on the seriousness of the offense,
Private Attorney General Actions Should Limited Criminal Prosecution; Expanded with the understanding that
Be Disallowed Where the FPPC is Pursu- Range of Monetary Penalties excessive multiplication of counts
ing the Violation The Bipartisan Commission must be avoided.
The possibility of monetary pen- believes that, in the event that
alties in a private attorney general Proposition 208 is restated by Enhancement of Due Process
action should be precluded if the courts, criminal prosecution The Bipartisan Commission iden-
the FPPC notifies the complain- of violations of the Act by the tified several areas where addi-
ant that it is investigating the FPPC should be the exception, tional due process rights need to
matter and within one year the and not the rule. The Commis- be established in order to create
FPPC has either entered into a sion also believes that the exist- an enforcement system that both
stipulation with the respondent ing penalties for violations of the is fair to the parties and is condu-
or has entered an order of prob- Act should be expanded to more cive to settlement.
able cause. accurately reflect a full range of
misconduct and culpability which RECOMMENDATION NO. 32
RECOMMENDATION NO. 28 constitutes a violation. Subjects of FPPC Complaints Should Be
Private Attorney General Actions Should Promptly Notified and Given Opportunity
Be Precluded in Instances Wherein the RECOMMENDATION NO. 30 to Respond
FPPC Has Already Issued a Warning The Primary Criminal Prosecutor Should The Political Reform Act should
Letter Not be the FPPC be amended to require that a
Government Code Section 83116 In the event that Proposition 208 subject of a formal or informal
should be amended so as to is reinstated by the courts, crimi- complaint filed with the FPPC
preclude the possibility of mon- nal prosecutions brought by the shall be notified of the complaint
etary penalties in a private attor- FPPC should be at the request of, by the FPPC within 14 days of
ney general action in instances or when referred by, the regular receipt of the complaint by the
in which the FPPC, acting as a criminal prosecutors. FPPC unless the FPPC, in its
Commission, has issued a warn- discretion, determines that such
ing letter to the respondent. notification would impede the
specific investigation.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 11
RECOMMENDATION NO. 33 The 14 member Bipartisan
Respondents in Enforcement Proceed- RECOMMENDATION NO. 35 Commission is comprised of 7
ings Should Have an Opportunity to View Higher Level Positions Should be Cre- Democrats and 7 Republicans.
the Evidence Against Them ated at the FPPC in Order to Recruit and The members include two former
The Political Reform Act should Retain Qualified Personnel FPPC Chairmen, three former
be amended to provide that a Higher level positions should be FPPC Commissioners, a former
respondent to an enforcement created for the FPPC’s highest- Assembly Speaker, a former
action, upon service of a Report level attorneys, including enforce- Member of the Assembly, a
in Support of Probable Cause, ment attorneys and investigators political consultant, a retired lob-
shall have an opportunity to (which includes accounting spe- byist, the Executive Director of
inspect and copy evidence in the cialists). the California Democratic Party,
possession of the FPPC which is the former Commissioner of the
used to support the allegations BACKGROUND Department of Corporations, two
contained in the probable cause Creation of the Bipartisan Commission attorneys who specialize in the
report. As the Political Reform Act Political Reform Act, and a Pro-
was approaching its 25 year fessor of Law. (See Chapter 2; see
RECOMMENDATION NO. 34 anniversary, the Legislature—with also Appendix 1.)
The Franchise Tax Board Should Not Governor Pete Wilson’s The Commissioners were
Issue Findings that are Inconsistent with approval—created the Bipartisan appointed by various constitu-
FPPC Interpretation Commission and empowered it tional officers, legislative leaders
The Franchise Tax Board should to investigate and to assess the and the Fair Political Practices
not issue findings in campaign effects of the Act on: core polit- Commission. Specifically, Gover-
and lobby report audits that are ical speech protected by the nor Pete Wilson (R) appointed
in any way inconsistent with the First Amendment; candidates for Steven S. Lucas (R) as Chairman
FPPC’s interpretation of the Polit- public office and campaign com- of the Bipartisan Commission,
ical Reform Act. mittees; voters; state and local and Jim Porter (D), Jesse Choper
officials; and public employees. (D), and Dale Bonner (R) as
Recruitment and Retention of Qualified In accordance with the Commissioners. Attorney General
FPPC Personnel enabling legislation, SB1737 Bill Lockyer (D) appointed Kathy
Lastly, the Commission addressed (McPherson), and following the Bowler (D)and Eileen Padberg (R)
the need for the FPPC to be able receipt of public comment and to the Bipartisan Commission.
to recruit and retain qualified the conclusion of its own research And Secretary of State Bill Jones
personnel—including enforcement and analysis, the Bipartisan Com- (R) appointed Tony Quinn (R)
attorneys and investigators—given mission was required to report and Jack Crose (D) to the Biparti-
the reality that the FPPC must its findings, conclusions and rec- san Commission.
compete with other state agencies ommendations to the California Senate President Pro Tempore
for the best and the brightest Legislature no later than June 30, John Burton (D) appointed Lance
employees. 2000. (See Appendix 2, 3.) Olson (D) to the Bipartisan

12 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
treasurers), and from campaign
reform advocates. Among the the Political Reform Act as well
Commission. Then-Senate Minor- later meetings held by the Biparti- as “users” of the information
ity Leader Ross Johnson (R) san Commission were a series of required under the Act. Specifi-
appointed Curt Pringle (R) to the Public Comment Hearings held cally, the Bipartisan Commission
Bipartisan Commission. Then- throughout the state to solicit and IGS conducted Focus Groups
Assembly Speaker Antonio Vil- public testimony and written sub- of campaign treasurers, candi-
laraigosa (D) appointed Joe mission on all facets of the Politi- dates, political journalists, and
Remcho (D) to the Bipartisan cal Reform Act, including: lawyer-practitioners in the area.
Commission. And then-Assembly • Campaign finance and dis- (See Chapter 5A; see also Appen-
Minority Leader Rod Pacheco closure at the state and local dix 6.)
(R) appointed Ted Weggeland level. In addition, the Bipartisan
(R) to the Bipartisan Commis- • Lobby activity disclosure and Commission and IGS conducted
sion. Lastly, the FPPC appointed other lobby requirements at the detailed empirical studies relating
Daniel Lowenstein (D) and Ben state level only. to both enforcement and cam-
Davidian (R) to the Bipartisan • Conflict of interest and paign disclosure issues. Specifi-
Commission. financial interest disclosure cally, the Bipartisan Commission
rules applicable to state and and IGS (i) conducted a detailed
Work of the Bipartisan Commission: local public officials. Campaign Report Form Experi-
Public Hearings, Focus Groups, Empirical • Gift rules applicable to state ment pursuant to which volun-
Studies and local public officials. teers (some experienced and some
To effectuate the statutory pur- Notices and Invitations for inexperienced) were required to
poses of the Bipartisan Commis- Public Comment for the Public complete hypothetical campaign
sion, the Commission conducted Hearings were sent to approxi- reports which were then evaluated
14 public meetings soliciting mately 7,400 persons and orga- for compliance with the dictates
public input and considering the nizations identified as possibly of the Political Reform Act; and
issues raised in this Report and having an interest in the subject (ii) conducted an FPPC Enforce-
the matters studied by the Com- matter being considered by the ment Study relating to FPPC
mission. Bipartisan Commission, and were enforcement practices under the
At some of the earliest meet- posted on various web sites, Act. (See Chapters 5B, 5C; see
ings, the Bipartisan Commission including those of the FPPC and also Appendix 6.)The statute
solicited comments and input the Secretary of State. (See Chap- creating the Bipartisan Com-
from the enforcers of the Political ter 3; see also Appendix 4.) mission also dictated that the
Reform Act (including represen- The Bipartisan Commission, Commission review any ballot
tatives of the FPPC, representa- working with the Institute of measures affecting the Political
tives of the Secretary of State, Governmental Studies (“IGS”) at Reform Act. Because Proposition
and local prosecutors), from prac- the University of California at 208—as adopted by the voters
titioners of the Act (including Berkeley, also conducted Focus in 1996—has been enjoined by
political attorneys and political Groups of persons regulated by the federal courts and is the sub-

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 13
in governmental decision-making,
ject of ongoing litigation, the and (iii) enforcement of the Act.
Bipartisan Commission did not its—and the relationship between After compiling all oral and
undertake a thorough review of the limits and the independent written comments received from
its many complex provisions. For expenditures and how both affect the public into 231 Proposed Rec-
similar reasons the Bipartisan campaigns. ommendations for the Commis-
Commission did not undertake a However, the statute creating sion’s consideration, each of the
detailed review of Proposition 25, the Bipartisan Commission Sub-Committees reviewed and
which would have substantially expressly precludes the Bipartisan considered the proposals relating
amended the Political Reform Act Commission from addressing to its specific subject matter.
but was rejected by the California contribution limits. Because of (See Appendix 5.) Following this
voters in March 2000. this limitation, the Bipartisan review, the Sub-Committees each
Lastly, the statute creating the Commission is of the view that prepared a Report and specific
Bipartisan Commission required any detailed and meaningful Recommendations for consider-
that the Commission assess the study of independent expenditure ation by the full Commission.
impact of “independent expen- committees would conflict with The Bipartisan Commission
diture committees.” The Biparti- its statutory charter. The Biparti- reviewed the Sub-Committee
san Commission is of the view san Commission nonetheless did Reports and voted on the
that the significance of indepen- address independent expenditure proposed Recommendations put
dent expenditure committees is committees in other contexts, forward by each of the Sub-Com-
largely dependent on the exis- such as disclosure requirements. mittees in their three substantive
tence of campaign contribution areas.
In each of these three areas,
the Bipartisan Commission has
In each of these three areas, the Bipartisan Commission has
assessed whether statutory,
assessed whether statutory, administrative, regulatory, proce-
administrative, regulatory, proce-
dural, and/or clarifying changes would provide for a more effi-
dural, and/or clarifying changes
cient and effective implementation of the Political Reform Act.
would provide for a more effi-
cient and effective implementa-
limits. More specifically, inde- The Three Discreet Subject Areas: tion of the Political Reform Act.
pendent expenditure committees Disclosure, Conflicts of Interest, and The Recommendations approved
tend to be significant as a politi- Enforcement by the Bipartisan Commission
cal tool most often when cam- In order to address discreet sub- are identified above. The Rec-
paign contribution limits are in ject areas of the Political Reform ommendations are also discussed
place. Because of this relation- Act in a detailed and organized in detail—together with the Com-
ship, the Bipartisan Commission manner, the Chairman appointed mission’s Findings in support
viewed any substantial investiga- three Sub-Committees to con- of the Recommendations based
tion of independent expenditure sider and study: (i) campaign, upon the Public Hearings, the
committees to essentially require lobby and public official financial Empirical Studies, and the Focus
that the Commission also inves- disclosure, (ii) conflicts of interest Groups—in Chapter 4 of the
tigate campaign contribution lim- Report.

14 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
chapter 2
BACKGROUND OF THE COMMISSION

The President Pro Tempore of


the Senate, the Minority Floor

T he Bipartisan Commission
was created on September 30,
1998 when Governor Pete Wilson
After receiving public com-
ment and input, and after con-
Leader of the Senate, the Speaker
of the Assembly, and the Minority
Floor Leader of the Assembly were
signed into law SB1737 (McPher- ducting its own research and each empowered to appoint one
son), which took effect on Janu- analysis, the Bipartisan Commis- Commissioner.
ary 1, 1999. (See Appendix 2.) sion was originally required to The FPPC was empowered to
Pursuant to SB1737, the Bipar- report its findings, conclusions appoint two Commissioners from
tisan Commission was empow- and recommendations to the Cal- among former FPPC Chairper-
ered to investigate and assess the ifornia Legislature no later than sons, one of whom was required
effects of the Political Reform October 1, 1999. That due date to be a member of the Democratic
Act: was extended to June 30, 2000 Party and one of the Republican
• on core political speech pro- by the passage of SB342 (McPher- Party.
tected by the First Amend- son). (See Appendix 3.) Pursuant The Secretary of State was
ment; to SB342, the Bipartisan Commis- empowered to appoint two Com-
• on candidates for public sion will cease to exist as of Janu- missioners, one of whom was
office and campaign com- ary 1, 2001. required to be a member of the
mittees; Democratic Party and one of the
• on voters; Appointing Authorities Republican Party. One of the
• on state and local officials Pursuant to SB 1737, the members appointed by the Secre-
and public employees. following public officials and tary of State was also required to
public agency were empowered be a former registered lobbyist.
In addition, the Bipartisan to appoint the 14 Commissioners Lastly, the Attorney General was
Commission was required to comprising the Bipartisan Com- empowered to appoint two Com-
assess whether administrative, mission: missioners, one a member of the
regulatory, procedural, and/or The Governor was empowered Democratic Party and one of the
clarifying changes would provide to appoint four Commissioners, Republican Party.
for a more efficient and effective two of whom were required to be Pursuant to SB1737, no more
implementation of the Political members of the Democratic Party than three Commissioners may be
Reform Act. Lastly, the Bipartisan and two of the Republican Party. attorneys at law who devote more
Commission was directed to The Governor was required to than 10 percent of their profes-
review any ballot measures affect- designate one of these members sional practice time to legislative,
ing the Political Reform Act, and to serve as Chairperson of the political campaign, or other polit-
to assess the impact of inde- commission. One of the members ically related activities. Pursuant
pendent expenditure committees. appointed by the Governor was to SB342, this limitation to three
The Bipartisan Commission was also required to be a public “political attorneys” was itself
prohibited from drafting or pro- member who is a representative of restricted so as to exclude from
posing campaign finance reform a nonprofit public interest organi- the calculation any Commission-
provisions. zation. ers appointed by the FPPC.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 15
A brief background on each of the fourteen Commissioners as

Commissioner Kathy Bowler (D) was


appointed by Attorney General Bill
Lockyer (D). Ms. Bowler is the
Chairman Steven S. Lucas (R) was Executive Director of the California Commissioner Ben Davidian (R) was
appointed by former Governor Pete Democratic Party. appointed by the Fair Political Prac-
Wilson (R). Mr. Lucas is a partner Commissioner Jesse Choper (D) was tices Commission, of which he is a
at the government and political law appointed by former Governor Pete former Chairman. Mr. Davidian is a
firm of Nielsen, Merksamer, Parri- Wilson (R). Mr. Choper, the former partner in the government and politi-
nello, Mueller & Naylor, specializing Dean of the Boalt Hall School cal law firm of Bell, McAndrews,
in political law. of Law, University of California at Hiltachk & Davidian, LLP, special-
Commissioner Dale Bonner (R) was Berkeley, is presently the Earl Warren izing in political law.
appointed by former Governor Pete Professor of Public Law at Boalt Hall. Commissioner Dan Lowenstein (D) was
Wilson (R). Mr. Bonner, currently Commissioner Jack Crose (D) was appointed by the Fair Political Prac-
Counsel in Hogan & Hartson’s Los appointed by Secretary of State Bill tices Commission, of which he is a
Angeles office, where he manages the Jones (R). Mr. Crose is the former former Chairman. Mr. Lowenstein,
firm’s California health care practice, Chief Assistant to the late California the principal drafter of Proposition 9
is the former Commissioner of the Assembly Speaker Jesse Unruh and, (the Political Reform Act of 1974), is
California Department of Corpora- before his retirement, was a registered a Professor at the UCLA Law School,
tions. state lobbyist. where he specializes in election law.

16 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
well as an identification of their appointing authorities follows:

Commissioner Lance Olson (D) was Commissioner Joe Remcho (D) was
appointed by Senate President Pro appointed by then-Assembly Speaker
Tempore John Burton (D). Mr. Antonio Villaraigosa (D). Mr.
Olson is the managing partner of Commissioner Curt Pringle (R) was Remcho, a former FPPC Commis-
Olson, Hagel, Leidigh, Waters and appointed by then-Senate Minority sioner, is a partner in the law firm of
Fishburn, LLP, specializing in politi- Leader Ross Johnson (R). Mr. Prin- Remcho, Johansen & Purcell.
cal law. gle, the former Speaker of the Cali- Commissioner Ted Weggeland (R) was
Commissioner Eileen Padberg (R) was fornia Assembly, is the principal of appointed by then-Assembly Minor-
appointed by Attorney General Bill Curt Pringle & Associates, LLC, a ity Leader Rod Pacheco (R). Mr.
Lockyer (D). Ms. Padberg is the public relations, governmental affairs Weggeland, a former Member of the
president of Eileen E. Padberg and consulting firm. Assembly, is the president of Entre-
Consulting, specializing in public Commissioner Tony Quinn (R) was preneurial Hospitality Corporation
affairs management, political cam- appointed by Secretary of State Bill and a Senior Vice President of Entre-
paign consulting and corporate Jones (R). Mr. Quinn, a former FPPC preneurial Capital Corporation.
public relations. Commissioner, is vice president of
Commissioner James Porter (D) was Goddard Claussen Porter Novelli, a * For complete biographies on
appointed by former Governor Pete public relations firm. the 14 Members of the Bipartisan
Wilson (R). Mr. Porter, a former Commission, please refer to
FPPC Commissioner, is the senior Appendix 1.
partner in the law firm of
Porter*Simon.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 17
18 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
chapter 3
WORK OF THE COMMISSION

Preliminary Information Gathering Research Projects: Empirical Investiga-


In order to refine the tasks at tions and Focus Groups
hand, the Bipartisan Commission The Bipartisan Commission
invited various speakers and orga- engaged IGS to work with the

F ollowing the appointment of


the Commissioners in Janu-
ary 1999 by various appointing
nizations to address the Com-
mission with their suggestions as
to the areas that the Bipartisan
Commission to conduct several
research projects relating primar-
ily to enforcement and campaign
officers and agencies, the Biparti- Commission should investigate disclosure under the Political
san Commission held a series of and the methods for such investi- Reform Act. These research proj-
public organizational meetings in gation. ects included two empirical
the State Capitol in Sacramento. In this regard, the Bipartisan investigations, one an FPPC
Between January and July Commission received presen- Enforcement Study (see Chapter
1999, the Bipartisan Commission tations from and questioned 5C) and the other a Campaign
focused its efforts primarily on numerous panels and speakers, Report Form Experiment. (See
undertaking preliminary informa- including an enforcement panel Chapter 5B.) They also included
tion gathering. Between October comprised of FPPC Enforcement several Focus Groups of various
1999 and January 2000, the Bipar- Division Chief Darryl East, San categories of persons who come
tisan Commission held a series of Diego Deputy City Attorney into contact with the Political
statewide Public Hearings during George Ramos, and San Francisco Reform Act, including candi-
which the Commission solicited Assistant District Attorney Tom dates, campaign treasurers, polit-
public comment and recom- Bogott and a compliance panel ical attorneys, and journalists.
mendations. Following the con- comprised of then-FPPC General (See Chapter 5A.) Chapter 5
clusion of the statewide Public Counsel Steve Churchwell, FPPC includes a full summary of the
Hearings, the Bipartisan Com- Technical Assistance Division research projects and outlines the
mission, working through three Chief Carla Wardlow, and Deputy major findings of the Bipartisan
Sub-Committees on three dis- Division Chief of the Secretary Commission’s research.
creet subject areas of the Political of State’s Office (Political Reform
Reform Act (disclosure, enforce- Division) John Keplinger. The Public Hearings Soliciting Comment
ment and conflicts of interest), Bipartisan Commission also After the Bipartisan Commission
began the drafting and consider- heard from Jim Knox representing successfully received funding for
ation of its Report and Recom- California Common Cause, Cary the 1999-2000 fiscal year, the
mendations. Minutes of each of Davidson representing the Commission held a series of
the Bipartisan Commission’s 14 California Political Attorneys Public Hearings throughout the
public meetings are contained in Association, Rich Eichman rep- state to solicit the input of the
Appendix 4. resenting the California Political public. Specifically, the Bipartisan
Treasurers Association, and politi-
cal reformer Tony Miller.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 19
The comments of the mem-
Commission held such meetings bers of the public who addressed
in San Diego, Los Angeles (Bur- the Bipartisan Commission are public into several volumes of
bank), San Francisco, and Sac- summarized in the Minutes of “Proposed Recommendations”
ramento. The purpose of the the Meetings contained in for the Commission’s consider-
statewide Public Hearings was to Appendix 4, as well as the written ation. In addition, the Commis-
solicit public input as to all submissions of the speakers con- sioners were each requested to
substantive areas of the Political tained in Appendix 6. In addition draft their own Proposed Recom-
Reform Act, including: to the comments and suggestions mendations for the consideration
• Campaign finance and dis- received at the statewide Public of the Bipartisan Commission. In
closure at the state and local Hearings, the Bipartisan Com- total, the Commission compiled
level. mission also received numerous over 230 Proposed Recommenda-
• Lobby activity disclosure and written comments from the tions (categorized by author and
other lobby requirements at public, all of which are also subject area) in various subject
the state level. included in Appendix 6. areas. The Proposed Recommen-
• Conflict of interest and finan- dations considered by the Biparti-
cial interest disclosure rules Work of the Sub-Committees san Commission are included in
applicable to state and local In order to address discreet sub- Appendix 6.
public officials. ject areas of the Political Reform Each of the Sub-Committees
• Gift rules applicable to state Act in an in-depth manner, the considered the Proposed Recom-
and local public officials. Chairman appointed the follow- mendations which related to the
ing Sub-Committees: subject area of the Sub-Commit-
In order to solicit public atten- The Enforcement Sub-Com- tee. From this basis and from the
dance and public comment at the mittee was chaired by Commis- Commissioners own ideas, the
four Public Hearings, the Biparti- sioner Lowenstein, and included Sub-Committees each prepared a
san Commission mailed and/or Commissioners Davidian, Quinn, Report and specific Recommen-
e-mailed a Notice, an Agenda, and Remcho. The Conflict of dations for consideration by the
and an Invitation for Public Interest Sub-Committee was full Commission. The Bipartisan
Comment to approximately 7,400 chaired by Commissioner David- Commission reviewed the Sub-
persons and organizations iden- ian, and included Commissioners Committee Reports and voted
tified as possibly having an Olson, Porter, Pringle, and Weg- on the proposed Recommenda-
interest in the subject matter geland. The Disclosure Sub- tions put forward by each of
being considered by the Biparti- Committee was chaired by the Sub-Committees. A proposed
san Commission. (See Appendix Commissioner Bonner, and Recommendation was included in
4.) Postings of such information included Commissioners Crose, this Report only if at least two-
was also made on various web Olson and Padberg. thirds of the Commissioners pres-
sites, including those of the FPPC The Bipartisan Commission ent voted in favor of it. The
and the Secretary of State. compiled all oral and written approved Recommendations are
comments received from the contained in Chapter 4.

20 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
chapter 4
REPORT AND RECOMMENDATIONS

I n conducting its various


research projects and preparing
this Report and Recommenda-
ary 1998 and is the subject of
ongoing litigation, the Bipartisan
Commission did not substantially
Commission is not to address
or propose contribution limits,
the Commission felt that any
tions, the Bipartisan Commission address its many complex pro- detailed study of independent
limited its investigation and assess- visions. Similarly, because Prop- expenditure committees was
ment of the effects of the Political osition 25—another attempt to beyond its charge. The Bipartisan
Reform Act to the areas that the substantially amend the Political Commission did nonetheless
Commission’s enabling legislation Reform Act—was rejected by the address independent expenditure
dictated (see Appendix 2), namely voters in March 2000, the Bipar- committees in other contexts,
the effects of the Act on: tisan Commission also chose not such as disclosure requirements.
• core political speech protected to undertake a detailed review of After concluding its public
by the First Amendment; its many provisions. hearings, the empirical investiga-
• candidates for public office Lastly, the Bipartisan Com- tions and the focus group stud-
and campaign committees; mission’s enabling legislation dic- ies, the Bipartisan Commission
• voters; tated that the Commission assess divided its subject matter into
• state and local officials and the impact of independent expen- the three major subject areas
• public employees. diture committees. It is the view of the Political Reform Act: (i)
of the Bipartisan Commission enforcement of the Act; (ii) cam-
To satisfy these directives, that the significance of indepen- paign, lobby and financial inter-
the Bipartisan Commission con- dent expenditure committees is est disclosure; and (iii) conflicts
ducted pubic hearings on all largely related to the application of interest. In each of these three
facets of the Political Reform of campaign contribution limits. substantive areas, the Bipartisan
Act, conducted focus groups of That is, independent expenditure Commission has assessed whether
campaign treasurers, candidates, committees tend to be significant statutory, administrative, regula-
political journalists, and practi- as a political tool most often tory, procedural, and/or clarify-
tioners in the area, and con- when campaign contribution ing changes would provide for a
ducted empirical investigations limits are in place. Because of more efficient and effective imple-
relating to both enforcement and this relationship, the Bipartisan mentation of the Political Reform
campaign disclosure issues. Commission viewed any substan- Act. In doing so, the Bipartisan
The Bipartisan Commission’s tial investigation of independent Commission has developed this
enabling legislation also dictated expenditure committees to essen- Report which contains various
that the Commission review any tially require also an investigation Recommendations in each of
ballot measures affecting the of campaign contribution lim- the three substantive areas, and
Political Reform Act. However, its—and the relationship between has supported these Recommen-
because Proposition 208—adopted the limits and the independent dations with Findings based upon
by the voters in 1996 as a substan- expenditures and how both affect the public hearings, the empirical
tial amendment to the Political campaigns. However, because the studies and the several focus
Reform Act—has been enjoined enabling legislation specifically groups.
by the federal courts since Janu- dictates that the Bipartisan

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 21
(e) Lobbyists often make their con-
In preparing this Report and tributions to incumbents who
these Recommendations, the cannot be effectively challenged (c) Assets and income of public
Bipartisan Commission has because of election laws and officials which may be materially
reviewed the original stated pur- abusive practices which give the affected by their official actions
poses of the Political Reform Act, incumbent an unfair advantage; should be disclosed and in appro-
as adopted by the voters over (f) The wealthy individuals and priate circumstances the officials
a quarter century ago, including organizations which make large should be disqualified from acting
those outlined in Sections 81001 campaign contributions fre- in order that conflicts of interest
and 81002 of the Act: quently extend their influence may be avoided.
§ 81001. Findings and Declarations. by employing lobbyists and (d) The state ballot pamphlet should
The people find and declare as follows: spending large amounts to influ- be converted into a useful docu-
(a) State and local government ence legislative and administra- ment so that voters will not be
should serve the needs and tive actions; entirely dependent on paid adver-
respond to the wishes of all citi- (g) The influence of large campaign tising for information regarding
zens equally, without regard to contributors in ballot measure state measures.
their wealth; elections is increased because (e) Laws and practices unfairly favor-
(b) Public officials, whether elected the ballot pamphlet mailed to ing incumbents should be abol-
or appointed, should perform the voters by the state is diffi- ished in order that elections may be
their duties in an impartial cult to read and almost impossi- conducted more fairly.
manner, free from bias caused ble for a layman to understand; (f) Adequate enforcement mechanisms
by their own financial interests and should be provided to public offi-
or the financial interests of per- (h) Previous laws regulating politi- cials and private citizens in order
sons who have supported them; cal practices have suffered from that this title will be vigorously
(c) Costs of conducting election inadequate enforcement by state enforced.
campaigns have increased and local authorities.
greatly in recent years, and can- § 81002. Purposes of Title. The people The Recommendations and
didates have been forced to enact this title to accomplish the fol- Findings follow in Chapters 4A
finance their campaigns by seek- lowing purposes: (Disclosure), 4B (Conflicts of
ing large contributions from (a) Receipts and expenditures in elec- Interest), and 4C (Enforcement).
lobbyists and organizations who tion campaigns should be fully and Summaries of the supporting
thereby gain disproportionate truthfully disclosed in order that research collected from the
influence over governmental the voters may be fully informed empirical studies and the focus
decisions; and improper practices may be groups follow in Chapters 5A
(d) The influence of large cam- inhibited. (Focus Group Studies), 5B (Cam-
paign contributors is increased (b) The activities of lobbyists should paign Report Form Experiment),
because existing laws for disclo- be regulated and their finances dis- and 5C (FPPC Enforcement
sure of campaign receipts and closed in order that improper influ- Study).
expenditures have proved to be ences will not be directed at public
inadequate; officials.

22 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
chapter 4a
DISCLOSURE UNDER THE POLITICAL REFORM ACT

D isclosure is the cornerstone


of the Political Reform Act.
Although the Political Reform
input including specifically with
respect to disclosure under the
seriously burden those who are
regulated by the Act that they, in
fact, threaten the Act’s effective-
Act contains many other signif- Political Reform Act. ness.
icant provisions—including con- Second, the Bipartisan Com- The Bipartisan Commission
flict of interest provisions, mission and IGS conducted found this in its public hearings
enforcement provisions, and con- Focus Group Studies—including where, for example, a math
tribution limits (which have been Focus Groups of candidates and teacher, who is a volunteer PAC
severely restricted by court campaign treasurers, journalists, treasurer and mother, took time
decisions on First Amendment and political attorneys—which off from her job and called in
grounds)—disclosure is certainly also specifically included disclo- favors to have her children cared
the primary focus of the Political sure issues, among others. (See for so that she could travel nearly
Reform Act both today and over Chapter 5A.) two hours to address the Biparti-
a quarter century ago when it Third, the Bipartisan Commis- san Commission. Her compelling
was first adopted by the voters of sion and IGS conducted a Cam- testimony included vivid state-
California. paign Report Form Experiment ments of her ongoing anxiety
However, because of the Act’s related exclusively to campaign over not knowing whether she
complexity—both its inherent disclosure under the Political is correctly completing her dis-
complexity and its “earned” com- Reform Act. (See Chapter 5B.) closure forms and filing them at
plexity—disclosure is also seen by Fourth, the Bipartisan Com- the correct intervals. Her stated
some as the Achilles’ heel of the mission’s Disclosure Sub-Com- fear: the possibility of enforce-
Political Reform Act. mittee (comprised of a former ment action taken against her
In order to study the complex- lobbyist, a former public official, for unknowing and unintentional
ities of the disclosure provisions a campaign consultant and a violations of the Act that may
of the Political Reform Act, the political attorney) studied dis- occur despite her diligence—or as
Bipartisan Commission examined closure issues, including all rec- she puts it, “who will take care of
the three primary areas of ommendations and proposals my kids when they lock me up?”
disclosure found within the submitted by the public (in writ- The Bipartisan Commission
Political Reform Act: campaign ing and in testimony) and pre- also found this sense of unnec-
disclosure, public official finan- pared a Report on Disclosure for essary complexity throughout its
cial disclosure, and lobby disclo- the consideration of the Biparti- Focus Groups where, for exam-
sure. The Bipartisan Commission san Commission. ple, the comments ranged from
explored disclosure through vari- The Bipartisan Commission the complexity of the forms, to
ous means. found in its investigations a the complexity of the time lines
First, as set forth earlier, the broad consensus that the com- and filing triggers, to the confu-
Bipartisan Commission held a plexities of the Political Reform sion created by the intersection of
series of Public Hearings through- Act in the area of disclosure so state and local law. (See Chapter
out the state requesting public 5A, Focus Group Findings 1, 2, 4,

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 23
sion identified numerous reforms
which it believes would, if imple-
mented, make the campaign dis-
closure provisions under the Act
work more efficiently. The Bipar-
tisan Commission believes that
these reforms are necessary to
ensure that the original purposes
of the Political Reform Act are
carried out without unduly dis-
couraging citizens from partici-
pating in the political process due
to confusing and unneeded regu-
latory requirements.
In addition, the Bipartisan
Commission notes that for the
most part the disclosure thresh-
olds have not been adjusted
in many years—in some circum-
13, 14.) Additionally, the Biparti- believes strongly that the gains stances in the 26 years since the
san Commission found direct evi- resulting from simplification Political Reform Act was adopted.
dence of these complexities in its greatly outweigh any such modest The Commission believes that
Campaign Report Form Experi- loss of disclosure. These gains raising these thresholds to
ment. (See Chapter 5B.) include the lessening of the costs account generally for inflation
Because of this broad consen- and other burdens of compliance, would serve the purposes of the
sus that there exists a need to the creation of consistencies and Act without posing any signifi-
simplify the disclosure require- simplified rules that further the cant public harm in terms of
ments of the Political Reform users’ understanding and comfort adequate disclosure.
Act, the Bipartisan Commission level with the Act, and the reduc- The Bipartisan Commission
proposes herein a series of Rec- tion of some of the First Amend- presents these Recommendations
ommendations which would elim- ment intrusions that all political to provide for a more efficient
inate some of the complexity of regulations entail. and effective implementation of
the Act. Many of the disclosure the Political Reform Act in order
The Commission recognizes reforms proposed by the Bipar- to carry out the original purposes
that in some real or hypothetical tisan Commission relate to cam- of the Act as adopted by the
circumstances the Recommenda- paign disclosure. Although there voters of California over 25 years
tions would, if adopted, result is certainly a strong sense that ago.
in some modest “loss of dis- campaign disclosure under the The Bipartisan Commission
closure” of nonessential informa- Political Reform Act is hopelessly would also like to note that
tion. However, the Commission complex, the Bipartisan Commis- because of the recent and ongo-

24 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
ing implementation of the elec-
tronic filing requirements under
the Political Reform Act—and A Threshold Issue: The Importance of
more importantly because that the FPPC’s Education Efforts
implementation is occurring just As a threshold matter, the Bipar- mony and written submissions of
as the Commission is required tisan Commission has addressed the public, and the discussions
to draft and finalize its Report the need for the FPPC to and deliberations of the Com-
and Recommendations—the Com- increase its efforts to educate per- mission, the Bipartisan Commis-
mission concluded that it was not sons regulated by the Political sion finds that educating persons
able to adequately and substan- Reform Act, including specifically who are regulated by the Political
tially address electronic filing and those with complicated disclosure Reform Act is of critical impor-
internet disclosure. The Commis- requirements under the Act. tance and that not enough edu-
sion recognizes that electronic Without proper education, wide- cation is presently conducted.
filing and internet disclosure may spread compliance with the Act— Education is an issue with respect
solve some of the problems including its many and complex to disclosure generally, as well as
of the Political Reform Act. It disclosure provisions—cannot be with respect to other areas of
may also either create new prob- expected. the Political Reform Act includ-
lems or exacerbate existing prob- ing, notably, conflicts of interest.
lems. Nonetheless, because of the RECOMMENDATION NO. 1 (See also Chapter 5B, Campaign
timing of the Commission’s work Increase FPPC Education Efforts Report Form Experiment.)
and the very recent and ongoing The Bipartisan Commission rec-
implementation of the new elec- ognizes the critical importance of The Need to Adjust Disclosure Thresh-
tronic filing requirements, the educating persons that have dis- olds to Account for Inflation
Commission concluded that it closure duties under the Political The Bipartisan Commission has
would be both unhelpful and Reform Act, as well as other per- also identified numerous cam-
unfair to review these new sons who are regulated by the paign and public official financial
requirements at this early date. Act, and that such educational interest disclosure thresholds that
The following are the Bipar- activities should be a priority are in need of adjustment to
tisan Commission’s specific Rec- of the FPPC. The FPPC should account for inflation. These
ommendations with respect to have funds adequate to increase disclosure thresholds have not
disclosure under the Political its educational programs for per- been adjusted for many years,
Reform Act, along with the Find- sons regulated under the Political and in some instances, much
ings which support the Rec- Reform Act. longer. These thresholds should
ommendations. The Bipartisan be adjusted immediately, as well
Commission believes that these Findings Supporting Recommendation as periodically thereafter in order
Recommendations are worthy of Based upon the results of the to eliminate some of the burden
serious consideration by the Bipartisan Commission’s several of unnecessary reporting.
Legislature, the Fair Political Research Projects, the oral testi-
Practices Commission, and the
Secretary of State.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 25
roots” activities without trig- threshold for qualification as a
RECOMMENDATION NO. 2 gering complicated disclosure Major Donor” committee has not
Raise Committee Qualification Threshold requirements that are likely oth- been adjusted for inflation during
The Political Reform Act should erwise to discourage political the past 15 years, imposes an
be amended to increase the participation. The Bipartisan onerous burden on certain cam-
annual threshold for qualification Commission specifically consid- paign contributors, and is too
as a recipient committee or inde- ered public testimony and the low. The Bipartisan Commission
pendent expenditure committee results of the Focus Group Stud- was guided in part by the pro-
from $1,000 to $5,000. ies that the current system was posed measure, Proposition 25,
too complicated. Raising the drafted by campaign reform
Findings Supporting Recommendation committee qualification thresh- advocate Tony Miller that would
Based upon the results of the olds would address some of these have raised the Major Donor
Bipartisan Commission’s several concerns. (See Chapter 5A, Focus threshold to $100,000.
Research Projects, the oral testi- Group Finding No. 2.) California is quite unique in
mony and written submissions of its requirement for Major Donor
the public, and the discussions RECOMMENDATION NO. 3 filings, including the Late Contri-
and deliberations of the Commis- Raise Major Donor Qualification bution Reports that Major Donor
sion, the Bipartisan Commission Threshold committees are required to file.
finds that the current thresholds The annual threshold for qualifi- This has led to many uninten-
for qualification as a recipient cation as a “Major Donor” com- tional violations of the Political
committee or an independent mittee should be raised from Reform Act, with little public
expenditure committee have not $10,000 to $100,000. After the harm resulting due to the fact
been adjusted for inflation during Secretary of State fully imple- that the recipients of the Major
the past 15 years and are too low. ments electronic disclosure and Donor’s contributions provide
A $5,000 threshold for such com- creates a database that permits reciprocal disclosure. The Biparti-
mittees would also be consistent adequate data searches based on san Commission also concludes
with federal law establishing cam- contributors, the requirement for that Major Donor reporting will
paign committee qualification. Major Donor committee disclo- become unnecessary once elec-
While the Bipartisan Commis- sure should be eliminated. tronic filing has been fully
sion certainly recognizes that dif- implemented by the Secretary
ferences exist between local and Findings Supporting Recommendation of State. Specifically, the Bipar-
state campaign committees, no Based upon the results of the tisan Commission believes that
such distinction was created in Bipartisan Commission’s several the current purpose of Major
the original Political Reform Act, Research Projects, the oral testi- Donor disclosure—easily locating
and the Commission does not mony and written submissions of all contributions by a single con-
believe that such a distinction the public, and the discussions tributor—could be readily and
should now be created. Raising and deliberations of the Com- efficiently accomplished by data
the committee qualification mission, the Bipartisan Com- searches of candidate and com-
thresholds would permit “grass mission finds that the current mittee reports filed electronically.

26 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
RECOMMENDATION NO. 4 Findings Supporting Recommendation
Raise Receipt and Expenditure Reporting Based upon the results of the
Threshold Investments and real property— Bipartisan Commission’s several
The thresholds for disclosing $2,000-$10,000; $10,000-$100,000; Research Projects, the oral testi-
receipts and disbursements on $100,000-$1,000,000; over mony and written submissions of
campaign reports should be $1,000,000 the public, and the discussions
raised from $100 to $200. Sources of income—$500-$1,000; and deliberations of the Commis-
$1,000-$10,000; $10,000-$100,000; sion, the Bipartisan Commission
Findings Supporting Recommendation over $100,000 finds that the present threshold
Based upon the results of the relating to the acceptance of cam-
Bipartisan Commission’s several Findings Supporting Recommendation paign contributions and disqual-
Research Projects, the oral testi- Based upon the results of the ification resulting from having
mony and written submissions of Bipartisan Commission’s several accepted contributions for certain
the public, and the discussions Research Projects, the oral testi- public officials who serve on
and deliberations of the Com- mony and written submissions of appointed Boards and Commis-
mission, the Bipartisan Commis- the public, and the discussions sions should be raised to $500 to
sion finds that the threshold and deliberations of the Com- account generally for the effects
for disclosing receipts and dis- mission, the Bipartisan Com- of inflation, again as was pro-
bursements on campaign reports mission finds that the current posed in AB1864 (Papan).
should be raised to generally thresholds for disclosure of finan-
reflect inflation. The $100 thresh- cial interests are in need of adjust- The Elimination of Burdensome and
old has not been increased in two ment to account generally for Unnecessary Disclosure Requirements
decades. This proposal is consis- inflation. The Bipartisan Com- The Bipartisan Commission has
tent with federal law as well as mission believes that the thresh- also identified several burden-
with public testimony received olds contained in AB1864 (Papan) some disclosure requirements that
asking that the Political Reform as passed by the Legislature in provide little or no meaningful
Act’s reporting requirements be the 1997-98 session but vetoed disclosure. These unnecessary and
simplified. by Governor Wilson (on unre- costly filing requirements should
lated grounds) establish a work- be eliminated in their entirety.
RECOMMENDATION NO. 5 able minimum level for disclosure
Raise Financial Interest Disclosure and should be implemented. RECOMMENDATION NO. 7
Thresholds Eliminate Unnecessary or Redundant
The thresholds for disclosure RECOMMENDATION NO. 6 Filings
by public officials of certain Raise Disqualification Threshold The threshold for filing supple-
financial information should be The threshold for acceptance of mental independent expenditure
increased as follows: contributions and disqualification reports should be raised from
Interests in real property—$2,000 under Government Code section $500 to $1,000. In addition, a
Investments—$2,000 84308 should be raised from $250 supplemental independent expen-
Source of income—$500 to $500. diture report should not be

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 27
The purpose of such special nature gatherers, (ii) all broadcast
filing is to alert jurisdictions media sub-vendor expenditures,
required where the filer already where the expenditure is being and (iii) all expenditures to
files a regular campaign disclosure made and where the filer does sub-vendors of under $1,000.
report in the same jurisdiction. not normally file its regular cam- However, all broadcast media
sub-vendor expenditures shall be
coded generally by form or cat-
In some instances, the schedules reflecting egory of media (either broadcast
the sub-vendor payments can completely dwarf the television, cable television, radio,
remainder of the report and can themselves require or internet) and total amount
more time to prepare than all other parts of the spent per category.
campaign report combined.
Findings Supporting Recommendation
Findings Supporting Recommendation paign report. However, in many Based upon the results of the
Based upon the results of the instances the filer is already Bipartisan Commission’s several
Bipartisan Commission’s several required to file its regular cam- Research Projects, the oral testi-
Research Projects, the oral testi- paign report in that jurisdiction. mony and written submissions of
mony and written submissions of This creates unneeded duplicate the public, and the discussions
the public, and the discussions reporting. Filing supplemental and deliberations of the Commis-
and deliberations of the Commis- independent expenditure reports sion, the Bipartisan Commission
sion, the Bipartisan Commission should be limited to those situa- finds that much of the currently
finds that the current requirement tions where the filer is not already required “sub-vendor” reporting
of filing a supplemental inde- required to file a regular cam- is extremely burdensome and pro-
pendent expenditure report—with paign report in the same jurisdic- vides little or no beneficial public
a $500 reporting threshold—is tion. In addition, the threshold disclosure. In some instances,
confusing and largely redundant for triggering the supplemental the schedules reflecting the sub-
to other required reporting. independent expenditure report vendor payments can completely
Presently, any committee which should be raised from $500 to dwarf the remainder of the report
makes independent expenditures $1,000 to create consistency and and can themselves require more
in support or opposition to a to eliminate confusion. (See also time to prepare than all other
candidate or ballot measure of Chapter 5B, Campaign Report parts of the campaign report
$500 or more must file—in addi- Form Experiment.) combined. The Bipartisan Com-
tion to its regular campaign mission finds that this is espe-
report—an additional report RECOMMENDATION NO. 8 cially the case with respect to
known as a supplemental inde- Eliminate Unnecessary “Sub-Vendor” three areas of sub-vendor disclo-
pendent expenditure report. This Reporting sure, each of which is typically
additional report duplicates the The requirement of reporting a source of great burden: disclo-
information contained on the fil- “sub-vendor” expenditures should sure of sub-vendor payments to
er’s regular campaign report. be eliminated for (i) all sub-ven- petition-signature gatherers, dis-
dor expenditures to petition-sig- closure of sub-vendor payments

28 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
or having done business within
for broadcast media, and dis- the jurisdiction of the public
closure of relatively small sub- in the circumstances in which official. In addition, and consis-
vendor payments (under $1,000). they do not maintain a political tent with federal gift rules, the
(See also Chapter 5B, Campaign committee and have not received term “gift” should be amended to
Report Form Experiment.) any campaign contributions or expressly exclude food and bever-
made any campaign expenditures. ages and incidental expenses pro-
RECOMMENDATION NO. 9 vided at “widely attended events”
Eliminate Unnecessary Travel Schedules Findings Supporting Recommendation such as conventions, conferences,
The requirement should be elimi- Based upon the results of the symposiums, forums, panel dis-
nated that candidates must pre- Bipartisan Commission’s several cussions, dinners and receptions.
pare a travel schedule reflecting Research Projects, the oral testi-
their in-state travel paid for by mony and written submissions of Findings Supporting Recommendation
their campaign committees. the public, and the discussions Based upon the results of the
and deliberations of the Commis- Bipartisan Commission’s several
Findings Supporting Recommendation sion, the Bipartisan Commission Research Projects, the oral testi-
Based upon the results of the finds that it is an unreasonable mony and written submissions of
Bipartisan Commission’s several burden to require that public the public, and the discussions
Research Projects, the oral testi- officials file campaign reports and deliberations of the Com-
mony and written submissions of (including reports of no activity) mission, the Bipartisan Commis-
the public, and the discussions in the circumstances in which sion finds that public officials
and deliberations of the Commis- the public officials do not main- currently are required to disclose
sion, the Bipartisan Commission tain campaign committees and all gifts of $50 or more from
finds that preparing lengthy and do not receive campaign con- any source regardless of whether
detailed travel schedules reflecting tributions or make campaign the source of the gift is located
in-state political and governmen- expenditures. (See Chapter 5A, within the public official’s juris-
tal travel by candidates is both Focus Group Finding No. 5; diction or has any intention of
unnecessary and extremely bur- Chapter 5B, Campaign Report doing business within the juris-
densome without providing suf- Form Experiment.) diction. On the other hand, the
ficient benefits to the public, rule for disclosure of sources of
and the requirement should there- RECOMMENDATION NO. 11 income is tied to the official’s
fore be eliminated. (See also Eliminate Unnecessary Reporting of jurisdiction and excludes sources
Chapter 5B, Campaign Report Irrelevant “Gifts” not located within or doing busi-
Form Experiment.) For purposes of public official ness within the jurisdiction of
financial interest disclosure, the the public official. The Bipartisan
RECOMMENDATION NO. 10 Political Reform Act should be Commission believes that gifts
Eliminate Unnecessary Reports of “No amended to exclude from the and income should be treated the
Activity” definition of “gift” sources not same for purposes of public offi-
Public officials should not be located in, doing business within, cial financial disclosure.
required to file campaign reports planning to do business within,

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 29
Findings Supporting Recommendation
Creation of a Simple and Understandable Based upon the results of the Year in and year out quarterly
Filing Schedule Bipartisan Commission’s several campaign reporting—with no spe-
The Bipartisan Commission Research Projects, the oral testi- cial pre-election deadlines—for all
believes that it is important mony and written submissions of recipient committees other than
that the campaign filing schedule the public, and the discussions those that are on the ballot (that
should be simplified and stream- and deliberations of the Commis- is, primarily formed committees),
lined in order to create a better sion, the Bipartisan Commission would provide consistency and
understanding of this critical finds that the current reporting confidence in and understanding
component of the Act and in schedule is entirely too complex of the Political Reform Act. Such
order to create certainty for cam- and as such, seriously discourages a change would thereby further
paign filers as to when reports participation in the political pro- the purposes of the Political
are due (as is the case already for cess. More specifically, the Bipar- Reform Act.
lobby filers). tisan Commission finds that one Similarly, supplemental pre-
of the most complicated aspects election reports should be elim-
RECOMMENDATION NO. 12 of the Political Reform Act’s dis- inated in their entirety. Such
Create Simple Quarterly Filing Schedule closure requirements is the deter- reports are currently required by
and Eliminate Other Special Reports mination of when reports must committees which make contri-
That Are Not Well Understood be filed, based upon certain trig- butions of $5,000 or more in
The schedule for filing campaign gering events. connection with any election
disclosure reports should be There are many events that including state, local or special
reformed and simplified as fol- can trigger a campaign report, elections. The reports must be
lows. “General purpose commit- and many committees and can- filed 12 days prior to the election.
tees” should be required only to didates are unaware of some of For purposes of determining
file quarterly campaign reports these requirements. This leads to the $5,000 threshold, committees
(in addition to late contribution missed filings, potential enforce- must look back 6 months in
reports) and should not be ment action, and unnecessary and time. These reports are in addi-
required to file pre-election cam- counter-productive “fear” of the tion to a committee’s regularly
paign reports. In addition, for Political Reform Act. The Biparti- required reports filed semi-annu-
all committees—including general san Commission concludes that ally, pre-election and quarterly in
purpose committees, primarily if reporting deadlines were easier odd-years. This provision is little
formed committees, and Major to understand, better compliance, understood and often violated. It
Donor committees—the require- better public disclosure, and also duplicates reporting because
ments to file “supplemental pre- greater public participation would the candidates and committees
election reports” and “odd-year result. The Bipartisan Commis- receiving the contributions are
quarterly reports” should be elim- sion specifically notes that much already required to report and
inated in their entirety. of the public testimony called for disclose the contributions by the
simpler filing requirements. contributing committee. More-

30 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
cussions and deliberations of
the government should assist in the Commission, the Bipartisan
over, the committee filing the the compliance function by noti- Commission finds that it would
supplemental report does not fying filers both of their upcom- be in the best interests of
have to file the report in the ing filing obligations and of any the public to supplement the
jurisdiction where it made con- errors or omissions on the face of existing system for regular notifi-
tributions unless it is otherwise their campaign filings. cation of filing requirements by
required to do so. the Secretary of State directly
Lastly, special “odd year” quar- RECOMMENDATION NO. 13 to candidates and committees.
terly campaign reports should Notify Candidates/Committees of Filing The Bipartisan Commission com-
also be eliminated in their Requirements mends the Secretary of State’s
entirety for all committees, The Secretary of State should be recent informative notifications,
including Major Donors. They required to affirmatively notify and believes that such commu-
are currently required for all com- registered state candidates and nications should be made as
mittees who make $5,000 in con- registered state recipient commit- a regular practice in order to
tributions to state elected officials tees of their disclosure require- fully inform the regulated com-
during a calendar quarter. These ments on at least an annual basis. munity. (See also Chapter 5A,
reports are confusing and of neg- Focus Group Finding No. 14;
ligible value. To the extent the Findings Supporting Recommendation Chapter 5B, Campaign Report
public is interested in who might Based upon the results of the Form Experiment.)
be contributing to state elected Bipartisan Commission’s sev-
officials and lobbying at the same eral Research Projects,
time, the Bipartisan Commission the oral testimony
notes that lobbyist employers are and written sub-
required to disclose campaign missions of
contributions on their lobbyist the public,
disclosure reports which are filed and the
quarterly. (See also Chapter 5A, dis-
Focus Group Finding No. 14.)

Place Burden of Notification on the


Government
The Bipartisan Commission feels
strongly that if the government
is going to impose a com-
plicated disclosure system
on those persons who
are politically active,
RECOMMENDATION NO. 14 value and could be used as a
Notify Filers of Errors/Omissions on model to apply to all campaign information is required to be
Reports reports. The Bipartisan Commis- reported if such information is
The Secretary of State should be sion believes this is especially not received within 60 days of
required to review all state can- important in light of the dif- receipt of the contribution.
didate and state committee cam- ficulties in preparing campaign
paign reports upon filing and to reports, as evidenced by the Findings Supporting Recommendation
notify filers of all omissions or Commission’s Campaign Report Based upon the results of the
errors observed on the face of Form Experiment. (See Chapter Bipartisan Commission’s several
the reports. The Secretary of State 5B, Campaign Report Form Research Projects, the oral testi-
should have funds adequate for Experiment.) mony and written submissions of
this purpose. the public, and the discussions
Put Some Teeth in Rule Requiring and deliberations of the Com-
Findings Supporting Recommendation Occupation/Employer Disclosure mission, the Bipartisan Commis-
Based upon the results of the The Bipartisan Commission rec- sion finds that there is substantial
Bipartisan Commission’s several ognizes the importance of requir- merit to the argument that full
Research Projects, the oral testi- ing recipient committees to disclosure of occupation and
mony and written submissions of disclose the occupation and employer information is impor-
the public, and the discussions employer information of their tant. The Bipartisan Commis-
and deliberations of the Commis- individual contributors. The sion, however, does not agree that
sion, the Bipartisan Commission Commission also recognizes that contributions should be returned
finds that it is in the interests the fact some committees sub- without first giving the candidate
of better disclosure to have all stantially ignore this requirement or committee a full opportunity
campaign reports timely reviewed is of great consternation both to obtain such information. The
for facial accuracy and complete- to the “users” of the reports Bipartisan Commission believes
ness. The Secretary of State cur- as well as to the other commit- that a 60 day period provides
rently provides such compliance tees who do substantially comply. a fair opportunity. (See Chapter
review for all lobby reports and This unfairness should be rem- 5A, Focus Group Finding No. 3.)
for many campaign reports. The edied.
Bipartisan Commission believes Lobby Disclosure
the Secretary of State should RECOMMENDATION NO. 15 As stated above, the Bipartisan
be provided adequate funds in Return Contributions if No Contributor Commission heard considerable
order to provide this compliance Information testimony at its public meetings
review for all campaign reports. Candidates and committees regarding the campaign disclo-
The Secretary of State’s current should be required to return sure provisions as well as the
lobby compliance review system contributions from individuals public official financial disclosure
has proved itself to be of great for whom occupation/employer provisions of the Political Reform

32 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
Act, and received numerous
recommendations and proposals munity regulated by the Political
from interested persons who sub- Reform Act—the Bipartisan Com- very familiar with the disclosure
mitted written comments and mission did not hear from either provisions, was also of the opin-
public testimony. In addition, the the regulated lobbying commu- ion that the current regulatory
Focus Group Studies, as well nity, the reform community or scheme works and that the public
as the Campaign Report Form the regulators that any lobby is adequately informed. While
Experiment, provided an abun- disclosure reforms were required. one commentator did suggest sev-
dance of thought and analysis In addition, the Bipartisan Com- eral minor changes in lobbying
relating to these disclosure issues. mission considered carefully the disclosure, the Bipartisan Com-
On the other hand, no public opinions of its one member who mission was not persuaded that
testimony was received proposing is a retired lobbyist, who was changes were needed.
changes with respect to lobby dis- also a member of the Sub-Com-
closure. More specifically, despite mittee on Disclosure. That Com- Therefore, the Bipartisan
the fact most of the Bipartisan missioner, who was required to Commission makes no recom-
Commission’s meetings were held comply with the Political Reform mendations for changes to the
in Sacramento—which is largely Act for many years and is current lobbying disclosure provi-
the home of the lobbying com- sions of the Political Reform Act.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 33
chapter 4b
CONFLICTS OF INTEREST UNDER THE POLITICAL REFORM ACT

rationale for the basic concept


created by the Political Reform
Act: that a public official should
because no area of the Political not participate in a governmental
Reform Act is more difficult to decision in which he or she has a
understand than the provisions financial interest.

N othing discourages the cit-


izenry from participating
in the political process more
of the Act concerning purported
“conflicts of interest.”
The issues faced by those who
The Bipartisan Commission
understands that its core directive
is to explore the Political Reform
quickly or completely than a must walk through the Political Act and its effects on the First
political system that is permitted Reform Act’s minefield of stat- Amendment and various catego-
to become unduly complex and utes, regulations and advice let- ries of persons, and that an
incomprehensible. If the rules of ters in this area are so difficult emphasis on campaign issues cer-
the game are too difficult or com- and unclear that some have tainly exists in the Commission’s
plicated for the average citizen simply chosen to leave public ser- enabling legislation. This direc-
to readily understand them, the vice rather than to risk violating tive clearly requires the Bipartisan
citizens are naturally repelled by laws they cannot understand. The Commission to focus primarily
that complexity. The average citi- Bipartisan Commission believes on the major issues discussed
zen may then rationally choose to these rules are in dire need of earlier, disclosure (primarily cam-
opt out of the process rather than a massive overhaul which must— paign disclosure) and enforce-
attempt to maneuver through more than anything else—result in ment. However, the Bipartisan
the difficulties and expense of simplification. Commission also recognizes that
obtaining the necessary legal or It is the conclusion of the an analysis of the conflict of
technical assistance. Such com- Bipartisan Commission that the interest concept is necessary to
plexity then runs counter to tireless efforts over the past quar- paint a complete picture of the
the purpose of government to ter of a century to make certain Political Reform Act’s effects on
encourage public participation. that not a single potential or California’s citizenry, particularly
The Bipartisan Commission even theoretical conflict of inter- as those effects apply to the First
has recognized this factor in est remains hidden have created Amendment and its protections.
considering both its enforcement a level of complexity that is In examining the conflict of
Recommendations and its disclo- entirely counterproductive to the interest provisions of the Political
sure Recommendations. However, basic purposes of the conflict of Reform Act, the Bipartisan Com-
the Bipartisan Commission, com- interest provisions of the Political mission solicited information,
prised of numerous members who Reform Act. Not entirely unlike input and ideas through various
have firsthand experience with a case of the “exceptions swallow- means, including:
all facets of the Political Reform ing the rule,” the conflict of inter- First, as referenced previously,
Act, recognizes that this factor is est scheme seems to be a matter the Bipartisan Commission held
even more relevant in the area of the rules and sub-rules com- a series of Public Hearings
of conflicts of interest. This is so pletely overwhelming the original throughout the state requesting

34 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
public input including specifically
with respect to the conflict of
interest provisions contained in ceived focus of the Commission’s
the Political Reform Act. enabling legislation on issues of
Second, the Bipartisan Com- disclosure and enforcement, the
mission’s Conflict of Interest Commission needed to devote Consolidation and Centralization of Con-
Sub-Committee (comprised of more of its time and efforts on flict Rules
two former public officials, a the latter two areas. The Bipartisan Commission
former FPPC Chairman, and The Bipartisan Commission believes that for the sake of clar-
a former FPPC Commissioner) nonetheless identified numerous ity and consistency in interpreta-
studied conflict of interest issues, reforms which it believes tion the various state and local
including all recommendations would—if implemented—make the conflict of interest rules should
and proposals submitted by the conflict of interest provisions be consolidated and centralized
public (in writing and in testi- under the Act work more effi- under the authority of a single
mony) and prepared a Report on ciently and effectively. The Bipar- body, the FPPC.
Conflicts of Interest for the con- tisan Commission believes that
sideration of the Bipartisan Com- these reforms are necessary to RECOMMENDATION NO. 16
mission. ensure that the original purposes Consolidation of State Conflict Codes
Although, as stated above, of the Political Reform Act are Under One Agency
there is certainly a strong sense carried out without unduly dis- All state conflict of interest stat-
that the conflict of interest pro- couraging citizens from partici- utes should be consolidated into
visions of the Political Reform pating in the political process due a single code or body of law to
Act are unnecessarily and danger- to confusing and unneeded regu- be interpreted and enforced con-
ously complicated, the Bipartisan latory requirements. sistently by a single state agency.
Commission’s study and analysis
of these provisions was substan- Specific Recommendations Findings Supporting Recommendation
tially limited by two factors. First, The following are the Bipartisan Based upon the discussions and
the Bipartisan Commission recog- Commission’s specific Recom- deliberations of the Commission,
nized both that the FPPC is cur- mendations with respect to the the Bipartisan Commission finds
rently undergoing a far-ranging conflict of interest provisions that the existence of multiple
regulatory overhaul of the con- contained in the Political Reform conflict of interest provisions
flict of interest provisions of the Act, along with the Findings sprinkled throughout various
Political Reform Act, and that the which support the Recommen- Codes creates unnecessary confu-
Bipartisan Commission needed to dations. The Bipartisan Com- sion in the minds of public offi-
respect and defer to the FPPC mission believes that these cials who strive to obey the law
in this regard. Second, the Bipar- Recommendations are worthy of but who often have no idea what
tisan Commission also recog- serious consideration by the Leg- Code to review or whom to ask
nized that given its own time islature and the Fair Political for advice.
constraints and given the per- Practices Commission.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 35
back to the Political Reform
The Bipartisan Commission Act’s adoption by the voters in
For example, a public official therefore recommends that the 1974, decentralizes responsibility
wondering whether he or she has Legislature consolidate all con- for the formulation and adoption
a conflict of interest in a particu- flicts of interest laws into one of the conflicts of interest codes
lar governmental decision must Code, presumably the Political to individual jurisdictions and
individually consider the Political Reform Act, to be interpreted and agencies. Although the FPPC is
Reform Act, Government Code enforced consistently by a single empowered, pursuant to Govern-
Section 1090, the conflict of authority. ment Code section 87312, to
provide technical assistance to
agencies in the preparation of
The Bipartisan Commission therefore recommends that the conflict of interest codes, the
Legislature consolidate all conflicts of interest laws into one FPPC has no authority to direct
Code, presumably the Political Reform Act, to be interpreted and these efforts in a standard and
enforced consistently by a single authority. uniform manner. The existing
decentralization can lead to a
myriad of inconsistent results.
interest provisions of the Public RECOMMENDATION NO. 17 For example, one local gov-
Contracts Code, and a number Centralization of Local Conflict Rules ernment entity may designate a
of other agency-specific and local Under the FPPC public defender as a position with
conflict of interest provisions. All local conflict of interest codes decision-making authority, while
These provisions are administered should be centralized and con- another entity may not. More-
or enforced by different agencies solidated under the authority of a over, the FPPC’s present lack of
such as the FPPC, the California single state agency—the FPPC. authority to examine and direct
Department of Justice, the courts, the conflict of interest efforts of
and numerous local agencies. The Findings Supporting Recommendation local government agencies under-
public official must determine for Based upon the discussions and mines the role of the FPPC,
himself or herself what agency deliberations of the Commission, which is the one agency with the
to approach for an answer to a the Bipartisan Commission finds technical expertise to administer
conflict of interest question. For that the Political Reform Act’s this highly technical area of law.
example, a question about the conflict of interest provisions The Bipartisan Commission
Political Reform Act conflict of (Government Code Section urges the Legislature to consider
interest rules must be addressed 87300 et seq.) should be amended legislation to give the FPPC more
to the FPPC while a question to centralize and consolidate all authority to ensure that all con-
about a Section 1090 contract state and local conflicts of inter- flict of interest codes for all
issue must be addressed to the est codes under the authority of agencies and all jurisdictions are
Department of Justice. a single state agency, the FPPC. properly regulated and adminis-
The current concept, which dates tered.

36 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
stances. However, this provision, and advice letters) and should
RECOMMENDATION NO. 18 which clearly is in the nature of consider, among others, the fol-
Consolidation of Financial Interest Dis- a conflict of interest statute, is lowing possible reforms.
qualification With Campaign Contribu- isolated from the rest of the con-
tion Disqualification flict of interest provisions of the Clarify Conflict Rules and Eliminate
Legislation should be enacted Political Reform Act. Its isolation Unnecessary Disqualification
to move Government Code is so complete that some public The Commission feels strongly
Section 84308—concerning dis- officials may be totally unaware that several of the conflict of
qualification and campaign con- of its presence. The Bipartisan interest provisions need clarifi-
tributions—to Chapter 7 of the Commission urges the Legislature cation in order to make the
Political Reform Act where the to enact legislation to move Sec- rules more understandable and
other conflict of interest provi- tion 84308 to Chapter 7 of the workable or to eliminate the
sions are located. Act, where the other conflict of unnecessary and too frequent
interest provisions are located. disqualification of officials from
Findings Supporting Recommendation participating in governmental
Based upon the discussions and Recommended Areas of Further Inquiry decisions.
deliberations of the Commission, As discussed above, due to time
the Bipartisan Commission finds constraints and out of deference RECOMMENDATION NO. 19
that, in order to consolidate all to the FPPC’s simultaneous and Clarify Rule of “Reasonable Foresight”
conflict of interest provisions in ongoing review and regulatory The element of conflict of interest
one area of the Code, legislation overhaul of the conflict of inter- analysis as to whether a financial
should also be passed to move est provisions of the Political effect is “reasonably foreseeable”
Government Code Section 84308 Reform Act, the Bipartisan Com- should be clarified and made
to Chapter 7 of the Political mission did not have the oppor- more workable.
Reform Act. tunity to conduct the full
Government Code Section investigation and review of the Findings Supporting Recommendation
84308 was added to the Political conflict of interest rules that is Based upon the oral testimony
Reform Act by legislation in warranted by this very complex and written submissions of the
1982, following reports in the Los area of the law. public, and the discussions and
Angeles Times in 1980 that sev- The Bipartisan Commission deliberations of the Commission,
eral members of the California believes that following the con- the Bipartisan Commission finds
Coastal Commission received clusion of the FPPC’s conflict of that the element of conflict of
campaign contributions from per- interest regulatory overhaul, the interest analysis as to whether
sons who had applications pend- Legislature and/or another body a financial effect is “reasonably
ing before their Commission. should conduct a fundamental foreseeable” is too vague and far-
Section 84308 pertains to the dis- top-to-bottom review of the con- reaching.
qualification of appointed mem- flict of interest provisions con- There is a great deal of concern
bers of boards and commissions tained in the Political Reform Act that the FPPC’s recent efforts to
who receive campaign contri- and its authoritative interpreta- overhaul the conflict of interest
butions under certain circum- tions (including FPPC regulations regulations will not go far enough

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 37
that the element of “materiality”
to cure the problems associated and the “public generally” excep-
with this important issue, given tion for conflict of interest analy- RECOMMENDATION NO. 21
that it must be conducted within sis have been applied in ways that Eliminate Unnecessary Disqualification
the constraints of the present do not further the purposes of for Small Investment Interests
statute. The Bipartisan Commis- the Political Reform Act, do After careful study and review,
sion believes serious consideration not provide basic fairness to the Political Reform Act should
should be given to the possibility either public officials or their be amended to apply the “public
of a statutory correction to the constituents, and often result generally” exception to situations
vague and far-reaching concept of in unnecessary and unreasonable in which the public official owns
whether a financial effect is “rea- disqualification from participa- less than 1% of a business entity.
sonably foreseeable” for conflict tion in a governmental decision.
of interest analysis purposes. (See For example, the Bipartisan Findings Supporting Recommendation
Appendix 6.) Commission received a number Based upon the results of the
of comments relating to the Bipartisan Commission’s several
RECOMMENDATION NO. 20 “public generally”exception and Research Projects, the oral testi-
Provide Fairness and Eliminate Unneces- whether it should apply in certain mony and written submissions of
sary Disqualification—Especially in Case circumstances to public officials the public, and the discussions
of Landowner Public Officials who own rental properties and and deliberations of the Commis-
The Political Reform Act’s “mate- who—because of that ownership— sion, the Bipartisan Commission
riality” rule and “public gener- are otherwise prevented from finds that the failure to apply
ally” exception for conflict of voting on rent-related issues, not- the “public generally” exception
interest analysis—particularly as withstanding the fact that tenant- to circumstances in which the
they apply to landowner public public officials are not similarly public official has only a very
officials who must vote on devel- disqualified. This issue generally small relative ownership interest
opment or rent control related arises in the context of voting in an entity leads to unnecessary
issues—should, after careful study on rent control or development and unreasonable disqualification
and consideration, be amended issues. of public officials from partici-
to provide basic fairness and Of equal significance is the pation in governmental decisions
to eliminate unreasonable and complexity of the “materiality” that do not further the purposes
unnecessary disqualification from rules. Consideration should be of the Political Reform Act and
participation in governmental given to whether, in order to sim- do not provide basic fairness to
decisions. plify the rules, the same “mate- either public officials or their con-
riality” threshold for indirectly stituents. Consideration should
Findings Supporting Recommendation involved real property should be therefore be given to expanding
Based upon the oral testimony applied in all cases, regardless the “public generally” exception
and written submissions of the of the proximity of the public to include cases in which a public
public, and the discussions and official’s property to the subject official owns less than 1% of
deliberations of the Commission, property. (See Appendix 6.) a business entity, regardless of
the Bipartisan Commission finds what financial effect the decision
may have on that business entity.

38 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
Alternatively, this issue may be
resolved with equal force and
result by addressing a different Strict Liability Under the Act Is Inconsis-
element of the conflict of interest tent With Basic Fairness The Bipartisan Commission
analysis. (See Appendix 6.) The Bipartisan Commission also recommends serious consider-
recognized the need to move away ation to the creation of a “stan-
RECOMMENDATION NO. 22 from the current unfair “strict lia- dard of care” element or defense
Allow Public Officials to Vote Against bility” concept of conflict of inter- for public officials who make a
Their Interests est rules in favor of a rule that reasonable and good faith effort
After careful study and review, requires reasonable diligence. to determine whether or not they
the Political Reform Act should may have a conflict of interest
be amended to further simplify RECOMMENDATION NO. 23 prior to participating in a gov-
the “materiality” standard by Eliminate “Strict Liability” Concept of ernmental decision. A number
eliminating the “negative effect” Conflict Rules of FPPC enforcement matters
rule that would find a conflict After careful study and review, over the years have involved
of interest even where the public the Political Reform Act should government officials who—despite
official’s participation in a gov- be amended to expressly include making a good faith effort and
ernmental decision is against his a “standard of care” element or obtaining advice from their agen-
or her financial interests. defense for public officials who cy’s legal counsel—nonetheless
make a reasonable and good faith inadvertently violate the Act by
Findings Supporting Recommendation effort to determine whether or participating in a governmental
Based upon the results of the not they may have a conflict decision in which they are later
Bipartisan Commission’s several of interest prior to participating found to have a conflict of inter-
Research Projects, the oral testi- in a governmental decision (thus est. There currently exists no
mony and written submissions of moving away from a “strict liabil- defense for such good faith con-
the public, and the discussions ity” standard for conflict of inter- duct in an FPPC enforcement
and deliberations of the Commis- est cases). action. Alternatively, the Biparti-
sion, the Bipartisan Commission san Commission believes that the
finds that it is illogical to find that Findings Supporting Recommendation FPPC could reasonably and fairly
a public official has a conflict of Based upon the discussions and interpret the conflict of interest
interest in a decision where his deliberations of the Commission, provisions of Government Code
or her participation in that deci- the Bipartisan Commission finds sections 87100 et seq. (which con-
sion runs contrary to the official’s that the present system of appar- tains the language “knows or has
financial interest. In such cases, ent “strict liability” for conflict reason to know”) to establish
the official’s participation in the of interest violations is lacking a violation only if a reasonable
government decision—by defini- in basic fairness, chills political person would know (i) that they
tion—cannot possibly be moti- participation, and does not fur- have a financial interest, and (ii)
vated by either financial gain or ther the purposes of the Political that it is reasonably foreseeable
protection of the official’s finan- Reform Act. that the governmental decision
cial interest. (See Appendix 6.) will materially affect that interest.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 39
chapter 4c
ENFORCEMENT OF THE POLITICAL REFORM ACT

not deterred, and (ii) to encour-


age conscientious and diligent
formally adopt a statement of effort on the part of those who
enforcement principles that is have no intent to violate the

T he Bipartisan Commission
believes that strong and
effective enforcement of the Polit-
consistent with this Chapter.
The Bipartisan Commission also
believes the FPPC should then
Political Reform Act. Enforce-
ment procedures and penalties
that go beyond what is required
ical Reform Act requires that the treat the Statement of General to attain these primary objectives
prosecutorial agency conform its Enforcement Principles as a guide are not only unfair to those
enforcement activities to sound to structuring and managing its who are directly affected but also
and clearly defined enforcement enforcement program as well as counterproductive to the Political
principles. to disposing of particular cases. Reform Act’s most general goal
The Bipartisan Commission’s of assuring an honest and freely
purpose in this Report is not to RECOMMENDATION NO. 24 competitive political process.
rate the current performance of The FPPC Should Adopt and Apply a To achieve this, the enforce-
the FPPC in comparison with the Statement of General Enforcement Prin- ment resources and processes
principles set forth herein. The ciples Consistent With This Report applied must be calibrated to
Bipartisan Commission does not The FPPC should formally adopt the nature and seriousness of the
believe it has information to do a Statement of General Enforce- offense. This is accomplished by
so, nor did it seek such informa- ment Principles consistent with first categorizing the cases or mat-
tion, as it believes such an “audit” the views expressed below. Legis- ters, and then applying both the
is not within the purview of the lation should be passed requiring prosecutorial resources and the
Bipartisan Commission. None- the FPPC to report in writing penalty structure to the cases by
theless, the Bipartisan Commis- to the Legislature each two years category.
sion does believe as a general as to how the FPPC’s enforce-
matter that the FPPC’s current ment program is carrying out Categorization of Enforcement Matters
enforcement program comes con- its Statement of General Enforce- The Bipartisan Commission
siderably closer to carrying out ment Principles. believes, generally speaking and
the principles set forth in this without great oversimplification,
Report than has been the case at Proposed Statement of General enforcement cases can be divided
other times in the FPPC’s history. Enforcement Principles into three broad categories.
The goal of enforcement should First, there exists the category
Threshold Enforcement be to bring about optimal of the most egregious conduct
Recommendation compliance with the Political wherein someone intentionally
However, as discussed below, the Reform Act while minimizing violates the Political Reform Act
Bipartisan Commission believes intrusion into the political pro- to seek political advantage. If
the FPPC should consider the cess. Enforcement should be enforcement is reasonably effi-
Statement of General Enforce- sufficient (i) to deter serious cient, such violations should be
ment Principles set forth in or intentional violations and to relatively unusual. Furthermore,
this Chapter and further should detect and punish those who are because it is in the nature of such

40 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
cases that the responsible persons requires the careful consideration
will seek to conceal the viola- pare the report accurately. (See of numerous factors including,
tions, the number of such cases Chapter 5B.) for example, the amount of the
that come to the attention of the Moreover, with no attempt to money not properly reported, the
FPPC is likely to be very small. conceal the violation, often the relative nature of the violation to
It is the seeking out and pursuit violation will be clear on the face the total activity, the frequency of
of that small number of cases of the report or will be discovered violations, the proximity of the
that should command a dispro- in audits. A large portion of the violation to a significant event
portionate amount of the FPPC’s cases that come to the attention such as an election or a govern-
enforcement resources, and war- of the FPPC are likely to fall into mental decision, and the sophisti-
rant the most serious penalties. this category. Yet, a well-struc- cation of the respondent.
Second, and at the other end tured enforcement program will Nevertheless, the Bipartisan
of the spectrum, exists the cat- handle these cases expeditiously Commission believes it is gener-
egory consisting of inadvertent and efficiently, so that they con- ally possible to single out those
violations committed by persons sume—on a relative basis—few cases, few in number, that involve
who have diligently attempted to enforcement resources. the most egregious conduct. It
comply with the Political Reform And third, there is the cat- is these matters that merit serious
Act and have no desire to conceal egory of cases that constitutes punishment and the use of exten-
anything or otherwise to violate the “middle ground” of the sive investigative resources as
the law. Given many factors— spectrum, consisting of conduct compared with the “minor” cases
including the complexity of the which does not amount to dil- or the “middle-ground” cases.
law; the vastly different levels of igent conduct but also does
experience and sophistication on not entail intentional miscon- The Importance of Case Categorization
the part of those subject to the duct. This category comprises This general breakdown of
law; the ad hoc nature of most both negligent and grossly neg- enforcement cases has important
election campaigns and the time ligent conduct. This category implications for managing
pressure under which they oper- may also be quite large, and enforcement. To the maximum
ate; and the onerous burden of requires enforcement activity suf- extent possible, the minor and
compliance—such violations are ficient both to provide an incen- middle-ground cases should be
likely to be common. In tive for future diligence by the handled administratively and rou-
fact, the Bipartisan Commission violator and to deter others from tinely. Where the facts seem
found direct evidence of this acting with negligence. clear—whether from the face of
in its Campaign Report Form Certainly, within each cate- the disclosure forms, from audit
Experiment, wherein both experi- gory there can be a considerable findings, or from other documen-
enced and inexperienced persons range in the seriousness of viola- tary evidence—the matter should
were asked to diligently prepare tions. Moreover, to distinguish be dealt with, expeditiously. In
a campaign report using the the minor from the moderate some cases, a warning letter noti-
instructions provided and were, from the most serious cases fying the respondent of the spe-
without exception, unable to pre- is certainly no easy task. It cific violation will suffice. Some

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 41
Calibrating Fines to the Level of small number of major cases – the
Misconduct most egregious misconduct which
minor and probably many mid- For the reasons stated above, the requires the most extensive inves-
dle-ground violations nonetheless Bipartisan Commission believes tigation and the most serious
would warrant a modest fine. modest penalties in all but the fines. The occasional occurrence
However, wherever possible, most egregious cases—combined of such serious enforcement mat-
such cases should be handled with audits and aggressive edu- ters—combined with the modest
like parking tickets. The initial cational and technical assistance but steady pressure from swift,
letter should give the respondent efforts—are both just and suffi- efficient administrative handling
the option of closing the matter cient to achieve the true goals of more routine cases—would
by correcting the error(s) and of enforcement of the Political effectively deter violation of the
returning payment in a specified Reform Act. law while assuring the public that
amount. The respondent should Following this approach, the the law is being enforced.
be afforded the opportunity to Bipartisan Commission would
correct, clarify, or supplement expect the largest number of fines Specific Recommendations
the information upon which the to be modest, possibly under In addition to studying the gen-
FPPC proposes the modest fine. $1,000. When routine cases eral principles of enforcement
The amounts should be no involving no egregious miscon- of the Political Reform Act,
higher than necessary to encour- duct are disposed of with min- the Bipartisan Commission also
age people subject to the law to imal expenditure of resources, examined enforcement more gen-
comply, both as a matter of fair- fines in this range may seem erally in order to develop and
ness and to encourage the accep- more appropriate than has been refine specific Recommendations
tance of routine disposition of the case in the past—wherein regarding enforcement rules and
these cases. more substantial prosecutorial procedures. In considering and
Some minor and middle- resources were required. The developing these Recommenda-
ground cases will require Bipartisan Commission believes tions, the Bipartisan Commission
somewhat higher fines than can that such modest fines in cases studied enforcement of the Politi-
be arranged through “parking involving minor or many of the cal Reform Act through various
ticket” procedures. Nevertheless, middle-ground violations would means:
if possible, they should still be be fair and would advance the First, as set forth later, the
subjected to expeditious resolu- purposes of the Political Reform Bipartisan Commission and IGS
tion. Of course, in all such cases Act. conducted an extensive FPPC
the respondents would have the As alluded to above, a final Enforcement Study. (See Chapter
option of refusing to cooperate advantage of expeditious disposi- 5C.)
with the FPPC. tion of routine matters is to be Second, the Bipartisan Com-
able to direct a disproportionate mission and IGS conducted Focus
amount of the FPPC’s investiga- Group Studies—including focus
tive and legal resources to the groups of candidates and cam-

42 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
RECOMMENDATION NO. 25
Private Attorney General Actions Should
Be Limited to Serious Violations of the
original purposes of the Political Act
paign treasurers, journalists, and Reform Act are carried out with- Private attorney general actions
political attorneys—which also out unduly discouraging citizens should be limited to serious viola-
specifically included enforcement from participating in the political tions as follows: As a necessary
issues, among others. (See Chap- process. element for the plaintiff to pre-
ter 5A.) The following are the Bipar- vail in any action brought by a
Third, as set forth earlier, the tisan Commission’s specific Rec- person other than a civil pros-
Bipartisan Commission held a ommendations with respect to ecutor under Sections 91004 or
series of public meetings through- enforcement of the Political 91005 of the Government Code,
out the state requesting public Reform Act, along with the Find- either of the following must be
input including specifically with ings which support the Rec- shown:
request to enforcement of the ommendations. The Bipartisan (1) That the violation was
Political Reform Act. Commission believes that these intentional or that because of the
Fourth, the Bipartisan Com- Recommendations are worthy of political consequences or other
mission’s Enforcement Sub-Com- serious consideration by the Leg- circumstances the violation is suf-
mittee (comprised of two former islature and the Fair Political ficiently material to justify an
Chairmen of the FPPC and Practices Commission. The action notwithstanding the deci-
two former FPPC Commission- Bipartisan Commission further sion of the civil prosecutor not
ers) studied enforcement issues, believes that each of the Rec- to act; or
including all recommendations ommendations, if adopted, would (2) In the case of a violation
and proposals submitted by the further the original purposes of that is curable and whose harm
public (in writing and in testi- the Political Reform Act by pro- to the public would be substan-
mony) and prepared a Report on viding for a more efficient and tially avoided if cured, that the
Enforcement for the consideration effective implementation of the defendant in the action has been
of the Bipartisan Commission. Act. notified of the violation and has
Although there is certainly a failed to cure it within a reason-
sense that enforcement of the Reform Act to Prevent Abuse of the Pri- able time.
Political Reform Act is a difficult vate Attorney General Provisions
and complex area, the Bipartisan Central among the reforms in the Findings Supporting Recommendation
Commission identified numerous area of enforcement is the need Based upon the results of the
reforms which it believes would, to protect against the abuse of Bipartisan Commission’s several
if implemented, make the enforce- the very important private attor- Research Projects, the oral testi-
ment of the Act work more ney general action provisions con- mony and written submissions of
efficiently. The Bipartisan Com- tained in the Political Reform the public, and the discussions
mission believes these reforms Act. and deliberations of the Commis-
are necessary to ensure that the sion, the Bipartisan Commission
finds that the private attorney

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 43
general provision of the Political evidence but that the private
Reform Act should be clarified to general provisions should be read plaintiff is able to substantiate;
restore its original intent. against the background of the or (iii) a case that—although not
Government Code Section Political Reform Act’s finding of necessarily very serious when con-
81001 as contained in the inadequate enforcement of prior sidered in isolation—can be dem-
Political Reform Act declares laws. Enforcement is not “inade- onstrated by the private plaintiff
“[p]revious laws regulating politi- quate” when the FPPC declines to to represent a class of violations
cal practices have suffered from initiate enforcement proceedings that is not being adequately dealt
inadequate enforcement by state in routine cases of negligence (or with by the FPPC and that, con-
and local authorities.” To address where diligence was present but sidered in the aggregate, results in
this problem, the Political a violation nonetheless resulted) a serious failure of the Political
Reform Act created a new agency, for the reasons described above in Reform Act to accomplish its pur-
the FPPC, whose sole responsi- the Statement of General Enforce- poses.
bility would be the implemen- ment Principles. Although cases in which a pri-
tation and enforcement of the The type of case most obvi- vate attorney general action is
Political Reform Act. To provide ously contemplated by the private warranted for these or similar
an additional backup, the Politi- attorney general provisions is one reasons may be rare, that does
cal Reform Act, while giving the in which there is an intentional, not mean the availability of such
FPPC primary civil enforcement serious violation that the FPPC actions serves no purpose. The
authority, permits private citizens declines to pursue out of excess very possibility of a private attor-
to bring civil actions and to col- timidity or for even less desirable ney general action is likely to pro-
lect half of any financial penalty. reasons. Other instances in vide an incentive to the FPPC
(See Government Code Section
91009.) Government Code Sec-
tion 91012 provides that in such a
The type of case most obviously contemplated by the pri-
case brought by a private citizen, vate attorney general provisions is one in which there is an
the court may award attorney’s intentional, serious violation that the FPPC declines to pursue
fees to the prevailing party and out of excess timidity or for even less desirable reasons.
may require the plaintiff to post
a bond to guarantee payment of
costs in the event the defendant which a private attorney general to pursue cases vigilantly. And
prevails. action might be desirable could when there is a breakdown, the
The Bipartisan Commission include (i) a case that the FPPC private attorney general action
concludes that to further the pur- cannot bring because the FPPC’s may bring about a just result.
poses of the Political Reform Act, investigative and legal resources On the other hand, the use
private attorney general actions are being devoted to other serious of private attorney general actions
should be limited to serious vio- cases; (ii) a case involving serious by individuals seeking to profit
lations. These private attorney allegations for which the FPPC from minor but easily detected
has concluded there is insufficient

44 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
violations that the FPPC – in Findings Supporting Recommendation
the sound exercise of its prosecu- Based upon the results of the
torial discretion—has declined to RECOMMENDATION NO. 26 Bipartisan Commission’s several
pursue, certainly does not pro- Attorneys Fees Should Be Awarded to Research Projects, the oral testi-
mote the purposes of the Political Respondents Who Successfully Defend mony and written submissions of
Reform Act. In fact, for the rea- Against a Private Attorney General the public, and the discussions
sons discussed in the Statement Action and deliberations of the Commis-
of General Enforcement Princi- Judicial decisions creating asym- sion, the Bipartisan Commission
ples above, such private prosecu- metry in the award of attorney’s finds that judicial decisions creat-
tions may be harmful and may fees between plaintiffs and defen- ing asymmetry in the award of
deter public participation in the dants should be legislatively attorney’s fees between plaintiffs
political process. The Bipartisan reversed as follows: Government and defendants should be legisla-
Commission therefore proposes Code Section 91012 should be tively reversed. The problem of
that a new paragraph (b) be amended to read as follows: the asymmetry in the award of
added to Government Code Sec- (a) The court may award to attorneys fees in private attorney
tion 91009, as set forth above, a plaintiff or defendant, other general actions has been created
limiting the use of the private than an agency, who prevails in by the courts.
attorney general action to serious any action authorized by this title More specifically, the Political
cases. The language of the pro- his costs of litigation, including Reform Act contains two provi-
posed paragraph (b)(1) leaves con- reasonable attorney’s fees. On sions for attorney’s fees. Gov-
siderable discretion in the court motion of any party, a court shall ernment Code Section 91003(a)
to set the threshold of seriousness require a private plaintiff to post permits the court to award attor-
that the plaintiff must cross a bond in a reasonable amount ney’s fees to the prevailing party
in order to prevail. Potential pri- at any stage of the litigation to in an action seeking injunctive
vate attorney generals who are guarantee payment of costs. relief. Government Code Section
confident that a violation has (b) Criteria used by courts 91012 permits the court to award
occurred might face some uncer- for determining whether or not attorney’s fees to the prevailing
tainty whether a court would find to award attorney’s fees and for party in any action brought
that the threshold was satisfied, determining the amount of attor- under the Political Reform Act,
and would face financial risk if ney’s fees, under this section unless the prevailing party is a
their predictions turn out to be and under Section 90003, shall government agency. Neither of
incorrect. This would have the not differentiate between cases in these provisions of the Political
beneficial effect of discouraging which the plaintiff or the defen- Reform Act contains any sug-
private attorney general actions dant is the prevailing party. gestion that the award of attor-
other than in plainly serious mat- ney’s fees should be affected by
ters. (See Chapter 5A, Focus whether the prevailing party is
Group Finding No. 4.) the plaintiff or the defendant.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 45
to encourage private litigation
Nevertheless, in a series of enforcing the Political Reform mission recommends that Gov-
cases decided in the 1980s, Cali- Act. The Bipartisan Commission ernment Code Section 91012 be
fornia appellate courts relied on believes that such reasoning is amended as set forth above. (See
these sections to make the award fallacious. As in the case of also Chapter 5A, Focus Group
of attorney’s fees almost auto- enforcement generally, the Bipar- Finding No. 4.)
matic when the prevailing party tisan Commission believes the
is the plaintiff, but to deny purpose of the attorney’s fee pro- RECOMMENDATION NO. 27
the award of attorney’s fees in visions is to encourage private lit- Private Attorney General Actions Should
most cases when the prevailing igation over serious matters where Be Disallowed Where the FPPC is Pursu-
party is the defendant. (See Thir- action by the FPPC would have ing the Violation
teen Committee v. Weinreb, 168 been desirable but for one reason The possibility of monetary pen-
Cal.App.3d 528, 214 Cal.Rptr. or another did not occur, and alties in a private attorney general
297 (1985); People v. Roger to discourage private litigation action should be precluded if
Hedgecock for Mayor Commit- in all other cases. This con- the FPPC notifies the complain-
tee, 183 Cal.App.3d 810, 228 clusion is strengthened by the ant that it is investigating the
Cal.Rptr. 424 (1986); Community provision in Government Code matter and within one year the
Cause v. Boatwright, 195 Section 91012 requiring a plain- FPPC has either entered into a
Cal.App.3d 562, 240 Cal.Rptr. tiff to post a bond and thereby stipulation with the respondent
794 (1987).) Under these deci- evidencing intent to protect the or has entered an order of prob-
sions, attorney’s fees are awarded interests of defendants as well as able cause.
to a prevailing plaintiff “in plaintiffs in such matters. It
the absence of overriding special is true, as the courts in the Findings Supporting Recommendation
circumstances,” even when the above-cited cases have noted, that Based upon the results of the
violation was committed by a the Political Reform Act gives Bipartisan Commission’s several
defendant who acted in good the courts discretion to decide Research Projects, the oral testi-
faith. (Thirteen Committee, 214 under what criteria attorney’s fees mony and written submissions of
Cal.Rptr. at 303.) However, should be awarded, and the Bipar- the public, and the discussions
a prevailing defendant receives tisan Commission does not pro- and deliberations of the Commis-
attorney’s fees only when the pose to remove that discretion. sion, the Bipartisan Commission
plaintiff ’s action is found to However, those who drafted the finds that monetary penalties in
be “frivolous, unreasonable, or Political Reform Act could have private attorney general actions
groundless.” (Community Cause, and would have specified asym- should be precluded under cir-
240 Cal.Rptr. at 803.) metric criteria if that had been cumstances in which the FPPC
The courts have reached these their intent, and the Bipartisan notifies the complainant that
asymmetric results, despite the Commission believes they were it is investigating the matter
absence of any statutory require- correct not to do so. To restore and within one year the FPPC
ment of support for them, on the symmetry that the Political has either entered into a stipu-
the ground that the purpose of Reform Act on its face seems lation with the respondent or
the attorney’s fee provisions is to call for, the Bipartisan Com- has entered an order of probable
cause.

46 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
visions. (See also Chapter 5A,
Findings Supporting Recommendation Focus Group Finding No. 4.)
Under Government Code Sec- Based upon the results of the
tion 91007(a), a private person Bipartisan Commission’s several RECOMMENDATION NO. 29
wishing to recover monetary pen- Research Projects, the oral testi- Formal Hearings Should Not Be Required
alties from a violator of the mony and written submissions of in Order to Dispose of Matters
Political Reform Act must first the public, and the discussions Government Code Section 83116
notify the civil prosecutor which, and deliberations of the Commis- should be amended to permit
in state cases, is the FPPC. If sion, the Bipartisan Commission informal disposition of cases
the civil prosecutor brings a finds that it is not in the interests without a formal hearing.
civil action within a specified of the Political Reform Act to
period, the private attorney gen- permit private attorney general Findings Supporting Recommendation
eral action is precluded. The actions in instances in which the Based upon the results of the
Bipartisan Commission believes FPPC has issued a warning letter Bipartisan Commission’s several
that the FPPC and the respon- or other administrative penalty. Research Projects, the oral testi-
dent should be provided adequate As set forth above, under Gov- mony and written submissions of
time prior to commencement of ernment Code Section 91007(a) the public, and the discussions
a private attorney general action of the Political Reform Act, a and deliberations of the Commis-
either to attempt to resolve the private person wishing to recover sion, the Bipartisan Commission
allegations or, at least, to allow monetary penalties from a viola- finds that the Political Reform
the FPPC to determine whether tor of the Political Reform Act Act should be amended to permit
probable cause exists to pursue must first notify the civil pros- informal disposition of cases by
the allegations. (See also Chapter ecutor; if the civil prosecutor FPPC staff without a formal hear-
5A, Focus Group Finding No. 4.) brings a civil action within ing and order voted upon by the
a specified period, the private five member FPPC. This Rec-
RECOMMENDATION NO. 28 attorney general action is pre- ommendation is a corollary of
Private Attorney General Actions Should cluded. The Bipartisan Commis- the Statement of General Enforce-
Be Precluded in Instances Wherein the sion believes that private attorney ment Principles set forth above
FPPC Has Already Issued a Warning general actions should be obvi- which call for “parking meter vio-
Letter ated in state cases even if the lation” procedures in some cases.
Government Code Section 83116 FPPC declines to bring a civil Currently, the FPPC believes
should be amended so as to action, so long as the FPPC either it can, consistent with Govern-
preclude the possibility of mon- initiates administrative proceed- ment Code Section 83116, dispose
etary penalties in a private attor- ings or sends a warning letter of cases without penalty, such as
ney general action in instances to the respondent, on account by sending the alleged violator a
in which the FPPC, acting as a of the fact that such action warning letter, without a finding
Commission, has issued a warn- demonstrates that the FPPC has of probable cause or other formal
ing letter to the respondent. given the matter consideration procedure. Government Code
and thereby serves the purpose of Section 83116 should be amended
the private attorney general pro- to make it clear that the FPPC

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 47
can use similar informal proce- Findings Supporting Recommendation the Bipartisan Commission does
dures to impose and collect fines, Based upon the results of the not believe it is in the interest
in order to facilitate the expe- Bipartisan Commission’s several of either the FPPC or the public
ditious and routine handling of Research Projects, the oral testi- for the FPPC to have unbridled
the many cases that involve nei- mony and written submissions of criminal enforcement powers on
ther intentional, serious wrong- the public, and the discussions top of its general responsibilities
doing nor significant contested and deliberations of the Commis- for administering and implement-
facts. Of course, the respondent sion, the Bipartisan Commission ing the Political Reform Act. The
should retain the option of deny- finds that any criminal prose- Bipartisan Commission believes
ing wrongdoing and contesting cutions brought by the FPPC it is important as a general matter
the allegations in an administra- should be at the request of, to keep prosecutorial power in
tive hearing. All notices sent by or with the authorization of, the hands of officers with respon-
the FPPC proposing expeditious the regular criminal prosecutors. sibility in a broad array of cases,
treatment should be required to Although the Political Reform so that priorities and prosecuto-
disclose this option. Act gives the FPPC a variety of rial discretion can be exercised
administrative and civil enforce- without the distortion inherent in
Limited Criminal Prosecution; Expanded ment functions, authority to considering only a narrow class of
Range of Monetary Penalties prosecute criminal cases under prosecutions in isolation.
The Bipartisan Commission the original provisions of the The advantages sought by
believes that criminal prosecution Political Reform Act is limited Proposition 208 of giving crimi-
of violations of the Act by the to the Attorney General, district nal prosecutorial power to the
FPPC should be the exception, attorneys, and elected city attor- FPPC, in cases where circum-
and not the rule. The Commis- neys of charter cities. (See Gov- stances make it appropriate, can
sion also believes that the exist- ernment Code Sections 91001(a), be obtained without the prob-
ing penalties for violations of the 91001.5.) Section 91000(d) of lems of distortion that might
Act should be expanded to more Proposition 208—which was otherwise occur by making the
accurately reflect a full range of approved by the voters in 1996 FPPC’s prosecutorial power effec-
misconduct and culpability which but whose implementation has tive only when one of the officers
constitutes a violation. been preliminarily enjoined by with criminal prosecutorial power
the United States District Court under the Political Reform Act
RECOMMENDATION NO. 30 for the Eastern District of Cal- either requests or authorizes the
The Primary Criminal Prosecutor Should ifornia—amends these provisions FPPC to prosecute.
Not be the FPPC to permit the FPPC to prosecute
In the event that Proposition 208 criminal cases. RECOMMENDATION NO. 31
is reinstated by the courts, crimi- There may be a variety of rea- Fines Should Range from $50-$5,000
nal prosecutions brought by the sons why, under particular cir- Depending on the Seriousness of the
FPPC should be at the request of, cumstances, the FPPC may be Violation
or when referred by, the regular better situated to prosecute a The current maximum fine of
criminal prosecutors. criminal case than the regular $2,000 that may be levied by
criminal prosecutors. However,

48 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
Enforcement Principles set forth
the FPPC in administrative pro- above, the Bipartisan Commis- receipt of the complaint by the
ceedings should be changed to sion does not intend that the pro- FPPC unless the FPPC, in its
$50-5,000 per count, depending posed increase in the maximum discretion, determines that such
on the seriousness of the offense, penalty should result in an across notification would impede the
with the understanding that the board increase of 150 percent specific investigation.
excessive multiplication of counts in the size of penalties levied.
must be avoided. The maximum penalty should Findings Supporting Recommendation
be seen as a maximum, not as Based upon the results of the
Findings Supporting Recommendation the normal penalty. Similarly, Bipartisan Commission’s several
Based upon the results of the the minimum penalty should be Research Projects, the oral testi-
Bipartisan Commission’s several seen as a minimum, and not mony and written submissions of
Research Projects, the oral testi- the normal penalty. Actual fines the public, and the discussions
mony and written submissions of imposed should be within this and deliberations of the Com-
the public, and the discussions broad range and should, in each mission, the Bipartisan Com-
and deliberations of the Commis- instance, accurately reflect the rel- mission finds that—except in
sion, the Bipartisan Commission ative seriousness of the violation circumstances in which the FPPC
finds that like many other dollar of the Political Reform Act. (See concludes that such notification
amounts set forth in the Political also Chapter 5A, Focus Group would impede investigation (for
Reform Act, the $2,000 per vio- Finding Nos. 12, 13.) example, illegal reimbursement
lation maximum for administra- cases that might include ongoing
tive monetary penalties has not Enhancement of Due Process misconduct or possible attempts
been changed since the voters The Bipartisan Commission to conceal or destroy evidence)—
approved the Political Reform identified several areas where the respondent of a complaint
Act. The Bipartisan Commission additional due process rights need filed with the FPPC should
recommends that the fine amount to be established in order to receive timely notice of the allega-
be changed to a range of $50 create an enforcement system that tions against him or her in order
to $5,000—depending on the seri- both is fair to the parties and is to be able to respond. The Bipar-
ousness of the offense—and with conducive to settlement. tisan Commission believes this is
the express understanding that necessary as a matter of basic
excessive multiplication of counts RECOMMENDATION NO. 32 fairness and due process, and
must be avoided. The increase Subjects of FPPC Complaints Should Be that this amendment will also
in the maximum fine should per- Promptly Notified and Given Opportunity aid the enforcement process by
haps be included as part of a leg- to Respond promoting the prompt resolution
islative package increasing many The Political Reform Act should of many complaints. (See also
of the other dollar thresholds be amended to require that a Chapter 5A, Focus Group Find-
in the Political Reform Act to subject of a formal or informal ing No. 11.)
account for inflation since 1974. complaint filed with the FPPC
However, as should be clear shall be notified of the complaint
from the Statement of General by the FPPC within 14 days of

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 49
RECOMMENDATION NO. 33
Respondents in Enforcement Proceed-
ings Should Have an Opportunity to View RECOMMENDATION NO. 34
the Evidence Against Them The Franchise Tax Board Should Not a manner that is inconsistent with
The Political Reform Act should Issue Findings that are Inconsistent with the Legal and Enforcement Divi-
be amended to provide that a FPPC Interpretations sions of the FPPC. (See Chapter
respondent to an enforcement The Franchise Tax Board should 5A, Focus Group Finding No.
action, upon service of a Report not issue findings in campaign 10.)
in Support of Probable Cause, and lobby report audits that are
shall have an opportunity to in any way inconsistent with the Recruitment and Retention of Qualified
inspect and copy evidence in the FPPC’s interpretation of the Polit- FPPC Personnel
possession of the FPPC which is ical Reform Act. Lastly, the Commission addressed
used to support the allegations the need for the FPPC to be able
contained in the probable cause Findings Supporting Recommendation to recruit and retain qualified
report. Based upon the results of the personnel—including enforcement
Bipartisan Commission’s several attorneys and investigators—given
Findings Supporting Recommendation Research Projects, the oral testi- the reality that the FPPC must
Based upon the results of the mony and written submissions of compete with other state agencies
Bipartisan Commission’s several the public, and the discussions for the best and the brightest
Research Projects, the oral testi- and deliberations of the Commis- employees.
mony and written submissions of sion, the Bipartisan Commission
the public, and the discussions finds that as a matter of basic fair- RECOMMENDATION NO. 35
and deliberations of the Commis- ness and consistent implementa- Higher Level Positions Should be Cre-
sion, the Bipartisan Commission tion of the Political Reform Act ated at the FPPC in Order to Recruit and
finds that as a matter of basic fair- the Franchise Tax Board should Retain Qualified Personnel
ness and due process, a respon- be required to issue findings Higher level positions should be
dent to an enforcement action in campaign and lobby report created for the FPPC’s highest-
should have an opportunity to audits that are consistent with the level attorneys, including enforce-
inspect and copy evidence in the FPPC’s interpretation of the Polit- ment attorneys, and investigators
possession of the FPPC which is ical Reform Act. The Bipartisan (which includes accounting spe-
used to support the allegations Commission finds that given the cialists).
against the respondent, upon ser- Political Reform Act’s bifurcation
vice of a Report in Support of audit duties on the one hand Findings Supporting Recommendation
of Probable Cause. The Bipar- and interpretation and enforce- Based upon the results of the
tisan Commission believes this ment duties on the other, it is Bipartisan Commission’s several
reform will also aid the enforce- both confusing and counter-pro- Research Projects, the oral testi-
ment process by promoting the ductive to permit the auditors to
prompt resolution of many com- interpret provisions of the Act in
plaints. (See also Chapter 5A,
Focus Group Finding No. 11.)

50 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
mony and written submissions of
the public, and the discussions sel both were recruited from the
and deliberations of the Com- because there are few positions Department of Justice and either
mission, the Bipartisan Commis- available into which one may had to take salary cuts or become
sion finds that the higher level hope to advance and there exists the subjects of a complicated
positions should be created for a relatively low wage “ceiling” civil service staffing adjustment
the FPPC’s highest-level attorneys that can only be exceeded by to assume their new supervisory
and investigators. The Bipartisan transferring to another state and managerial duties. For the
Commission recognizes that, for agency. An excellent comparison remainder of their tenure at the
a long time, the FPPC has had can be found in the staffing of FPPC, they will enjoy no possibil-
difficulty recruiting and retaining the Department of Justice. Rank ity of a pay increase, other than
cost of living adjustments.
The FPPC’s investigator series
The Commission addressed the need for the FPPC to be is limited to Investigator I-III.
able to recruit and retain qualified personnel—including Three of their eleven investigators
enforcement attorneys and investigators—given the reality are Investigator III’s. Two of
that the FPPC must compete with other state agencies for the FPPC’s best Investigator III’s
the best and the brightest employees. recently left for other agencies
because they had no opportunity
for advancement if they stayed.
experienced attorneys and inves- and file attorneys in that depart- Because the FPPC’s investigator
tigators. The problem is not ment are classified Deputy Attor- series does not have peace officer
uncommon in small agencies but ney General (DAG) I-IV. The status, many investigators have
is a larger problem for the FPPC supervisory and managerial attor- left the FPPC to secure positions
because its attorney and investiga- ney positions are paid above that in agencies that do enjoy that
tor salary structures are linked range. In stark contrast, the status. FPPC investigators are
to the Attorney I-IV and Special FPPC’s attorney classifications are paid less than analysts in state
Investigator/Investigator III classi- comparable only to DAG I-III service. Many investigators leave
fications used by larger state agen- salary ranges. FPPC division investigation altogether to
cies. Because of its relatively chiefs are compensated at lower become Associate Governmental
small size, the highest attorney levels than are rank and file attor- Program Analysts (AGPA) in
staffing level at the FPPC is Attor- neys (DAG IV) at the Department other agencies. The AGPA is
ney Level III. The highest investi- of Justice, even though DAG IV practically an entry-level position
gator staffing level is a non-peace attorneys have no supervisory or in the analyst series but the
officer status Investigator III. managerial responsibilities. position pays more than does a
Because of these classifica- The FPPC’s present Chief of position as an Investigator I or
tions, there is little opportunity Enforcement and General Coun- II. FPPC investigators require
for advancement in the FPPC accounting, analytical and inves-

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 51
Division could retain its highly
trained and experienced attorneys
tigative skills, yet they are not and investigators.
paid accordingly. The Bipartisan Commission
As illustrated above, the FPPC therefore recommends that the
has difficulty competing with FPPC be granted a special
other, larger state agencies that “senior” level category for its
enjoy higher and better paying most qualified enforcement attor-
attorney and investigator staffing neys and an Investigator IV
positions and more possibilities category for its most qualified
for advancement. Once a par- investigators. This recommenda-
ticularly capable person begins tion should be addressed initially
to rise within the civil service to the State Personnel Board
system, or reaches the higher but, if necessary, it should be
salary levels at the FPPC, he or sent to the Legislature for a statu-
she can easily be lured to another tory remedy. Similar adjustments
state agency that enjoys a higher should be made for other posi-
salary range, peace officer status, tions within the FPPC.
or greater possibilities of further
advancement. The staffing sit-
uation being what it is, the
FPPC cannot effectively compete
with other agencies or hope to
retain its best people in either
its attorney or investigator posi-
tions. The real losers in this
scenario are the regulated public
and the citizens who want and
expect the FPPC to do its
job efficiently and effectively.
The public is deprived of the
obvious value they would oth-
erwise enjoy if the Enforcement

52 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
chapter 5
RESEARCH PROJECTS

“It’s getting to the point where people have to hire


campaign treasurers, and it ought to not be that way. ”

T he Bipartisan Commission,
working with IGS, undertook
several research projects on • a campaign finance report
behalf of the Commission. Spe- “form experiment” (the “Cam-
cifically, the Bipartisan Commis- paign Report Form Experiment”)
sion and IGS undertook the designed to evaluate how easy or
following research projects: difficult these forms are to fill out
• focus group studies and for both the experienced consul-
interviews (the “Focus Group tant as well as the layperson (see
Studies”) with local campaign Chapter 5B); and
treasurers, journalists, and politi- • an empirical investigation
cal law attorneys with the goal of of FPPC enforcement practices
providing a better understanding (the “FPPC Enforcement Study”)
of what these groups think about with the goal of providing a
the present system created by the better understanding of how the
Political Reform Act and how the Political Reform Act is enforced
system might be improved (see (see Chapter 5C).
Chapter 5A); For the sake of clarity, each
Research Project is discussed sep-
arately in this Chapter as well as
(more fully) in Appendix 5, which
contains the report of IGS to the
Bipartisan Commission.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 53
chapter 5a
FOCUS GROUP STUDIES

“If I don’t find it, I’m scattering through papers


trying to find that small $6 or whatever it is . . . ”

THE FILERS’ PERSPECTIVE: LOCAL logical, because … your only asset

A s part of its research and


investigation, the Bipartisan
Commission commissioned IGS
CANDIDATES AND TREASURERS
The filer Focus Groups included
candidates who filed their own
really is your cash. So it’s not
very logical where you’re record-
ing the loans that you have out-
to conduct a number of Focus campaign reports, volunteer trea- standing or that you owe.
Groups on critical categories of surers and professional treasurers. (February 10, 2000 Focus Group, pp.
filers and users of the data gener- The major findings of the local 35-36.)
ated by the Political Reform Act. candidate and treasurer Focus
The purpose of this research was Groups, as well as representative VOICE : I don’t know if they
to gain some insight into the comments from the Focus can make, like you said, have
experiences of those who prepare Groups, follow. some form of an EZ form where
the campaign reports and analyze these things don’t apply. I did not
the data required by the Political FOCUS GROUP FINDING NO. 1 have any bank loans, no loans,
Reform Act. Many of the filers felt that no extra money coming in from
Specifically, the Bipartisan the campaign report forms were here. Just check them off so you
Commission conducted formal overly complex and confusing don’t need these forms. All you
Focus Groups through IGS for and that the FPPC advice was not need from me is the one that said
both local candidates and trea- always helpful. I had this much interest on my
surers (the filers) and journalists bank account which I opened for
(the users), as well as with prac- Representative Comments my campaign. I probably made
titioners—political attorneys—who VOICE : I mean the biggest prob- the mistake of putting interest
tend to be both filers and users. lem for me really was just having on that bank account, which
All comments gleaned from the to fill it out and not having the means now I have to declare a
Focus Groups have been edited software. The only thing that I small amount of interest every six
to remove any names or refer- find confusing about the forms is months. If I don’t find it, I’m
ences that might compromise the the section where you record out- scattering through papers trying
anonymity of the participants. standing loans. Either payable or to find that small $6 or whatever
Appendix 5 contains the full due to you. Because I’m used to it is ...
report drafted by IGS of the sev- … a balance sheet and an income (February 15, 2000 Focus Group, pp.
eral Focus Groups conducted. statement, and the ... form sort 14-15.)
of combines those things in sort
of one lump. And it’s not very

54 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
FOCUS GROUP FINDING NO. 2 VOICE : But they’ve got a state
The overlay of state and local cally the complaints are made attorney’s office who kind of
laws is a source of major complex- because people read this ordi- oversees it a little bit. But both
ity. Since the laws vary at each nance and they don’t understand [County] and [City] never regis-
level and across jurisdictions, it it. So they file these complaints tered their ordinances with the
is not always easy to obtain the and your ethics commission state, which is what they are sup-
correct rules that pertain to a par- doesn’t know anything about posed to do.
ticular race. Some of the confu- campaigning, so they hire a spe- (February 15, 2000 Focus Group, pp.
sion that filers face is caused by cial counsel. 58-59.)
the multiple layers of regulations (February 15, 2000 Focus Group, pp.
placed by different jurisdictions. 25-26.) FOCUS GROUP FINDING NO. 3
A common problem that many
Representative Comments VOICE : There’s a problem with filers face is that donors do
VOICE : The political format is that. That is that often times the not complete all the information
complicated. It’s getting more local jurisdictions don’t under- needed for the disclosure forms.
complicated. Every time you pass stand these rules. So you’ve got A particularly hard piece of
another campaign reform act, it your board of [supervisors] or information to get is the contrib-
throws the whole thing in tur- your city council, whatever, they utor’s occupation and employer
moil. It’s getting to the point will pass a campaign reform ordi- information. The dilemma then
where people have to hire cam- nance. Then depending upon the is whether to take the money
paign treasurers, and it ought to jurisdiction—for instance, I was and risk the violation or forego
not be that way. doing a campaign in [County]. the money and risk not having
At that time [Proposition] 73 had enough money to win the elec-
MODERATOR : Even at the local been thrown out but you had tion.
level? this ordinance that had fiscal year
VOICE : Absolutely at the local contribution ... limits, it had Representative Comments
level. Even at the local level I on year, off year. They required VOICE : No, they...“Here, here’s
think they’re raising somewhere reporting of $25 contributions my check.” And maybe they’ll
in the neighborhood of $50,000 and [in-kinds], and expenditures. give their employer, but getting
to $200,000. When you start It was this horrible thing. Well, the other piece of the informa-
becoming aware of all of those when I went into talk to the tion, what’s their occupation, a
laws, and then overlaid on top of county clerk about some of these lot of times is just a pain to
that are a large number of local provisions, he looked at me and have to follow up and try to...
campaign ordinances. It just gets said, I just hold people to the “Okay, what do you do?” It’s like,
to the point here in [City]—the high points. He said, I don’t it’s an invasion of my privacy.
city ... now has probably spent know what’s in it and I don’t You’ve got my name, you’ve got
$225,000 on special counsels to care. I happen to think it’s silly. my address.
adjudicate the complaints. Basi- I said, okay. (February 10, 2000 Focus Group, p. 24.)

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 55
Representative Comments
VOICE : It depends on the rules… VOICE : So yeah, I did worry. The have mailed? And they’ll ask you
I mean pretty typically the state first thing that the FPPC sent me all these questions that in the
allows that you make your best was their latest newsletter, which original reporting you don’t need
effort at getting the information, was all full of the latest fines, to report. So that’s frustrating.
but of course, you take the right. And I think it was like (February 10, 2000 Focus Group, p. 50.)
money. I mean [City] had very
strict rules, which I now think “Any treasurer who tells you they don’t
have been changed. They used to
say if you can’t get it within a cer- make mistakes is lying to you or themselves.”
tain amount of time you’ve got to
return it.
[public official], who happened to
VOICE : [City] is different, be working ... upstairs from us in VOICE : So yeah, I worried, but I
though, because [candidate’s], the same building. And they were didn’t worry that much, because
half his contributions say “infor- like letting us use their phones. we raised and spent $385,000. I
mation requested.” I’m going, “Oh my God, they thought that given that it was
fined this man all this money.” a very high profile event, high
VOICE : I mean state law says And really, you don’t have a profile election, and that people
that you make your best effort whole lot of recourse. would probably come after us, I
and then you say on the form (February 10, 2000 Focus Group, pp. did worry a little bit that every-
“information requested.” They 37-38.) thing had to be squeaky clean
say you’re supposed to amend because people were going to be
when you do get the information, VOICE : Any treasurer who tells looking at it. But I didn’t worry
but no one does. you they don’t make mistakes is because we weren’t doing any-
(February 10, 2000 Focus Group, p. 25.) lying to you or themselves. We all thing wrong. So I didn’t think
make mistakes. All it takes is to that there would be any prob-
FOCUS GROUP FINDING NO. 4 misspell somebody’s name. When lems. As it turned out, one of the
Some of the more conscientious you go to get a second contribu- organizations that gave us a good
filers worried about the possi- tion, you’ll never find them to get size chunk of money—because
bility of making mistakes and it. there were no limits, because it
having to pay fines for their (February 15, 2000 Focus Group, p. 50.) was a ballot measure—failed to
errors. This was less of a concern file their major donor committee
for the veteran and paid treasur- VOICE :And you’re required to do form. And the other ones all did.
ers, who worry more about the things that we know we have to And I had sent them a letter and
audits. The private attorney gen- do now, but it took years of expe- everything, and they were friends
eral provision introduces another rience. Like you’re supposed to of mine and they said “oh, yeah”.
source of potential threat. keep a sample of literature of And then the person who was
your guys’ mailings. How are you responsible left and in the interim
supposed to say how many you

56 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
to front that money to put you
they forgot. So [a private attor- on the ballot—you’re going to run VOICE : Unless they go to a
ney] went to the FPPC and a campaign, they’re going to run public institution like a library.
said, “I want you to fine this a campaign for you. A filing fee
organization for failing to file is there to cover the cost, as I VOICE : Yeah, but who wants
their report.” And the FPPC said, understand it, of the election and to be sitting there with their
“Well, you know what? We’re other stuff. It’s gotten pretty out- campaign contributions and their
going to pass on that.” And so rageous when the filing fee is checks in the library? You want a
he’s suing them ... . already at the limit here. If all little bit of privacy.
(February 10, 2000 Focus Group, p. 37.) you’re going to do is file, the (February 10, 2000 Focus Group, pp.
[short form] should be adequate. 86-87.)
FOCUS GROUP FINDING NO. 5 (February 15, 2000 Focus Group, pp.
An unusual problem that was 82-83.) VOICE : Well, there are huge
brought up was the prospect that glitches. I don’t have so much of
someone might only raise money FOCUS GROUP FINDING NO. 6 a problem with the filing online
to pay the filing fees for an office, The Internet and electronic filing as I do with the equity. That is,
but that amount of the filing fee holds much promise but several I’m not sure that if you are a
then requires filing a disclosure of the treasurers who are report- single committee—if they’re going
form. This seemed to all present ing campaign activities electron- to make you file online, the least
at the Focus Group to be unfair ically over the Internet under they can do is pay for the lousy
and unnecessary. the current law have complaints web server. The data is no longer
about the expense and inconve- on my computer. It is on their
Representative Comments nience. web site.
VOICE : Or maybe you leave it at
$1,000 but you say, any filing fee Representative Comments VOICE : But trying to get stuff
doesn’t apply to that. So then let VOICE :Then my other concern is out of it is a bear. It will get
the filing fee go as high as you the cost, and access for smaller better. I find it hard because I’m
want, not that that would be par- campaigns, smaller organizations. not able to do some things that
ticularly good, but I’m still not For example, my organization I’m normally able to do. Like
getting sucked into that regardless happens to have a DSL connec- I can’t access an address. I’m
of what number you put on that tion to the Internet because we responsible for aggregated contri-
paper. I just don’t apply that. I’m use it so much, and that’s great. butions but I can’t aggregate my
sorry I didn’t mention that. There are going to be campaigns address. I can’t aggregate by the
that don’t want to spend that business name unless the check
VOICE : No, I like that thought kind of money, and so they’re came from the business.
because this is for—granted, some- going to be sitting there with (February 15, 2000 Focus Group, pp.
body else could have fronted that their 56k modem trying to enter 34-35.)
money for you to run but if you information.
don’t campaign somebody’s going

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 57
not have to bear the costs and FOCUS GROUP FINDING NO. 7
VOICE : But the people I work inconveniences of providing more It is difficult to trace the sources
[with] are very frugal, we’re very information, and the more data of funding, the officers and mem-
targeted, and we try to spend our they can get and the easier they bers of committees, and bundled
money wisely. But when you look can get it, the better their stories contributions. Furthermore, data
at these forms, here’s a $500 filing will be and the easier their jobs analysis, including under the new
for electronic filing fee. It’s ridicu- will be. In addition, an important electronic filing system, could be
lous. If you want electronic filing theme that comes out of the jour- assisted in various ways.
then the government should be nalist Focus Groups is the need
up front and say we’ll pay for it. to pay attention to the back-end Representative Comments
I’m not a very big advocate of the of disclosure: namely, the ease or VOICE : The flip-side really quick,
Internet because not everybody’s difficulty of use of the data to one thing that I found is a frus-
on it—for various reasons. uncover the connections between tration ... that the Good Gov-
(February 15, 2000 Focus Group, p. 46.) money and political action. ernment Committees, you know
The first journalist Focus ... Californians for Good Gov-
THE USERS’ PERSPECTIVE: Group, which was conducted ernment, and you can find out
JOURNALISTS in Sacramento, consisted of six who’s giving the money to them
The Bipartisan Commission, political reporters who knew each ... the only thing you have to file
through IGS, conducted two other and regularly investigated about who’s running it is the trea-
Focus Groups consisting, in total, and wrote about the campaign surer, and that could be anybody.
of eleven journalists. The journal- finance system—although their And there was a particular ... on
ist Focus Groups invited journal- perspectives on the system were the local level, there was a com-
ists who had worked on campaign varied. The second journalist mittee I was trying to (investi-
finance stories to share their Focus Group, conducted in gate) ... but because the treasurer
experiences in using the data gen- Berkeley, consisted of 5 reporters wouldn’t talk to me and wouldn’t
erated by the Political Reform participating along with two aca- tell me who else was on the com-
Act. Those who attended repre- demic users of campaign finance mittee, I had to sort of track
sented a broad spectrum of news- data. In contrast to the Sacra- it back. There was no way for
papers and covered politics at mento group, these reporters had me to find out who was running
either or both the local and state more experience with reporting the committee, which to me is
levels. on local level campaign finance fairly problematic, if the treasurer
In general, their perspectives issues. In addition, eight other could just say, ‘Well, I just deal
were understandably very differ- journalists were interviewed by with the money. You have to
ent from that of the treasurers phone. deal with the other people run-
and candidates who complete The major findings of the ning the committee.’ ‘Well, who’s
and file the campaign report journalist Focus Groups, as well running the committee?’ ‘Well, I
forms. Of course, journalists do as representative comments from can’t tell you.’
the Focus Groups, follow. (January 28, 2000 Focus Group, p. 30.)

58 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
VOICE : But what happens is ...
all the candidate sees is that hard to figure out who that is in
they got it from this PAC. But five minutes, but if we get $1,000 if the contributions were reported
where does the money come or $5,000 limit and people start timely and they were in a data-
from, okay? An example of this spreading their money around or base so that you can—we don’t
is a union that was taking money bundling contributions, it’s going have to put them in. Because we
from developers. The money was to be much harder to track where don’t have the resources.
going from developers to the all that money is coming from. (January 28, 2000 Focus Group, p. 39.)
police officers’ association, which So it will then be more important
reports at the county level on to know people’s employers and VOICE : Yeah. Yeah. Their search
the county schedule and then occupations ... . engine works in certain times.
dumps it into the city election (January 28, 2000 Focus Group, pp. 4-5.) But when you want to search
on the city cycle. So what’s hap-
pened is that you have a shield ...
you have basically laundered the
“So what’s happened is that you have a
shield. . . you have basically laundered the
money from the developer. Okay? ”
money from the developer. Okay?
And you don’t know during
the election where the money’s
coming from. It’s a serious prob- across campaigns, or you want
lem. It’s becoming more wide- VOICE : Every active contribution to really do some analysis, you
spread. needs to be a separate event that want the database yourself. And it
(February 7, 2000 Focus Group, p. 37.) appears in a data base that you seems to me that the next logical
can search and slice and dice the step, and I hope that this is going
VOICE : The data is not always, data on every field. And you can to be part of the other informa-
you know, in the most useful conglomerate it and disaggregate tion they provide is, you know,
form. I think some of the it, and the rest, so that you can downloadable Excel files. Because
employer ID’s and tying people look ... for people who want to the data is coming in some sort
to industry or occupation is very look by zip codes, you know, that of field format to begin with, it
difficult. And, you know, it cer- you can look by zip codes you should be simply a matter of a
tainly would be nice to have that want to look by contributor, you simple conversion. I hope they’re
more systematized and concrete find all the contributions to all going that way. If they’re not, I’m
so it could be used. Especially the different campaigns. Or you going to be greatly disappointed
if one of these reform measures want to look by date, you know, after all this buildup to it.
passes. And the beauty of no for instance, in the week after
limits on campaign contributions a committee passes X bill, you VOICE : Right. Yeah. Because we
is that the big contributions are know, how many contributions in want to manipulate it, you know,
very obvious. If somebody gives the succeeding week did the com- we want to search it. And ... their
you ... or $100,000, it’s not very mittee members get from trial search engines are only as fast as
lawyers, for instance. The system,

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 59
ture, you want to be able to find
VOICE : And if you’ve got a con- out how many attorneys or how
tributor ... if you have (Bob many of a particular group. And,
your modem and their modem, Jones) contributes some money, particularly, on the occupations
and their site. and then the next time it’s (Bob and identifiers, it might say attor-
(February 7, 2000 Focus Group, p. 12.) and Jill Jones) contributes some ney, it might say lawyer, it might
money, and the next time it’s say self-employed. So it can be
FOCUS GROUP FINDING NO. 8: (Robert M. Jones) contributes difficult to run that, unless you
There are problems concerning some money, and the next time know the names of all the attor-
aggregation of contributions. it’s (B. Jones), every one of those neys and you can cross-reference
Many of the stories that journal- will be a separate listing. And one something like that, which theo-
ists write look at the total amount of those may be, you know, an retically, you can do now, but
of money that certain individuals incredible amount of money, and it’s difficult ... . I think one of
or interest groups contribute to you just lose it in the mess. So the things that would be benefi-
political campaigns. This is diffi- there has to be a way to kind of cial would be to have some sort
cult when the names of contribu- consolidate those things. of uniform identifiers in occupa-
tors vary in small ways or when tions and things like that, so
there are other small discrepan- VOICE : But when the data is col- then you can’t say self-employed
cies in how the forms are filled lected on the other end, though, if you are an attorney, and you’re
out. This led them to push for I mean, if it’s not a major a prominent attorney.
standardized industry and occu- donor, it’s just a $500 contribu- (January 28, 2000 Focus Group, p. 11.)
pation codes and for a better tor, the contributor doesn’t do
system of contributor identifica- anything in the reporting system, FOCUS GROUP FINDING NO. 9
tion. it’s reported by the recipient. So On the whole, the FPPC inves-
if recipient A gets it from (Bob tigations do not provide much
Representative Comments Jones) and recipient B gets it useful material for reporting.
VOICE : [What] also makes it from (Robert Jones), they have no
worse is ... the contribu-
tors ... . Every time the “ So for a big contributor, you might have to plow
contributor ... changes
their committee name through 15 or 20 different contributor codes... ”
or changes their name
slightly, or even uses for no real way of knowing that that’s the Representative Comments
reason, a variation of their name, same person and record it. VOICE : The FPPC is generally
it gets inputted in with a differ- (January 28, 2000 Focus Group, p. 9.) the end of the process. By
ent contributor code. So for a big the time you hear anything
contributor, you might have to VOICE : And one of the prob- about what they’re doing, they’ve
plow through 15 or 20 different lems, frustrations, we’ve had with already reached an agreement
contributor codes ... . that has been that the identifiers, with the person who is alleged to
(January 28, 2000 Focus Group, p. 8.) basically. If you’re trying to ana- commit the violation. Generally,
lyze it on looking at the big pic- if there’s a violation, we’re either

60 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
going to see it ourselves and there’s not a lot of stuff, you
write about it, or you’re going to know, that’s out in the open in
have a campaign that files a com- court. It’s always ... stipulated SUMMARY OF REPRESENTATIVE
plaint with the FPPC, and then agreement stuff, and lawyers COMMENTS
you won’t hear anything from the meeting, and ... coming to some For example, the FPPC said it
FPPC for five, ten years. arrangement. was acceptable not to include
(January 28, 2000 Focus Group, p. 15.) (January 28, 2000 Focus Group, p. 25.) the addresses of radio stations

“And another problem is . . . ironically, the FPPC,


a lot of its enforcement stuff is done behind closed doors. ”
on campaign finance reports, and
VOICE : [Candidate] was eventu- THE PRACTITIONERS’ PERSPECTIVE: the FTB claimed the lack of
ally fined by the FPPC, but I POLITICAL ATTORNEYS addresses constitute a “material
think he was in Congress by then. The Bipartisan Commission, finding” in an audit.
I mean the penalties, the swift- again through IGS, conducted a
ness of them, they have no rela- small Focus Group of practitio- FOCUS GROUP FINDING NO. 11
tionship to the seriousness of the ners—political attorneys who prac- There should be more “due
offenses. I think if you use the tice in the area of the Political process” present in FPPC
game analogy with politics, in Reform Act. The major findings enforcement procedures, and
that campaign finance violations of the political attorneys Focus enforcement should be meted out
are treated in politics ... like trav- Group, as well as a summary (as fairly.
eling in basketball—you lose one opposed to excerpts from actual
possession, or something, it’s not transcripts, as was the case above) Summary of Representative Comments
even a technical foul, it’s not of the representative comments At times in past years FPPC
even ejection from the game. So from the Focus Group, follow. enforcement has been “heavy-
you can ... in [candidate’s] case handed and one-sided.” The
... you can make an argument FOCUS GROUP FINDING NO. 10 agency has a lot of resources,
that what he did allowed him to The Franchise Tax Board some- and they try to catch people
win an election he wouldn’t have times interprets the laws or regu- they are investigating at home
otherwise won. lations in ways that are directly in the evenings, or on the week-
(January 28, 2000 Focus Group, p. 17.) contradictory to the interpreta- ends, so those people will make
tions given by the FPPC. When incriminating statements off the
VOICE : And another problem is presented with FPPC written cuff. The current FPPC Chief of
... ironically, the FPPC, a lot opinions, the FTB claims they do Enforcement is trying to make
of its enforcement stuff is done not have to follow the FPPC’s improvements in this regard.
behind closed doors. I mean, opinions because they are sepa- Some Enforcement staffs have
rate agencies.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 61
and they know that few people
roots democracy and have essen-
simply wanted maximum counts have the resources to oppose
tially professionalized politics so
and maximum fines. And to get them. You get little or no practi-
that you have to have lawyers
this the staff may ignore prece- cal benefit from cooperating with
and accountants on your cam-
paign staff. First time violators

...one of the things that would be beneficial should be given a warning.
Right now, it’s a strict
would be to have some sort of uniform identifiers in
liability system.
occupations and things like that... ”
FOCUS GROUP
FINDING NO. 14
dent (i.e., previously-decided cases the FPPC. It makes their lives The Political Reform Act has cre-
with similar fact patterns) in easier if you cooperate, but the ated a system which requires too
order to get the maximum fines. client gets very little in the way of much and overly complex filing—
Over the past few years, however, fine reduction. There are always different amounts of disclosure at
the FPPC has become better at aggravating and mitigating factors different intervals.
treating like cases alike. This in any case. But the mitigating
change is due to good personnel factors don’t help you, because Summary of Representative Comments
changes. The present Chief of the FPPC staff can always come Not even the experts can under-
Enforcement really does believe up with aggravating factors to stand it. The present reporting
in due process. Also, the FPPC counterbalance them. It’s a tit- system is too fragmented with
has come up with a standardized for-tat approach that the enforce- different amounts of reporting
fine mechanism (such as with ment staff uses to neutralize the at different intervals, with filing
major donor violations and as a mitigating factors. dates all over the place. This
result of private attorney general is especially hard for general-pur-
actions). FOCUS GROUP FINDING NO. 13 pose committees which give to
People who get hit the hardest are different campaigns at different
FOCUS GROUP FINDING NO. 12 those new to politics, especially times. Filing dates should be con-
There exists a lack of incentives local candidates, who are making solidated. Just have monthly or
to cooperate with the FPPC in simple mistakes. quarterly filings and one pre-elec-
enforcement investigations and tion report. It would be more
proceedings. Summary of Representative Comments consistent and require less paper-
The unintended consequence of work. It would be less volume of
Summary of Representative Comments this is that the price of admission reporting each time and easier to
If you don’t accept a deal on into politics becomes too high. keep up with.
the FPPC’s terms, the FPPC People do not want to become
will simply load up charges candidates or treasurers because
against you. It’s a take-it-or- of the potential liability. Thus
leave-it approach on their part, the regulations have injured grass-

62 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
chapter 5b
CAMPAIGN REPORT FORM EXPERIMENT

T he Bipartisan Commission
and IGS designed and con-
ducted a Campaign Report Form
Experiment that attempted to and a short questionnaire about
determine the difficulty campaign their experience, if any, working
treasurers face when they seek with political campaigns. Using
to complete campaign reporting this information, participants
forms as required by the Political were asked to complete the Form Summary Results of the Experiment
Reform Act. 460 to the best of their ability. As expected, participants who
As discussed above, participants had worked in previous cam-
Participants in the Experiment with experience in campaigns and paigns were more likely to fill
The primary subjects in the those with no campaign experi- out the forms correctly. On every
experiment were graduate and ence were recruited. The Cam- Schedule (contributions, loans,
undergraduate students affiliated paign Report Form Experiment non-monetary contributions, and
with IGS. In addition, a few compared the performance of the expenditures) and in almost every
staff members from IGS also par- two groups using the same cam- data field, participants with cam-
ticipated. Many participants had paign data. paign finance experience were
little campaign finance experi- Data for the sample campaign more likely to provide accurate
ence, although graduate students was based upon a hypothetical information. These differences
were more likely to have had race for a nonexistent local office. were especially dramatic on the
some exposure to campaign work Participants were provided with a summary page, the contributions
in the past. The group was split list of contributions, some sent schedule (Schedule A), and the
fairly evenly between men and by mail and others generated non-monetary contributions
women. At least one participant from a fund-raising party held at schedule (Schedule C).
did not speak English as a native a personal residence. In addition, The time it took to complete
language. the hypothetical candidate was the experiment varied dramati-
provided a personal campaign cally, from approximately 45 min-
Parameters of the Experiment loan, and received a non-mone- utes to three hours. Those with
For this study, participants were tary contribution in the form of past campaign experience were
provided with a Form 460 opposition research. Finally, to slightly more likely to complete
“Recipient Committee Campaign complete the Form 460 report the study quickly. There was
Report” together with the schedules, participants were pro- no noticeable correlation between
instructions provided by the vided with a completed check reg- the time taken to complete the
FPPC along with the form, ister containing memos for each study and overall accuracy of the
sample data about a campaign, purchase. results.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 63
Summary Page
Beginning with the Summary Page, monetary contributions which the
almost all participants attempted address for a candidate, identifying participants found confusing. In
to identify the reporting period, a treasurer, and/or signing the ver- addition, making correct calcu-
but only participants with expe- ification form. The most common lations on the Summary Page
rience in campaigns did so cor- errors, however, were on the page resulted in the Summary Page
rectly. In addition, participants where participants attempted to data failing to match the accounts
with experience were much more summarize contributions and kept by the campaign. A complete
likely to supply the election date expenditures. Participants with review of the accuracy of responses
required on the summary page. campaign experience were more for the Summary Page is provided
While most participants identified likely to complete these fields accu- in Table 1. The data for all partic-
the type of committee (an office- rately, but only managed to fill out ipants is provided first, followed
holder or candidate committee) one field accurately in every case. by the results for participants with
appropriately, a number of inexpe- A number of participants noted campaign experience, and then the
rienced participants failed to com- in their comments that the Sum- results for participants who lack
plete the form by providing an mary Page double-counts non- campaign experience.

TABLE 1: PERCENTAGE OF CORRECT RESPONSES FOR SUMMARY PAGE DATA

Form 460: Summary Page All Participants Campaign Experience No Experience


(percent) (percent) (percent)

Reporting period noted 80 100 67


Reporting period correct 30 75 0
Date of election supplied 60 75 50
Type of committee identified correctly 90 100 83
Type of statement identified correctly 80 75 83
Committee information given 80 100 67
Treasurer information given 90 100 83
Officeholder/candidate address included 100 100 100
Verification signed 90 100 83
Contributions totaled accurately 60 75 50
Expenditures totaled accurately 50 50 50
First non-monetary adjustment 70 100 50
Second non-monetary adjustment made 30 75 0
Ending cash balance correct 60 75 50

64 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
All participants successfully
Participants were then asked which reported the amount that each con- experienced participants provided
Schedules and pages were the most tributor gave. However, very few identification codes for political
difficult to complete. Participants participants identified, included, action committees, though inexpe-
without campaign experience usu- and summarized two contributions rienced participants were slightly
ally chose the Summary Page as the of less than $100 from the same more likely to indicate the occu-
hardest form. In contrast, those person, which totaled over $100 for pation of the contributor, or note
with experience felt that Schedule the reporting period. Inexperienced that such information was not
B (loans) or Schedule A (monetary participants only included these available.
contributions) was the hardest. contributions when they incorrectly Most of the inexperienced
listed all contributions, including participants totaled contributions
Schedule A—Monetary Contributions those contributions of less than incorrectly on the summary, failed
Schedule A, which lists monetary $100, on Schedule A. Only partic- to make the distinction between
contributions to candidates, was ipants with campaign experience itemized and unitemized contri-
the form that inexperienced par- consistently provided cumulative butions, and totaled all contribu-
ticipants felt was easiest. However, totals for contributions. tions inaccurately. In contrast, all
it was also the form on which the In addition, the experienced of the experienced participants did
inexperienced participants made participants were more likely to total all contributions correctly.
the most errors. correctly identify the contributor The responses for Schedule A are
code of each contributor. Only summarized in Table 2.

TABLE 2: PERCENTAGE OF CORRECT RESPONSES FOR CONTRIBUTIONS DATA

Form 460: Schedule A (Contributions) All Participants Campaign Experience No Experience


(percent) (percent) (percent)

Two-part contribution summarized 40 50 33


Candidate contributions listed 100 100 100
Cumulative totals for contributors given 70 100 50
PAC ID number included on form 20 50 0
Amount received from contributors correct 30 50 17
Unitemized contributions noted 30 50 17
Total contributions correct 70 100 50
Contributions of less than $100 left out 70 75 67

Contributor code correct (of 12) 10.3 10.8 10.0


Occupations given/Info not available (of 7) 5.9 5.8 6.0

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 65
Schedule B—Loans
Schedule B, which contains loan
data, is one of the only Schedules simple (participants only had to
on which inexperienced partici- identify the lender, the amount,
pants did not appear to be dis- and the interest rate), most par-
advantaged in their ability to ticipants completed it correctly.
complete the data entry correctly. A majority of participants com-
Schedule B contained a very simple pleted Schedule B accurately in
personal loan made by the can- full. Results for Schedule B are
didate to the campaign commit- summarized in Table 3.
tee. Because this form was fairly

TABLE 3: PERCENTAGE OF CORRECT RESPONSES FOR LOANS DATA

Form 460: Schedule B (Loans) All Participants Campaign Experience No Experience


(percent) (percent) (percent)

Lender noted 90 100 83


Lender identified as lender, not guarantor 90 75 100
Amount of loan correct 100 100 100
Contributor code accurate 90 75 100
Interest rate given 100 100 100
Total amount of loan correct 100 100 100
Net loans accurate 90 100 83
Annual report NOT completed 60 75 50

66 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
Schedule C—Non-Monetary
Contributions
Participant comments and reviews though the instructions resolved contributors (or to write “infor-
of Schedule C, which details non- the question that arose with the mation not available”)—an omis-
monetary contributions, were quite sample data. In the case presented sion that was made several times
varied. to participants, a lawyer had done on Schedule A. Participants who
Some participants felt Sched- opposition research for the can- had no experience with campaigns
ule C was the hardest form to didate for free. All of the partic- were much less successful, though a
complete, while others felt it was ipants with previous experience majority of them did complete the
the easiest. In a follow-up discus- completed this form correctly in Schedule accurately in full. Table
sion, most participants felt that the nearly all fields. The only excep- 4 summarizes responses made on
issue of non-monetary contribu- tion was the failure to provide the Schedule C.
tions was initially quite confusing, occupation and employer of the

TABLE 4: PERCENTAGE OF CORRECT RESPONSES FOR NON-MONETARY CONTRIBUTIONS

Form 460: Schedule C (Non-Monetary) All Participants Campaign Experience No Experience


(percent) (percent) (percent)

Non-Monetary contributor identified 89 100 83


Contributor code correct 78 100 67
Occupation/employer supplied 67 67 67
Description of goods offered 89 100 83
Fair market value stated 78 100 67
Cumulative fair market value given 67 100 50
Summary/total completed 78 100 67

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 67
Schedule E—Expenditures
In contrast to inexperienced par- No single participant managed rienced participants were more
ticipants, most of the experienced to finish Schedule E without likely to code the expenditures
participants felt that the expendi- making at least three errors. Inex- correctly, and to include unitem-
tures data (Schedule E) was the perienced participants were more ized expenditures in the summary
easiest to complete. However, like likely to list payees correctly, statement at the bottom of the
the experience with Schedule A, although that was due in part to form. In many cases, participants
the perception that it was easier incorrectly including expenditures failed to total expenditures cor-
to complete did not lead to more of less than $100 (similar to the rectly. Responses for Schedule E
accurate responses. error many inexperienced partici- are summarized in Table 5.
pants made on Schedule A). Expe-

TABLE 5: PERCENTAGE OF CORRECT RESPONSES FOR EXPENDITURES DATA

Form 460: Schedule E (Expenditures) All Participants Campaign Experience No Experience


(percent) (percent) (percent)

Unitemized expenditures not listed 78 100 67

Payments totaled correctly 67 67 67

Unitemized expenditures included in summary 89 100 83

Total accurate 56 67 50

Payees listed (of 6) 4.9 3.3 5.7

Payees coded correctly (of 6) 4.6 4.7 4.5

68 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
General Comments and Conclusions
Overall, results of the Campaign
Report Form Experiment con-
ducted by the Bipartisan Com- Previous experience in cam-
mission and IGS suggest that paigns also meant that participants
participants with campaign expe- could spend less time completing
rience find the forms much easier the forms. While those with a
to complete and are more likely campaign background could com-
to complete the forms accurately plete the campaign report in as
than participants with no experi- little as 45 minutes, people without
ence. Interestingly, the forms that campaign experience spent much
participants felt were the easiest longer (up to 3 hours), unless they
(Schedule A for the inexperienced, gave up in frustration part of the
and Schedule E for the inexperi- way through. Those who did com-
enced) were the two that contained plete the campaign reports felt that
the greatest number of errors. Even the instructions had allowed them
participants with backgrounds in to do so with reasonable accuracy.
campaigns—using a fairly simple However, in later discussion, all
set of mock campaign data—could of the participants felt uncomfort-
not generate a Form 460 without able and uncertain about some of
making multiple mistakes. their responses.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 69
chapter 5c
FPPC ENFORCEMENT STUDY

As is the case with all regu-


latory or prosecutorial agencies,
the FPPC does not pursue every

W orking with and through


IGS, the Bipartisan Com-
mission conducted a detailed
matter that it is offered. Although
some observers (such as the Cali-
fornia Auditor’s report) have in
study and analysis of the FPPC’s the past questioned the FPPC’s
enforcement practices. The FPPC declination rate, the Bipartisan
Enforcement Study focused on Commission believes that a
two principal areas: robust declination policy is neces-
• matters in which the FPPC sary in any prosecutorial body.
declined to take any action in That is, innocuous violations or
response to a complaint filed with good faith mistakes should not
the FPPC; and be pursued so that resources
• matters that were pursued can be concentrated on more seri-
by the FPPC, whether com- ous violations, thereby enhancing
menced by a complaint filed by a future deterrence of violations of
third party or commenced as an the Political Reform Act. (See
FPPC-initiated matter. Chapter 4C.)
Working with the staff at the
Matters Declined FPPC, IGS was able to examine
The Bipartisan Commission and redacted copies of letters sent in
IGS studied all matters (during a 154 matters that were declined
defined time period) in which the between January 1998 and May
FPPC determined not to initiate 1999, coding them for respondent
an administrative proceeding or (the individual or group against
civil suit against an alleged viola- whom the allegation was alleged),
tor, including instances in which alleged violation, time to clear-
the FPPC (i) dismissed a com- ance (time between receipt of the
plaint without investigation, (ii) complaint and the issuance of the
dismissed a complaint following declination letter) and reason for
an investigation, or (iii) dismissed declination. Because not all infor-
a complaint after having sent the mation sought was available in
alleged violator a formal warning every declination letter, the uni-
letter. verse of cases for this particular
section varies with each topic dis-
cussed.

70 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
Although the FPPC Enforce- lations pursued—for many times
ment Study includes many other an alleged violation was declined
findings (see Appendix 5), the precisely because its facts were
Bipartisan Commission believes insufficient to prove the underly-
the most important findings are ing violation. That is, in many
identified below. instances the FPPC found that
The Bipartisan Commission the alleged violations did not in
and IGS examined the types of fact happen. Instead, the Biparti-
alleged violations declined, the san Commission draws the read-
results of which are offered in Table er’s attention to the percentage
1, below. Table 1 does not com- of “nonjurisdictional violations”
pare violations declined to vio- declined.

TABLE 1: TYPES OF ALLEGED VIOLATIONS DECLINED


Alleged Violation Total Declinations
(percent)

Reporting Violations 48 33
Nonjurisdictional Violations 30 21
Conflict of Interest 20 14
Campaign Use of Funds 16 11
Statement of Economic Interest Violations 14 10
Disclaimer Violations 4 3
Proposition 208 Violations 4 3
Illegal Reimbursement Violations 3 2
Personal Use Violations 1 1
Lobbying Violations 1 1
Other 3 2
TOTAL 144 100

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 71
As is evident, the “non-jurisdic- TABLE 2: BREAKDOWN OF NON-JURISDICTIONAL DECLINATIONS
tional” violations—those matters
Nature of Non-Jurisdictional Violation Number
over which the FPPC does not
have legal jurisdiction to inves- Brown Act Violation 6
tigate or enforce—accounted for Content Based Objection 5
21 percent of all declinations.
Other Impropriety by Government Official 5
In addition, alleged violations of
Improper Use of Government Funds 3
Proposition 208—which currently
has been enjoined against enforce- Election Code Violation 3
ment—accounted for another 3 Local Ordinance Violation 2
percent of declinations. Thus, Federal Campaign Finance Violation 1
many complainants have had their
Activities of Non-Elected Official 1
requests for FPPC action “turned
down” simply because they mis- Could Not Be Determined 4
took the scope of FPPC author-
ity. Table 2 further analyzes those TOTAL 30
matters that were declined for lack
of jurisdiction.

TABLE 3: TIME-TO-CLEARANCE OF DECLINATIONS


Perhaps the two most
Time-to-Clearance Total Percentage Cumulative
important factors in case (percentage)
declination are “time-to-
clearance” and reason for 0-1 month 24 19 19
declination. Table 3 ana- 1-2 months 33 27 46
lyzes the time-to-clearance
2-3 months 28 23 69
of the declinations.
3-6 months 20 16 85
6-9 months 3 2 87
9-12 months 5 4 91
12-18 months 3 2 93
18-24 months 2 2 95
24 or more months 6 5 100

TOTAL 124 100 100

72 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
First, unless a complaint is filed
As Table 3 indicates, 46 percent formally (i.e. sworn under penalty The Bipartisan Commission
of declined matters are cleared of perjury), FPPC staff have the also studied the reasons why partic-
within two months, almost 70 ability to decline a case without ular matters were declined. Accord-
percent are cleared within three the approval of the Commission. ing to the FPPC Enforcement
months, and 85 percent are cleared On the other hand, every matter Division Briefing Book, FPPC staff
within six months. As a point before the FEC must be consid- ask two questions when deciding
of general comparison, previous ered by the Commissioners them- whether a case should be pursued:
research conducted by IGS found selves, thus extending the clearance “Assuming the alleged facts are
that the Federal Election Com- time. 2 Second, as discussed previ- true, could this case be success-
mission (“FEC”) takes appreciably ously, a large percentage of FPPC fully pursued, and even if the case
longer to clear its declinations. 1 declinations involve matters over could be prosecuted, should it be?”
The FPPC’s comparative efficiency which the FPPC has no jurisdic- Table 4 aggregates the data as to
in clearing declinations is likely tion; these matters may be dis- the reasons why the matters were
due to two factors. posed of quickly simply by writing declined.
a letter to that effect.

TABLE 4: REASONS FOR DECLINATION


Reason Total Declinations
(percent of)

No Jurisdiction 29 19
No Violation 28 18
Weak Evidence 28 18
Mitigation 13 9
De Minimus Violation 7 5
Alternate Resolution (handled by other agency/indiv.) 6 4
No History of Violations 5 3
208 Violation 4 3
Lack of Resources 3 2
No History of Violations AND De Minimus Violation 8 5
No History of Violations AND Lack of Resources 6 4
Lack of Resources AND De Minimus Violation 5 4
Mitigation AND De Minimus Violation 5 3
Mitigation AND No History of Violations 3 2
Mitigation AND Weak Evidence 1 1
Mitigation AND Lack of Resources 1 1
Weak Evidence AND De Minimus Violation 1 1

TOTAL 153 100

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 73
As discussed above, roughly 19 and 85 percent of these matters of resolution, and fine imposed.
percent were declined due to the disposed of within six months. Analyzing the types of violations
fact that the FPPC simply did 2. A sizeable proportion of that were pursued by the FPPC
not have jurisdiction to pursue FPPC declinations were due to the since 1980, roughly 46 percent were
the claim. 3 Another 18 percent fact that the agency had no juris- some type of reporting violation,
were declined due to the fact that diction over the subject matter (19 17 percent involved illegal reim-
the alleged actions were not in percent of all declinations) or no bursement, 15 percent involved
fact violations of the law. Other violation had in fact occurred (18 conflicts of interest, 9 percent
prominent reasons for declina- percent of all declinations). Miti- involved Statements of Economic
tion included some combination gation, weak evidence, the de min- Interest, 8 percent involved dis-
of weak evidence, respondent mit- imus nature of the violation, and claimer violation (i.e., disclaimers
igation, no prior history of viola- lack of previous enforcement his- on political mass mailing), 2 per-
tions, and the de minimus nature tory also were important factors in cent involved lobbying violations,
of the violation. the declination decision. 2 percent involved personal use
of campaign funds, and 2 percent
To summarize the findings with respect Matters Pursued involved other infractions. Table
to matters declined: To analyze those matters that the 5 shows how the composition of
1. The FPPC was able to clear the FPPC did pursue, 518 enforcement violations pursued changed over
cases that it chose to decline fairly cases were coded for such variables time both in terms of quantity
quickly, with almost half of these as respondent, violation, manner and category.
matters disposed of in two months

TABLE 5: ALL MATTERS PURSUED—VIOLATIONS BY YEAR

Violation 1980-82 1983-85 1986-88 1989-91 1992-94 1995-97 Total

Total Cases 33 25 71 111 115 163 518

(percent) (percent) (percent) (percent) (percent) (percent) (percent)


Illegal Reimb. 6 12 7 7 21 29 17
Reporting 58 28 55 57 47 34 46
Disclaimer 15 16 7 15 4 4 8
Personal Use 0 4 0 0 3 3 2
Conflict 9 12 14 12 16 17 15
SEI 3 16 13 6 9 8 9
Lobbying 9 8 4 2 1 1 2
Other 0 4 0 1 0 4 2

74 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
Table 6 compares fines levied
by the FPPC over time, including
In the 1980-1982 period, illegal due to any number of factors, such any fine reached in a stipulation,
reimbursements constituted only as changes in the underlying inci- an administrative law judge hear-
6 percent of those matters pur- dence of the infractions, the refer- ing, a default judgment, or a civil
sued, but increased dramatically, ral rates for particular infractions suit.
constituting 29 percent of all mat- to the FPPC, or the prioritization Table 6 shows that the level
ters pursued by the 1995-1997 time of particular infractions by the of fines has increased rather dra-
period. Reporting violations have FPPC. This said, it is unquestion- matically over time. Fines of less
fluctuated over time, though com- ably true that the FPPC has than $1,000 became increasingly
paratively fewer were pursued in the recently focused its attention on rare over time, while fines between
1995-1997 period than previously. the pursuit of illegal reimburse- $3,000 and $7,000 became much
Pursuit of disclaimer violations has ment cases, consonant with the more common. At the other end
decreased over time, whereas con- FPPC’s stated strategy to pursue of the spectrum, large fines (in
flict of interest cases have slightly these violations. excess of $50,000) increased sub-
increased. These changes could be stantially over time.

TABLE 6: ALL MATTERS PURSUED—FINES BY YEAR

Amount 1980-82 1983-85 1986-88 1989-91 1992-94 1995-97 Total (percent of all)
$0-1,000 12 6 13 12 6 4 53 (10)
$1,001-3,000 11 10 27 39 32 37 156 (30)
$3,001-7,000 5 2 15 32 27 40 121 (23)
$7,001-11,000 1 1 8 12 15 24 61 (12)
$11,001-20,000 4 4 7 11 16 23 65 (13)
$20,001-30,000 0 1 0 0 4 12 17 (3)
$30,001-50,000 0 0 0 2 7 13 22 (4)
$50,001-100,000 0 0 1 0 3 6 10 (2)
$100,001-200,000 0 0 0 3 2 1 6 (1)
$200,000+ 0 0 1 0 3 3 7 (1)

TOTAL 33 24 72 111 115 163 518 (100)

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 75
TABLE 7: TIME TO RESOLUTION BASED UPON MANNER OF DISPOSITION

Table 7 examines how Disposition Stipulation ALJ Hearing Civil Suit DefaultJudg. TOTAL
long it took the FPPC to 0–1 year 53 0 0 2 55 (29%)
close cases—that is, the time 1–2 years 59 2 1 4 66 (35%)
from the receipt of a com-
2–3 years 41 3 1 3 48 (25%)
pliant to its ultimate dispo-
sition, based upon a dataset 3–4 years 11 0 0 0 11 (6%)
of cases that were pursued 4 or more 7 1 1 1 10 (5%)
and closed during the years TOTAL 171 6 3 10 190 (100%)
1994-1998.
A further examination
of the resolution of matters pur- hearing by an Administrative Law
sued by the FPPC found that 88 Judge, 2 percent resulted in a civil
percent of all matters resulted in a suit, and 4 percent resulted in a
stipulation, 6 percent resulted in a default judgment.

TABLE 8: TIME TO RESOLUTION BASED UPON FINE LEVIED

Fine 0–1 year 1–2 years 2–3 years 3–4 years 4+ years TOTAL
0-$3,000 13 18 12 1 1 45
$3,000-$7,000 11 21 12 1 1 46
$7,000-$15,000 14 12 14 6 3 49
$15,000-$25,000 7 6 2 1 3 19
$25,000-$50,000 6 5 4 1 2 18
$50,000-$100,000 3 3 2 1 0 9
$100,000-$200,000 0 0 1 0 0 1
$200,000+ 1 1 1 0 0 3

TOTAL 55 66 48 11 10 190

Table 8 compares the time Although we would expect that


to ultimate disposition with case cases in which large fines were
severity. As there is no objective imposed would generally (though
definition of case “severity”, a not always) take longer to finalize
proxy was used—specifically, the than cases with comparatively
fine that the respondent eventu- small fines, this did not appear to
ally paid. be the case.

76 • BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS
To summarize the findings with 2. Pursuit of illegal reimburse- 4. Fines increased over time,
respect to matters pursued by the ment cases increased dramati- with smaller fines becoming
FPPC: cally over time, pursuit of less common and larger fines
1. Of the violations pursued by disclaimer violations gener- becoming more frequent.
the FPPC, roughly 46 percent ally decreased over time, and 5. Slightly less than one-third
were some type of reporting pursuit of reporting viola- of all matters were resolved
violation, 17 percent involved tions fluctuated over time. within one year, roughly
illegal reimbursement, 15 per- 3. Ten percent of all matters another third were resolved
cent involved conflicts of pursued ended with a fine in one to two years, one-
interest, 9 percent involved less than $1,000 while 30 quarter of all matters were
statements of economic inter- percent ended with a fine resolved in two to three
est, 8 percent involved between $1,000 and $3,000 years, and roughly 10 percent
disclaimer violation (i.e. dis- and another 23 percent of all matters took three or
claimers on mass mailings), ended with a fine between more years to conclude.
2 percent involved lobbying $3,000 and $7,000. 25 per- 6. Most of the cases with the
violations, 2 percent involved cent ended with a fine lowest level of fines ($1,000
personal use of campaign between $7,000 and $20,000 to $3,000) took between one
funds, and 2 percent involved while 7 percent resulted in and three years to settle, as
other infractions. fines between $20,000 and did most of the cases with
$50,000, and 4 percent fines between $3,000 and
resulted in fines in excess of $7,000.
$50,000.

Footnotes
1
See Todd Lochner and Bruce E. Cain, “Equity and Efficacy in the Enforcement of Campaign Finance Laws,” 77 Texas
Law Review 1891 (1999).
2
Id. at 1905-08.
3
Table 4 notes that 19 percent of matters were declined due to lack of jurisdiction whereas Table 1 notes that 21 percent of
all claims involved nonjurisdictional matters. The reason for this discrepancy is due to the fact that the universe of cases
for Table 4 was slightly larger than that of Table 1.

BIPARTISAN COMMISSION ON THE POLITICAL REFORM ACT OF 1974 • FINAL REPORT AND RECOMMENDATIONS • 77