BILL ANALYSIS Ó SENATE COMMITTEE ON ELECTIONS AND CONSTITUTIONAL AMENDMENTS Senator Norma J. Torres, Chair BILL NO: AB 409 HEARING DATE: 8/20/13 AUTHOR: QUIRK-SILVA ANALYSIS BY: Darren Chesin AMENDED: 8/13/13 FISCAL: YES SUBJECT Statements of Economic Interest: online filing DESCRIPTION Existing law requires that candidates for, and current holders of, specified elected or appointed state and local offices and designated employees of state and local agencies file Statements of Economic Interests (SEIs) disclosing their financial interests, including investments, real property interests, and income. Existing law authorizes an agency to permit the electronic filing of a SEI, including amendments, in accordance with regulations adopted by the Fair Political Practices Commission (FPPC). Existing law permits the FPPC to adopt regulations to require an agency to redact information on a SEI prior to posting it on the Internet. This bill would permit the FPPC to develop and operate its own online system for filing SEIs which must enable a filer to comply with all relevant requirements and must include, but not be limited to, both of the following: A means or method whereby a filer may electronically file, free of charge, a SEI submitted under penalty of perjury in conformity with existing law. Security safeguards that include firewalls, data encryption, secure authentication, and all necessary hardware and software and industry best practices to ensure that the security and integrity of the data and information contained in each SEI are not jeopardized or compromised. This bill provides that such a system must issue to a person who electronically files his or her SEI, or an amendment thereto, an electronic confirmation that notifies the filer that his or her SEI or amendment was received. The confirmation must include the date and the time that the SEI or amendment was received and the method by which the filer may view and print the data received. A paper copy retained by the filer of a SEI or amendment that was electronically filed and the confirmation issued shall create a rebuttable presumption that the filer filed his or her SEI or amendment on time.This bill provides that if the FPPC develops an online SEI filing system it must provide for all of the following: Conduct public hearings to receive input on the implementation of that system, maintain ongoing coordination among affected state and local agencies as necessary, and develop training and assistance programs for state and local filing officers and filers regarding use of the online system for filing. Make all the data filed on the system available on the FPPC's Internet Web site in an easily understood format that provides the greatest public access, and provide assistance to those seeking public access to the information. Redact private information, including, but not limited to, the signatures of filers, from the data that is made available on the Internet. Develop and implement a policy regarding redaction of private information for the purposes of this paragraph and conduct one or more public hearings to receive input on the development of that policy.Specify which categories filers may file SEIs electronically through the online system. This bill provides that if the FPPC specifies that designated persons may file their SEIs electronically through their online system, the FPPC must assume specified duties of those filers' filing officer. This bill would take effect immediately as an urgency statute. AB 409 (QUIRK-SILVA) Page 2 BACKGROUND Statements of Economic Interests . As part of the PRA's comprehensive scheme to prevent conflicts of interest by state and local public officials, existing law identifies certain elected and other high-level state and local officials who must file SEIs. Similarly, candidates for those positions must also file SEIs. Other state and local public officials and employees are required to file SEIs if the position they hold is designated in an agency's conflict of interest code. A position is designated in an agency's conflict of interest code when the position entails the making or participation in the making of governmental decisions that may foreseeably have a material financial effect on the decision maker's financial interests. The information that must be disclosed on an SEI, and the location at which an SEI is filed, varies depending on the position held by the individual who is required to file an SEI. Although there are some exceptions, individuals who are required to file an SEI typically must file that document with the agency of which they are an elected official or by which they are employed. In some cases, original SEIs or copies thereof are filed with the FPPC. The purpose of the SEI is two-fold: It provides necessary information to the public about a public official's personal financial interests so there is assurance that officials are making decisions that do not enhance their personal finances; and, It serves as a reminder to the public official of potential conflicts of interests so the official can recuse him or herself from making or participating in governmental decisions that are deemed conflicts. In short, the Form 700 provides transparency and ensures accountability. FPPC Role . The FPPC is the agency charged with administration and enforcement of the SEI reporting requirements for all state and local agencies and filers. Currently, filers at various levels of state and local government submit an estimated 500,000 forms annually, which are funneled through an array of local AB 409 (QUIRK-SILVA) Page 3 agencies and certified private filers. No central repository of SEI filings currently exists, and with just a fraction of the forms filed electronically, a searchable tool to illuminate activities on a statewide level is nearly impossible. The FPPC is required to accept electronic copies of SEIs forwarded by agencies that are operating FPPC approved electronic filing systems. Because the FPPC has no system in place to receive the statements, the electronically filed SEIs have to be manually processed under their current paper filing system. Additionally, SEIs are posted on the FPPC's website for all legislators, judges, FPPC Commissioners, county boards of supervisors, mayors and city councilmembers. Prior to posting on the FPPC website, the forms have to be manually scanned, and certain information (such as addresses and signatures) has to be manually redacted from the forms. According to the FPPC, this is a very labor intensive and costly program. With interest in government transparency increasing rapidly, the number of requests by the public to view SEI filings continues to escalate each year. The FPPC is mandated to provide access to SEIs no later than the second business day after receiving the forms. When the FPPC receives a request for SEIs, staff must manually retrieve the forms from their file room, make copies and either provide hard copies or email the copies to the requestor. COMMENTS 1.According to the Author : Currently state law requires all state legislators, judges, Fair Political Practices Commissioners, county boards of supervisors, mayors, and city councilmembers to file a SEI which is filed with the FPPC by filling out Form 700. The intent for this filing is to create transparency of economic interest that public officials and other filers may have to ensure decision making is not made to enhance their own personal finances. On May 30th, 2013 the FPPC released a Request for Information (RFI) in regards to Form 700s electronic filing. The document gives explicit details to the needs for the FPPC to advance with current technology and how it would create effective and AB 409 (QUIRK-SILVA) Page 4 sufficient transparency to the general public. According to the document the FPPC manually processes all Form 700s that requires an approximately 8 steps depending on the form that the documents are received. In today's society many of these steps are outdated and very time consuming. In recent years the FPPC has moved towards an online approach of the availability of Form 700s. One proactive approach that they have taken is scanning Form 700s and placing the forms on the Internet for the public to access. In 2011 the FPPC changed its policy for California judges to have the ability to file electronically which now provides Form 700 information in a digitized electronic user friendly form for this demographic of filers. Another approach that they have taken is through the pilot program which allows election filings for state legislators to be done electronically which allow filings to be submitted and certified. Such proactive steps to move to electronic filing aligns with a goal of the FPPC to lessen the amount of paper that is used for filings. Lastly, the FPPC has stated on several occasions that electronic filing would increase the amount of transparency available to the public as it is the duty of the FPPC to provide transparency to the general public. It is suggested in the RFI report that moving from paper filing to electronic filing will be cost saving to the FPPC and other local agencies that file and store Form 700s. It is stated that agencies will save on personnel cost due to an expected decrease in Form 700 requests, manual processing, and paper cost. Other potential cost savings may occur through tracking fines and e-commerce. The FPPC receives approximately 500,000 statements that are filed throughout the year during filing periods that are manually processed by staff. According to the recent FPPC RFI there are multiple processing steps that are timely which result in extra personnel cost. Moreover, extra steps in manual processing are at times escalated due to filing deadlines that are required by law. Additionally, it is the obligation of the FPPC to provide all requested reports within two business days of its requested date by law which has a timely process as well due to filing and storage of documents. Recently the amount of Form 700s AB 409 (QUIRK-SILVA) Page 5 has increased over the years with 2012 having over 5,500 requests. It has been found to be common that requesters will ask for several copies of forms at a time including copies of several years back. In 2013 request from state and local filing officials increased as well from agencies that had forgotten to retain Form 700s for the public to view which is current law. 2.Permissiveness . This bill permits the FPPC to develop an online system for filing SEIs. Individual SEI filers would be permitted, not required, to use this online system. Filers would continue to have the option of filing a hard copy SEI. 3.Prior Related Legislation . AB 2062 (Davis), Chapter 500 of 2012 established the process whereby local agencies may establish systems for the electronic filing of SEIs. PRIOR ACTION This bill was completely rewritten in the Senate therefore the Assembly votes are irrelevant to the current amended version. POSITIONS Sponsor: Fair Political Practices Commission Support: None received Oppose: None received AB 409 (QUIRK-SILVA) Page 6