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.
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                                      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  
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          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  
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            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  
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            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












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