BILL ANALYSIS                                                                                                                                                                                                    Ó






                           SENATE COMMITTEE ON ELECTIONS 
                            AND CONSTITUTIONAL AMENDMENTS
                             Senator Alex Padilla, Chair


          BILL NO:   AB 2320              HEARING DATE: 6/17/14
          AUTHOR:    FONG                 ANALYSIS BY:  Darren Chesin
          AMENDED:   AS INTRODUCED 
          FISCAL:    YES
          
                                        SUBJECT

           Political Reform Act of 1974: campaign funds: compensating  
          spouses
           
                                     DESCRIPTION  
          
           Existing law,  pursuant to the Political Reform Act (PRA),  
          prohibits a spouse or domestic partner of an elected officer or  
          a candidate for elective office from receiving compensation from  
          campaign funds held by a controlled committee of the elected  
          officer or candidate for elective office for services rendered  
          in connection with fundraising for the benefit of the elected  
          officer or candidate for elective office.

           Existing law  prohibits the use of campaign funds for an  
          expenditure that confers a substantial personal benefit on any  
          individual or individuals with authority to approve the  
          expenditure unless the expenditure is directly related to a  
          political, legislative, or governmental purpose.

           Existing law  prohibits the use of campaign funds to compensate a  
          candidate or elected officer for the performance of political,  
          legislative, or governmental activities, except for  
          reimbursement of out-of-pocket expenses incurred for political,  
          legislative, or governmental purposes.

           This bill  prohibits a spouse or domestic partner of an elected  
          officer or a candidate for elective office from receiving, in  
          exchange for services rendered, compensation from campaign funds  
          held by a controlled committee of the elected officer or  
          candidate for elective office.   

                                      BACKGROUND  
          
           Compensating Spouses  .  Candidates and officeholders both within  









          and outside of California often find themselves the subject of  
          scrutiny and controversy for paying a spouse or other family  
          member for professional services rendered to, and paid by, their  
          campaign committees.  

          Consequently, in 2009 the Legislature passed and the Governor  
          signed SB 739 (Strickland), Chapter 360, Statutes of 2009, which  
          prohibits a spouse or domestic partner of an elected officer or  
          a candidate for elective office from receiving compensation from  
          campaign funds held by a controlled committee of the elected  
          officer or candidate for services rendered in connection with  
          fundraising for the benefit of the officeholder or candidate.  

          However, ethical concerns continue to come up because existing  
          law allows a candidate or officeholder to pay a spouse for  
          services other than fundraising services that are rendered to,  
          and paid by, the campaign.  Under California's community  
          property laws, any income earned by a married person while  
          living with his or her spouse generally is considered to be  
          community property, which is jointly held by both spouses.  As a  
          result, when a candidate pays his or her spouse for professional  
          services rendered to the candidate's campaign committee, the  
          campaign committee's payment indirectly becomes the candidate's  
          personal property.  These arrangements are controversial because  
          they allow candidates to personally benefit from the  
          contributions that their campaigns seek and accept.  Under such  
          circumstances, a candidate or officeholder can personally  
          benefit financially from contributions received by his or her  
          campaign.  

          In fact, California law already recognizes that ethical concerns  
          may arise when a candidate can personally benefit financially  
          from contributions received by his or her campaign.  For that  
          reason, the PRA prohibits campaign funds from being used to  
          compensate a candidate or elected officer for the performance of  
          political, legislative, or governmental activities, except for  
          reimbursement of out-of-pocket expenses incurred for political,  
          legislative, or governmental purposes.  Along the same lines,  
          the PRA limits the amount of money that a candidate may loan to  
          his or her own campaign.  Those limits were put into place due  
          to concerns that money raised by a candidate subsequent to an  
          election to repay that candidate's personal loan to his or her  
          campaign committee would go into the candidate's own pocket,  
          indirectly resulting in campaign contributions becoming a  
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          candidate's personal funds.

          This bill expands on the prohibitions already in current law by  
          eliminating provisions of law that allow the spouse or domestic  
          partner of an officeholder or candidate to receive compensation  
          from campaign funds for services rendered for purposes other  
          than fundraising for the benefit of the elected officer or  
          candidate.

                                       COMMENTS  
          
           1.According to the Author  :  The PRA, among other provisions,  
            places restrictions on the use of campaign funds for state and  
            local candidates and elected officers.  For example, the PRA  
            prohibits the use of campaign funds for gifts or personal  
            purposes unless they are directly related to a political,  
            legislative, or governmental purpose.  Furthermore, the PRA  
            prohibits campaign funds from being used to compensate a  
            candidate or elected officer for the performance of political,  
            legislative, or governmental activities, except for  
            reimbursement of out-of-pocket expenses incurred for  
            political, legislative, or governmental purposes.  

          In 2009, the Legislature passed and the Governor signed SB 739  
            (Strickland), which prohibits a spouse or domestic partner of  
            an elected officer or a candidate from receiving compensation  
            from campaign funds for services rendered in connection with  
            fundraising for the benefit of the elected officer or  
            candidate.  

          Despite these restrictions, ethical concerns may continue to  
            arise, because existing law allows a candidate or officeholder  
            to pay a spouse for services other than fundraising services  
            that are rendered to, and paid by, the campaign.  Under such  
            circumstances, a candidate or officeholder can personally  
            benefit financially from contributions received by his or her  
            campaign.

          AB 2320 improves transparency and strengthens campaign integrity  
            by prohibiting a candidate or officeholder from paying his or  
            her spouse or domestic partner from campaign funds for  
            providing services to the campaign.

           2.Related Legislation  .  This bill is identical to SB 1402 (De  
          AB 2320 (FONG)                                                    
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            Leon) which passed out of this committee 5-0 and is now  
            pending in the Assembly.  

                                     PRIOR ACTION
           
          Assembly Elections and Redistricting Committee:  7-0
          Assembly Appropriations Committee: 17-0
          Assembly Floor:                         75-0
                                           
                                      POSITIONS  

          Sponsor: Author

           Support: None received

           Oppose:  None received



























          AB 2320 (FONG)                                                    
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