Amended in Assembly August 21, 2013

Amended in Assembly August 7, 2013

Amended in Senate May 24, 2013

Amended in Senate April 18, 2013

Senate BillNo. 594


Introduced by Senator Hill

February 22, 2013


An act to add Sectionsbegin delete 8314.1, 8314.2, andend delete 54964.5begin insert and 54964.6end insert to the Government Code, relating to campaign activity.

LEGISLATIVE COUNSEL’S DIGEST

SB 594, as amended, Hill. Use of public resources.

(1) Existing law prohibits the use of public funds for campaign activities.

This bill would prohibit a nonprofit organizationbegin insert or an officer, employee, or agent of a nonprofit organizationend insert from using, or permitting another to use, public resources, including but not limitedbegin delete toend deletebegin insert to,end insert public resources received in exchange for consideration, from a local agency for campaignbegin delete activities. This bill would also prohibit an officer, employee, or agent of a nonprofit organization from expending, or authorizing the expenditure of, public resources from a local agency to support or oppose a ballot measure or candidate.end deletebegin insert activity, as defined and not authorized by law.end insert This bill would define, among other terms, “public resources” to include, but not be limited to, cash, lands, buildings, funds, andbegin delete facilities,end deletebegin insert facilities owned by a local agency,end insert and “nonprofit organization” to mean an entity incorporated under thebegin delete Californiaend delete Nonprofit Corporation Law or a nonprofit organization that qualifies for exempt status under the federal Internal Revenue Code of 1986, except as specified. This bill would authorize a civil cause of action for a violation of these prohibitions and damages that include, but are not limited to, 3 times the value of the unlawful use of the public resources. This bill would authorize the Attorney General, a district attorney, and a city attorney of a city having a population in excess of 750,000 to seekbegin delete theend deletebegin insert theseend insert civil remedies.

(2) Existing law requires qualifying individuals and political organizations to report specified information, including, but not limited to, political contributions, in statements filed with the Fair Political Practices Commission.

This bill would require an auditable nonprofit organization that engages in campaign activity to deposit into a separate bank account all “specific source or sources of funds” it receives and to pay for all campaign activity from that separate bank account. This bill would define, among other terms, “auditable nonprofit organization” to mean a nonprofit organization for which public resources from one or more local agencies account for more than 20% of the organization’s annual gross revenue, as specified, and “specific source or sources of funds” to mean any funds received by the auditable nonprofit organization that have been designated for campaign activity use or any other funds received by the nonprofit organization, including funds received in exchange for consideration, as specified.

This bill would further require an auditable nonprofit organization that engages in campaign activity to periodically disclose to the Attorney General, and post on its Internet Web site in a certain manner, the identity and amount of each specific source or sources of funds it receives for campaign activity, a description of the campaign activity, and the identity and amount of payments the organization makes from the required separate bank account, as specified. This bill would require the Attorney General tobegin delete regularlyend deletebegin insert bienniallyend insert audit each auditable nonprofit organization, issue a written audit report, and transmit the report to the district attorney for the county in which the auditable nonprofit organization is domiciled. This bill wouldbegin delete requireend deletebegin insert authorizeend insert the Attorney General to assess a monetarybegin insert civilend insert penaltybegin insert of up to $10,000end insert against an auditable nonprofit organization forbegin delete aend deletebegin insert eachend insert violation of these disclosure requirements, as specified.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin delete
P3    1

SECTION 1.  

Section 8314.1 is added to the Government Code,
2to read:

3

8314.1.  

(a) It is unlawful for any nonprofit organization to use
4or permit others to use public resources, including, but not limited
5to, public resources received in exchange for consideration, from
6any local agency for any campaign activity not authorized by law.

7(b) For purposes of this section:

8(1) “Campaign activity” means a payment that is used for
9communications that expressly advocates for the approval or
10rejection of a clearly identified ballot measure or the election or
11defeat of a clearly identified candidate by the voters, or constitutes
12a campaign contribution.

13(2) “Local agency” shall include those entities listed in Section
1454951 and a public entity created pursuant to the Joint Exercise
15of Powers Act (Chapter 5 (commencing with Section 6500) of
16Division 7 of Title 1) by one or more entities listed in Section
1754951, but “local agency” shall not include a county superintendent
18of schools, a school district, or a community college district.

19(3) “Nonprofit organization” means an entity incorporated under
20the Nonprofit Corporation Law (Division 2 (commencing with
21Section 5000) of Title 1 of the Corporations Code) or a nonprofit
22organization that qualifies for exempt status under Section 115 or
23501(c), excluding Section 501(c)(3), of the Internal Revenue Code
24of 1986.

25(4) “Public resources” means any property or asset owned by
26a local agency, including, but not limited to, cash, land, buildings,
27facilities, funds, equipment, supplies, telephones, computers,
28vehicles, travel, and local government compensated time that is
29provided to a nonprofit organization.

30(5) “Use” means a use of public resources from one or more
31local agencies that is substantial enough to result in a gain or
32advantage to the user or a loss to any local agency for which any
33monetary value may be estimated.

34(c) This section does not prohibit the use of public resources
35for providing information to the public about the possible effects
36of any bond issuance or other ballot measure on state activities,
37operations, or policies, provided that the informational activities
38are otherwise authorized by the California Constitution or the laws
39of this state, and the information provided constitutes a fair and
40impartial presentation of relevant facts to aid the electorate in
P4    1reaching an informed judgment regarding the bond issue or ballot
2measure.

3(d) (1) Any nonprofit organization that intentionally or
4negligently violates this section is liable for a civil penalty not to
5exceed one thousand dollars ($1,000) for each day on which a
6violation occurs, plus three times the value of the unlawful use of
7public resources. The penalty shall be assessed and recovered in
8a civil action brought in the name of the people of the State of
9California by the Attorney General or by any district attorney or
10any city attorney of a city having a population in excess of 750,000.
11If two or more nonprofit organizations are responsible for a
12violation, they shall be jointly and severally liable for the penalty.
13If the action is brought by the Attorney General, the moneys
14recovered shall be paid into the General Fund. If the action is
15brought by a district attorney, the moneys recovered shall be paid
16to the treasurer of the county in which the judgment was entered.
17If the action is brought by a city attorney, the moneys recovered
18shall be paid to the treasury of that city.

19(2) A civil action alleging a violation of this section shall not
20be commenced more than four years after the date of the alleged
21violation.

22

SEC. 2.  

Section 8314.2 is added to the Government Code, to
23read:

24

8314.2.  

(a) An auditable nonprofit organization that engages
25in campaign activity, either directly or through the control of
26another entity, shall deposit into a separate bank account all specific
27source or sources of funds received and shall pay for all campaign
28activity from that separate bank account.

29(b) For purposes of this section:

30(1) “Auditable nonprofit organization” means a nonprofit
31organization for which public resources from one or more local
32agencies account for more than 20 percent of the organization’s
33annual gross revenue in the current fiscal year or either of the
34previous two fiscal years, including gross revenue from public
35resources received in exchange for consideration.

36(2) “Specific source or sources of funds” shall mean any funds
37received by the auditable nonprofit organization that have been
38designated for campaign activity use or any other funds received
39by the nonprofit organization, including, but not limited to, funds
P5    1received in exchange for consideration, that are used, in whole or
2in part, within a two-year period from receipt for campaign activity.

3(3) Unless otherwise defined herein, the definitions found in
4subdivision (b) of Section 8314.1 shall apply to this section.

5(c) Fifteen days after the end of each quarter, beginning with
6the first quarter of each odd year through the fourth quarter of the
7following even year, an auditable nonprofit organization that
8engages in campaign activity, either directly or through the control
9of another entity, at any point during that quarter shall disclose the
10following information for that quarter:

11(1) The name and amount of each specific source or sources of
12funds used for campaign activity, provided that the aggregate
13amount of funds received since January 1 of the most recent odd
14year by an auditable nonprofit corporation from that specific source
15or sources of funds is at least two hundred fifty dollars ($250).

16(2) The name of the payee and amount of all payments
17aggregating two hundred fifty dollars ($250) or more made from
18the single bank account required under subdivision (a).

19(3) A description of each campaign activity.

20(d) Fifteen days after the end of each even year, an auditable
21nonprofit organization that engages in campaign activity, either
22directly or through the control of another entity, at any point during
23that even year or the prior odd year shall disclose all the following
24information for those two calendar years:

25(1) The name and amount of any specific source or sources of
26funds used for campaign activity, provided that the aggregate
27amount of funds received since January 1 of the most recent odd
28year by an auditable nonprofit corporation from that specific source
29or sources of funds is at least two hundred fifty dollars ($250).

30(2) The name of the payee and amount of all payments made
31from the single bank account required under subdivision (a).

32(3) A description of each campaign activity.

33(e) Each auditable nonprofit organization that engages in
34campaign activity, either directly or through the control of another
35entity, shall display on its Internet Web site the information it is
36required to disclose under this section. The information shall be
37clearly described and identified on a separate Internet Web page,
38which shall be linked from the home page of the organization’s
39Internet Web site. The link to this Internet Web page from the
40home page shall be as visible as all similar links.

P6    1(f) The Attorney General shall conduct a biennial audit of each
2auditable nonprofit organization. Each auditable nonprofit
3organization shall provide records to the Attorney General that
4substantiate the information required to be disclosed by this section.
5The audit shall determine whether the organization complied with
6the requirements of Sections 8314.1 and this section. The Attorney
7General shall issue a written audit report and transmit it to the
8district attorney for the county in which the auditable nonprofit
9organization is domiciled.

10(g) If the audit determines that an auditable nonprofit
11organization has violated Section 8314.1 or this section, the
12Attorney General may impose a fine upon the auditable nonprofit
13organization in an amount up to ten thousand dollars($10,000) for
14each violation.

end delete
15

begin deleteSEC. 3.end delete
16begin insertSECTION 1.end insert  

Section 54964.5 is added to the Government Code,
17to read:

18

54964.5.  

(a) begin deleteAn end deletebegin insertA nonprofit organization or an end insertofficer,
19employee, or agent of a nonprofit organizationbegin delete may not expend or
20authorize the expenditure of any public resources from any local
21agency to support or oppose the approval or rejection of a ballot
22measure or the election or defeat of a candidate by the voters.end delete
begin insert shall
23not use, or permit another to use, public resources, including, but
24not limited to, public resources received by the nonprofit
25organization in exchange for consideration, from any local agency
26for any campaign activity not authorized by law.end insert

27(b) As used in this section, the following terms shall have the
28following meanings:

29(1) “Ballot measure” means a state or local initiative,
30referendum, or recall measure certified to appear on a regular or
31special electionbegin delete ballot.end deletebegin insert ballot or other measure submitted to the
32voters by the Legislature or the governing body of a local agency
33at a regular or special election.end insert

begin insert

34(2) “Campaign activity” means a payment that is used for
35communications that expressly advocate for or against the
36qualification of a clearly identified measure, the approval or
37rejection of a clearly identified ballot measure, or the election or
38defeat of a clearly identified candidate by the voters, or that
39constitutes a campaign contribution.

end insert
begin insert

P7    1(A) For the purposes of this section, “campaign activity” does
2not include the costs of an endorsement of a clearly identified
3ballot measure or candidate by a nonprofit organization through
4the adoption of a resolution supporting or opposing the ballot
5measure or candidate, including, but not limited to, posting the
6endorsement on the nonprofit organization’s Internet Web site,
7communicating the endorsement to members of the nonprofit
8organization, or issuing a press statement.

end insert
begin insert

9(B) For the purposes of this section, “campaign activity” does
10not include incidental or minimal inadvertent use of public
11resources.

end insert
begin insert

12(C) For purposes of this section, “campaign activity” does not
13include incidental costs related to the establishment or
14administration of a sponsored committee as defined in Section
1582048.7, provided public resources are not used to pay for that
16cost. A reasonable accounting method may be used to determine
17the use of nonpublic resources to pay for that cost. “Establishment
18and administration” means the cost of office space, telephones,
19salaries, utilities, supplies, legal and accounting fees, and other
20expenses incurred in establishing and operating a sponsored
21committee.

end insert
begin delete

22(2)

end delete

23begin insert(3)end insert “Candidate” means an individual who has qualified to have
24his or her name listed on the ballot, or who has qualified to have
25write-in votes on his or her behalf counted by elections officials,
26for nomination or election to an elective office at any regular or
27special primary or general election, and includes any officeholder
28who is the subject of a recall election.

begin delete

29(3)

end delete

30begin insert(4)end insert “Expenditure” means a paymentbegin delete that isend delete used for
31communications that expressly advocate the approval or rejection
32of a clearly identified ballot measure, or the election or defeat of
33a clearly identified candidate, by the voters or that constitutes a
34campaign contribution.

begin delete

35(4)

end delete

36begin insert(5)end insert “Local agency” shall include those entities listed in Section
3754951 and a public entity created pursuant to the Joint Exercise
38of Powers Act (Chapter 5 (commencing with Section 6500) of
39Division 7 of Title 1) by one or more entities listed in Section begin delete4054951, but “local agency” shall not include a county superintendent
P8    1of schools, an elementary school, high school, or unified school
2district, or a community college districtend delete
begin insert 54951end insert.

begin delete

3(5)

end delete

4begin insert(6)end insert “Nonprofit organization” means any entity incorporated
5under the Nonprofit Corporation Law (Division 2 (commencing
6with Section 5000) of Title 1 of the Corporations Code) or a
7nonprofit organization that qualifies for exempt status under
8Section 115 orbegin delete 501(c), excludingend deletebegin insert 501(c) of the Internal Revenue
9Codeend insert
begin insert. “Nonprofit organization” shall not include a nonprofit
10organization exempt under Sectionend insert
begin delete 501(c)(3),end deletebegin insert 501(c)(3)end insert of the
11Internal Revenue Codebegin delete of 1986end delete.

begin delete

12(6)

end delete

13begin insert(7)end insert “Public resources” means any property or asset owned by
14begin delete anyend deletebegin insert aend insert local agency, including, but not limited to, cash, land,
15buildings, facilities, funds, equipment, supplies, telephones,
16computers, vehicles, travel, and local government compensated
17time that is provided to a nonprofit organization.

begin insert

18(8) “Use” means a use of public resources from one or more
19local agencies that is substantial enough to result in a gain or
20advantage to the user or a loss to any local agency for which any
21monetary value may be estimated.

end insert

22(c) This section does not prohibit the use of public resources
23for providing information to the public about the possible effects
24of anybegin delete bond issuance or otherend delete ballot measure onbegin delete stateend deletebegin insert theend insert activities,
25operations, orbegin delete policies,end deletebegin insert policies of the state or a local agency,end insert
26 provided that the informational activitiesbegin delete are otherwise authorized
27by the California Constitution or the laws of this state, and the
28information provided constitutes a fair and impartial presentation
29of relevant facts to aid the electorate in reaching an informed
30judgment regarding the bond issue or ballot measure.end delete
begin insert meet both
31of the following conditions:end insert

begin insert

32(1) The informational activities are not otherwise prohibited
33by the California Constitution or the laws of this state.

end insert
begin insert

34(2) The information provided constitutes an accurate, fair, and
35impartial presentation of relevant facts to aid the electorate in
36reaching an informed judgment regarding the ballot measure.

end insert

37(d) (1) Any person who intentionally or negligently violates
38this section is liable for a civil penalty not to exceed one thousand
39dollars ($1,000) for each day on which a violation occurs, plus
40three times the value of the unlawful use of public resources. The
P9    1penalty shall be assessed and recovered in a civil action brought
2in the name of the people of the State of California by the Attorney
3General or by any district attorney or any city attorney of a city
4having a population in excess of 750,000. If two or more persons
5 are responsible for any violation, they shall be jointly and severally
6liable for the penalty. If the action is brought by the Attorney
7General, the moneys recovered shall be paid into the General Fund.
8If the action is brought by a district attorney, the moneys recovered
9shall be paid to the treasurer of the county in which the judgment
10was entered. If the action is brought by a city attorney, the moneys
11recovered shall be paid to the treasury of that city.

12(2) A civil action alleging a violation of this section shall not
13be commenced more than four years after the date of the alleged
14violation.

15begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 54964.6 is added to the end insertbegin insertGovernment Codeend insertbegin insert, to
16read:end insert

begin insert
17

begin insert54964.6.end insert  

(a) An auditable nonprofit organization that engages
18in campaign activity, either directly or through the control of
19another entity, shall deposit into a separate bank account all
20specific source or sources of funds received and shall pay for all
21campaign activity from that separate bank account.

22(b) As used in this section, the following terms shall have the
23following meanings:

24(1) “Auditable nonprofit organization” means a nonprofit
25organization for which public resources from one or more local
26agencies account for more than 20 percent of the nonprofit
27organization’s annual gross revenue in the current fiscal year or
28either of the previous two fiscal years, including gross revenue
29from public resources received by the nonprofit organization in
30exchange for consideration. An auditable nonprofit organization
31shall not include a nonprofit organization that sponsors a
32committee, as defined in Section 82048.7 of the Government Code,
33if the nonprofit organization reports all contributions it received
34and all expenditures it made on campaign disclosure statements
35filed by the sponsored committee and the nonprofit organization
36makes no payments from its general treasury to the sponsored
37committee other than payments for contributions by donors
38earmarked for the sponsored committee. For purposes of this
39subdivision, “earmarked” means a payment by a donor to a
40nonprofit organization subject to a condition, agreement, or
P10   1understanding that the payment will be used for making
2contributions or independent expenditures by the sponsored
3committee of the sponsoring nonprofit organization.

4(2) “Specific source or sources of funds” shall mean any funds
5received by the auditable nonprofit organization that have been
6designated for campaign activity use or any other funds received
7by the nonprofit organization, including, but not limited to, funds
8received by the nonprofit in exchange for consideration, that are
9used, in whole or in part, within a two-year period from receipt
10for campaign activity.

11(3) Unless otherwise defined herein, the definitions found in
12subdivision (b) of Section 54964.5 shall apply to this section.

13(c) Fifteen days after the end of each quarter, an auditable
14nonprofit organization that engages in campaign activity, either
15directly or through the control of another entity, at any point during
16that quarter shall disclose the following information for that
17quarter:

18(1) The name and amount of each specific source or sources of
19funds used for campaign activity, provided that the aggregate
20amount of funds received since January 1 of the most recent odd
21year by an auditable nonprofit organization from that specific
22source or sources of funds is at least two hundred fifty dollars
23($250).

24(2) The name of the payee and amount of all payments
25aggregating two hundred fifty dollars ($250) or more made from
26the single bank account required under subdivision (a).

27(3) A description of each campaign activity.

28(d) Fifteen days after the end of each even year, an auditable
29nonprofit organization that engages in campaign activity, either
30directly or through the control of another entity, at any point during
31that even year or the prior odd year shall disclose all the following
32information for those two calendar years:

33(1) The name and amount of any specific source or sources of
34funds used for campaign activity, provided that the aggregate
35amount of funds received since January 1 of the most recent odd
36year by an auditable nonprofit organization from that specific
37source or sources of funds is at least two hundred fifty dollars
38($250).

39(2) The name of the payee and amount of all payments made
40from the single bank account required under subdivision (a).

P11   1(3) A description of each campaign activity.

2(e) Each auditable nonprofit organization that engages in
3campaign activity, either directly or through the control of another
4entity, shall display on its Internet Web site the information it is
5required to disclose under this section. The information shall be
6clearly described and identified on a separate Internet Web page,
7which shall be linked from the homepage of the organization’s
8Internet Web site. The link to this Internet Web page from the
9homepage shall be as visible as all similar links.

10(f) The Attorney General shall conduct a biennial audit of each
11auditable nonprofit organization that engages in campaign activity.
12Each auditable nonprofit organization shall provide records to
13the Attorney General that substantiate the information required
14to be disclosed by this section. The Attorney General shall
15determine whether the organization complied with the requirements
16of Section 54964.5 and this section, issue a written audit report,
17and transmit the written audit report to the district attorney for
18the county in which the auditable nonprofit organization is
19domiciled.

20(g) If the Attorney General determines at the conclusion of an
21audit that an auditable nonprofit organization has violated Section
2254964.5 or this section, the Attorney General may impose a civil
23fine upon the auditable nonprofit organization in an amount up
24to ten thousand dollars ($10,000) for each violation.

end insert


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