BILL ANALYSIS Ó
SB 1442
Page 1
Date of Hearing: June 24, 2014
ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING
Paul Fong, Chair
SB 1442 (Lara, et al.) - As Amended: May 12, 2014
SENATE VOTE : 34-0
SUBJECT : Political Reform Act of 1974: campaign statements.
SUMMARY : Requires most state candidates and campaign
committees to file periodic campaign reports every calendar
quarter, instead of semi-annually. Requires the development of
a new Internet-based campaign filing and public display system.
Specifically, this bill :
1)Requires elected state officers, candidates for elective state
office, and recipient committees that are primarily formed to
support or oppose a candidate for elective state office or one
or more statewide ballot measures to file quarterly campaign
statements, instead of semi-annual campaign statements, in
accordance with the following schedule:
a) No later than April 7 for the period commencing January
1 and ending March 31;
b) No later than July 31 for the period commencing April 1
and ending June 30;
c) No later than October 7 for the period commencing July 1
and ending September 30; and,
d) No later than January 31 for the period commencing
October 1 and ending December 31.
2)Requires an independent expenditure committee or major donor
committee that is primarily formed to support or oppose a
candidate for elective state office or one or more statewide
ballot measures to file quarterly campaign statements,
pursuant to the schedule outlined above, unless the committee
has not made contributions or independent expenditures during
the reporting period. However, because independent
expenditure committees and major donor committees cannot, by
definition, be primarily formed to support or oppose a
candidate for elective state office or one or more statewide
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ballot measures, this appears to be a drafting error.
3)Eliminates requirements for committees to file certain special
reports, including supplemental preelection statements,
supplemental independent expenditure reports, odd-numbered
year reports, and state ballot measure contribution and
independent expenditure reports.
4)Requires contributions and independent expenditures of $1,000
or more that are made on election day to be reported within 24
hours of the time that the contribution or expenditure is
made.
5)Requires the Secretary of State (SOS), in consultation with
the Fair Political Practices Commission (FPPC), to develop a
statewide Internet-based system for the electronic filing and
public display of all records filed pursuant to the Political
Reform Act (PRA), including, but not limited to, statements of
organization, campaign statements, reports, registrations, and
certifications filed by or for any of the following:
a) An officeholder account or legal defense fund;
b) A committee that is primarily formed to support one or
more candidates for elective state office or one or more
statewide ballot measures, including, but not limited to,
major donor and independent expenditure committees;
c) A slate mailer organization;
d) A lobbyist, lobbying firm, or lobbyist employer; and,
e) A multipurpose organization that is required to file any
report pursuant to the PRA.
6)Requires the electronic filing and public display system
described above to provide both of the following:
a) Search capabilities that are data-driven and
user-friendly for members of the public; and,
b) Regular availability of all filings in a raw,
machine-readable data format that may be downloaded by
members of the public.
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7)States the intent of the Legislature to enact legislation that
would provide for monthly filing of campaign statements,
instead of the quarterly filing established by this bill,
after the SOS implements the electronic filing and public
display system required by this bill.
8)Makes conforming and technical changes.
EXISTING LAW :
1)Creates the FPPC, and makes it responsible for the impartial,
effective administration and implementation of the PRA.
2)Requires candidates, political committees, and slate mail
organizations to file specified periodic and activity-based
campaign finance reports, including semiannual statements,
pre-election statements, supplemental pre-election statements,
and late contribution/expenditure reports that include
specified campaign finance information.
3)Defines "late contribution" as either of the following:
a) A contribution, including a loan, that totals $1,000 or
more in the aggregate and that is made to or received by a
candidate, controlled committee, or committee primarily
formed or existing primarily to support or oppose a
candidate or measure within 90 days before the date of the
election at which candidate or measure is to be voted on;
or,
b) A contribution, including a loan, that totals $1,000 or
more in the aggregate and that is made to or received by a
political party committee within 90 days before a state
election.
4)Defines "late independent expenditure" as an independent
expenditure that totals $1,000 or more in the aggregate and
that is made for or against a specific candidate or measure
involved in an election within 90 days before the date of the
election.
5)Requires a "late contribution" or a "late independent
expenditure," as defined, to be publicly reported within 24
hours of the time that it is made or received, as specified.
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6)Requires the SOS, in consultation with the FPPC, to provide an
online and electronic filing system for use by specified state
candidates, committees, lobbyists, lobbying firms, and
lobbyist employers. This online reporting and disclosure
system is commonly referred to as the Cal-Access system.
Requires the SOS to make all the data filed using the system
available on the Internet for public viewing in an easily
understood format and to provide a means whereby entities that
are required to file statements or reports online or
electronically with the SOS pursuant to the PRA, can submit
those required filings free of charge.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
First year costs of $156,000 and annual ongoing costs of
$146,000 to the SOS (General Fund).
Annual costs of $147,000 to the FPPC (General Fund).
The SOS will require 2 personnel years (PYs) for Program
Technician III positions at a cost of $156,000 in the first year
and $146,000 ongoing resulting from increased workload
associated with the more frequent filing of the reports, as well
as compliance and fine enforcement.
The FPPC indicates the need for 1/2 PY for an Attorney I
position and 1 PY for a Political Reform Consultant to handle
new regulations, increased requests for advice, and for the
revisions of forms and campaign manuals.
Preliminary estimates for implementing an online filing system
for campaign disclosure reports is $10 million to $15 million.
COMMENTS :
1)Purpose of the Bill : According to the author:
This bill is a part of a package of bills that are
aimed at strengthening the relationship between the
citizens of California and their state government -
the California Accountability in Public Service Act
(CAPS Act). Recent events have raised significant
questions about the transparency and accountability of
rules and political practices in state government.
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This package of bills is the most significant change
to political practices in California in at least
twenty years. SB 1442 is a part of the CAPS Act and
replaces semi-annual reporting statements with
quarterly filing reports. This doubles the amount of
disclosure currently provided to the public. This
will streamline and consolidate the current reporting
process without losing transparency. Specifically, it
makes the following changes to reporting:
Replaces Semi-Annual Statements
with Quarterly Filing Reports - doubles the
amount of disclosure currently provided to
[the] public.
Reducing total amount of
statements to four, making compliance easier
- resulting in greater disclosure.
Reducing complexity while
increasing disclosure.
Keeps 24 Hour Reporting for
contributions over $1,000 in the 90-day
pre-election period, so large contributions
will continue to be disclosed immediately.
Keeps one pre-election report
closest to the election.
Transparency is one key to restoring public trust in
government. The current campaign filing system does
not provide enough timely disclosure of campaign
activity and the number of reports required makes it
more difficult for the public to access the
information. A new system based on quarterly filing
for state officials accomplishes increased disclosure
with fewer reporting statements.
Additionally, SB 1442 requires the Secretary of State
to consult with the FPPC to develop an online campaign
reporting system. An online system will improve the
ease of reporting, occurrence of reporting and allow
the public to easily access reports. A user-friendly,
online reporting system is an important component to
ensuring that state government is transparent and
accountable to the public. Once such a system is
developed, it is the intent to [move to] monthly
filing of campaign statements.
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1)Filing Schedules, State Committees, and Suggested Amendments :
Under existing law, candidates and committees generally are
required to file regular campaign disclosure reports
semi-annually. Candidates generally are required to file two
pre-election campaign statements for any election where they
will appear on the ballot, and certain non-candidate
committees similarly must file pre-election reports. When
candidates and committees are required to file these
pre-election reports, they generally must also file late
contribution reports, and late independent expenditure
reports, disclosing within 24 hours any contributions made or
received and independent expenditures made of $1,000 or more
in the last 90 days before the election (election cycle).
Candidates and committees can also be required to file
additional special campaign reports at other times of the
year, based on the particular campaign finance activity of the
candidate or committee.
This bill seeks to require elective state officers, candidates
for elective state office, and other state committees to file
quarterly reports, instead of semi-annual reports, while
reducing the number of pre-election reports to one such report
per election (the new quarterly reports would, in effect,
replace the first pre-election report that is required to be
filed under existing law). For many state candidates and
committees, this change will result in a small increase in the
number of reports that must be filed over a given period of
time. Some state candidates and committees will file fewer
campaign reports under this bill, however, due to the
elimination of certain special activity-based reports. Local
candidates and committees would continue to file semi-annual
reports and two pre-election reports per election.
Due to drafting errors, however, this bill does not currently
require all state committees to file quarterly reports.
Instead, as currently drafted, state general purpose
committees would continue to file semi-annual reports, but
would not be required to file any pre-election reports.
Committee staff recommends that this bill be amended to
correct those drafting errors to ensure that all state
committees are subject to quarterly reporting.
2)Periodic and Activity Based Reports and Suggested Amendments :
Under the PRA, there are two general types of reporting
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requirements. The first type of report is referred to as a
periodic report. Periodic reports must be filed according to
a specified time schedule for all similarly-situated
candidates and committees, regardless of the amount of
campaign activity during the period of time covered by the
report. These reports generally include all campaign activity
(contributions, loans, expenditures, etc.) that occurred over
a specified period of time. Semi-annual reports and
preelection reports are two examples of periodic reports that
are required under the PRA.
The second type of report that the PRA requires is an
activity-based report. An activity-based report is triggered
when a candidate or committee has campaign activity that meets
or exceeds a specific dollar threshold. Late contribution
reports and late independent expenditure reports are examples
of activity-based reports.
This bill seeks to eliminate a number of special activity-based
reports in an effort to streamline the campaign reporting
process. Among the reports that would be eliminated by this
bill are supplemental preelection statements, special
odd-numbered year reports, and supplemental independent
expenditure reports. Because this bill requires state
candidates and committees to file quarterly reports, and
because previous legislation has expanded the circumstances
under which 24 hour reporting is required for contributions
and independent expenditures, these special activity-based
reports largely can be eliminated without sacrificing
disclosure or transparency.
There is one type of report that this bill proposes to eliminate
(special state ballot measure contribution and expenditure
reports), however, that could result in a loss of timely
disclosure of campaign activity in connection with the
qualification of proposed state ballot measures. AB 1759
(Umberg), Chapter 438, Statutes of 2006, required specified
campaign committees to file an electronic report within 10
business days of making contributions or independent
expenditures of $5,000 or more to support or oppose the
qualification or passage of a single state ballot measure.
This reporting requirement was enacted, in part, in response
to a situation where a state general purpose committee made
close to $900,000 in contributions to two committees that were
seeking to qualify state ballot measures. Because of the
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timing of those contributions, the committee making the
contributions was not required to disclose its donors until
after those measures had qualified for the ballot.
Because the reporting requirements created by this bill may not
ensure the timely disclosure of information that would
otherwise be required to be reported pursuant to AB 1759,
committee staff recommends that this bill be amended so that
the special reporting requirements that were enacted by AB
1759 not be eliminated.
3)Cal-Access Status : Created in 1999, Cal-Access is a database
and filing system the SOS has used to make much of the
lobbying and campaign finance information available online at
no cost to users. In November 2011, the Cal-Access system
went down, and the system was unavailable for most of the
month of December. In response to a letter from the chair of
this committee, the SOS provided the following information
about the status of the Cal-Access system and the challenges
to replacing that system with a new (and more robust) campaign
and lobbying disclosure database:
Cal-Access is a suite of applications developed in 13
different programming languages which, until
[recently], ran the system on a server cluster and
associated components?that are more than 12 years old,
using an uncommon version of the Unix operating
system.?While the [SOS] has the funding to maintain
the existing hardware and software, finding parts and
qualified people to do the maintenance on such
outdated equipment has been increasingly difficult?.
The Cal-Access system went down November 30, was
restored December 7, went down December 9, and was
restored again on December 30. The causes of the
outages were layered and complex, and no quick fix was
available?.
The recovery efforts that [SOS] staff and contractors
pursued in December should stabilize Cal-Access and
enable it to continue running, but the system can
never be made stronger or patched with new features.
Any attempt to upgrade or modernize Cal-Access could
be as risky, time-consuming, and expensive as
developing and deploying a new system. Even the
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December work to restore Internet availability of
Cal-Access will not last forever. It is highly likely
that Cal-Access will require more robust servers in
the next three to four years simply to continue
providing access to the ever-growing volume of
information.
The cost of an entirely new system and the speed with
which it can be deployed will depend on many factors
and ultimately can only be borne out through the
state's IT procurement process, which history has
shown to be lengthy and expensive. Before the
Cal-Access outage began on November 30, my office was
looking at existing commercial off-the-shelf (COTS)
products, as well as systems used by other states to
prepare a feasibility study report (FSR) - the project
blueprint that is the required precursor for an IT
project and subject to approval by state control
agencies. Any consideration of an FSR, along with the
subsequent legislative and gubernatorial review of any
budget change proposal to conduct a procurement, would
take into account the replacement of Cal-Access in the
context of the two major IT procurements - VoteCal and
California Business Connect - that my office is
currently conducting.
4)Suggested Technical Amendments : In addition to the amendments
outlined above, committee staff recommends the following
technical amendments to this bill:
On page 4, line 34, strike out "or quarterly"
On page 4, line 36, strike out "84200.3, 84200.8," and insert:
84200.8
On page 11, line 2, after "(e)" insert:
of this section and subdivision (h) of Section 84605
On page 11, line 33, after "and" insert:
, except as provided by subdivision (j) of Section 84615,
On page 11, line 39, after the first "and" insert:
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, except as provided by subdivision (j) of Section 84615,
On page 12, lines 32 to 33, strike out "held on a date other
than the first Tuesday after the first Monday in June or
November of an even-numbered year"
On page 14, line 8, after "filed" insert:
with the Secretary of State
On page 14, strike out lines 29 through 39, inclusive, and on
page 15, strike out lines 1 through 30, inclusive.
5)Previous Legislation : SB 3 (Yee & Lieu) of 2013, would have
required the SOS, not later than December 31, 2014, to develop
a FSR to outline the technology requirements and the costs of
a new statewide electronic campaign filing and disclosure
system, among other provisions. SB 3 was vetoed by Governor
Brown. In his veto message, the Governor argued that other
provisions of the bill were "costly and unnecessary," but also
acknowledged that the current campaign filing and disclosure
system needed to be upgraded.
6)Political Reform Act of 1974 : California voters passed an
initiative, Proposition 9, in 1974 that created the FPPC and
codified significant restrictions and prohibitions on
candidates, officeholders and lobbyists. That initiative is
commonly known as the PRA. Amendments to the PRA that are not
submitted to the voters, such as those contained in this bill,
must further the purposes of the initiative and require a
two-thirds vote of both houses of the Legislature.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Common Cause
California Forward Action Fund
Opposition
None on file.
Analysis Prepared by : Ethan Jones / E. & R. / (916) 319-2094