BILL NUMBER: AB 2318	CHAPTERED
	BILL TEXT

	CHAPTER  825
	FILED WITH SECRETARY OF STATE  SEPTEMBER 29, 2016
	APPROVED BY GOVERNOR  SEPTEMBER 29, 2016
	PASSED THE SENATE  AUGUST 29, 2016
	PASSED THE ASSEMBLY  AUGUST 31, 2016
	AMENDED IN SENATE  AUGUST 15, 2016
	AMENDED IN ASSEMBLY  MAY 18, 2016
	AMENDED IN ASSEMBLY  MARCH 28, 2016

INTRODUCED BY   Assembly Member Low

                        FEBRUARY 18, 2016

   An act to amend Section 54964.5 of, to add Section 84222.5 to, and
to repeal Section 54964.6 of, the Government Code, relating to
nonprofit organizations.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 2318, Low. Nonprofit organizations: use of public resources.
   (1) Existing law prohibits a nonprofit organization or an officer,
employee, or agent of a nonprofit organization from using, or
permitting another to use, public resources received from a local
agency for any campaign activity not authorized by law. Existing law
authorizes the Attorney General, any district attorney, or any city
attorney of a city with a population over 750,000 to bring a civil
action to recover a civil penalty against any person who
intentionally or negligently violates that prohibition.
   This bill would clarify that the prohibition applies to making
contributions or expenditures not authorized by law, and would
specify certain expenditures authorized by law that are not subject
to the prohibition.
   (2) Existing law requires a reporting nonprofit organization that
engages in campaign activity to deposit into a separate bank account
all specific sources of funds it receives and to pay for all campaign
activity from that separate bank account. Existing law defines
"reporting nonprofit organization" as a nonprofit organization for
which public resources from one or more local agencies account for
more than 20% of the nonprofit organization's annual gross revenue,
as specified.
   Existing law requires a reporting nonprofit organization that
engages in campaign activity of specified amounts or more to
periodically disclose to the Franchise Tax Board, 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. Existing law authorizes, and in some instances
requires, the Franchise Tax Board to audit a reporting nonprofit
organization, requires the board to issue a written audit report, and
requires the board to transmit the audit report to the Attorney
General and the district attorney for the county in which the
reporting nonprofit organization is domiciled. Existing law
authorizes the Attorney General or the district attorney for the
county in which the reporting nonprofit organization is domiciled to
impose a monetary civil penalty of up to $10,000 against a reporting
nonprofit organization for misusing public resources received from a
local agency, as described in (1), for failing to maintain the
separate bank account, or for not complying with the disclosure
requirements described above.
   This bill would recast and relocate those provisions within the
Political Reform Act of 1974, thereby making the Fair Political
Practices Commission responsible for their administration and
enforcement, except as specified. The bill would change the term
"reporting nonprofit organization" to "publicly funded nonprofit
organization," defined as a nonprofit organization for which public
resources from one or more local agencies account for more than 20%
of the nonprofit organization's annual gross revenue, as specified.
The bill would require certain publicly funded nonprofit
organizations to register as recipient committees and file the
campaign statements that those committees are required to file under
the act. This bill would shift the Franchise Tax Board's authority
and duties under these provisions to the Commission and would
authorize the Commission, in addition to the Attorney General or the
district attorney, to impose the monetary civil penalty of up to
$10,000 against a publicly funded nonprofit organization.
   The Political Reform Act of 1974 makes a willful violation of its
provisions a misdemeanor. By expanding the scope of an existing
crime, this bill would impose a state-mandated local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   The Political Reform Act of 1974, an initiative measure, provides
that the Legislature may amend the act to further the act's purposes
upon a 2/3 vote of each house and compliance with specified
procedural requirements.
   This bill would declare that it furthers the purposes of the act.




THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 54964.5 of the Government Code is amended to
read:
   54964.5.  (a) A nonprofit organization or an officer, employee, or
agent of a nonprofit organization shall not use, or permit another
to use, public resources received from any local agency to make a
contribution or expenditure not authorized by law.
   (b) As used in this section and Section 84222.5, the following
terms have the following meanings:
   (1) "Local agency" has the same meaning as that term is defined in
paragraph (4) of subdivision (b) of Section 54964 and shall also
include a public entity created pursuant to the Joint Exercise of
Powers Act (Chapter 5 (commencing with Section 6500) of Division 7 of
Title 1) by one or more entities described in Section 54964.
   (2) "Nonprofit organization" means an entity incorporated under
the Nonprofit Corporation Law (Division 2 (commencing with Section
5000) of Title 1 of the Corporations Code) or a nonprofit
organization that qualifies for tax-exempt status under Section 115
or 501(c) of the federal Internal Revenue Code. "Nonprofit
organization" does not include a nonprofit organization that
qualifies for tax-exempt status under Section 501(c)(3) of the
federal Internal Revenue Code.
   (3) "Public resources" means either of the following:
   (A) Any property or asset owned by a local agency, including, but
not limited to, cash, land, buildings, facilities, funds, equipment,
supplies, telephones, computers, vehicles, travel, and local
government compensated work time that is provided to a nonprofit
organization, except funds received in exchange for consideration for
goods or services.
   (B) Funds received by a nonprofit organization that have been
generated from any activities related to conduit bond financing by
those entities subject to the conduit financing and transparency and
accountability provisions of Chapter 10.7 (commencing with Section
5870) of Division 6 of Title 1, whether or not those funds are
received by the nonprofit organization in exchange for consideration
for goods or services.
   (4) "Publicly funded nonprofit organization" means a nonprofit
organization for which public resources from one or more local
agencies account for more than 20 percent of the nonprofit
organization's annual gross revenue in the current fiscal year or
either of the previous two fiscal years.
   (5) "Use" means a use of public resources from one or more local
agencies that is substantial enough to result in a gain or advantage
to the user or a loss to a local agency for which a monetary value
may be estimated.
   (c) This section does not prohibit the use of public resources for
expenditures authorized by law, including all of the following:
   (1) The costs of adopting a position or resolution supporting or
opposing a clearly identified ballot measure or candidate, including
posting the position or resolution on the nonprofit organization's
Internet Web site, communicating the position or resolution to
members of the nonprofit organization, or issuing a press statement.
   (2) Incidental or minimal use of public resources.
   (3) Incidental costs related to the establishment or
administration of a sponsored committee, as defined in Section
82048.7. A reasonable accounting method may be used to determine the
use of nonpublic resources to pay for that cost. For purposes of this
paragraph, "establishment and administration" means the cost of
office space, telephones, salaries, utilities, supplies, legal and
accounting fees, and other expenses incurred in establishing and
operating a sponsored committee.
   (4) Providing information to the public about the possible effects
of a ballot measure on the activities, operations, or policies of
the state or a local agency if the informational activities meet both
of the following conditions:
   (A) The informational activities are not otherwise prohibited by
the California Constitution or the laws of this state.
   (B) The information provided constitutes an accurate, fair, and
impartial presentation of relevant facts to aid the electorate in
reaching an informed judgment regarding the ballot measure.
   (d) (1) Any person who intentionally or negligently violates this
section is liable for a civil penalty not to exceed one thousand
dollars ($1,000) for each day on which a violation occurs, plus three
times the value of the unlawful use of public resources. The penalty
shall be assessed and recovered in a civil action brought in the
name of the people of the State of California by the Attorney General
or by any district attorney or any city attorney of a city having a
population in excess of 750,000. If two or more persons are
responsible for a violation, they shall be jointly and severally
liable for the penalty. If the action is brought by the Attorney
General, the moneys recovered shall be paid into the General Fund. If
the action is brought by a district attorney, the moneys recovered
shall be paid to the treasurer of the county in which the judgment
was entered. If the action is brought by a city attorney, the moneys
recovered shall be paid to the treasury of that city.
   (2) A civil action alleging a violation of this section shall not
be commenced more than four years after the date of the alleged
violation.
  SEC. 2.  Section 54964.6 of the Government Code is repealed.
  SEC. 3.  Section 84222.5 is added to the Government Code, to read:
   84222.5.  (a) A publicly funded nonprofit organization that makes
contributions or expenditures, either directly or through the control
of another entity, shall establish and deposit into a separate bank
account all funds that will be used to make contributions and
expenditures, and those contributions and expenditures shall come
from that separate bank account.
   (b) In addition to subdivisions (b) and (c) of Section 84222, a
publicly funded nonprofit organization is a recipient committee
within the meaning of subdivision (a) of Section 82013 if any of the
following occur:
   (1) It makes contributions or expenditures totaling fifty thousand
dollars ($50,000) or more related to statewide candidates or ballot
measures or makes contributions or expenditures totaling two thousand
five hundred dollars ($2,500) or more related to local candidates or
ballot measures, either directly or through the control of another
entity, during the prior quarter.
   (2) By January 31 of each odd-numbered year, it makes
contributions or expenditures totaling one hundred thousand dollars
($100,000) or more related to statewide candidates or ballot measures
or makes contributions or expenditures totaling ten thousand dollars
($10,000) or more related to local candidates or ballot measures,
either directly or through the control of another entity, during the
previous two years.
   (c) If a publicly funded nonprofit organization qualifies as a
recipient committee pursuant to subdivision (b), it shall comply with
the registration and reporting requirements of Section 84222.
   (d) Each publicly funded nonprofit organization that makes
contributions or expenditures, either directly or through the control
of another entity, shall provide to the Commission, and display on
the organization's Internet Web site, the information it is required
to disclose under this section. The information shall be clearly
described and identified on a separate Internet Web page that is
linked from the homepage of the organization's Internet Web site. The
link to this Internet Web page from the homepage shall be as visible
as all similar links.
   (e) The Commission may require an audit of a publicly funded
nonprofit organization that is required to provide records to the
Commission pursuant to this section. The Commission shall require an
audit of any publicly funded nonprofit organization that makes
contributions or expenditures in excess of five hundred thousand
dollars ($500,000) in a calendar year. The publicly funded nonprofit
organization shall provide records to the Commission to substantiate
the information required to be disclosed by this section.
   (f) If the Commission determines at the conclusion of an audit
that a publicly funded nonprofit organization has violated this
section, the Commission, the Attorney General, or the district
attorney for the county in which the organization is domiciled may
impose a civil fine upon the organization in an amount up to ten
thousand dollars ($10,000) for each violation.
   (g) The definitions in subdivision (b) of Section 54964.5 apply to
this section.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
  SEC. 5.  The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the meaning
of subdivision (a) of Section 81012 of the Government Code.