BILL ANALYSIS                                                                                                                                                                                                    



SENATE RULES COMMITTEE                             SB 49  
Office of Senate Floor Analyses
1020 N Street, Suite 524
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                        THIRD READING
                                                              
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Bill No:  SB 49
Author:   Karnette (D), et al
Amended:  5/20/97
Vote:     27 - Urgency
                                                              
                                                             
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  SENATE ELECTIONS & REAP. COMMITTEE  :   3-0, 4/16/97
AYES:  Karnette, Polanco, Rosenthal
NOT VOTING:  Craven, Lewis

  SENATE APPROPRIATIONS COMMITTEE  :   12-0, 5/29/97
AYES:  Johnston, Alpert, Burton, Calderon, Johnson,  
  Karnette, Kelley, Lee, Leslie, McPherson, Mountjoy,  
  Vasconcellos
NOT VOTING:  Dills
                                                              
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SUBJECT  :    Political Reform Act:  online disclosure

  SOURCE  :     The author
                                                              
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DIGEST  :    This bill enacts the Online Disclosure Act  
requiring the Secretary of State to develop a process  
whereby reports and statements required under the Political  
Reform Act can be filed online and viewed by the public, as  
specified.

  ANALYSIS  :    Existing law, the Political Reform Act (PRA),  
requires that candidates, lobbyists, campaign committees  
and others file statements and reports documenting their  
activities.  These reports and statements are filed at a  
variety of locations, but primarily with the Secretary of  
State, appropriate county clerks, and the Fair Political  
Practices Commission (FPPC).  These filings must be  





personally signed by designated individuals (either the  
candidate, campaign treasurer, lobbyist or other  
individual, or a combination thereof).

AB 3575 (Speier, Chapter 1136, Statutes of 1994), required  
the Secretary of State to conduct a study on the  
feasibility of implementing a computerized system for the  
electronic filing of documents required by the PRA.  That  
study, "Electronic Filing:  A New Era in Campaign and  
Lobbying Financial Disclosure," was completed in December  
1995.  The advisory panel that conducted the study included  
representatives from the Secretary of State's office, the  
FPPC, county and city clerks and other elections officials,  
lobbyists, campaign treasurers, computer consultants and  
public interest groups.

The Secretary of State reports that more than 30,000  
documents constituting over 500,000 pages will be filed in  
connection with the 1998 election cycle.  Additionally,  
lobbying registrations and disclosure reports aggregate  
more than 30,000 documents and 80,000 pages during an  
average two year legislative session.

According to the National Resource Center for State & Local  
Campaign Finance Reform, during 1995-1996, two states,  
Hawaii and Missouri, mandated that campaign related  
documents be filed electronically.  Seven other states had  
voluntary programs in place.  Close to half of the states  
are studying the issue or have projects in development.   
San Francisco, New York, and Seattle already have or are in  
various stages of implementing electronic filing systems.

Five different pieces of legislation during the 1995-96  
legislative session contained, at one time or another,  
provisions to implement an electronic filing system for  
specified campaign and lobbying documents.  None of those  
bills became law.

This bill enacts the Online Disclosure Act of 1997.  It  
directs the Secretary of State, in consultation with the  
FPPC, to develop and implement an online filing and  
disclosure system for specified documents mandated to be  
filed by the PRA.













This bill specifically requires the Secretary of State to:

1.Develop a system that provides for the online transfer  
  and acceptance of data.  The system must insure the  
  integrity of the data and institute safeguards against  
  efforts to tamper with or subvert the data.  In  
  developing the system, the Department of Information  
  Technology must be consulted regarding implementing  
  sufficient technology to prevent alteration or  
  manipulation of the data.  The system must be approved by  
  the department before becoming operational.

2.Specify a non-proprietary, standardized record format or  
  formats using industrywide standards for transmission of  
  the data.  Require the Secretary of State to hold public  
  hearings prior to development of the record format as a  
  means to ensure that affected entities have an  
  opportunity to provide input into the development  
  process.  The format or formats are to be made public not  
  later than September 1, 1999 to ensure sufficient time to  
  comply with the requirements of this bill.  The Secretary  
  of State shall certify commercial vendors and private  
  persons who develop software that complies with the  
  standardized format and is compatible with the Secretary  
  of State's system.  Filers can only use software that has  
  been certified.

3.Publish a list of all certified vendors and persons who  
  have developed software that meets the above  
  requirements, and designate those software programs that  
  are available for $99 or less.  If, by June 1, 2000,  
  there is no certified software that complies with  
  appropriate requirements, the Online Disclosure Act of  
  1997 is repealed.

4.Develop a procedure to enable filers to comply with  
  existing requirements that reports be personally signed  
  under penalty of perjury.

5.Make the electronically filed data available at no cost  
  on the "largest non-proprietary, nonprofit, cooperative  
  computer network", a.k.a., the Internet, in a format that  
  is easily understood and provides the greatest public  
  access.  The data shall be made available free of charge,  
  and as soon as possible after receipt.  Data made  
  available on the public computer network shall not  
  contain the residential street address of any person.

6.Maintain the data on-line for a period of 10 years, and  





  then archive it in a secure format.  In addition, a  
  secured, official version of all originally  
  electronically filed statements and reports will be  
  maintained for audit and other legal purposes once the  
  system is operational.

7.Provide assistance to those seeking public access to the  
  information.

This bill requires that all statewide candidates and ballot  
measures appearing on the November 1998 ballot, in addition  
to paper filings, to submit a copy of their reports on  
computer disk.  The Secretary of State will provide copies  
of the computer disks at cost to the public.  The Secretary  
of State must also disclose online all late contributions  
and late independent expenditures made in connection with  
the 1998 General Election.

This bill states that filers may voluntarily begin filing  
appropriate reports online once the Secretary of State  
publicly announces that all state-mandated development,  
procurement and oversight requirements have been met.   
There will be an online disclosure program in connection  
with the 2000 primary election with the following  
participants:

1.Candidates, committees, or other persons who cumulatively  
  receive contributions or make expenditures (including  
  loans) of $100,000 or more in an election cycle in  
  connection with a state elective office or a state ballot  
  measure.

2.General purpose and small contributor committees that  
  cumulatively receive contributions or make expenditures  
  totaling $100,00 or more to support or oppose candidates  
  for any elective state office or state ballot measure.

3.Slate mailer organizations with cumulative reportable  
  payments received or made of $100,000 or more.

4.Lobbyists, lobbyist employers, and lobbying firms who  
  have reportable payments, expenses, contributions, or  
  gifts of $100,000 or more in a calendar quarter.

5.The Secretary of State will be responsible for disclosing  
  online all late contributions and late independent  
  expenditures.

Starting July 1, 2000, online filing and disclosure of  
reports becomes mandatory for all candidates, committees,  





and lobbyists.  The threshold for having to file is lowered  
to $50,000 in an election cycle for candidates, committees,  
and slate mailer organizations and $5,000 in a calendar  
quarter for lobbyists.  In determining the threshold, all  
controlled committees and office holder accounts will be  
included.

This bill would require the Secretary of State, in addition  
to the filings listed above, to continue to disclose online  
all late contributions and late independent expenditures.

This bill specifies that any entity not mandated to file  
online may do so voluntarily.  Once an entity, whether by  
mandate or choice, files required reports online, all  
subsequent reports must also be filed online.

Paper copies of documents would still be required.  The  
paper copy will continue to be the official filing for  
audit and legal purposes until the Secretary of State  
publicly determines that the system is operating securely  
and effectively.  In making that determination, the  
Secretary of State shall consult with the FPPC, the  
Department of Information Technology, and any other  
appropriate public or private entities they choose.  Once  
that determination is made, the requirement to file paper  
forms with local filing officers would be repealed.

This bill requires the Secretary of State to report to the  
Legislature regarding the effectiveness of the online  
filing and disclosure system and related issues.  One  
report is due before the system is operational and a second  
report after completion of the 2000 election cycle.  The  
FPPC may present their suggestions and comments along with  
the reports.

This bill appropriates $1.1 million to develop the online  
filing system and other provisions of the bill. 

A similar bill is SB 7 (Kopp), which failed passage in the  
Senate Elections and Reapportionment Committee.

 FISCAL EFFECT  :   Appropriation:  Yes   Fiscal Com.:  Yes    
Local:  Yes

Appropriates $1.1 million.

  SUPPORT  :   (Verified 5/30/97)

Secretary of State
League of Women Voters





American Association of Retired Persons (AARP)
California Teachers Association 
California League of Conservation Voters
Center for Civic Literacy
Mexican American Legal Defense and Educational Fund  
(MALDEF)
Californians for Political Reform
California Newspaper Publishers Association
Consumers Union
California Association of Licensed Investigators
Common Cause

  ARGUMENTS IN SUPPORT  :    According to the author's office,  
providing easy public access to campaign and lobbying  
reports over the Internet is an idea whose time has  
arrived.  For too long, California has relied on an  
antiquated system of paper filings that makes it difficult  
for the average person to find out who is giving money to  
their elected officials.  This bill will bring California's  
campaign and lobbying reporting into the 21st century.

  
  DLW:ctl  6/3/97  Senate Floor Analyses
              SUPPORT/OPPOSITION:  SEE ABOVE
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