BILL ANALYSIS �
SENATE COMMITTEE ON ELECTIONS
AND CONSTITUTIONAL AMENDMENTS
Senator Norma J. Torres, Chair
BILL NO: SB 831 HEARING DATE: 4/22/14
AUTHOR: HILL ANALYSIS BY: Darren Chesin
AMENDED: 4/10/14
FISCAL: YES
SUBJECT
Political Reform Act: behested payments; gifts of travel; use of
campaign funds
DESCRIPTION
Behested Payment Reports and Prohibitions
Existing law , pursuant to the Political Reform Act (PRA),
provides that a payment made at the behest of a candidate for
state or local elective office is considered a contribution
unless the payment is made for purposes unrelated to the
candidate's candidacy. A payment is presumed to be unrelated to
a candidate's candidacy if it is made principally for
legislative, governmental, or charitable purposes. Payments
principally for legislative, governmental, or charitable
purposes made at the behest of an elected officer must be
reported within 30 days following the date on which the payment
or payments equal or exceed $5,000 in the aggregate from the
same source in the same calendar year in which they are made.
This bill would reduce the reporting threshold for a behested
payment to $2,500 and would also require the Fair Political
Practices Commission (FPPC) to post behested payment reports
from state agencies on its Internet Web site within 30 days of
receipt of the report.
This bill would codify the existing regulatory definition of
"made at the behest of" as "made under the control or at the
direction of; in cooperation, consultation, coordination, or
concert with; at the request or suggestion of; or with the
express, prior consent of."
Behested Payment Prohibitions
This bill would prohibit an elected officer from requesting that
a payment be made, and a person from making a payment at the
behest of the elected officer, to a nonprofit organization that
the elected officer knows or has reason to know is owned or
controlled by that officer, any other elected officer who serves
on the same elective body, or a family member of any elected
officer who serves on that elective body. For the purposes of
this prohibition, this bill would provide for all of the
following:
An elected officer is deemed to have complied with the
requirements of this provision if the FPPC determines that the
elected officer has made a reasonable effort to ascertain
whether a nonprofit organization is owned or controlled by any
individual subject to the prohibition.
As applied to a Member of the Legislature, "same elective
body" includes both houses of the Legislature.
For purposes of this provision, a nonprofit organization is
owned or controlled by an elected officer or family member of
an elected officer if the elected officer or family member of
the elected officer, or a member of that person's immediate
family, is a director, officer, partner, or trustee of, or
holds any position of management with, the nonprofit
organization.
For the purposes of this provision "family member of an
elected officer" means the spouse, child, sibling, or parent
of an elected officer.
This prohibition shall not apply to behested payments made to
a nonprofit organization that is formed for the purpose of
coordinating or performing disaster relief services.
Gifts of Travel: Limitations and Reporting
Existing law prohibits specified elected officers and other
public officials from receiving gifts, as defined, in excess of
$440 in value from a single source in a calendar year.
Existing law exempts gift payments for the actual costs of
specified types of travel from the annual limit on the value of
gifts from a single source. Payments for travel that is
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reasonably related to a legislative or governmental purpose, or
to an issue of state, national, or international public policy
are not limited if either of the following applies:
The travel is in connection with a speech given by the
officeholder or official and the lodging and subsistence
expenses are limited to the day immediately preceding, the day
of, and the day immediately following the speech, and the
travel is within the United States.
The travel is provided by a government, a governmental agency,
a foreign government, a governmental authority, a bona fide
public or private educational institution, a nonprofit
organization that is exempt from taxation under Section
501(c)(3) of the Internal Revenue Code, or by a person
domiciled outside the United States who substantially
satisfies the requirements for tax-exempt status under Section
501(c)(3) of the Internal Revenue Code.
This bill would impose an annual limit on gift payments from a
single source for these types of travel at $5,000.
This bill would also require a nonprofit organization that pays
for these types of travel to disclose the names of donors
responsible for funding the payments who knew or had reason to
know that their donation would be used for a payment, advance,
or reimbursement for the travel. The nonprofit organization
shall not report a donor if the organization has evidence
indicating that the donor restricted or otherwise did not intend
the donation to be used for such travel. A donor knows or has
reason to know that his or her donation will be used for the
travel under any of the following conditions:
The donor directed the nonprofit organization to use the
donation for the travel.
The donation was made in response to a solicitation for
donations for the travel.
The nonprofit organization made payments for this type of
travel in the current calendar year or any of the immediately
preceding four calendar years.
Use of Campaign Funds
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Existing law requires that contributions deposited into a
campaign account be held in trust for expenses associated with
the election of the candidate or for expenses associated with
holding office. An expenditure to seek office is within the
lawful execution of this trust if it is reasonably related to a
political purpose and an expenditure associated with holding
office is within the lawful execution of this trust if it is
reasonably related to a legislative or governmental purpose.
Existing law authorizes the use of campaign funds to make
donations or loans to bona fide charitable, educational, civic,
religious, or similar tax-exempt nonprofit organizations.
This bill would prohibit an expenditure of campaign funds by an
elected officer or committee controlled by the elected officer
to a nonprofit organization that the elected officer knows or
has reason to know is owned or controlled by the elected
officer, any other elected officer who serves on the same
elective body, or a family member of any elected officer who
serves on that body. For the purposes of this prohibition, this
bill would provide for all of the following:
An elected officer is deemed to have complied with the
requirements of this provision if the FPPC determines that the
elected officer has made a reasonable effort to ascertain
whether a nonprofit organization is owned or controlled by any
individual subject to the prohibition.
As applied to a Member of the Legislature, "same elective
body" includes both houses of the Legislature.
For purposes of this provision, a nonprofit organization is
owned or controlled by an elected officer or family member of
an elected officer if the elected officer or family member of
the elected officer, or a member of that person's immediate
family, is a director, officer, partner, or trustee of, or
holds any position of management with, the nonprofit
organization.
For the purposes of this provision "family member of an
elected officer" means the spouse, child, sibling, or parent
of an elected officer.
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This prohibition shall not apply to behested payments made to
a nonprofit organization that is formed for the purpose of
coordinating or performing disaster relief services.
Existing law provides that expenditures which confer a
substantial personal benefit must be directly related to a
political, legislative, or governmental purpose.
Existing law imposes additional limitations on certain
expenditures, including those relating to automotive expenses,
travel expenses, tickets for entertainment or sporting events,
personal gifts, and real property expenses.
This bill would also prohibit the expenditure of campaign funds
for other purposes, as specified, including:
Personal vacations.
Payments for membership dues for a country club, health club,
or other recreational facility.
Clothing to be worn by the candidate or officeholder
Tuition payments
Utility payments and real property leases where the lessee or
sublessor is, or the legal title resides in, in whole or in
part, a candidate, elected officer, campaign treasurer, or any
individual or individuals with authority to approve the
expenditure of campaign funds, or member of his or her
immediate family.
Vehicle use and sports or entertainment tickets not directly
related to an election campaign.
Specified gifts for specified family members of a candidate,
elected officer, or other individuals with the authority to
approve the expenditure of campaign funds held by a committee.
Legal Defense Contributions and Expenses
Existing law permits the expenditure of campaign funds for
attorney's fees and other costs in connection with
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administrative, civil, or criminal litigation, as specified.
Existing law also authorizes a candidate or an elected officer
to establish a separate legal defense account to defray
attorney's fees and other related legal costs incurred for the
officer's legal defense in an administrative, civil, or criminal
proceeding arising directly out of the conduct of an election
campaign, the electoral process, or the performance of the
officer's governmental activities or duties. A candidate or
elected officer may receive contributions to this account that
are not subject to applicable state contribution limits.
However, all contributions must be reported in a manner
prescribed by the FPPC.
Existing law , pursuant to FPPC regulations, provide that legal
defense funds may not be raised in connection with a proceeding
until the following has occurred:
In a proceeding brought by a government agency, when the
candidate or officer reasonably concludes the agency has
commenced an investigation or the agency formally commences
the proceeding, whichever is earlier.
In a civil proceeding brought by a private person, after the
person files the civil action.
This bill would prohibit the expenditure of campaign funds for
attorney's fees and other costs in connection with criminal
litigation but would continue to permit elected officers to
establish a legal defense account.
This bill would prohibit a committee that is not a legal defense
committee from making an expenditure of campaign funds to any
legal defense account.
BACKGROUND
Behested Payments . Behested payments are payments made
principally for legislative, governmental, or charitable
purposes. These payments are not for personal or campaign
purposes. For example, an elected official may ask a third
party to contribute funds to a charity, a school in his
district, or to a job fair or health fair. Generally, a
donation will be "made at the behest" if it is requested,
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solicited, or suggested by the elected officer, or otherwise
made to a person in cooperation, consultation, coordination
with, or at the consent of, the elected officer. This includes
payments behested on behalf of the official by his or her agent
or employee. Behested payments totaling $5,000 or more from a
single source in a calendar year must be disclosed by the
official which is filed with the official's agency within 30
days of the date of the payment(s).
Travel Payment Exceptions . The following travel payments are
not prohibited or subject to the $440 gift limit, but may be
reportable on a statement of economic interests (SEI). If the
travel payment would otherwise be considered a gift under the
PRA (i.e., the recipient did not provide equal or greater
consideration for the payment), the payment would be subject to
the existing $10 lobbyist/lobbying firm gift limit.
Travel that is reasonably necessary in connection with a bona
fide business, trade, or profession, as specified.
Travel within the United States that is reasonably related to
a legislative or governmental purpose in connection with an
event at which the recipient gives a speech, participates in a
panel or seminar or provides a similar service, as specified.
Travel not in connection with giving a speech, participating
in a panel or seminar, or providing a similar service, but
which is reasonably related to a legislative or governmental
purpose, or to an issue of state, national, or international
public policy, and which is provided by a government,
governmental agency, foreign government, or government
authority, a bona fide public or private educational
institution, a non-profit organization that is exempt from
taxation under Section 501(c)(3) of the Internal Revenue Code,
or a foreign organization that substantially satisfies the
requirements for tax-exempt status under Section 501(c)(3) of
the Internal Revenue Code.
COMMENTS
1.According to the Author : SB 831 is intended to modernize
California's Political Reform Act. It would increase
transparency of behested payments, create new limits and
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disclosures for travel related gifts, and prohibit certain
types of campaign expenditures.
SB 831 includes all of the following reforms:
a. Prohibiting elected officials from contributing campaign
funds to nonprofits owned or operated by their family
members.
b. Prohibiting elected officials from asking people to
donate to a nonprofit owned or operated by a family member.
c. Prohibiting elected officials from contributing campaign
funds to nonprofits operated by another elected official on
the same governing body.
d. Prohibiting elected officials from contributing campaign
funds to nonprofits owned or operated by other elected
officials' family members.
e. Increasing transparency of "behested" payments to and
from elected officials by lowering the reporting threshold
from $5,000 to $2,500 and requiring the FPPC to post the
transactions on its website within 30 days.
f. Creating a limit of $5,000 for travel-related gifts to
elected officials from nonprofits and other groups.
Currently, there is no limit on the amount of money elected
officials can receive from groups for travel. Elected
officials would have to use campaign or personal funds for
travel-related expenditures exceeding $5,000 in a calendar
year from a single source.
g. Prohibiting the expenditure of campaign funds for an
elected official's mortgage, rent, utility bills, clothing,
club memberships, vacations, tuition, tickets for sporting
and entertainment events, vehicles, and gifts to family
members.
h. Requiring non-profits that pay for legislator travel to
disclose to the FPPC the name of the donors responsible for
funding the travel. Currently non-profits do not have to
disclose the source of travel funding preventing the public
from knowing who was behind the gift to the elected
official.
i. Prohibiting the use of campaign funds for attorney's
fees and other costs in connection with criminal
litigation. Currently elected officials can use campaign
funds for legal costs associated with a criminal, civil or
administrative case if it relates to their political,
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legislative, or governmental duties. SB 831 would still
allow this for administrative and civil cases but not for
criminal cases. An elected official could still use
revenue from a legal defense fund for the criminal case.
A Common Cause report released in December 2013 found that
in 2012 state elected officials solicited or received $6.7
million in behested payments. Since 2000, state elected
officials solicited or received over $109 million in
behested payments from various companies, organizations and
nonprofits.
On March 5, 2014 an analysis by the Sacramento Bee found
that California lawmakers received more than $550,000 in
travel-related expenses from outside organizations in 2013.
In 2012 lawmakers received $329,000 in travel expenses
from outside organizations.
The FPPC defines behested payments as "contributions
solicited by members of the Assembly, Senate and statewide
elected officers. These payments are not considered
campaign contributions or gifts, but are payments made at
the 'behest' of elected officials to be used for
legislative, governmental or charitable purposes." State
law requires the reporting of behested payments only if
they total $5,000 or more per year from a single source.
There are no reporting requirements for behested payments
up to $4,999.99.
1. Where Does Your Sister Work ? This bill provides that an
elected officer is deemed to have complied with the new
behested payment prohibitions and similar prohibitions on
the use of campaign funds if the FPPC determines that the
elected officer has made a reasonable effort to ascertain
whether a nonprofit organization is owned or controlled by
any individual subject to the prohibition.
Individuals subject to the prohibitions include the
officeholder him/herself, any other elected officer who
serves on the same elective body, or a family member of any
elected officer who serves on that elective body. "Family
member" is defined as spouse, child, sibling, or parent of
an elected officer. It is unknown how the FPPC would
define "reasonable effort" when making this determination.
Would a member of the Legislature have to periodically poll
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every other member of the Legislature to determine if any
other members have family working at a nonprofit
organization? Would it suffice to ask the nonprofit
organization itself if they have any affected employees who
are family members of California legislators? Would they
even know this information?
POSITIONS
Sponsor: Author
Support: California Common Cause
Oppose: None received
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