FY 2016-2017 Annual Report
HAWAII CAMPAIGN SPENDING COMMISSION
Fiscal Year July 1, 2016 to June 30, 2017
The Hawaii Campaign Spending Commission’s (“Commission”) mission is to maintain the integrity and transparency of the campaign finance process by enforcing the law, educating the public, administering public financing, and training campaign committees in order to encourage timely compliance. The Commission is guided by a 5-year Strategic Plan to assist the organization in shaping its future, set longer term priorities, and to establish a framework to make decisions and allocate resources. This report discusses activities as applied to the Strategic Plan that occurred in fiscal year 2017 covering the period July 1, 2016 to June 30, 2017 as well as documents other significant events. It also includes a discussion of future considerations for fiscal year 2018.
GOAL – TO SIMPLIFY AND CLARIFY CAMPAIGN FINANCE LAWS IN ORDER TO IMPROVE IMPLEMENTATION AND COMPLIANCE.
- Propose legislation. For the 2017 Legislative Session, the Commission submitted eleven (11) bills to the President of the Senate and the Speaker of the House for introduction, of which four (4) passed and were signed by the Governor. They are:
Act 97 (H.B. 280) – Effective July 5, 2017, this Act amends HRS §11-334 by clarifying the due dates of preliminary, final, and supplemental reports to be filed with the Commission, requiring a candidate to file the Final Election Period Report three (3) business days before the date the candidate is to be sworn into office, and requiring that the Supplemental Report for candidate committees due on January 31st be filed annually.
Act 98 (H.B. 279) – Effective July 5, 2017, this Act amends HRS §11-363 by specifying that certain types of dissemination, distribution, republication, and use of certain types of campaign materials or the financing of such by any person shall not be considered to be a contribution to a candidate.
Act 108 (H.B. 281) – Effective July 10, 2017, this Act amends HRS §11-340 to require the Commission to publish on its website the names of all noncandidate committees that fail to file a report or to correct a report within two weeks of notification by the Commission.
Act 109 (H.B. 282) – Effective July 10, 2017, this Act amends HRS §11-340 to clarify that increased fines may apply if a noncandidate committee fails to timely file a 2nd Preliminary General Report.
The following Commission bills did not pass the 2017 Legislative Session:
H.B. 283 / S.B. 440 – Sought to amend HRS §11-410 by raising the amount of fine that can be assessed against a Super PAC (that receives at least one contribution of more than $10,000 from one person or has made expenditures of more than $10,000 in aggregate, in an election period) from $1,000 to $5,000 and to permit the fine to be up to three times the amount of the unlawful contribution or expenditure. Also, allows the Commission to recover its costs of investigative services and bank fees for subpoenaed records from violators.
H.B. 284 / S.B. 441 – Sought to amend HRS §11-341 (electioneering communications) by changing “disclosure date” to when the electioneering communication is publicly distributed rather than when the contract for the electioneering communication is executed. This is in line with federal law and makes more sense. Also, deletes “communications that constitute expenditures by the expending organization” from the exceptions to the definition of “electioneering communications” to make it clear that candidate and noncandidate committees are required to file statements of information.
H.B. 285 / S.B. 442 – Sought to amend HRS §11-412(b) to provide that the applicable statute of limitations for criminal prosecution of campaign spending violations shall not commence until the Commission’s discovery of the offense. This amendment was recommended by the Attorney General’s Office – Criminal Justice Division.
H.B. 286 / S.B. 443 – Sought to amend HRS §11-322(a) by deleting the requirement that contributions be reported in the organizational report of candidate committees. There is no space in the organizational report to list contributions. The Commission has not required candidates to report contributions in the organizational report.
H.B. 287 / S.B. 444 – Sought to amend HRS §11-323(a) by deleting the requirement that contributions be reported in the organizational report of noncandidate committees. There is no space in the organizational report to list contributions. The Commission has not required noncandidate committees to report contributions in the organizational report.
H.B. 288 / S.B. 445 – Sought to amend HRS §11-324(e) to require treasurers of candidate and noncandidate committees to keep information about the employer and occupation of all contributors.
H.B. 289 / S.B. 446 – Sought to amend HRS §11-339 to require candidates who do not intend to have more than $1,000 in activity to provide notice to the Commission of such intent by June 30 of an election year and to require noncandidate committees who do not intend to have more than $1,000 in activity to provide notice to the Commission of such intent by the 5th calendar day prior to the due date of the Preliminary Primary Report.
- Other legislation of significance that the Commission provided written/oral testimony and supported included Act 49 (H.B. 100), the Executive budget bill, which restored the funding of Commission operations to general funds. The Commission was close to declaring that the funds in the Hawaii Election Campaign Fund (“HECF”) were nearing depletion such that there would be no public funding in the 2018 election, but thanks to the inclusion of our operational budget in the Executive budget, the HECF is expected to be able to finance qualified public funding candidates in the 2018 election.
- Draft and submit administrative rules. Proposed amendments to Chapter 3-160 (Election Campaign Contributions and Expenditures) and Chapter 3-161 (Administrative Practice and Procedure Before the Commission) of the Hawaii Administrative Rules were approved by Governor David Ige in December 2016. The amendments made non-substantive changes for the purposes of style and clarity, housekeeping changes, as well as addressed changes to the campaign finance laws such as implementation of the hardship waiver in HRS §11-393(c) (Act 112, Haw. Sess. Laws 2013), which requires Super PACs to identify its top contributors in their advertisements, and the defining of “close to depletion” and “near depletion” of the HECF which will impact the operation of the partial public financing program.
- Advisory Opinions. Under HRS §11-315, the Commission may render written advisory opinions upon the request of any candidate, candidate committee, noncandidate committee, or other person or entity subject to campaign finance laws, as to whether the facts and circumstances of a particular case constitutes or will constitute a violation of the laws. If no advisory opinion is rendered within ninety (90) days after all information necessary to issue an opinion has been obtained, it shall be deemed that an advisory opinion was rendered and that the facts and circumstances of that particular case do not constitute a violation of the campaign finance laws.
During this period, there were no Advisory Opinions requested. However, Advisory Opinion No. 16-02 was issued on August 10, 2016, and thus, was reserved for discussion in this annual report. Advisory Opinion No. 16-02 addressed a law firm’s request concerning the establishment of a hybrid PAC, or two affiliated PACS, with one being a traditional noncandidate committee directly supporting candidates and the other being a noncandidate committee making only independent expenditures (“Super PAC”). The opinion also addressed the application of HRS §11-363(a) to a person’s dissemination, distribution, or republication of a candidate’s campaign material, as well as a Super PAC’s use of a candidate’s polling data to produce independent expenditures.
In the hybrid PAC or two affiliated PACs situation, the requestor contemplated that one PAC would engage in independent expenditures and the other PAC would directly contribute to candidates with an informational firewall erected between the PACs. Requestor asked if the PAC making independent expenditures would not be subject to the contribution limits contained in HRS Chapter 11. The Commission responded that the answer would depend upon the facts. Among other factors, if the two PACs shared staff and resources, the decision on spending for both PACs was made by the same person, the PACs coordinated their activities, or otherwise shared information about candidates, the Commission may find that the PACs were not functionally distinct, and thus, the contribution limits would also apply to the PAC making independent expenditures.
The Commission also reaffirmed its position first published in In Re the Matter of Sierra Club Hawaii PAC, Docket No 15-13 (November 19, 2014), that the payment for the republication of a candidate’s campaign material taken from the candidate’s website was a contribution to the candidate under HRS §11-363(a). In that case, a Super PAC took a photograph of a candidate’s family from the candidate’s website and used the photograph in the Super PAC’s mailers in support of the candidate and in opposition to the candidate’s opponent. The Commission recently applied HRS §11-363(a) to a Super PAC’s use of a candidate’s photograph taken from the candidate’s social media account in the Super PAC’s mailers in support of the candidate. In Re the Matter of University of Hawaii Professional Assembly-PAC, Docket No. 17-36 (June 14, 2017).
Finally, the Commission determined that if a Super PAC received polling data from a candidate’s agent and then paid for advertising in support of that candidate, if a nexus can be shown between the polling data and the Super PAC’s advertisements in support of the candidate or in opposition to the candidate’s opponent, the Commission will likely find that the production of the advertisements was coordinated with the candidate and thus attribute the cost of the advertisements to the candidate as both a contribution and an expenditure.
GOAL – TO INCREASE PUBLIC EDUCATION, AWARENESS AND ACCESS.
- Direct the public to the Commission’s website and continue to improve web-based information. For purposes of transparency, much of the Commission’s operations, business, and finances are posted on the Commission’s website including Commissioners’ biographies, meeting agendas and minutes, newsletters, advisory opinions, HECF information, annual reports, campaign finance statistics, and the Strategic Plan. Information of current interest is constantly identified and posted on the Commission’s website including statute and rule changes, legislation, reporting deadlines, enforcement issues, and new informational and technological tools. There are also links for viewing reports, filing reports, seeking guidance including cyber-learning presentations, forms, guidebooks, and qualifying for public funding. Based on the results of our annual online survey, we understand that our website continues to be our strongest resource in providing stakeholders and interested parties with campaign finance information. As such, we continue to fine-tune our website with a focus on building more efficient and user friendly navigation tools which includes a searchable database of all the campaign finance data filed by committees. We have also included a section on our home page for our latest tweets and highlighted the candidate and noncandidate committee data visualization apps. These updates are done at zero cost to the Commission. During this period, we had 107,645 “hits” to our website.
Furthermore, the Commission has an ongoing partnership with the State of Hawaii’s Office of Enterprise Technology Services (“ETS”) to improve the Commission’s two statutorily required electronic filing systems for candidate committees and noncandidate committees which provides us campaign spending data we use to provide transparency in elections to the public.
- Disseminate to the public information on contributions, expenditures, and other pertinent topics of interest. The Commission continues to promote the two data visualization applications available to anyone on the Commission’s website. The candidate committee and noncandidate committee data visualization applications permit viewers to see the data reported by over 600 committees in a more visually attractive, user–friendly, and dynamic way for a particular election period. These applications were conceived to provide greater transparency and accountability in political campaigns to enable the public to follow the money of candidate committees’ and noncandidate committees’ participation in Hawaii elections.
Other mechanisms to disseminate to the public information concerning campaign finance include regular posts of anything new/interesting on our website under “What’s New,” biannual newsletters, e-blasts, Facebook posts, and tweets. New candidates, new noncandidate committees (including Super PACs), notice of fundraisers, notice of Commission meetings, updates to the guidebooks and manuals, new legislation, updates to the electronic filing systems, new forms, requests to take/submit our annual online survey, registering for training classes, electioneering communication statements of information, etc., are tweeted, e-blasted, and/or posted on the Commission’s website.
Throughout the 2016 election, the Commission compiled and summarized data as well as shared information with the Commissioners and the public at its meetings and in its newsletters. In the 2016 election, there were 269 candidates running for 104 seats up for election out of 128 elective seats in the state of Hawaii and its four counties. The 104 seats up for election were: Senate (14), House (51), Honolulu Mayor (1), Hawaii Mayor (1), Honolulu Prosecutor (1), Hawaii Prosecutor (1), Kauai Prosecutor (1), Honolulu City Council (5), Hawaii County Council (9), Maui County Council (9), Kauai County Council (7), and Office of Hawaiian Affairs (4). Nineteen (19) candidates were unopposed and ten (10) incumbent candidates decided not to run for their seat. 146 or 54% of the 269 candidates filed the Affidavit to voluntarily agree with the expenditure limit set for their office and 46 or 17% of the 269 candidates filed the Statement to notify the Commission of their intent to seek partial public funding. Twenty-eight (28) candidates received a total of $202,190.49 in public funding. Lastly, 249 fundraisers were held in 2016 with 62 of those fundraisers occurring during the 2017 legislative session by legislators.
- Plan, organize, participate, and host trainings to inform and educate on campaign finance laws and rules. Community presentations to candidate and noncandidate committees, corporations, legislators, community groups, contractors, certified public accountants, political parties, etc., on various areas of campaign finance laws are regularly delivered when requested. In anticipation of the 2016 election, campaign finance presentations to candidates and committees were planned and delivered in May and June 2016. The only other training presentation provided during this period was speaking at the Kokua Council (8/22/16). At the Council on Governmental Ethics Laws’ (“COGEL”) Annual Conference in December 2016, Executive Director Izumi-Nitao participated by serving on the Steering Committee and chairing the Nominating Committee for a second term. In April 2016, she attended the COGEL mid-year meeting in Chicago, IL. Additionally, requests to respond to media inquiries are regularly addressed.
- Explore and implement social and other media applications to inform and educate on campaign finance laws and rules. The Commission regularly uses e-blasts as well as Facebook and Twitter accounts to inform and educate committees, interested parties, subscribers, and the public on campaign finance. We have found the e-blasts to be especially effective in sending out time sensitive information such as reporting deadline reminders and changes in the law. It also permits us to notify interested parties about registering for training classes, publication of new educational tools, and other campaign finance information. Efforts to not overuse the email system and reserve it for distribution of important announcements is always a consideration. During this period, the CSC email system was employed 84 times and we have 843 total subscribers. Notably, subscribers are separated into three groups – candidates (326 subscribers), noncandidate committees (268 subscribers), and the public (249 subscribers), thereby permitting us to target relevant audiences with the e-blast.
Since July 2011, we have been employing social media tools such as Facebook and Twitter to leverage our capabilities to increase, enhance, and supplement our communication efforts to inform the public of important and time sensitive campaign finance information. During this fiscal year, we issued 321 tweets.
Every year, we attend the PCATT (Pacific Center for Advanced Technology Training) IT Symposium / Conference to identify and learn new ways to improve and educate committees and the general public in campaign finance. This year, the symposium was entitled “A Glance at the Future of Education and Security” and highlighted future trends in education and cybersecurity, utilizing open data for collaboration, increasing data fluency as a core competency for success at the human technology frontier, and learning the basics of coding for problem solving.
- Raise public awareness and increase visibility of the Commission’s work, hold at least one Commission meeting in a neighbor island county each year. This action item has been deferred due to budgetary constraints, but continues to be considered. Raising public awareness and increasing visibility of the Commission’s work are always considerations when the Commission communicates with the public.
GOAL – INCREASE THE TECHNOLOGICAL CAPACITY TO IMPROVE ACCESS, REDUCE PAPERWORK, AND INCREASE COMPLIANCE.
- Increase the Commission’s analytical capability. During this period, there were no changes to the Commission’s electronic filing systems as a result of legislative enactments to improve transparency and disclosure. The Commission continues to rely on its searchable database to run queries on various campaign finance issues.
- Maintain awareness of newer technology, including electronic filing systems and hardware/software or applications, for consideration of integration and/or implementation. The Commission works closely with ETS and as a result has benefitted from their expertise and assistance in scaling and maximizing our hardware/software applications.
For the 2016 election, the Commission employed eSign forms for committees to use as an additional and alternative way to submit forms. The new tool was made available through ETS’ commitment to employ new technology to improve government efficiency, services, and communication. The success of eSign was tremendous and we have received and processed 893 eSign documents during this reporting period.
For candidate committees, eSign is available for the following forms: (1) Electronic Filing Form; (2) Executed Loan Document; (3) Notice of Intent to Hold a Fundraiser; (4) Request for Termination of Registration; and (5) Public Funding – Statement of Intent to Seek Public Funds. For noncandidate committees, eSign is available for the following forms: (1) Electronic Filing Form; (2) Notice of Intent to Hold a Fundraiser; and (3) Request for Termination of Registration. For both committees, eSign is available for filing the Statement of Information for Electioneering Communications.
The Commission has also commenced research on identifying online fine payment mechanisms, but has decided to delay launching of this additional payment method until FY 2018 to better effectuate its employment both internally and externally.
The annual COGEL conference is another source from which we learn about other campaign finance systems and technology. During this period, however, there were no plans nor funding to alter our electronic filing systems.
- Maintain awareness of the implications of technological changes on all aspects of campaign finance including political contributions. The annual COGEL conference has been a great venue for the Commission to learn about technological changes or advances employed by other campaign finance offices. During this fiscal year, there were no technological changes that the Commission deemed viable for employment in Hawaii; however, we remain receptive to all new ideas.
GOAL – UPGRADE THE TRAINING FOR AND ABILITY OF THE COMMITTEES TO COMPLY WITH CAMPAIGN FINANCE LAWS.
- Explore new methods for training and disseminating information. The Commission continues to work with the Office of Elections and county clerks in providing informational packets to be given to candidates who file their nomination papers. When candidates file their nomination papers, Office of Elections has included on their Candidate Profile worksheet a section that the candidate initials acknowledging that he/she understood that they need to register with the Commission and file reports. This has been very beneficial. Prior to each election, the Commission meets with Office of Elections and county clerks to address any new concerns/issues as well as to ensure that the process of certifying compliance so that the winning candidates are able to be sworn into office is operating properly.
- Offer training to committees to improve compliance with campaign finance laws and rules. In an effort to prepare candidates for the numerous reporting requirements and understand the laws regarding campaign finance, training classes were offered across the State and were reported in the previous annual report.
- Publish guidebooks, manuals, and e-learning videos on how to comply with campaign finance laws and rules as well as how to use the electronic filing systems. Guidebooks, manuals, and e-learning videos have always been available on the Commission’s website. For the 2016 election, the Commission revised and posted new cyber learning videos, guidebooks, and manuals on the Commission’s website.
GOAL – ENCOURAGE COMPLIANCE.
- Develop escalating penalties for repeat and gross violations, and disseminate information about the penalties. The Commission continues to find that there are some candidate and noncandidate committees who do not file their reports. To this extent, the Commission has been invoking administrative fines pursuant to HRS §11-410(a) and (h) as a means to take a stronger punitive stance to those committees who completely fail to file reports by the statutory deadline. The Commission further finds that there are some candidate and noncandidate committees who do not comply with Commission orders when a campaign finance violation has been determined. To this extent, the Attorney General’s Office – Civil Recoveries Division has been assisting the Commission to obtain judicial enforcement of Commission orders.
During this fiscal year, which represents an election year, there were 36 complaints of which:
- 21 complaints yielded a preliminary determination of a campaign finance violation resulting in $6,125 in assessed administrative fines
- 4 of the 21 complaints yielded a preliminary determination of a campaign finance violation, but due to noncompliance, were referred to the Attorney General’s Office – Civil Recoveries Division to seek judicial enforcement pursuant to HRS §11-410(d)
- 9 complaints were withdrawn or dismissed due to a finding of no campaign finance violation(s) or compliance prior to the complaint being heard by the Commission at a HRS Sunshine Meeting
- 1 complaint failed due to a tie vote
- 1 complaint was referred for criminal prosecution
- 4 complaints are pending
- Simplify and expedite disposition of campaign finance violations. Representative of this strategy are conciliation agreements which are essentially settlement agreements negotiated by the staff and approved by the Commissioners in a publicly noticed meeting. In this fiscal year, there were 67 conciliation agreements that were approved resulting in a total of $11,483.54 in assessed administrative fines.
- Seek enforcement of the campaign finance laws and rules against violators. During this fiscal year, a total of $56,965.12 was assessed in administrative fines and $28,376 was escheated to the Hawaii Election Campaign Fund due to campaign finance violations. Most of the Commission’s enforcement actions were a result of late or unfiled reports. Because this was an election year, there were at least four reports filed by approximately 650 committees. Due to late filed reports, a total of $26,327.47 was assessed in fines which did not involve a complaint or a conciliation agreement from 115 candidate committees and 64 noncandidate committees. Notably, this was the first election that the public was able to view all reports filed by the candidates prior to the general election.
Other campaign finance violations that occurred during this period that did not include the issuance of an administrative complaint or a conciliation agreement which resulted in a total of $13,029.11 in assessed fines include:
- 26 advertisements missing the proper disclaimer resulting in $650 in fines
- 18 failures to report a contribution resulting in $4,500 in fines
- 11 failures to report expenditures resulting in $2,750 in fines
- 8 late fundraiser notices resulting in $250 in fines
- 6 excess contributors resulting in $2,950 in fines
- 3 community/charitable contributions made during a prohibited period resulting in $700 in fines
- 2 failures to report a loan resulting in $200 in fines
- 2 prohibited expenditures resulting in $166.45 in fines
- 1 prohibited use of campaign funds for personal use resulting in a $862.66 fine
- Evaluate the effectiveness of training modules and revise them as needed. In preparation for the 2016 election, the Commission reviewed and revised its training modules (i.e., guidebooks, manuals, e-learning videos, powerpoint presentations).
- Evaluate the effectiveness of communication efforts and revise them as needed. Current efforts to communicate have been successful – especially, our website, e-blasts, and tweets. We have noticed that oftentimes our tweets get retweeted. The Commission will continue to identify other mechanisms to communicate with multi-generational audiences and employ such tools as needed.
- Encourage compliance to call the Commission, visit the Commission’s office, and/or go to the Commission’s website for information to comply with campaign finance laws and rules. The Commission handles numerous phone calls, walk-ins, and inquiries daily. A computer is located in our office for committees to file their reports and to seek our assistance.
GOAL – INCREASE AND STABILIZE CSC’S INSTITUTIONAL CAPACITY TO CARRY OUT ITS MISSION.
- Develop proposals to stabilize funding. The Commission’s operating expenses and public financing programs are funded by the HECF which is a trust fund within the state treasury. See, HRS §11-421. The Commission’s beginning balance at the close of fiscal year 2016 was $1,513,301.40. In fiscal year 2017, a total of $211,495.04 in revenue was realized and a total of $926,613.89 in expenditures/encumbrances was incurred, thereby closing fiscal year 2017 with a balance of $795,546.22.
For the past eleven fiscal years (FY 2007 – FY 2017), the Commission has been operating at a net deficit and the fund has not been generating enough revenue to sustain operations. Primary revenue sources for the HECF are generated from the $3 state income tax check-off, the interest generated from the principal, and any funds that escheat to the HECF pursuant to campaign finance laws. This year, the $3 tax check-off generated $164,254 (which is $15,581 less than last year), the interest yielded $9,274.49, and the escheats/false name/surplus/anonymous contributions totaled $34,273.52. Although we regularly remind people about the $3 tax check-off through newsletters, public appearances, informational and educational materials, as well as request the Comptroller to approve paystub messages to government employees, the revenue from the tax check-offs has been inadequate.
Fortunately, this legislative session, the Commission’s operating expenses including salaries and administrative expenses were absorbed by the Executive Branch and approved in Act 49 (H.B. 100). The Commission was close to declaring that the funds in the HECF were nearing depletion such that there would be no public funding in the 2018 election, but thanks to Act 49, the HECF is expected to be able to pay for public funding for qualified candidates in the 2018 election.
- Plan for potential staff transitions and ensure position descriptions are current. There were no staff transitions during this period. The new Administrative Assistant transitioned quickly and has performed well. Upon the passage of Act 49 (H.B. 100), Commission staff worked closely with Department of Accounting and General Services to transition trust funded positions to general funds.
- Continue Commissioner development through trainings and conferences as well as issuing a Commissioner handbook and orientation of new Commissioners. Commissioners are regularly updated on any new or developing issues and provided information from annual COGEL conferences. This year’s COGEL conference in December 2016 was held in New Orleans, LA, and was attended by Chair Bryan Luke and Commissioner Kenneth Goodenow. Two Commissioners’ terms expired on June 30 2016 and one Commissioner’s term expired on June 30, 2017; however, Governor Ige has not appointed their successors. Fortunately, these three Commissioners have continued to attend the Commission meetings such that the Commission has been able to continue operations and business.
FUTURE CONSIDERATIONS FOR FISCAL YEAR 2018
New Commissioners. Two Commissioners’ terms expired on June 30, 2016, one of whom would like to serve a second 4-year term. Another Commissioner’s term expired on June 30, 2017, and would like to serve a second 4-year term. We expect at least one or maybe three new Commissioners to be appointed this year.
2018 Election. The offices for Governor, Lieutenant Governor, Senate (Districts 3 and 24), House (Districts 40 and 48), Maui Mayor, Kauai Mayor, Honolulu County Council (District 2), and Kauai County Council are among the larger and competitive races set to occur in fall 2018. Incumbent candidates vacating their seats as a result of term-limits, retirement, or resignation to seek another seat, will create open seats and play a major role in the 2018 election.
 There were actually 69 conciliation agreements in this fiscal period; however, 2 became complaints due to noncompliance.
 Pursuant to HRS §11-410(e), this amount is deposited into the State general fund.
 Pursuant to the relevant sections of the HRS, this amount is deposited into the Hawaii Election Campaign Fund.
 This does not include the interest from June 2017 which will be realized in FY 2018.