Campaign Spending Commission

HAWAII CAMPAIGN SPENDING COMMISSION
ANNUAL REPORT
Fiscal Year July 1, 2008 to June 30, 2009

Introduction

The Hawaii Campaign Spending Commission’s (“Commission”) Annual Report for Fiscal Year July 1, 2007 to June 30, 2008 (“FY 08”) listed four projects that the staff would focus on for Fiscal Year July 1, 2008 to June 30, 2009 (“FY 09”).  These projects and much more were completed and will be discussed below:

1. Introduce the Recodification draft to the legislature and lobby for its enactment.
2. Develop a plan and begin to build the Comprehensive Public Funding program.
3. Further develop a plan to regulate Constitutional Convention candidates and noncandidate committees.
4. Complete review of all campaign disclosure reports for election year 2008.

Strategic Plan

The Commission’s five-year Strategic Plan (2008 – 2012) establishes the following six goals:

• To simplify and clarify campaign spending laws in order to improve implementation and compliance.
• To increase public education, awareness and access.
• Increase the technological capacity to improve access, reduce paperwork, and increase compliance.
• Upgrade the training for and ability of the committees to comply with campaign spending laws.
• Encourage compliance.
• Increase and stabilize CSC’s institutional capacity to carry out its mission.

Results Achieved in FY 09

(Only action items with progress in FY 09 are listed.)

GOAL 1

  To simplify and clarify campaign spending laws in order to improve implementation and compliance 

     ACTION ITEMS:

     b.  Submit and lobby for passage of the Recodification in the 2009 legislature.

Recodification 

The efforts of the Commission’s staff and Blue Ribbon Recodification Committee came to fruition with the drafting and introduction of S.B. 95 and H.B. 215, companion bills which proposed to recodify the law.  The contents of the recodification bills (and other provisions) were inserted into H.B. 128, H.D 1, S.D.1, C.D.2 and passed by the Legislature.  The bill was transmitted to the Governor on May 11, 2009.  The Governor sent a Notice of Intent to veto this bill to the Legislature on June 30, 2009.

House Bill 128 was vetoed by the Governor on 7-15-09.  On 7-15-09 the Senate overrode the veto, and the House was unable to override the veto by one vote.

Additional efforts under Goal 1 include:

Submittal of Amendment to the Hawaii Administrative Rules

Proposed Hawaii Administrative Rules 2-14.1 et seq. were submitted to the Attorney General’s Office on June 26, 2009, for approval as to form before being routed to the Governor’s Office.

Legislation

Two additional bills (with companion bills) were proposed by the Commission staff:

S.B. 93 and H.B. 217 proposed a grace period during which a candidate or candidate’s committee may return or refund contributions that exceed the 20% cap on nonresident contributions.  These bills also required noncandidate committees to file an additional preliminary report on July 31st prior to each primary election.

S.B. 94 and H.B. 216 proposed to increases the per-voter dollar amount expenditure limit of partial public financing and the percentage of total expenditure limit available as public funds and repeal equalizing fund provisions.

None of these bills passed.

Screening

3,523 bills were introduced in the Hawaii State Legislature, Regular Session of 2009.  All of these bills were screened to determine the possible impact on campaign finance law and the operations of the Commission.

Tracking

80 bills including, budget bills, were identified as having possible impact on the campaign law or the operation of the Commission and were subsequently tracked.

Testimonies and Letters

Over 12 hearings were attended and oral and written testimony provided.

Constitutional Convention Legislation

There were a number of bills for a Constitutional Convention and for full public financing for the Constitutional Convention candidates.  The Legislative Reference Bureau was tasked with a study of the costs for various forms of a Constitutional Convention and asked for in-depth cost data from the Commission.  The Commission staff spent a great deal of time first determining what additional work would be involved, and then what human resources would be needed including types of positions and costs, what equipment would be required, and how much additional physical space would be necessary.

Costs were then broken down by various numbers of candidates and with and without full public financing.

Hawaii County Council Comprehensive Public Funding Project

The Commission was given an unfunded mandate by the 2008 Legislature to initiate and build a new Hawaii County Council Comprehensive Public Funding Project. In the 2009 Legislature, various groups attempted to delay the start of the project by introducing House Bill 345, but the measure was not heard by the Senate Judiciary Committee.

The Commission staff first reviewed the legislation to learn the law and how sections interplay.  Timelines were created.  Business requirements to make modifications to the Candidate Filing System and the Noncandidate Committee Filing System were developed.  Meetings were held with the State of Hawaii Information and Communications Division (”ICSD”) to develop a timeline for ICSD to complete modifications to the electronic filing systems and to assist them in understanding what the project is about.  Also, reservations for class sites on the neighbor islands were made and class dates were set for Participant and Non-Participant classes, as well as classes for Noncandidate Committees.  A determination will be made later as to whether contracts must be drafted and executed for extra assistance for the Commission staff to carry out this program.

GOAL 2

  To increase public education, awareness and access

     ACTION ITEMS:

     b.  Hold periodic public seminars to highlight important issues

2009 Forum

A tentative date of October 9, 2009 was set.  The following speakers agreed to that tentative date: Jason Kaune, Esq. and Darrin Lim, Esq. of Nielsen, Merksamer, Parrinello, Mueller & Naylor, LLP; Paul Ryan, Esq., F.E.C. Program & Associate Legal Counsel of The Campaign Legal Center; Noriko Hara, Ph.D., Associate Professor of Information Science, Indiana University, and Robert Stern, President, Center for Governmental Studies. 

At the February, 2009 Commission meeting, staff recommended cancellation of the 2009 Forum due to the State’s economic crisis and the need to minimize expenditures.  The Commission had no objections but hoped it could take place in a future year.

The Council on Governmental Ethics Laws Annual Conference (COGEL)

The COGEL Conference, an international conference, with regulators in campaign finance law, lobbying and ethics attending, was held in Chicago, Illinois in December, 2009.  We were invited to facilitate and present a “table topic” on Strategic Planning at the “Breakfast Table Topics” section of the conference.

Community Presentations

1.  An early morning presentation on campaign contributions and noncandidate committees was made to the General Contractor’s Association on August 13, 2008.

2.  The Hawaii Society of Certified Public Accountants asked for a presentation on contributions and noncandidate committees, which was provided on October 17, 2008.

3.  A presentation on noncandidate committees was made to the Hawaii Republican Party in the evening of April 21, 2009.

4.  The Hawaii State Commission on the Status of Women, Rutgers University Center for American Women and Politics- Ready to Run program asked us once again to make a presentation on campaign finance.  This was held on June 3, 2009.  This presentation was filmed and made available on Olelo cable television.

5.  Efforts were made to do live demonstrations of the Candidate Filing System and the  Noncandidate Filing System at various shopping centers in and around September, 2008.  Ala Moana Shopping Center said they didn’t allow any type of television screen or computer monitor, nor could you ask people to look at the website.  Pearlridge Mall was booked through the end of the year.  Kahala Mall was welcoming and the entire Commission staff spent Saturday, September 6, 2008 talking to the patrons of the mall and demonstrating the Candidate Filing System and the Noncandidate Committee Filing System. 

Most mall-goers appeared intent on getting where they needed to go, and interest in seeing the systems was minimal.  We did place advertisements in the Honolulu Advertiser and the Star-Bulletin prior to September 6th to provide notice to the community.

Honolulu City Council District 3 Special Election

Upon the passing of City Councilmember Barbara Marshall on February 22, 2009, the City Clerk had 10 days to announce a special election that would occur within 60 days.  The Commission staff created a Candidate Quickstart guide, planned two Candidate classes, calculated new reporting periods, created reporting deadline information sheets, and drafted and mailed out reminders to noncandidate committees as to their reporting obligations if they participated in the special election.  Information packets for candidates were assembled and provided to the City Clerk’s office.  The two candidate classes were taught on March 12 and 13, 2009.  Notarization and collection of affidavits to voluntarily comply with expenditure limits were also coordinated with the City Clerk’s Office.  The Commission provided Special election candidates assistance with compliance with the laws and rules, and with filing reports.

Honolulu City Council District 5 Special Election

Upon the passing of City Councilmember Duke Bainum on June 9, 2009, the City Clerk had 10 days to announce a special election that would occur within 60 days.  The Commission staff updated the Candidate Quickstart guide, planned two Candidate classes, calculated new reporting periods, created reporting deadline information sheets, and drafted and mailed out reminders to noncandidate committees as to their reporting obligations if they participated in the special election.  Information packets for candidates were assembled and provided to the City Clerk’s office.  The two candidate classes were taught on June 24 and June 26, 2009.  Notarization and collection of affidavits to voluntarily comply with expenditure limits were once again coordinated with the City Clerk’s Office.  The Commission provided Special election candidates assistance with compliance with the laws and rules, and with filing reports. 

     c.  Improve web-based information

Redesign of the website.  The Commission staff met several times to work out a design template for a fresh, new website look.  Topping our list was a desire to make it easier for viewers to find what they needed.  A request was submitted to ICSD to build the new site and by October, 2008, Karen Higa had built a site with a new look and functionality.  After some few tweaks were made by ICSD, the Commission staff moved everything on the old site to the new site.  Additional changes were made and our new website was launched on March 9, 2009.

In July of 2008, the Candidate Committee Guidebook and the Noncandidate Committee Guidebook were updated, edited, and reposted on our website.  Later, the website FAQs were updated, edited, and reposted.

In August, 2008 a Noncandidate Committee Filing System Administrator’s Guide was drafted.  After several rounds of editing, the Guide was posted on our website. 

     d.  Develop capacity for regular public information releases during the lectoral season on contributions and expenditures.

1.  The Commission Bulletin was drafted, published and sent out to all Candidates, Treasurers, Noncandidate Committee Chairs and Treasurers and others in July, 2008 and January, 2009.  Information provided included the launch of the Noncandidate Committee filing system, launch of training videos, the Blue Ribbon Recodification Committee, reporting deadlines, legislation, fines and penalties, and Commission accomplishments.

2.  KGMB, KHNL, KHON, KITV, Pacific Business News and the Honolulu Advertiser were contacted between August and September, 2008, regarding creation of a link on their websites to our website.  We later verified that KITV, KHNL, KHON, and KGMB assisted us by creating the links on their websites.

3.  From July, 2008 through March, 2009, we averaged 58,121 hits per month on our website, with a total of 523,085 hits.  This was an increase over FY08.

In April, 2009 ICSD transitioned the Commission website from Webstats to Google Analytics to gather website statistics.  This changed the statistical baseline as Google Analytics does not record all search engine term visits.[1]  Additionally, Google Analytics claims that Webstats records bot[2]visits which would increase the number of hits on a website.

As a result of the change in statistical software and the resulting baseline, there was a drastic drop in the number of hits from April – June, 2009. 

4.  On September 5, 2008 we had our message about being an informed voter and going to our website to view candidate contributions and expenditures printed on approximately 47,650 State employee paycheck stubs.

5.  We wrote an article entitled, “Are you in compliance with Hawaii campaign spending laws?”, that was printed in “Kala”, the Hawaii Society of Certified Public Accountants December, 2008 newsletter.

6.  We wrote a “Letter to the Editor” that was printed on February 27, 2009 in the Hoolulu Advertiser regarding House Bill 539 and House Bill 215 and acknowledging the good work of the Commission Blue Ribbon Recodification Committee.

7.  In July, 2008, we appeared in Honolulu Magazine in which two sides of full public funding for elections was presented.

8.  Three advertisements each were placed in the Honolulu Advertiser, Honolulu Star-Bulletin, The Garden Island, Maui News, and Hawaii Tribune Herald in July, 2008 for Candidate, Noncandidate Committee, and Public Financing classes.

9.  Numerous flyers were sent out to candidates and committees during the election period reminding them of reporting deadlines and providing other information.

10. The Commission staff handled a little over 3,000 phone requests for assistance.

     e.  Establish procedures between campaign spending, elections and ethics offices to formalize coordination efforts.

The Office of Elections sent a representative to our July, 2008 classes on Kauai, Maui, and Oahu, and in Hilo to present information on candidate qualifications and the pulling and filing of nomination papers.

A formalized procedure was developed by the Commission staff to coordinate classes and to coordinate use of Conference room 203 by the Office of Elections and was reviewed by Chief Election Officer Kevin Cronin.  He had no objections.

The Executive Director and General Counsel for the Hawaii State Ethics Commission, Dan Mollway, was contacted regarding coordination of efforts in regards to receipt of potential Ethics complaints.  A formalized procedure was developed regarding referral of the complaints to Ethics.  The procedure was reviewed by Executive Director Mollway.  He had no objections.

The State Procurement Officer Aaron Fujioka (“Fujioka”) was contacted in regards to Hawaii Administrative Rule §3-126-11.01 that specifies the Commission notify the State Procurement Office (“SPO”) of fines and penalties.  Previously, the SPO had been notified that the information was available on our website.  However, in recent contact with Fujioka, his preference was written notification from the Commission.  A procedure was drafted by the Commission staff whereby monthly notification via letter will be provided to the SPO Administrator when fines and penalties are imposed pursuant to HRS §11-228.

GOAL 3

  Increase the technological capacity to improve access, reduce paperwork, and increase compliance

     Action Item:

     d.     Keep the system updated, and current

The Candidate Filing System and Noncandidate Committee Filing System were both     modified to accommodate new reporting periods and to add new late contribution reports for the Honolulu City Council District 3 Special Election in April, 2009 and for the Honolulu City Council District 5 Special Election to be held August 7, 2009.

Throughout 2008, several conversations were held and some written requests made to ICSD to increase the capacity and speed of the servers that the Candidate Filing System and Noncandidate Committee Filing System run on (which servers are borrowed from ICSD).  The Commission staff sought outside advice on Service Level Agreements (“SLA”) for the virtual servers and drafted specifications for a proposed SLA.  ICSD formulated a plan to transition to IBM Blade virtual servers and then provided us specifications in June, 2009 for two Blade servers and numerous items of software, including a database program.

In June, 2009, quotes on the list of equipment and software provided by ICSD were obtained and a request for approval to purchase was submitted to the Governor.  Terms of the SLA are still pending negotiation with ICSD.

In January, 2009, a request was submitted to ICSD to build a “Subscribe-Unsubscribe” system on the Commission website.  Specifications for the system were researched and drafted for this request.  First and foremost, the system had to be driven by the users self-subscribing and unsubscribing.  The Commission is constantly looking for more ways to make more efficient use of the staff’s time and to better communicate with candidates, committees, and the public.  Mail-outs, consisting of the Commission Bulletin, reporting deadline reminders, and informational notices, are costly and time-consuming for the staff who have to print labels and stuff envelopes by hand for about 750 recipients of each mail-out.  Confirmation was received from ICSD in June, 2009 that they would build the system if we would purchase the Blade servers to handle the needed capacity and software.

GOAL 4

  Upgrade the training for and ability of the committees to comply with campaign spending laws

     ACTION ITEMS:

     a.      Develop a comprehensive curriculum, with training modules on most asked, most problematic, and new provisions

Classes for Candidates, Noncandidate Committees, and Partial Public Financing were held in July, 2008, which included a legislative update, as follows: 

Candidate classes were held on March 12 and 13, 2009 for Honolulu City Council District 3 Special Election candidates.  There were 10 attendees.  Candidate classes were also held on June 24 and 26^th for Honolulu City Council District 5 Special Election candidates.  There were 8 attendees. 

     c.      Create new methods for training and disseminating information, including   virtual training (i.e. web-based, DVD)

In July, 2008 13 new Candidate, Noncandidate Committee, and Partial Public Financing training video modules were presented by Commission staff, filmed and edited by ICSD, and posted on the Commission website.  All training became available on the Commission website 24 hours a day, seven days a week.  Live class attendees noted they appreciated the videos because they could go home and listen to the material again.  Virtual training became a reality.

     d.  Hold periodic public discussions to highlight important issues

See Goal 2, Action Item b, 2009 National Forum.

GOAL 5

  Encourage compliance

     ACTION ITEMS:

Review of approximately 1,675 Candidate disclosure reports for the 2008 election year has been completed.  Numerous letters have been sent seeking corrections and clarifications.  Letters are tracked.  Conciliation Agreements in regards to the reviews have been completed.

The following Docketed Complaints were investigated and decided:                     

Docket No. 08-03 Niel O’Brien v. William Kenoi– The complaint alleging failure to disclose non-monetary contributions to his campaign from owners of property in which William Kenoi’s headquarters were located was dismissed, however a $50 fine was  assessed for the unreported “other receipt.”

Docket 08-06 Sarah Hunt v. Kurt Fevella–  The complaint alleging faulty endorsements on candidate Kurt Fevella’s campaign brochures was dismissed.

Docket 08-07 Sarah Hunt v. Kurt Fevella–  The complaint alleging Kurt Fevella campaigned for other candidates by holding a sign post with multiple signs was dismissed.

Docket No. 09-01   John Lester v. Don Couch– The complaint alleged that the Don Couch campaign received excess non-resident contributions during the First Preliminary Primary, Preliminary General, Final Election Periods, and on the Late Contribution (General) report.  The Commission dismissed allegations involving the , First Preliminary Primary, Preliminary General and the Late Contribution reports, and made a preliminary determination of probable cause for the Final Election Period report.  The fine is scheduled to be imposed at the August, 2009 meeting.

Docket No. 09-02   John Lester v. Don Couch, Michael Rosenfeld–  The complaint  alleged that Don Couch and Michael Rosenfeld, a contributor to the Couch campaign, violated the law by:  “bundling of campaign contributions by using several entities, attempting to bypass the 20% limit on non-resident contributions, and exceeding the 20% limit on non-resident contribution during a reporting cycle.  The Commission dismissed all allegations.

The following Conciliation Agreements (“CA”) and fines were drafted, negotiated, and approved by the Commission in FY 09:

CA 09-02     Jeffrey Stone, Pacific Northwest Ltd. – $260
Fined for one excess contribution.  Self-reported.

CA 09-01     Hawaii Optometric Political Action Committee – $150
Fined for one excess contribution.  Self-reported.

CA 08-06     Debbie Hecht, Friends of Debbie Hecht – $100 Fine
Fined for prohibited use of campaign funds, paying for advertisement with another candidate in the ad, without apportioning costs.

CA 08-05     Reynolds American Inc. – $150
Fined for one excess contribution.  Self-reported.

CA 08-04     Colleen Meyer, Friends of Colleen Meyer – $200
Fined for two donations to a community organization after filing nomination papers.

CA 08-03     William J.K. Medeiros, Medeiros for Council Committee – $2,000
Fined for multiple late reports.

CA 08-02     Jay Kimura, Friends of Jay Kimura – $260
Fined for two donations to a community organization after filing nomination papers.  Self-reported.

The following matter was decided by the Commission in FY 09:

In Re Matter of Hawaii Restaurant Association Political Action Committee

The Hawaii Restaurant Association Political Action Committee is requesting a waiver of late filing penalties of $300 for the Preliminary Primary report and $200 for the Final Primary report. Commission denied the waiver of late filing penalties.

     b.   Develop escalating penalties for repeat and gross violations

The Commission successfully proposed and sought passage of a law increasing late report fines.  Writing numerous letters to late filers, tracking the letters, and at times, drafting conciliations took enormous amounts of staff time, in addition to the reports not being available for public viewing.

In FY07, 599 late report fines were imposed totaling $29,920.  In FY08, 185 late report fines were imposed totaling $20,152.08.  In FY 09, when 4-6 additional reports per candidate are required between July 1 and December 31st than FY08, the number of late reports dropped to 163 with $35,036.53 in fines imposed.

The increased fines appear to be very effective in encouraging compliance. 

*Includes Candidate Committees and Noncandidate Committees

Fines imposed in FY 2009:
Excess Contributions- 3 totaling $560
Excess Donations to Community Organizations- 2 totaling $460
Prohibited Use of Campaign Funds for Another Candidate (Advertisement)- 1 – $100
Advertising violations- 16 totaling $1,200
Collected Fines Imposed Prior to FY09- $15,000
Late Report Fines- $38,086.53
Total Fines- $55,406.53

GOAL 6

  Increase and stabilize CSC’s institutional capacity to carry out its mission

     ACTION ITEMS:

     a.  In anticipation of continued annual reductions in the tax check-off, develop proposals to stabilize funding, including a general appropriation to be made into the trust fund at 4 to 6 year intervals.

A proposed bill to request a general appropriation to the Hawaii Election Campaign Fund was nixed when the State’s economic crisis worsened in January, 2009.  Any request for funding must be delayed until at least the 2010 legislature.

The Governor ordered 3-day furloughs of executive branch employees to begin July 1, 2009 for a two-year period.  Notification to the public was provided on our website along with a color-coded calendar of closed office days.

The Commission has two primary sources of revenue: the State income tax check-off and the interest on the principal in the Hawaii Election Campaign Fund.  Though the number of tax check-offs decreased from 95,240 in FY08 to 70,957 in FY09, revenue increased because the tax check-off was increased from $2 to $3 on January 1, 2009.  Interest revenue spiraled downward in FY09.

***The 2008 Legislature amended the law so that fines are deposited in the General Fund, rather than the Hawaii Elections Campaign Fund.  Fines were formerly a source of revenue for the Commission.

The Commission must also carry out the Legislature’s unfunded mandate to create and run the Hawaii County Council Comprehensive Public Funding Project, which is estimated to cost $300,000 in public funding and up to $100,000 in administrative costs.

     c.      Plan for potential staff transitions (beyond 2012)

The Department of Accounting and General Services requires multiple training classes for procurement, etc., before staff members are authorized to carry out specified transactions, as well as other types of training.  By increasing the number of staff members attending classes, more are qualified to carry on the various types of administrative work necessary to complete the Commission’s work.  There were no fees for all classes listed below except the COGEL Conference.  Most classes were about 2 hours in duration.

     e.     Document procedures

Each staff position continued the process of building a binder of their duties and responsibilities and the steps to carry out these duties and responsibilities.  Approximately 82 new processes and steps were added to the 5 binders (Executive Director, Associate Director, General Counsel, Administrative Assistant, Elections Assistant.)

     f.      Evaluate space needs for possible staff expansion due to potential for increased statutory responsibilities

All legislative bills regarding a 2010 Constitutional Convention died, and thus planning for it was terminated.   The Hawaii County Council Comprehensive Public Funding Project may require 1 to 2 contract hires.  One to two hires would require additional office space, however, we cannot have new hires working in a physical location separate from the regular office staff.  Thus, because of the temporary nature of the project, we will not pursue additional office space at this time.

     g.     Develop contingency plans for public funding scenarios.

The Commission staff began building the Hawaii County Council Comprehensive Public Funding Program shortly after the 2008 election.  The Commission staff first reviewed the legislation to learn the law and how sections interplay.  Timelines were created.  Business requirements to make modifications to the Candidate Filing System and the Noncandidate Committee Filing System were developed.  Meetings were held with the State of Hawaii Information and Communications Division (”ICSD”) to develop a timeline for ICSD to complete modifications to the electronic filing systems and to assist them in understanding what the project is about.  Also, reservations for class sites on the neighbor islands were made and class dates were set for Participant and Non-Participant classes, as well as classes for Noncandidate Committees.  A determination will be made later as to whether contracts must be drafted and executed for extra assistance for the Commission staff to carry out this program.

Focus for FY 2010

1.  Blades.  Move to a virtual environment.  Obtain Blade virtual servers and software to increase capacity and speed for the CFS and NCFS, along with sufficient redundancy for backup purposes.

2.  Subscribe-Unsubscribe.  Initiate a subscribe-unsubscribe system on our website to reduce costs and staff time mailing out deadline reminders, the Campaign Spending Commission Bulletin, and other pieces of information.  Transition candidates, treasurers, noncandidate committees, and chairpersons from mail-out reminders and information to an e-mail system where users are responsible for subscribing, unsubscribing, and maintaining updated addresses.

3.  Hawaii County Council Comprehensive Public Funding Project.  Continue all phases of development of the Hawaii County Council Comprehensive Public Funding Project, provide notice to the public on the start of the program, develop guidebooks and training videos, provide training, coordinate with the Hawaii County Clerk’s Office and the State of Hawaii Budget and Finance’s Treasury Division, execute the program, monitor independent expenditures and noncandidate committee expenditures, audit usage of funding, initiate investigations when necessary, negotiate conciliations, prepare cases for presentation to the Commission.

4.  2010 Elections.  Facilitate all aspects of the Commission’s responsibilities in the 2010 elections.

5.  Recodification.  Reintroduce the Recodification into the 2010 Legislature.  Set and attend multiple meetings with legislators, provide written and oral testimony, respond to requests for information and data.

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