Campaign Spending Commission

HAWAII CAMPAIGN SPENDING COMMISSION
ANNUAL REPORT
Fiscal Year July 1, 2018 to June 30, 2019

INTRODUCTION

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 compliance.  The Commission is guided by a 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 2019 covering the period July 1, 2018 to June 30, 2019 as well as documents other significant events.  It also includes a discussion of future considerations for fiscal year 2020.

STRATEGIC PLAN

GOAL – TO IMPROVE CAMPAIGN FINANCE LAWS AND RULES TO INCREASE TRANSPARENCY, COMPLIANCE, AND ENSURE THE INTEGRITY OF THE CAMPAIGN FINANCE PROCESS.

• Review existing laws as well as propose and submit legislation as needed. For the 2019 Legislative Session, the Commission submitted five (5) bills to the President of the Senate and the Speaker of the House for introduction, of which two (2) were signed into law and went in to effect on July 1, 2019.  The bills that passed were:

Act 8 (H.B. No. 165) – This bill was introduced on behalf of the Commission.  Requires candidate committees to inform the Commission if they intend to spend or receive $1,000 or less by June 30th of an election year and noncandidate committees to inform the Commission if they intend to spend or receive $1,000 or less by the fifth calendar day before the due date of the preliminary report.

Act 107 (S.B. No. 197) – Allows donations to charities and full-time scholarship awards prior to the day after the general election if the candidate wins outright or loses in the primary election.  Donations to charities and full-time scholarship awards are currently prohibited from the filing of nomination papers through the general election for charitable donations, or from the nomination paper filing deadline through the general election for full-time scholarship awards.

Act 241 (S.B. No. 138) – This bill was introduced on behalf of the Commission.  Requires an October 1st report for candidate committees and the House added another report on April 30th for candidate committees whose candidates file nomination papers by April 25th of an election year.

The following Commission bills did not pass the 2019 Legislative Session:

H.B. 164 / S.B. 139 – Amends 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.  Also, increases the expenditure aggregate to $3,000 and retolls the amount before the filing of additional statements of information are required.  Lastly, 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. 162 / S.B. 137 – Amends HRS §11-410 by raising the amount of fine that can be assessed against a Super PAC (that has received or spent more than $10,000 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 order that the payment of the fine assessed against a noncandidate committee, or any portion, be paid from the personal funds of an officer of the noncandidate committee.

S.B. 643 – Amends HRS §11-364 by requiring nonresident contributions exceeding 30% of the total contributions received by a candidate committee for each election period to escheat to the Hawaii election campaign fund if not returned to the contributor within thirty days. This bill was introduced by the Chair of the Senate Judiciary Committee and was heard by this committee; however, it died when the Senate Ways and Means Committee declined to give it a hearing.

o    Review existing rules and procedures as well as propose administrative rules as needed.  There were no changes to the Commission’s administrative rules and procedures during this fiscal year.

GOAL – TO PROVIDE TRAINING, EDUCATION, AND ACCESS TO COMMITTEES FOR PURPOSES OF COMPLIANCE WITH, AND INCREASING AWARENESS OF, CAMPAIGN FINANCE LAWS AND RULES.

• Offer and provide training on campaign finance laws and rules. Most of the onsite training was conducted last fiscal year in anticipation of the 2018 election; however, we did participate on a Hawaii Public Radio program in August 2018 and on another radio show in October 2018, sat on a panel regarding the Constitutional Convention at the University of Hawaii, William S. Richardson School of Law in October 2018, and delivered a training on fundraising to the Democratic Party in January 2019.

• Provide educational and informational materials on how to comply with campaign finance laws and rules. In preparation for the 2018 election, the Commission reviewed and revised its training modules which are all available on the Commission’s website (i.e., guidebooks, manuals, cyber-learning videos, and powerpoint presentations).  This fiscal year was unusual since the Hawaii Supreme Court invalidated the results of the general election with regard to the Honolulu City Council, District 4, race which resulted in an unprecedented Special Election that occurred on April 13, 2019.  Efforts to communicate with the two candidates and all noncandidate committees as well as coordinate with the Office of Elections and Honolulu County Clerk’s Office were critical.

• Evaluate the effectiveness of and explore (and implement as needed) new methods of training, education, and communication of information. Current efforts to communicate with committees 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.

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 understands 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 candidates’ compliance with campaign finance laws is operating properly so that the winning candidates are able to be sworn into office.

• Direct the committees to the Commission’s website and continue to improve web-based information as well as other social media applications. 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, Hawaii Election Campaign Fund (“HECF”) trust fund 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 174,049 “hits” to our website.

The Commission regularly uses e-blasts as well as Facebook and Twitter accounts to inform and educate committees on campaign finance topics.  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 127 times and we have 903 total subscribers.  Notably, subscribers are separated into three groups – candidates (359 subscribers), noncandidate committees (243 subscribers), and the public (301 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 393 tweets with a total tally of over 186,710 impressions or times a tweet has been seen.

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 with the campaign spending data that we use to provide transparency in elections to the public.

The new candidate dashboard app that was launched at the end of last fiscal year which consolidated campaign spending data filed by candidates and provided for better comparative analyses of the data by office, party, and reporting period, was very helpful and was viewed 13,914 times.  Its success helped the Commission to seek funding to build the noncandidate committee dashboard counterpart in the next fiscal year.

• Encourage the committees to contact the Commission and/or visit the Commission’s office to assist in compliance with campaign finance laws and rules. This position has always been emphasized.  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.

• Issue advisory opinions as requested. There were no advisory opinions requested during this fiscal year.

GOAL – TO INCREASE EDUCATION, AWARENESS, AND ACCESS FOR THE PUBLIC.

• Inform and educate the public about campaign finance laws and rules. The Commission disseminates to the public information concerning campaign finance by posting anything new/interesting on our website under “What’s New,” publishing biannual newsletters, and e-blasting, tweeting, and posting on Facebook.  New laws, legislation, guidance, updates to the guidebooks and manuals, updates to the electronic filing systems, and new forms are examples of what the Commission e-blasts, tweets, and posts.  With the Special Election in April 2019, the Commission composed and sent out a special memo and emailed it to all the committees as well as posted it on the Commission’s website and tweeted it to inform the committees of the laws and rules as it applied to the unanticipated election.

• Explore and implement improvements to the Commission’s online presence and other media applications to provide the public with campaign finance committee data and information. The Commission continues to promote its searchable database, data visualization applications, and candidate dashboard which are 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.  As mentioned above, just before this fiscal year came to a close, the Commission decided to add another data visualization app to help the public (and committees) see contributions and expenditures from candidates in a comparative format arranged by office, party, and reporting period.

Further, at the close of each election, election data is compiled, sorted, analyzed, and summarized in charts, top 10 lists, and cost per vote which is then posted on the Commission’s website.

GOAL – TO EXPLORE, EXAMINE, AND IMPLEMENT TECHNOLOGICAL ADVANCES AND CAPACITIES TO IMPROVE ACCESS, REDUCE PAPERWORK, AND INCREASE COMPLIANCE.

• Increase the Commission’s capability to process and analyze reported data.  During this period, there were no changes to the Commission’s electronic filing systems besides house-keeping measures as a result of legislative enactments to improve transparency and disclosure as well as adding in reports and creating additional forms to address the Special Election in April 2019.  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.

The Commission continues its employment of 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 is tremendous and we have received and processed 1,814 eSign documents during this reporting period.

Effective January 2018, the Commission extended an alternative payment method for those committees fined to achieve a higher level of compliance and offer better convenience to the committees.  Specifically, committees who were assessed an administrative fine were informed that they would have the option to pay their fine not only by check, money order, or cash, but with a credit card online via PayPal using their PayPal account or a guest account.  The committees were informed that there would be no fee to use this alternative option and that the Commission opted to absorb the fee of 2.9% of the total payment plus $0.30.  The Commission however noted that if at any point in time the Commission was unable to afford these fees or the fees were approaching the state procurement threshold, it would notify the committees that it would have to stop accepting online payments.  During this fiscal year, the Commission received 121 payments via PayPal totaling $25,585.

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.  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 – TO OBTAIN COMPLIANCE WITH CAMPAIGN FINANCE LAWS AND RULES THROUGH ENFORCEMENT ACTIONS.

• 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.  As such, the Commission has been invoking administrative fines pursuant to HRS §11-410(a) as a means to take a stronger punitive stance to those committees who completely fail to file reports by the statutory deadline or violate campaign finance laws.  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.  Four (4) matters were referred to this office in this fiscal year for collections and enforcement. 

As for complaints in this fiscal year, which was an election year, there were 38 which resulted in a total of $15,163.51 in assessed administrative fines.

• 25 complaints yielded a preliminary determination of a campaign finance violation resulting in $14,213.51 in assessed administrative fines;
• 3 complaints were withdrawn or dismissed due to compliance resulting in $950 in assessed administrative fines;
• 3 complaints resulted in conciliation agreements; and
• 1 complaint is pending and is anticipated to be resolved in the next fiscal year.

The remaining complaints were closed or dismissed because they did not result in a finding of a campaign spending violation.           

Pursuant to Hawaii Administrative Rules (“HAR”) §3-160-73(d), this annual report is the means in which the Commission reports the amount of fines paid by persons thereby furthering the dissemination of information concerning the penalties.  This rule also requires that the Commission adopt a Schedule of Fines for violations which is posted on the Commission’s website and is referred to in all fine letters to the committees.

Seek enforcement of the campaign finance laws and rules against violators.  During this fiscal year, a total of $108,384.18 was assessed in administrative fines[1] and $32,224.73 was escheated to the HECF[2] due to campaign finance violations.  There were 164 conciliation agreements resulting in reduced fines totaling $44,368.47.  The majority of the conciliation agreements concerned the failure to file or the late filing of the Statement of Electioneering Communications (89) followed by the late filing of reports (79).

Most of the Commission’s enforcement actions were a result of late or unfiled reports.  Specifically, there were 132 late or unfiled reports which did not involve a complaint or a conciliation agreement (i.e., 75 times from candidate committees and 57 times from noncandidate committees) for a total of $32,316.21 in assessed administrative fines.  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 $16,535.99 in assessed fines include:

• 21 late filing of the Statement of Electioneering Communications resulting in $5,250 in fines;
• 13 prohibited expenditures resulting in $2,460.99 in fines;
• 12 failures to register and file organizational reports resulting in $700 in fines;
• 12 insufficient advertisement disclaimers resulting in $375 in fines;
• 10 failures to report expenditures resulting in $2,500 in fines;
• 6 failures to report contributions resulting in $1,500 in fines;
• 6 excess contributors resulting in $800 in fines;
• 3 late fundraiser notices resulting in $75 in fines;
• 2 exceeding the expenditure limit resulting in $1,000 in fines;
• 1 failure to file the Statement of Electioneering Communications resulting in a $500 fine;
• 1 failure to timely deposit contributions resulting in a $375 fine; and
• 1 government contractor ban resulting in a $1,000 fine.

 GOAL – TO ENSURE ORGANIZATIONAL AND INSTITUTIONAL SUSTAINABILITY.

• Monitor funding and develop proposals to stabilize funding as needed. The Commission’s beginning balance at the close of fiscal year 2018 was $1,003,228.16.  In fiscal year 2019, a total of $186,619.88 in revenue was realized (i.e., $145,524 in tax check-offs and $41,095.88 in other revenue) and a total of $103,688.08 in expenditures/encumbrances was incurred, thereby closing fiscal year 2019 with a balance of $1,086,159.96.

Notably, this was the second fiscal year that the Commission’s operating expenses including salaries and administrative expenses were absorbed by the Executive Branch and thus general funded.  It is expected that this will permit HECF trust funds to replenish and provide a healthier base to pay for public funding for qualified candidates in the upcoming elections.  That said, it was a challenging year for the Commission when the Governor restricted spending for all departments and agencies.  However, the Commission was able to successfully seek an exemption from the budgetary restrictions thereby permitting it to use most of the funds allocated for this fiscal year.

• Provide Commissioner and staff development. Commissioners are regularly updated on any new or developing issues and provided information from annual COGEL conferences.  This year’s COGEL conference in December 2018 was held in Philadelphia, Pennsylvania, and was attended by Commissioners Stanley Lum and Maryellen Markley as well as Executive Director Kristin Izumi-Nitao and General Counsel Gary Kam.

In May 2019, Associate Director Tony Baldomero attended the annual conference at the PCATT (Pacific Center for Advanced Technology Training) to identify and learn new ways to improve and educate committees and the general public in campaign finance.  This year, the symposium was entitled “Data Science and Cybersecurity” which focused on data analytics, cybersecurity, emerging technologies, as well as new projects and concepts defining the human-technology frontier.

• Develop and implement plans for continuity of operations. A new Elections Assistant was hired in May 2019 who transitioned quickly and has been performing well.  The transition from trust fund to general funds operations continue to go smoothly.

• Monitor compliance with the strategic plan and annually report to the Commission, committees, and the public. Records are organized and kept to satisfy this requirement internally.  The annual report is typically prepared and presented in a public Sunshine meeting in the fall to the Commissioners for their consideration and approval.  Once approved, the annual report is posted on the Commission’s website.

OTHER SIGNIFICANT EVENTS

2019 Legislative Session.  This was the first legislative session that fiscal budgets were zeroed out and assigned to subject matter committee chairs for justification.  The Commission was fortunate to have realized the funding it requested through this process.

2019 Special Election, Honolulu City, District 4.  This was an unprecedented election when the Hawaii Supreme Court invalidated the November 6, 2018 general election results for Honolulu City Council, District 4.  The Commission was required to modify its electronic filing systems and forms to accommodate this new election period.

FUTURE CONSIDERATIONS FOR FISCAL YEAR 2020

2020 Election.  The offices for Honolulu Mayor, Honolulu Prosecuting Attorney, Honolulu City Council, and Hawaii Mayor are among the larger and competitive races set to occur in fall 2020.  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 2020 election.  This will also be the first election for the State of Hawaii for all mail-in voting.

Develop and Launch the Noncandidate Committee Dashboard.  A dashboard that will help the public and the committees to see contributions and expenditures from noncandidate committees in a comparative format will be developed for the 2020 election.  Its counterpart, the candidate committee dashboard, was developed this past fiscal year for the 2018 election.

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[1] Pursuant to HRS §11-410(e), this amount is deposited into the State general fund.

[2] Pursuant to the relevant sections of the HRS, this amount is deposited into the HECF.