Campaign Spending Commission

HAWAII CAMPAIGN SPENDING COMMISSION
ANNUAL REPORT
Fiscal Year July 1, 2011 to June 30, 2012

Introduction

The Hawaii Campaign Spending Commission’s (“Commission”) mission is to provide transparency and integrity in the campaign finance process.  The Commission is guided by a 5-year Strategic Plan (i.e., 2008 – 2012) 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 2012 covering the period July 1, 2011 to June 30, 2012 as well as documents other significant events.  It also includes a discussion of future considerations for fiscal year 2013.

Strategic Plan

Goal #1 – To simplify and clarify campaign spending laws in order to improve implementation and compliance.

• For the 2012 Legislative Session, we did not seek to open conference on House Bill 257, which stalled in a joint conference committee with the Senate and House in the 2011 Legislative Session.  Instead, we drafted and sought introduction of a bill that identified sections contained in House Bill 257 that the Commission deemed a priority (i.e., defining “matching payment period,” requiring noncandidate committees to specify in disclosure reports the name of the candidate that is supported or opposed by an independent expenditure of the committee, reinstating the expenditure limit for the office of the prosecuting attorney, and changing the report filing deadline for the first preliminary primary report to avoid back-to-back filing deadlines for the first and second preliminary primary reports (i.e., due thirty (30) calendar days prior to a primary election) as well as codified present practice of filing a supplemental report on January 31st every year regardless of whether it is an election year.  For strategic purposes, a long-form bill and a fast-track bill were introduced.  The long-form bill contained all of the aforementioned areas in contrast to the fast-track bill which captured only the new material that addressed the reporting deadlines for the first preliminary primary report and supplemental report.  Only one short-form bill submitted by the Commission (Senate Bill 2508) survived this session, and notably, it did not contain the requirement that a supplemental report be filed January 31st regardless of whether it is an election year.  Senate Bill 2508 was signed into law and went into effect on June 15, 2012 as Act 118.  Attempts to correct this will be considered for the next legislative session as well as consideration of those provisions contained in the long-form bill that did not pass.

• Other legislation of significance that we provided written and oral testimony and/or tracked included Senate Bill 2648 which authorized campaign funds to be used to award scholarships to full-time students attending an institution of higher learning or vocational education school.  House Bill 2174 which required the Commission to create and maintain a searchable database of its public records as well as eliminated the corporate electronic filing system, and House Bill 2700 which amended the Hawaii County Council Comprehensive Public Funding Program (HCCCPF) to raise the program cap, repeal the requirement of a minimum fund amount, extend the period for signature collection, clarify provision of matching funds, and clarify the formula to determine the amount of funds given.  Senate Bill 2648 was signed by the Governor on April 13, 2012 and became Act 20.  As for the other bills which ultimately did not pass, we expressed concerns mainly for purposes of implementation, resources, and inconsistencies.  Further, there were joint efforts from the House and Senate to request that our Congressional delegation recognize that corporations are not natural persons and to address campaign spending issues as a result of Citizens United.  These resolutions were adopted (i.e., House Resolution 5, House Concurrent Resolution 5, and Senate Resolution 68).

• 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, no Advisory Opinions were requested.

Goal #2 – To increase public education, awareness and access.

• Hold public seminars.  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.  Campaign finance presentations were delivered in October 2011 to lobbyists, and in January 2012, presentations were given to the House and Senate Majority Caucuses.  An invitation to participate as part of a panel of commissioners at the Council on Governmental Ethics Laws’ (COGEL) Annual Conference in December 2011 was met.  Additionally, requests to respond to media inquiries are accepted where practicable.

• Improve web-based information.  We have an ongoing partnership with the State of Hawaii’s Information & Communication Services Division (ICSD) to improve our website which contains three (3) statutorily required electronic filing systems for candidate committees, noncandidate committees, and corporations.  For purposes of transparency, much of the Commission’s operations, business, and finances are posted online including Commissioners’ biographies, meeting agendas and minutes, newsletters, conciliation agreements, advisory opinions, Hawaii Election Campaign Fund (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, reporting deadlines, enforcement issues, and contribution limits.  There are also links to viewing reports, filing reports, seeking guidance including e-learning presentations, forms, guidebooks, and qualifying for public funding.  Presentations concerning candidates and candidate committees, partial public financing, and noncandidate committees were updated and recorded in 2010 as e-learning videos which are posted online and therefore available 24/7.  As a result of our online survey, we believe that our website is our strongest resource and mechanism in providing stakeholders and interested parties with campaign finance information.  We anticipate reviewing our website in the next fiscal year and seeking ways to improve it.
• In October 2011, ICSD completed building a subscribe-unsubscribe email program for the Commission.  This program permits us to send eblasts of time sensitive information to stakeholders 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 guidebooks, and other campaign finance information.  Efforts to not overuse this program or rather reserve it for distribution of important announcements is always a consideration.  The CSC email program has been employed 23 times and we have 742 subscribers.  Notably, these subscribers are separated into four (4) groups – candidates (408 subscribers), noncandidate committees (200 subscribers), corporations (77 subscribers), and the public (57 subscribers), thereby permitting us to identify relevant audiences when the eblast goes out.
• 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 including reporting deadline reminders, new candidates, new noncandidate committees, notice of fundraisers, notice of meetings, new guidebooks, registering for training classes, etc.  To date, we have issued 454 tweets.
• Every year, we attend the PCATT IT Summit / Conference to identify and learn new ways to improve and educate committees and the general public in campaign finance.  This year, creating a mobile application of our website and employing free text messaging programs were discussed and will be examined for purposes of implementation.
• Develop capacity for regular public information releases during the electoral season on contributions and expenditures.  When training classes are scheduled, announcements are placed in relevant mediums such as our website, Facebook, Twitter, newsletter, and CSC email blast to inform the public to register.  Staff compose and publish biannual newsletters which capture important information to share with interested parties including candidates, chairpersons, treasurers, noncandidate committees, corporations, and others.  In preparation for the 2012 elections, forms, presentations, and guidebooks for candidate and noncandidate committees were reviewed, updated, and posted on our website.  We specifically focused efforts in revising our Treasurer’s Guidebook for candidate and noncandidate committees.  In January 2012, quotes were obtained to create a new Treasurer’s Guidebook in consideration of the upcoming election and the fact that the present guidebook, which was created in 1998, was outdated.  At its February 2012 meeting, the Commission awarded the contract to Paul Kuramoto.  A final draft was submitted according to the terms of the contract by June 1, 2012 and was made available on the Commission’s website to all committees by mid-June 2012.

• Establish procedures between campaign spending, elections and ethics offices to formalize coordination efforts.  We continue to work with the Office of Elections in arranging joint training presentations concerning the campaign process for candidates.  We also provide informational packets to the Office of Elections to be given to candidates who file their nomination papers.  Because this was a reapportionment year, we closely followed developments in the redistricting of districts and resulting lawsuits as to any impact to campaign spending (e.g., computation of public funding amounts).  During this period, we also met with County Clerks in preparation of the 2012 elections and identified areas requiring better coordination and collaboration.  Monthly meetings with the State Ethics Commission, the Honolulu Ethics Commission, and the Office of Information Practices (OIP) started in 2011 to identify areas in which we may be able to partner and coordinate efforts including legislation and public seminars/training efforts.

• Establish procedures between the campaign spending office and the procurement office to formalize coordination efforts.  Since 2009, we have been working with the State Procurement Office (SPO) to notify them of fines and penalties imposed by the Commission for purposes of compliance with HAR §3-126-11.01.

Goal #3 – Increase the technological capacity to improve access, reduce paperwork, and increase compliance.

• Increase the analyses capability for CSC.  During this fiscal year, a legislative bill sought to require the Commission to build and maintain a searchable database which would permit people to search any electronically filed report by any committee or corporation by any identifying element required in the report such as names of contributors, expenditures, etc. as well as ascertain through a single search the total amount of contributions or expenditures for a person, party, candidate, or committee for any applicable reporting period.  Although the bill did not pass, the Commission staff believes that such a database would increase our analyses capability and improve access to the data contained in committee reports filed in the electronic systems.  Media groups have been particularly interested in the data contained in these reports, and therefore, if made available in a more user-friendly form, we believe compliance will be a natural byproduct of such a program.

• Keep the system updated and current.  Appropriate work orders are constantly submitted to ICSD to tweak the system including adding and modifying fields to allow for independent expenditures, and reporting and developing a searchable database.  Additionally, there have been a number of modifications to the three (3) electronic filing systems.

Goal #4 – Upgrade the training for and ability of the committees to comply with campaign spending laws.

• Develop a comprehensive curriculum, with training modules on most asked, most problematic, and new provisions.  In an effort to prepare candidates of the numerous reporting requirements and laws regarding campaign finance, training classes were offered across the State.  There were five (5) classes offered in February (and July 2012 which will be discussed in the next Annual Report) with 114 registrants who attended presentations on candidate committees, noncandidate committees, and public financing.  In preparation for these trainings and in consideration of new case law and entering into an election year, powerpoint training presentations were revised and made available online via our website.
• As early as 2007, certified public accountants were attending these trainings because they were often employed or asked to assist with treasurer duties of candidate and noncandidate committees.  Accordingly, with the assistance of former Commissioner Chair Paul Kuramoto, we were approved to provide Continuing Professional Education credits by the Board of Accountancy to certified public accountants.  Eight (8) CPAS received credit from our trainings this fiscal year.  Our instructor certification must be annually renewed and our current certification will expire in December 2013.
• Create new methods for training and disseminating information, including virtual training (i.e., web-based).  By July 2008, thirteen (13) training videos for candidate committees, noncandidate committees, and partial public financing were available on the Commission’s website thereby making virtual training 24/7 a reality.  Live class attendees noted that they appreciated the e-learning videos because they could go home and listen to the material again.  Video for the HCCCPF program was recorded in November/December 2009 and then uploaded to the Commission’s website for viewing.  We are in the process of updating our e-learning videos and continuing their “bite-size” modules of assistance with a particular focus on electronically filing various campaign spending reports.  We anticipate that this will be completed sometime during the next fiscal year.
  Additionally, we continue to explore other avenues for training and disseminating information including developing a searchable database at no additional costs to the Commission.

• Hold periodic public discussions to highlight important issues.  The 2009 National Campaign Finance Laws Forum was suspended due to the challenging economic conditions. All speakers and our location partner were contacted and informed of the need to suspend the forum until better economic times.  This unfortunately continues to remain our present position.

Goal #5 – Encourage compliance.

• Develop system for automatic on-line, email, and postal notifications.  In October 2011, ICSD completed the Commission’s subscribe-unsubscribe email blast system.  Continued collaboration with ICSD is anticipated to identify newer technologies and mobile applications to increase communication and engagement with stakeholders.  Our decision to employ social media tools was meant to enhance and increase our communication efforts to inform committees of important and time-sensitive information to obtain compliance.
• Develop escalating fines for repeat and gross violations.  We continue to find that there are some candidate and noncandidate committees who do not file their reports timely or not at all.  In consideration of staff resources in getting these parties to file their reports, the Commission decided to consider other remedies including filing complaints against violators last fiscal year.  During this period, thirteen (13) complaints were filed of which five (5) were resolved which resulted in fines totaling $7,164.50.  We also filed five (5) applications in First Circuit Court to seek judicial enforcement of Commission orders pursuant to HRS §11-410(d) as a result of noncompliance.  Although this process has been time consuming and requires process servers to be retained for purposes of serving filed court documents, it is our hope that a contempt of court for failure to comply with a Commission order will be an effective deterrent for late reporters and non-reporters.  The five (5) First Circuit Court applications in this reporting period were all withdrawn by our General Counsel as a result of compliance despite a cost of $446.40 in process serving fees.
• Simplify, expedite disposition of offenses.  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 fiscal year 2012, there were eight (8) conciliation agreements which were approved resulting in a total of $1,803.31 in administrative fines.
• On March 21, 2012, the Yamada v. Kuramoto, et. al., Civil No. CV10-0497 (now, Yamada v. Weaver, et. al.) lawsuit was decided.  The Federal District Court in the State of Hawaii held that:  (1) the $1,000 per election contribution limit applicable to noncandidate committees under HRS §11-358 cannot be constitutionally applied to noncandidate committees that solely make independent expenditures; (2) the definitions of “noncandidate committee” and “expenditure” in HRS §11-302 are not unconstitutionally vague or overbroad; (3) the electrical contractor plaintiff did not have standing to challenge the electioneering communications registration requirements because by administrative rule, the contractor, as a noncandidate committee, was not required to comply with HRS §11-341; (4) the disclaimer for advertisements required by HRS §11-391(a)(2)(B) is not unconstitutionally vague; and (5) the ban on government contractors’ contribution contained in HRS §11-355 is constitutionally permissible.  The final order was appealed to the 9th Circuit Court of Appeals.  Plaintiffs have not sought a stay of the order so the order is effective until reversed on appeal.
  Based upon the court’s decision, organizations, including corporations and other business entities, that make contributions to candidates (or make expenditures) that aggregate more than $1,000 in a two-year election period, were contacted by the Commission asking them to register as a noncandidate committee or as a corporation (if applicable) with the Commission and to file disclosure reports.  This has required additional man hours in educating committees and assisting them in complying with campaign finance laws.

• Automate tracking and follow up communications.  As ICSD is able to complete our current work requests for modifications to the electronic filing systems, and in consideration of other priorities and new initiatives, a request to automate the identification of late report filers and the automatic generation of late report letters will be considered.  We continue to identify and explore other measures to automate our system to discuss with ICSD.
• In addition, to encourage compliance, we encourage people to call us and visit our website.  The staff handles numerous phone calls, walk-ins, and inquiries daily.  There are computers located in our office for parties to file their reports and to seek our assistance.

Goal #6 – 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.  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.  Prior to the 2008 Legislature, another revenue stream was administrative fines imposed by the Commission.  The 2008 Legislature amended the law so that these fines are now deposited into the general fund rather than the HECF.  Although regular requests are made annually to the Comptroller to approve paystub messages to government employees to remind them of the $3 check-off on State tax returns, the number of $3 tax check-offs declines.  We therefore remain very concerned about our funding.  In FY 2012, a total of $73,528 in revenue was generated and a total of $790,035 in expenditures / encumbrances was incurred, thereby closing FY 2012 with a balance of $3,424,708.
• As for public funding, the Commission funds and services two (2) public financing programs – partial public financing and comprehensive or full public financing which is the HCCCPF program.  By law, the HCCCPF program provides for a statutory ceiling of $300,000 for all qualifying candidates during election years 2010, 2012, and 2014 if the fund has at least $3.5 million as of September 1^st of the year prior to the election.  See, Act 244, SLH 2008, Section 12.  As such, the HCCCPF program may deplete as much as $1 million from the HECF for the 2010, 2012, and 2014 elections.  As the balance of the fund declines, the interest on the fund is also rapidly declining.  The situation is amplified by the challenge facing our state’s economic situation.  A proposed bill to request a general appropriation to the HECF was withdrawn when the state’s fiscal situation worsened in January 2009.  It is projected that an appropriation will be needed by at least 2014, if not sooner, and thus, strategies must be developed to anticipate this need.
• Plan for potential staff transitions (beyond 2012).  Before staff members are able to carry out specified transactions, DAGS requires multiple training classes for procurement, etc.  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.  Furthermore, in FY 2008, all position descriptions were extensively updated and sent to DAGS Personnel for filing.  Each staff position has a binder documenting their respective duties which continues to be updated and modified with each new employee assuming the position.
• Continued Commissioner development.  A Commissioner’s handbook was developed in FY 2008 which was reviewed and updated in FY 2011.  Commissioners are also regularly updated on any new or developing issues (e.g., court cases, public financing concerns, tax laws, etc.) and provided information from annual COGEL conferences.  Although a request for two (2) Commissioners to attend COGEL was sought, only one was able to attend in December 2011.  Lastly, orientations for new Commissioners are conducted.  Accordingly, during this period, two (2) orientations occurred in November 2011 and January 2012.
• Document procedures.  Commission staff continues to build binders to document their duties and responsibilities as well as the steps necessary to carry out their duties and responsibilities.  It is expected that as processes and procedures are added, revised, or eliminated, that the binders will be amended accordingly.
• Evaluate space needs for possible staff expansion.  Evaluation of physical space, positions, and equipment has occurred as a result of different initiatives and legislation which expanded and increased duties of the Commission.  Although the findings were such that our present office space is unable to accommodate additional personnel, there has not been adequate funding secured to explore expansion.
• Develop contingency plans for public funding scenarios.  The Commission administers two (2) public funding programs – HCCCPF and partial public funding.  With regard to HCCCPF, we continue to emphasize in our legislative testimony and in meetings with legislators that, unlike Hawaii, the Arizona, Maine and Connecticut clean election programs all have substantial revenue for their programs coming primarily from sources other than the state tax check-off.  In this fiscal year, there are eight (8) candidates who were certified for HCCCPF funding in amount approximating $210,000.  As for partial public funding, we anticipate that at least four (4) candidates will be certified for funding in the amount of $15,349.  Given the fact that there is no separate funding source for these programs, and that the funding comes directly from the HECF, in consideration of our ever decreasing revenue, we do not believe that we will have the statutorily required $3.5 million to run the HCCCPF program in the 2014 election.  We have been very open about this reality to legislators and clean election groups in Hawaii.  We have considerable concerns about our ability to run such programs at the expense of our other duties and responsibilities.

Significant Events in FY 2012

New Commission Staff.  Within the last two (2) years, there have been significant turnovers in staff due to retirements.  In October 2010, a new Executive Director was hired; in February 2011, a new General Counsel was hired; and, in August 2011, a new Elections Assistant was hired.

New Commissioners.  At the commencement of this fiscal year, two (2) Commissioners’ terms expired (i.e., Paul Kuramoto and Gino Gabrio).  Then, in November 2011, another Commissioner’s term expired (i.e., Steven Olbrich).  Three (3) new Commissioners were therefore appointed (G. William (“Bill”) Snipes, Tina Pedro Gomes, and Mara Miller) during this period.  Unlike Commissioners Snipes and Gomes whose terms expire on June 30, 2015, Commissioner Miller’s term expires on June 30, 2012 as does Commissioner Dean Robb thereby leaving only one (1) remaining Commissioner from the prior fiscal year (Michael Weaver) whose term will expire on June 30, 2013.  In effect, by the end of the next fiscal year, we will have a 100% turnover in the Commission.

2012 Elections.  Facilitate and carryout all aspects of the Commission’s responsibilities in the 2012 elections – especially, as a result of reapportionment.

Yamada Lawsuit.  After almost nineteen (19) months of litigation, on March 21, 2012, the federal district court upheld the constitutionality of various campaign finance laws, but struck down contribution limits on noncandidate committees making solely independent expenditures in consideration of Citizens United.

Reapportionment Lawsuits.  There were two (2) lawsuits filed as a result of the redistricting that occurred for the 2012 elections.  Impact to the Commission primarily concerned computation of public funding amounts which ultimately did not become an issue.

Online Survey.  On May 23, 2012, we emailed registered committees, corporations, and email subscribers to participate in an online survey to help us evaluate and improve the effectiveness of our operations and communications. The survey was divided into five areas: 1) general background information of the survey taker; 2) communication with or access to the Commission; 3) education and training provided by the Commission; 4) public funding; and 5) questions related to the HECF, independent expenditures, and a general comment question. The Commission was very pleased with the responses and plans to use them to improve our efforts to better serve the public and those that are required to file reports with our office.

Searchable Database.  In the last few months of this fiscal year, with the assistance of ICSD and the Office of Information Management and Technology (OIMT), we started to build a searchable database of the data filed on our electronic filing systems.  This database will eventually allow people to search any electronically filed report of candidates, committees, and corporations by any identifying element required in the reports such as names of contributors, employer, occupation, amount, expenditures, etc.  We believe that such a database would increase our analyses capability and improve access to the data contained in committee reports filed in the electronic systems.  We are hopeful that we can release this product before the general election in November 2012 to enable Hawaii residents to follow the money of candidates before they vote.

Supplemental Time-Off.  As a result of State labor agreements, staff was advised of receiving six (6) hours per month (i.e., nine (9) days) of Supplemental Time Off (STO) for the period July 1, 2011 to June 30, 2013.  This is in addition to vacation, sick leave, and compensatory time off.  At the end of June 2012, we were informed that a new State labor agreement was signed and were advised that STO will now be called Supplementary Time Off Without Pay (STOWOP), and that the hours will increase from six (6) to eight (8) hours per month for the period July 1, 2011 to July 1, 2013.  STOWOP hours not used by July 1, 2013 will be forfeited.  In effect, this means that for fiscal years 2012 and 2013, staff has a total of thirteen (13) days off per fiscal year in addition to vacation, sick leave, and compensatory time off.

Future Considerations for FY 2013

Appropriation of Funds.  It is essential that we continue to examine other campaign finance systems to identify revenue streams to sustain our operations and programs.  We anticipate an appropriation will be needed by at least 2014, if not sooner, to fund Commission duties and responsibilities.  This will be a difficult challenge in consideration of our State’s economic situation, and therefore, strategies should be evaluated.  Furthermore, we anticipate that the HECF will not have the minimum $3.5 million in its fund to administer the HCCCPF program in the 2014 election.  Discussion with DAGS who we are administratively attached to is anticipated.

Discussion of Core Business and 2013 Strategic Planning.  Consideration and evaluation of Commission operations and programs including identification of core business requirements should be considered as well as strategic planning because the current 5-year plan approaches an end in 2012.  Both discussions are vital to help guide and aid the Commission in prioritizing issues.

Technology – Newer Applications & Social Media.  In recognition that technology plays a critical role in communicating with the public, it is important to keep abreast of newer applications and social media to better understand and utilize systems in which we can more effectively engage the public and/or monitor environments where candidates, noncandidate committees, and corporations are connecting, engaging, and interacting.

Amendments to HAR.  Updates to our Hawaii Administrative Rules will need to be assessed.