Campaign Spending Commission

HAWAII CAMPAIGN SPENDING COMMISSION
ANNUAL REPORT
Fiscal Year July 1, 2017 to June 30, 2018

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.[1]  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 2018 covering the period July 1, 2017 to June 30, 2018 as well as documents other significant events.[2]  It also includes a discussion of future considerations for fiscal year 2019.

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 2018 Legislative Session, the Commission submitted six (6) 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 into effect on July 1, 2018.  They are:

Act 80 (S.B. No. 2153) – Eliminates the requirement under Hawaii Revised Statutes (“HRS”) §11-322(a) that candidate committee organizational reports include the name and address of each contributor who contributed an aggregate amount of more than $100 to the candidate committee since the last election.  This was a house-keeping measure because this information is reported in the committee’s disclosure reports filed with the Commission.

Act 81 (S.B. No. 2154) – Eliminates the requirement under HRS §11-323(a) that noncandidate committee organizational reports include contributions. This was a house-keeping measure because this information is reported in the committee’s disclosure reports filed with the Commission.

The following Commission bills did not pass the 2018 Legislative Session:

H.B. 1656 / S.B. 2151 – Amends HRS §11-410 by raising the amount of the 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 order that a fine assessed against a noncandidate committee, or any portion thereof, be paid from the personal funds of the officers of the noncandidate committee.

H.B. 1657 / S.B. 2152 – Amends HRS §11-341 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. 1660 / S.B. 2155 – Amends HRS §11-324(e) to require treasurers of candidate and noncandidate committees to keep records that show the name and address of all contributors and treasurers of noncandidate committees to keep records of the employer and occupation of all contributors that aggregate over $100.

H.B. 1661 / S.B. 2156 – Amends 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 5^th calendar day prior to the due date of the Preliminary Primary Report.

Other legislation of significance was S.B. 2992 which was vetoed on July 10, 2018 by Governor David Ige which would have amended HRS §11-391 to exempt signs and banners from the advertisement disclaimer requirement for all committees except for signs and banners advocating the passage or defeat of a ballot issue.

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. In anticipation of the 2018 election, campaign finance presentations to candidates and committees were planned and delivered in January through June 2018 on all islands.  In May 2018, on Kauai, sixteen (16) people attended the candidate committee training; on Maui, fifteen (15) people attended the candidate committee training; and, in June 2018, on Oahu, thirty-eight (38) people attended the candidate committee training and thirteen (13) people attended the noncandidate committee training.  Unfortunately, there were only a few people who registered for the training on the Big Island so it was rescheduled, and ultimately, canceled due to low registration.  The Hawaii Alliance for Progressive Action (“HAPA”) also sought candidate committee training which was provided in January 2018 on Maui where fifteen (15) people were trained, and, in February 2018, on Oahu where fourteen (14) people were trained.

In addition, 20-minute Wiki Meetings were offered every Thursday for thirteen (13) weeks from January 25 through April 19, 2018 to permit committees to meet with Commission staff to answer questions.  These meetings were designed to help committees (especially new candidate and noncandidate committees) to comply with the campaign finance requirements.  Unfortunately, only one candidate signed up for this offering.

• 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).

• 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 20-minute Wiki Meetings were a new training and education program offered this fiscal year (see above), but unfortunately, was not that well attended.

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.

• 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 131,038 “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.  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 46 times and we have 998 total subscribers.  Notably, subscribers are separated into three groups – candidates (440 subscribers), noncandidate committees (274 subscribers), and the public (284 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 582 tweets with a total tally of over 200,000 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.

As the fiscal year was coming to a close, the Commission committed itself to launch a new campaign spending data visualization app.  The new dashboard app was designed to supplement and enhance the Commission’s other data visualization apps which consolidates campaign spending data filed by candidates and provides for better comparative analyses of the data by office, party, and reporting period.  This new app would permit the public to see in a more visually engaging and interactive way how candidates running for state and county offices in the 2018 election would be stacking up against one another in the area of contributions, expenditures, and loans.

• 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.

• 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 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 700 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.

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.  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 788 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.  Since January 2018, the Commission received nineteen (19) payments via PayPal totaling $5,125.73.

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.  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 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.

During this fiscal year, which was a non-election year, there were 12 complaints of which:

• 8 complaints yielded a preliminary determination of a campaign finance violation resulting in $18,317.90 in assessed administrative fines. Notably, 3 of the 8 complaints yielded a preliminary determination of a campaign finance violation, but one is pending appeal, one is inactive, and one is on a payment plan;
• 3 complaints were withdrawn due to compliance prior to the complaint being heard by the Commission at a HRS Sunshine Meeting resulting in $600 in assessed administrative fines; and
• 1 complaint is pending and is anticipated to be resolved in the next fiscal year.

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 $17,633.02 was assessed in administrative fines[3] and $9,362.46 was escheated to the HECF[4] due to campaign finance violations.  Most of the Commission’s enforcement actions were a result of late or unfiled reports.  Due to late filed reports, a total of $4,949.35 was assessed in fines which did not involve a complaint or a conciliation agreement from 26 candidate committees and 8 noncandidate committees.

Other campaign finance violations that occurred during this period that did not include the issuance of an administrative complaint or a conciliation agreement[5] which resulted in a total of $12,683.67 in assessed fines include:

• 18 failures to report expenditures resulting in $6,750 in fines;
• 7 failures to report contributions resulting in $1,750 in fines;
• 12 late fundraiser notices resulting in $650 in fines;
• 2 excess contributions resulting in $1,066.67 in fines;
• 2 prohibited expenditures resulting in $1,492 in fines;
• 2 advertisements missing the proper disclaimer resulting in $75 in fines;
• 2 failures to timely deposit contributions resulting in $50 in fines;
• 8 failures to register and file organizational reports resulting in $800 in fines; and
• 1 failure to amend an organizational report resulting in a $50 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 2017 was $795,546.22.  In fiscal year 2018, a total of $209,963.94 in revenue was realized (i.e., $195,310 in tax check-offs and $14,653.94 in other revenue) and a total of $2,282 in expenditures/encumbrances was incurred, thereby closing fiscal year 2018 with a balance of $1,003,228.16.

Notably, this was the first 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 2017 was held in Toronto, Canada, and was attended by Chair Bryan Luke and Associate Director Tony Baldomero.

Two new Commissioners were appointed this year, Stanley Lum and Maryellen Markley, Ph.D., who were given an orientation on February 5, 2018.  On April 11, 2018, a training on the Sunshine Law and Open Records law was provided to Commissioners and staff by the Office of Information Practices.  On May 23, 2018, a training on HRS Chapter 91 contested cases hearings was provided to Commissioners and staff as well as opened to the State Ethics Commission and Honolulu Ethics Commission offices.

In May 2018, the Executive Director was invited to attend a conference entitled “Searching for Terra Firma” at the National Institute of Money in State Politics in Montana.  At this meeting, she was asked to showcase the Commission’s data visual applications and met a wide spectrum of colleagues as well as journalists, educators, and community groups.

• Develop and implement plans for continuity of operations. A new Administrative Assistant was hired in May 2018 who transitioned quickly and has been performing well.  The transition from trust fund to general funds operations went 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

The Commission brought three (3) significant complaints before the Commission this fiscal year[6]; however, only the following complaint was resolved:

 Docket No. 18-08 – In Re the Matter of Mark K. Ing and Friends of Kaniela Ing.  This complaint was against a member of the state House of Representatives and his candidate committee for filing false reports, failing to timely deposit contributions, receiving an excess contribution, commingling campaign and personal funds, prohibited use of campaign funds for personal use (i.e., paid rent for his two residences as well as his girlfriend’s credit card bill), exceeding expenditure limits as a publicly funded candidate, and failing to file late contributions report.  Respondent Ing (“Ing”) essentially won three elections despite having filed false reports over the entire 6-year period.

For the period January 1 to June 30, 2016, Ing filed with the Commission four (4) notices of intent to hold a fundraiser.  In his disclosure report that covered that reporting period, Ing reported that he had no expenditures for the entire 6-month period of an election year.  Since candidates commonly incur expenses in connection with fundraisers, Commission staff subpoenaed Ing’s bank records.

A review of the bank records uncovered evidence that Ing had:  (1) without amending his Organizational Report, opened and closed three bank accounts, and that the open account staff sought information was Ing’s fourth campaign account (violation of HRS §11-322); (2) routinely made withdrawals and deposits to the campaign accounts when he was not the treasurer or deputy treasurer of his candidate committee (violation of §11-324(d)); (3) filed twenty-three (23) false reports for the period covering July 1, 2011 to December 31, 2016 (violation of HRS §§11-331(a), 11-333(a)); (4) failed to timely deposit numerous contributions (violation of §11-351(a)); (5) accepted an excess contribution (violation of HRS §11-357); (6) commingled campaign and personal funds (violation of Hawaii Administrative Rule (“HAR”) §3-160-30(a)); (7) converted campaign funds for personal use (violation of HRS §11-382(3)); (8) exceeded expenditure limits as a publicly-funded candidate (violation of HRS §§11-426, 11-428, HAR §3-160-64); and (9) failed to file a Late Contributions Report (violation of HRS §11-338).

The Commission entered an order against Ing and his committee that:  (1) assessed a fine in the amount of $15,422; (2) required Ing to escheat the $2,000 excess contribution to the state; (3) required Ing to personally reimburse $4,344.55 to his campaign account; (4) required Ing to amend the twenty-three (23) false reports so that the reports accurately conveyed the information contained in the bank statements; and (5) required Ing to file the 2012 General Late Contributions Report.

FUTURE CONSIDERATIONS FOR FISCAL YEAR 2019

2018 Election.  The offices for Governor, Lieutenant Governor, Senate, House of Representatives, Maui Mayor, Kauai Mayor, Honolulu County Council, Maui County Council, Hawaii County Council, Kauai County Council, and Office of Hawaiian Affairs 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.

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[1] This mission statement was approved at the Commission’s November 8, 2017 public meeting.

[2] In consideration of the time period covered by this Annual Report, the Commission had two overlapping strategic plans – the 2013-2018 Strategic Plan and the Strategic Plan (effective 1/1/18) which was approved at the Commission’s November 8, 2017 public meeting.  Notably, the two strategic plans are similar and the goals were not dramatically changed.  Consequently, this report will address action items in the Strategic Plan (effective 1/1/18) because most action items identified in the prior Strategic Plan were incorporated into the new plan.

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

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

[5] There were three (3) conciliation agreements in this fiscal period totaling $208.34; however, one defaulted and became a complaint due to noncompliance.

[6] The two (2) complaints that are pending resolution are:  (1) Docket No. 18-02 – In Re the Matter of Alan Arakawa, Anthony T. Arakaki, and Friends of Alan Arakawa; and (2) Docket No. 17-23 – In Re the Matter of Eric Ching and Friends of Eric Ching.  The former is being appealed pursuant to HRS Chapter 91 proceedings and the latter is being criminally prosecuted by the Attorney General’s Office.