Campaign Spending Commission

Draft

Campaign Spending Commission Meeting
Zoom Video Conference
July 10, 2024
10:00 a.m.

Commissioners Present
Neal Herbert, David Chee, Jon Itomura (Joined meeting at 10:20 a.m.), Barbara B. Polk, Danton S. Wong

Staff Present
Kristin E. Izumi-Nitao, Tony Baldomero, Gary Kam, Terence Lau, Anthony Diep, Deputy Attorney General Candace Park

Guests
Ashley Mizuo, Jeanne Ohta, Louisa Duggan, Robert Armstrong, Sarah Hague, “KITV4 News”

Call to Order
Chair Herbert called the meeting to order at 10:00 a.m.

Chair Herbert went over the procedures for the remote meeting via Zoom and introduced the Commissioners and Commission staff who were present.  Commissioner Itomura was not present at the time.  Executive Director Izumi-Nitao stated that she is in communication with him and will inform Commissioners and staff when he logs in during the meeting.

Consideration and Approval of Minutes of Meeting on 6/12/24

*Executive Director Izumi-Nitao asked to take the matters out of order to allow time for Commissioner Itomura to join the meeting to achieve quorum as Commissioner Wong and Commissioner Polk were not present at the June meeting.

New Business
*Welcome and Introduction of New Commissioners Danton Wong and Barbara Polk – Executive Director Izumi-Nitao stated that Danton Wong and Barbara Polk were appointed by Governor Green on 6/28/24.  Commissioners Wong and Polk took the oath of office as Campaign Spending Commissioners on 7/3/24 which was followed by a 4-hour orientation provided by staff.

Chair Herbert stated that Danton Wong was born and raised in Honolulu.  In 1979, he graduated from Stanford University with a degree in Economics, and in 1982 earned his law degree from UC Law San Francisco (formerly known as UC Hastings).  He is a partner in Chun Kerr LLP concentrating in real estate transactions and business consultation.  Out of the office he enjoys traveling, golfing and playing music.  His term expires on June 30, 2028.

Chair Herbert stated that Barbara Polk was raised on the mainland and earned a BA in Psychology from Oberlin College in Ohio and a Ph.D in Social Psychology from University of Michigan.  She was an Assistant Professor of Sociology at Wayne State University in Detroit before moving with her then husband and son to Honolulu in 1973. After a year as a planner for the Developmental Disabilities Council, she joined the staff of the University of Hawaii, spending the next 26 years in various staff and line positions, mostly in the Community College system, including nine years as Provost of Leeward Community College. She retired as Policy and Planning Officer for the University of Hawaii System. In retirement Barbara has been a meeting facilitator, and volunteer mediator and literacy tutor, as well as board member and chair of both Americans for Democratic Action Hawaii, and Common Cause Hawaii, as these organizations worked on good government issues at the legislature, including ethics and campaign spending.  Her term expires on June 30, 2028.

*Consideration, Discussion, and Approval of Proposed Advisory Opinion No. 25-01 – Jeanne Y. Ohta – Executive Director Izumi-Nitao stated that the last time we received an Advisory Opinion request was July of 2020 and that General Counsel Kam will present the Advisory Opinion draft for the Commission’s consideration.

General Counsel Kam stated that we received the formal request for an Advisory Opinion from Ms. Jeanne Ohta on June 13, 2024 asking whether campaign funds can be used to pay for childcare expenses.  The recommendation is that campaign funds can be used if it is directly related to campaign activities and that it would not exist outside of the person being a candidate.

He also stated that in 2023 and for several years prior, a bill was introduced at each legislative session proposing to have childcare and dependent care costs added as allowable expenses using campaign funds, and that the Commission submitted testimony in support of the bills but they were not passed.

Jeanne Ohta was present at the meeting and stated that she requested the Advisory Opinion after noticing that the bill did not pass.  She is aware that some candidates want to use campaign funds to pay for childcare expenses but fear that there would be fines if not allowed and that can be damaging to a candidate’s reputation.  She added that this change would encourage and enable more candidates with young families to run for office.

Louisa Duggan was present and testified in support of Advisory Opinion No. 25-01 on behalf of Vote Mama Foundation.  She stated that childcare obligation is a major factor for candidates when deciding to run for office.  The approval of campaign funds for childcare would alleviate the cost that deters parents from running for office.  She also mentioned that in 2018, the Federal Election Commission approved for federal candidates to utilize campaign funds to pay for childcare unanimously.  32 states have already aligned with the federal guidelines to allow both local and state candidates to have caregiver cost paid for by campaign funds.  Advisory Opinion No. 25-01 is an option and not a mandate with no cost to taxpayers.  In Vote Mama Foundation’s report on campaign funds for childcare reveals that since 2018, campaign funds for childcare spending has increased substantially for federal and state candidates.

Commissioner Polk wanted to know if Advisory Opinion No. 25-01 were to be passed, would it include both childcare services in and outside of the candidate’s home, considering that certain campaign activities can be done over videoconference.

Vice-Chair Chee asked General Counsel Kam if whether the language of Advisory Opinion No. 25-01 should be more specific to state that it only applies to childcare expenses that incurred while a candidate is actively campaigning to avoid it being misinterpreted as allowable for an elected official who is no longer actively campaigning.

General Counsel Kam stated that the language in Advisory Opinion No. 25-01 indicates that the childcare expenses should be directly related to the candidate’s campaign, which matches the language in Hawaii Revised Statutes §11-381(a)(1), and that expenses relating to an elected official’s duties as an officeholder is in another paragraph of Hawaii Revised Statutes §11-381.

Vice-Chair Chee recommended amending paragraph five of Advisory Opinion No. 25-01 to further clarify that childcare expenses can only be paid for using campaign funds when a candidate is actively campaigning.

Executive Director Izumi-Nitao asked Ms. Ohta and Ms. Duggan if they intend on reintroducing the related bill next legislative session since it addresses the specifics on this subject at greater length than Advisory Opinion No. 25-01 and whether they know why the bill was not passed.

Jeanne Ohta commented that she was not involved in the introduction of the related bill from this past legislative session and only became aware of it from acquaintances who had testified.

Louisa Duggan said she is aware that the same bill was introduced by Senator Donna Kim in 2023 and 2024, but was not heard in conference committee in both sessions.

General Counsel Kam asked Ms. Ohta and Ms. Duggan if they have any objections to Vice-Chair Chee’s recommended amendment to Advisory Opinion No. 25-01.  Ms. Ohta said she has no issue with the change as it will only further clarify her request.

Executive Director Izumi-Nitao shared that the initial concern when the bill was first introduced had to do with pre-existing childcare services provided by families or other pre-arranged activities that would not have incurred costs that could now be arguably paid as childcare expenses using campaign funds.  She commented that Advisory Opinion No. 25-01 is limited and responds to the requestor’s question, but that a bill would be more comprehensive and a better approach.

Louisa Duggan mentioned that an Advisory Opinion on this subject in other states have been helpful in moving related bills forward and hopes that the approval of Advisory Opinion No. 25-01 would do the same for Senator Kim’s bill, which also includes dependent care.

Chair Herbert asked if there is any suggestion to modify Advisory Opinion No. 25-01 to include dependent care and what is the federal regulation regarding it.

General Counsel Kam stated that he is not aware of any FEC Advisory Opinion relating to dependent care on the federal level, but based on the current language, if a candidate claims that it is necessary for them to campaign then the candidate should be allowed to pay for dependent care expense using campaign funds.

Chair Herbert commented that based on the current language of the statute, the scope could be beyond just child and dependent care as candidates can defer other expenses that they suggest are a hindrance to them campaigning, so Advisory Opinion No. 25-01 should focus on childcare expenses only.

Commissioner Itomura asked if questions regarding what constitute as childcare expenses will be handled on a case-by-case basis, because there is not a defined list for childcare and whether this needs to be addressed in the Advisory Opinion.

General Counsel Kam stated that Commission staff did not define childcare because it was not part of the request; however, staff can review the expenses and if it were a cost for an activity that would be incurred whether or not the candidate was campaigning, then it would not qualify to be paid for by campaign funds.

Commissioner Wong stated that this could be a slippery slope because there could be situations where candidates use campaign funds to pay for childcare provided by family members that would otherwise not carry a cost.  He commented on his concerns for the potential of abuse and asked if there would be any consequences for a violation.

General Counsel Kam said that based on the language in §11-381(a)(1), if it is directly related to campaigning, then the candidate would be allowed to use campaign funds to pay for the expenses, and it should not be restricted to services provided by non-family members only.

Executive Director Izumi-Nitao added that in terms of enforcement, staff can request candidates to provide supporting documents to show that the expenses are eligible to be paid for using campaign funds, and if there is a violation, staff can issue fines based on the Commission’s administrative fine guidelines which include personal reimbursement to the campaign for the prohibited use as well as an administrative fine.  She also encouraged Ms. Ohta and Ms. Duggan to meet with Senator Kim to have the bill reintroduced because there are many other concerns beyond this Advisory Opinion that needs to be addressed.

Commissioner Itomura added that a statute is still preferred to address this subject and that based on the topics discussed, it is assumed that it would include other expenses that would fall under the umbrella of whether they are directly related to campaigning.

Chair Herbert commented that the language in §11-381(a)(1) simply stating expenses directly relate to a candidate’s campaign is broad and should be further defined, but as far as the Advisory Opinion is concerned, he agreed with Vice-Chair Chee that we should modify it by adding the word “activities” after the word “campaign” to clarify what are eligible childcare expenses.

Vice-Chair Chee moved to modify the second to the last paragraph of Advisory Opinion No. 25-01 by adding the word “activities” after the word “campaign” and before “for office.”  Motion seconded by Commissioner Wong.  Motion carried (5-0).

Vice-Chair Chee moved to accept Advisory Opinion No. 25-01 as amended.  Motion seconded by Chair Herbert.  Motion carried (5-0).

*Executive Director Izumi-Nitao recommended to resume the approval of minutes of meeting on 5/8/24.

Executive Director Izumi-Nitao stated that Chair Herbert noted a housekeeping error under “Consideration, Discussion, Approval, and/or Update of Commission Legislation and Other Related Bills/Resolutions for the 2024 Legislative Session” on page 8, 1st paragraph, 2nd sentence.  She stated that it is missing the close parenthesis so sentence should be amended to read:  “SB 2687 (prohibits deep fake advertising without the required disclaimer) is before the Governor for consideration which will become law by default on 7/10/24 if . . . “

Commissioner Itomura moved to approve the amended minutes on 6/12/24.  Motion seconded by Vice-Chair Chee.  Motion carried (3-0) (Commissioners Polk and Wong abstained because they were not present at the 6/12/24 meeting).

Old Business
*Consideration, Discussion, Approval, and/or Update of Commission Legislation and Other Related Bills/Resolutions for the 2024 Legislative Session – Consideration, discussion, approval, and/or update of Commission legislation and other related bills/resolutions for the 2024 Legislative Session.

General Counsel Kam reported that Governor Green signed SB 2687 (prohibits deep fake advertising without the required disclaimer) on 7/3/24 as Act 191.  It went into effect upon approval.

Report from Executive Director
*Report on Compliance of Filing Timely Disclosure Reports – Executive Director Izumi-Nitao noted that there are a number of reporting deadlines coming up.  They included:

• 1B Preliminary Primary Report that all candidates (except $1,000 or less filers) running in this election need to file is due on 7/11/24. This report covers the period of 1/1/24 (or 4/26/24 for candidates that filed 1A Preliminary Primary Report) to 6/30/24.
• 212 candidate committees are expected to file this report.
• 45 of these committees filed the 1A Preliminary Primary Report.
• As of 7/10/24, 51 committees have filed this report.
• 33 candidate committees are $1,000 or less for this election and therefore, are not required to file this report.
• Reminders were sent to candidates in the form of the July newsletter and eblast.

Associate Director Baldomero added that there will be a report due for both noncandidate and candidate committees on 7/31/24 totaling approximately 740 reports.  They are:

• Preliminary Primary Report for the reporting period of 1/1/24 to 7/26/24 for all noncandidate committees (except $1,000 or less filers).
  • 265 noncandidate committees are expected to file this report.
  • 11 noncandidate committees are $1,000 or less for this election, and therefore, are not required to file this report.
• 2^nd Preliminary Primary Report for the reporting period of 7/1/24 to 7/26/24 for all candidates running in this election (except $1,000 or less filers).
• Supplemental Report for the reporting period of 1/1/24 to 6/30/24 for all candidate committees that are still registered with the Commission, but are not running in this election.
  • 260 candidate committees are expected to file this report.

Chair Herbert asked if reminders to file were sent to the candidate committees that are still registered with us, but are not running in this election.  Associate Director Baldomero reported that the Commission sends multiple reminders to this group; however, due to the most recent filing date for them being 6 months ago, many stopped tracking their campaign spending requirements, and as a result, this group often has a high number of failures to file.

Executive Director Izumi-Nitao reported that there are 8 committees that have not filed prior reports and have been referred to the Attorney General Civil Recoveries Division.  She also stated that starting 7/11/24, noncandidate committees will need to start filing Electioneering Communication statements if their spending aggregates over $2,000 as it is now 30 days prior to the primary election.

*Discussion of Fiscal Year Budgets 2026-2028 – Executive Director Izumi-Nitao reported that the Commission is in a new biennium budget cycle and will submit its budget request for fiscal years 2026 to 2028.  She added that the Commission will resubmit a request for additional staff in this budget.

Associate Director Baldomero stated that it is in the Commission’s Strategic Plan “to explore, examine, and implement technological advances and capacities to improve access, reduce paperwork, and increase compliance” as well as “to ensure organizational and institutional stability”, which the Commission has been able to achieve over the years with the support of its IT team.  However, to prepare for possible changes in resources, the Commission has explored other options to host its electronic filing systems and has received an estimate of $1.8 million from a vendor that specializes in campaign finance software and systems.  He stated that staff would like to obtain the Commissioners’ approval to submit a $1.8 million budget request to explore this option.

Executive Director Izumi-Nitao added that the Commission’s budget has been approximately $590,000, which covers salaries and other expenses, and staff has never asked for an increase in its budget until last year when it requested $200,000 for additional staff positions.  In response to Chair Herbert’s and Commissioner Itomura’s questions, she stated that the only time staff was increased was in 1997 for an investigator but that funding was removed after one year and the position was sunset.  She further stated that there has never been a request nor has there ever been money appropriated by the legislature for a new or enhanced electronic filing system.  She noted that the current electronic filing system is still functional so there is no immediate need; however, to comply with the Commission’s mandated strategic plan, it would be prudent to begin discussion of possible newer technology that can help in improving compliance, enforcement, and user functionality.  She requested the Commissioners’ approval to pursue consideration of the purchase of a new electronic filing system by seeking funding through the budgetary process.

Discussion ensued and Commissioners commented that an investment would be appropriate to improve clean elections especially in consideration of AI and newer technologies to improve compliance and enforcement.  Other comments concerned the budget process which staff explained that additional personnel and a new electronic filing system are separate requests.

Commissioner Wong shared that a budget is given each year for technological improvement in private practice and that it is astounding that the Commission cannot receive the upgrade necessary to keep up with the inevitable changes.

Commissioner Polk moved to approve the Commission to pursue the purchase of a new electronic filing system by seeking funding through the budgetary process.  Motioned seconded by Commissioner Itomura.  Motion carried (5-0).

Executive Session
*Consideration and Approval of Executive Session Minutes of Meeting on 6/12/24 –Chair Herbert asked if there were no corrections or amendments to the proposed executive session minutes on 6/12/24, he would ask for a motion in open session.

Vice-Chair Chee moved to approve the executive session minutes on 6/12/24. Motion seconded by Chair Herbert. Motion carried (3-0) (Commissioners Polk and Wong abstained because they were not present at the 6/12/24 meeting).

Next Meeting:
Scheduled for Wednesday, August 7, 2024.

Vice-Chair Chee moved to adjourn the meeting.  Motion seconded by Commissioner Itomura.  Motion carried (5-0).

Meeting Adjourned at 11:35 a.m.