PANEL FINDINGS AND RECOMMENDATIONS

At the outset of its deliberations, the Secretary of State's Electronic Filing Advisory Panel rapidly concurred that the time has arrived to replace the current system of filing mounds of pre-landfill paper campaign and lobbying reports with electronically transmitted data.2

Replacing typewriters, pencils and pens with computers to disclose campaign receipts and expenditures "is hardly cutting edge technology," observed one Panel member.

Having quickly resolved that the process can be automated, the Panel identified and focused on several critical issues, and reached consensus on a number of recommendations.


WHO SHOULD BE REQUIRED TO FILE ELECTRONICALLY?

The Panel recommends that all state candidates and campaign committees, including ballot measure committees, that reach a certain threshold in contributions should file required receipt and expenditure disclosure statements electronically. This includes all those who file the current "400 series" of disclosure forms with the Secretary of State. In 1994 alone, more than 31,200 of these paper campaign statements were filed with the Secretary of State.3

The dollar threshold in contributions received that triggers mandatory electronic filing should be $30,000 for candidates and campaign committees. The Panel found, based on a Secretary of State study of 1994 legislative campaigns, that no candidates won with contributions of less than $50,000 during that calendar year.4 The Panel selected the $30,000 threshold on the assumption there could be viable legislative candidates with that level of receipts in future elections. The Panel recommends receipts be cumulated on a calendar year basis. The receipts of all committees controlled by a candidate would be aggregated in determining if the $30,000 threshold was reached. Candidates and committees with receipts under $30,000 could voluntarily file electronically. If they initially file paper documents and then exceed the $30,000 threshold in a calendar year, previous reports would have to be refiled electronically.

The Panel agreed that filings by lobbyists, lobbying firms and lobbyist employers should be transmitted electronically, but the requirement should be phased in over two legislative sessions. Electronic filing would be voluntary during the 1997-1998 session, and mandatory for the 1999-2000 session.

The Panel believes that local jurisdictions should remain free to determine their own electronic filing needs, but if they do turn to computers they should follow the disclosure format adopted by the state.


WHEN SHOULD ELECTRONIC FILING OF CAMPAIGN STATEMENTS START?

The Panel recommends that campaign disclosure reporting via electronic transmission should be initiated with a voluntary program in connection with the 1996 elections. This would be followed by a mandatory pilot program for a limited number of specified filers for the 1997-1998 election cycle. By January 1, 1999, electronic filing would be mandatory for all campaign statements filed with the Secretary of State and with a cumulative calendar year contribution level of $30,000 or more.

During the mandatory pilot program, the Panel recommends that all statewide candidates and statewide ballot measure committees that exceed a $100,000 threshold in contributions be required to file electronically. During both the voluntary and the mandatory pilot programs, filers would be required to continue filing back-up paper documents simultaneously. The Secretary of State will eliminate the requirement to file paper back-up reports once the viability of the program has been established.

A significant portion of the Panel meetings held on June 9th and July 14th was focused on identifying a number of vital subject areas and adopting a number of basic recommendations. A summary of the identified subject areas and the Panel's findings and recommendations follow.


FORMATTING OF DATA

Panel Finding

It is essential that the Secretary of State develop a relatively simple data entry software package which will allow "small" filers (i.e., those who do not have access to or cannot afford the more sophisticated systems of computerized campaign report generation developed by outside vendors) to file their reports electronically. This program must include the features of: a) providing automatic arithmetical calculations for data entered under the various categories of the report, such as contributions, loans, value of non-monetary contributions, expenditures, accrued expenses, etc.; b) providing automatic arithmetical calculations for reporting summary information; c) being "user friendly" by employing various "help" screens and mechanisms to guide the user through the report compilation and electronic filing process; and d) being compatible with DOS/Windows IBM personal computers and Macintosh personal computers.

Panel Recommendation

The Secretary of State shall provide a simple data entry software package for free distribution to all state-level filers, which includes the features described above. The Secretary of State shall establish a single standard data format no later than July 1, 1996, to be utilized by all filers required to file campaign or lobbying reports electronically. This standard data format must be utilized by all local jurisdictions which adopt electronic filing ordinances.


MEDIUM OF DATA EXCHANGE

Panel Finding

There are two principal methods by which data could be exchanged between a filer and the Office of the Secretary of State: (1) the utilization of a diskette; or, (2) electronic transfer utilizing a modem which transmits the data over a telecommunications medium.

The utilization of diskettes to transfer data has a significant number of liabilities that must be taken into consideration, namely:

  1. The potential for damage to the diskette throughout the handling process, including during the time it is in the mail or being transported by a private courier;

  2. The potential for the diskette to be contaminated with a virus that may, in turn, infect the database of the Secretary of State;

  3. Should data be lost as a result of damage to the diskette, the difficulties that would arise in accepting or not accepting a partial report, particularly given the very sensitive reporting deadlines that occur during elections;

  4. The extraordinary number of staff hours that would be required to load the information supplied on diskettes onto the Secretary of State's database, as well as properly identify, catalog and archive the original diskettes for potential future retrieval. As a matter of perspective, in 1994 over 7,000 filings of Forms 420 and 490 were received by the Secretary of State's office. If filing by diskette were permitted, and assuming the average diskette required only ten minutes of staff time to process, a potential of 1,100 or more staff hours (approximately 137.5 staff days) would need to be allocated to this function. Clearly, this would be an expensive and time-consuming burden on the Secretary of State's staff; and

  5. With the advances in technology that are occurring at breakneck speed, it is likely diskettes will become an outmoded form of data storage in the foreseeable future.

Panel Recommendation

Only electronic transfer of the filing data shall be permitted, utilizing telecommunications technology. This transfer would occur between the filer and the host system of the Secretary of State.


VERIFICATION OF FILER DATA FORMAT AND FILE INTEGRITY

Panel Finding

Signatures

Presently, almost all campaign and lobbying reporting forms filed with the Secretary of State are required to bear the original signature of the filer. In some instances, more than one signature is required (i.e., the signatures of both the committee treasurer and the candidate/officeholder). With the advent of electronic filing of these reports, an alternative method must be developed for verifying the authenticity of the filer and also meeting the legal requirement that the filer be on record as approving the contents and accuracy of the report filed.

Data Format

The potential would exist for filers to attempt to electronically submit data files that could not be read by the system developed by the Secretary of State, thus creating a situation wherein the filer met the requirements of the law with respect to a timely filing, but the data could not be organized by the Secretary of State for viewing and access by the general public.

File Integrity

Because the electronic filing procedure is entirely dependent upon the correct functioning of equipment and the quality of the transmission via telecommunication linkages, the potential exists for the integrity of the data file to be violated during the time of submission. Receipt of an incomplete data file could: a) create serious future accounting problems for the filer; b) cause potential legal and financial consequences if the report is considered late; c) provide inaccurate information to the Secretary of State; and d) potentially create an embarrassing political situation if inaccurate or incomplete information were made available to the public.

Panel Recommendations

Signatures

The Secretary of State shall explore the possibility of using a "digital signature" in lieu of a handwritten signature. Utilizing this recently developed technology, the filer would have a private key (a code known only by the filer) which would be used in transmitting the data file to the Secretary of State. The Secretary of State would have a corresponding public key, which would allow the transmitted file to be sent and accepted. The interaction of the two keys would verify the authenticity and "digital signatures" of the filer.

Data Format

The electronic filing system developed by the Secretary of State shall be designed to accept only data that is formatted according to the standards established by the agency, and to reject any other data format.

File Integrity

The electronic filing system developed by the Secretary of State shall be designed to assure that the integrity of the data submitted by the filer has been maintained during the transmission process. This will require a system which verifies that the data received is identical to the data transmitted. The system shall include a procedure allowing the Secretary of State to acknowledge receipt of the transmission from the filer.


METHOD OF ALLOWING PUBLIC ACCESS TO ELECTRONICALLY FILED DATA

Panel Finding

The intent of the Political Reform Act with respect to the public availability of campaign and lobbyist disclosure information would be significantly enhanced by the development of a system whereby the data would be electronically filed with the Secretary of State. The opportunities would be greatly increased for not only immediate public access to the filed data, but also for the ability it would provide users to down-load data, through computer linkage, to a personal computer for customized organization of the data.

The widest possible dissemination of the filed data should occur. With the anticipated development of a statewide computerized registered voter file, this system of electronic communication with all of California's 58 counties will provide the opportunity for the integration of programs allowing public access to campaign and lobbying disclosure information in each county elections office.

The Internet is currently the largest non-profit, nonproprietary computer network. It provides an outstanding medium through which the electronically-filed data can be made available to the general public either by simply viewing the information on a computer screen, or by down-loading the data to a personal computer where it can be organized and sorted to accommodate the needs of the user.

Utilizing a computer network such as the Internet, literally tens of thousands of sites in California would have access to the data, since the vast majority of educational institutions, public libraries and government offices, as well as much of the private sector, are already linked to the network.

Panel Recommendations

  1. Electronically-filed campaign and lobbying data shall be made available by the Secretary of State through two parallel means: a) an online host system supported by the Secretary of State and interlinked via computer with the 58

    county elections offices; and b) the utilization of a web site on the Internet. The data available on either system is to be identical.

  2. The online host system developed by the Secretary of State shall have a browsing mechanism that can be employed by the user, as well as the capability for printing selected records and information onto hard copy

    for a reasonable fee. Additionally, the on-screen data shall be organized so that persons with limited computer expertise can easily access the information with no need for prior training.

  3. In addition to the Secretary of State's offices in Sacramento, all branch offices of the agency shall provide public access to the online host system.

  4. With respect to the data supplied to the Internet, the Secretary of State shall provide the data as submitted by the filer on one or more established network web sites.

  5. The Secretary of State can assume that value-added services and programs will be developed and marketed by outside vendors to meet the variety of specific data analysis and display needs of the public.

  6. Data on the network shall be available to the public both through viewing of the information utilizing a browsing mechanism, and the capability of down-loading the data to a personal computer. If necessary, the browsing tool shall be provided at no charge by the Secretary of State and be linked with and automatically down-loaded with the database for the convenience of the user.

  7. With the implementation of an electronic filing system for campaign statements, and with public access to that data provided by both an online host system and a computer network, there would no longer be any need for any state candidate or committee to file copies of their disclosure reports with any local filing officer.


SYSTEM MAINTENANCE, SUPPORT, SECURITY & ARCHIVING

Panel Finding

System Maintenance

Additions and modifications to laws governing campaign and lobbying reporting have occurred in the past and will undoubtedly occur in the future. Such changes have required the development of new reporting forms or revision of existing ones. Likewise, filers utilizing a computerized system of report generation have had to make significant modifications in their software routines to accommodate these changes, oftentimes at considerable expense. This is a result of these systems having been developed as forms replication software, rather than simply data entry software as is proposed and recommended by the Panel in this report.

Panel Recommendation

For the data entry software system developed for filers by the Secretary of State, it shall be the responsibility of the agency to implement any formatting revisions to that system which might be required as a result of changes in the laws governing the filing of campaign and lobbying reports.

Panel Finding

System Support

Inquiries regarding filing deadlines, where to file, etc., as well as those requesting information contained in reports filed with the Secretary of State, are handled by the Political Reform Division of the agency.

Upon development of an electronic filing system, it is anticipated there will be two basic groups of people requesting assistance: a) those asking assistance with the loading and operation of the agency-provided data entry software package, including the electronic filing of the data; and b) those wishing to access the Secretary of State's database for the data provided by filers.

Panel Recommendation

It shall be the responsibility of the Secretary of State to provide assistance for filers utilizing the agency-provided data entry software package, including the support required to electronically file the report data. Additionally, the agency shall provide assistance for those wishing to access the data that has been filed.

Panel Finding

System Security

In the case of the present paper-based system, the original of any filed report is maintained in a secure environment by the Political Reform Division and only copies of a report are provided to the public for viewing. This minimizes the risk of any tampering with respect to the original document.

Similarly, security of the original data electronically submitted by a filer must be assured. Once provided in an online or network environment, there is opportunity for data tampering to occur, which could create a number of serious problems.

Panel Recommendation

The Secretary of State shall store the original electronic submission of a filer's report on an approved medium and in a secure environment. Only a copy of the report is to be utilized for public access via an online system or computer network. The Secretary of State shall be responsible for maintaining the integrity of the public system.

Panel Finding

Report Archiving

An original report that is filed under the present paper-based system is maintained in a secure environment for four years before being submitted to the State Archives for cataloging and storage.

With term limits for elected state officials now in place, many candidates will be more likely to seek various levels of elective office during their political careers. This will increase the need for convenient public access to all of a candidate's campaign committee reports for relatively long periods of time.

Data that is electronically filed in a digital form can, given today's technology, be maintained online for extended periods of time at minimal expense.

Panel Recommendation

The Secretary of State shall maintain electronically-filed campaign and lobbying report data online for a minimum of a ten-year period, after which it shall be permanently available on a digital or computer format such as CD-ROM.

Additionally, the Secretary of State shall maintain the original electronically filed reports on a medium recommended by the State Archivist and in a secure and proper environment within the State Archives.

SYSTEM IMPLEMENTATION

Panel Finding

Clearly, to attempt to develop a system that will accommodate in excess of 31,000 filings in a single calendar year (31,200 filings were received in 1994) without first developing and testing the system utilizing a smaller universe of typical filers would, in the opinion of the Panel, invite disaster. Thorough testing and refinement of any system needs to occur before total mandatory implementation.

Panel Recommendations

  1. During the 1996 election cycle, the Secretary of State shall encourage voluntary electronic disclosure and development of software working with private companies or individuals, as well as campaign report filers.

  2. The Secretary of State shall implement a pilot project mandating statewide candidates and statewide ballot measure committees raising $100,000 or more in contributions in a calendar year to file their campaign reports electronically beginning January 1, 1997. The system would include the features of online public access to the filed data, as well as being made available utilizing a Secretary of State-established web site on the Internet. The filer would be required to submit paper-generated campaign reports as a form of backup throughout the period of the pilot program.

  3. By January 1, 1999, the Secretary of State shall complete the development of an electronic filing system for campaign filers receiving a cumulative calendar year contribution level of $30,000 or more and utilizing any of the paper-based "400 series" of reporting forms.

  4. The electronic filing of lobbying reports shall begin as a voluntary program during the 1997-98 legislative session, and become mandatory during the 1999-2000 legislative session.

30-Jun-96