Laws at the federal level and in every state and the District of Columbia require candidates and political action committees to report their campaign finance activities. All but Arkansas require disclosure by political party committees. In addition, many states require corporations and labor unions to report their political contributions and expenditures.

More recently, public concern about the influence of large donations on elected officials has focused increasing attention on the campaign finance activities of lobbyists. By 1994, at least 19 states prohibited legislative agents from making contributions while the legislature is in session, with two states - Kentucky and South Carolina - banning lobbyist donations year-round.⁸ Other states have chosen to address this concern through disclosure: Arkansas, California, Connecticut, Idaho, Iowa, New Mexico, Oklahoma, Pennsylvania, Tennessee, Utah, Washington, and the District of Columbia now require lobbyists to directly report their campaign contributions. While such donations are normally reported by the recipient candidate, many jurisdictions do not require candidates to identify the donor's occupation. Where this is the case, separate campaign reporting by lobbyists makes it possible to identify, for example, the recipients and total amount of donations from lobbyists representing specific business and industry interests.

Similar concerns exist about campaign contributions by individuals and firms that bid on government contracts. If anything, the interest of these donors in government decisions is less visible than that of lobbyists, who normally must register and report their lobbying activities. Furthermore, most candidate disclosure reports do not indicate whether a donor is seeking or has received a government contract. One rare exception to this is Connecticut. When reporting contributions of over $1,000, candidates must indicate whether the donor has received a state contract valued at over $5,000. Another is Hawaii, where donors who receive $50,000 or more in state or county contracts must register and report with the Campaign Spending Commission.

Contributions

Expenditures

Independent Expenditures

Contributions

Most important among the information found on campaign disclosure reports is the itemized, or detailed, reporting of all contributions over a certain threshold. The details required by state and federal laws include the name and address of the contributor, the amount given, and the date of the contribution. The only exception is Wyoming, which requires only the donor's name, city, and state. Such itemization is crucial to identifying the sources of a candidate's financial support and to the enforcement of contribution limits.

In addition, federal law, the law of the District of Columbia, and laws in 27 states now require the contributor's occupation and employer to be reported. These states are: Alaska, Arizonan, Arkansas, California, Connecticut, Florida, Georgia, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, New Hampshire, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Virginia, Washington, West Virginia, and Wisconsin. Federal law requires disclosure of donor occupation and employer for contributions totaling more than $200 in the aggregate. The threshold varies in the states.

Occupation and employer information enables more precise identification of donors and, importantly, the economic interests they represent. Donor occupation/employer information enables journalists and researchers to trace patterns of contributions from a particular business or industry sector. Identification of contributors' employers also aids in detecting "bundling" activity by corporations or other firms.

Expenditures

Just as with contributions, campaign expenditure reporting in most jurisdictions requires itemized detail for payments over a certain threshold. This includes the date and amount of the expenditure, the name and address of the person or entity to whom the payment was made, and the purpose of the expenditure.

In addition, disclosure rules in some states - including Alaska, California, and Oregon - require detailed reporting of second-party payments. These are payments made by intermediary contractors or consultants authorized to make expenditures on behalf of the campaign committee; e.g., a media consultant retained by the campaign who buys air time for the candidate's commercials. In this case, the campaign committee would report its payments to the consultant as well as the consultant's payments to advertising agencies and television stations. In another example, the Federal Election Commission requires campaign committees that report payments to credit card companies to itemize the vendors, goods, and services included in the credit card payment.

When it comes to reporting the purpose of each expenditure, most jurisdictions require filers to provide a brief description. This often results in free-form explanations that vary widely in clarity and detail. In an effort to obtain more precise accounting of campaign spending, Federal Election Commission rules prohibit as unacceptable such vague expenditure descriptions as advance, election day expenses, expense reimbursement, outside services, and get-out-the-vote . ⁹Another example of the way in which the purpose of expenditures is clarified is provided by California, where campaign committees that pay travel reimbursements to a candidate, his representative, or a member of his immediate family, must also report the date, destination, and total expenditure for each trip.

A number of jurisdictions - including Alabama, California, Maryland, New York, Ohio, Washington, and New York City - permit political committees to use a standard list of expenditure categories, either in addition to or in lieu of free-form descriptions. The use of agency-defined expenditure codes can reduce vague and inconsistent descriptions of expenditures and enable comparisons of how candidates spend their campaign funds. Where campaign reports are filed or stored electronically, expenditure codes are particularly useful for putting the information into a database format.

On the other hand, some campaign finance agencies find that the use of expenditure codes alone may reduce the amount of detail provided by some filers. This was the case in Ohio, where expenditure codes became necessary when the Secretary of State's office began computerizing the reports of all state candidates. However, enforcement officials such as Chief Campaign Finance Examiner Stephanie Peters saw the longer, free-form descriptions of expenditures as "one more tool to use in auditing for compliance with the law." Starting in 1996, new disclosure forms issued by the Secretary's office retain the "purpose" line for brief descriptions of each payment, while also requiring filers to check one of eight expenditure codes.

Independent Expenditures

Federal laws require detailed and regular reporting of independent expenditures by the persons who make them. Filers must indicate whether the expenditure is in support of or opposition to a candidate, along with the candidate's name and office sought. Furthermore, persons making independent expenditures must state their occupation and employer and must identify any others who contributed to making the independent expenditure. Independent expenditures of over $1,000 made in the last days before the election must be reported within 24 hours of being made.

Laws in Arizona and Florida try to reduce the unfair advantage of independent expenditures made in the days just prior to the election - particularly surprise "attack" ads. Persons who purchase such last-minute ads must not only disclose the expenditure immediately with the agency but must also notify the affected candidates - in Florida's case, within 24 hours of obligating the funds.

With the single exception of Wyoming - which requires campaign reports to be filed within 10 days after an election - all state and federal laws require campaign finance activity to be disclosed prior to the primary and general elections. Under federal law, reports must be filed on a quarterly basis during election years. In addition, the Federal Election Commission gives certain committees the option of filing monthly reports. Federal law requires monthly reports in the case of presidential candidates who accept public funding.

Candidates in Arkansas and Washington must disclose their campaign finance activities on a monthly basis. In Florida, publicly funded candidates report their activity weekly during the month prior to the election.¹⁰ A handful of states - Connecticut, Florida, Iowa, Rhode Island, South Carolina, and Virginia - require quarterly reporting.¹¹ In many states, however, the first pre-election report is not due until as few as 12 days before the election.

In an effort to capture the large contributions that often come in during the final days of the campaign, federal law requires candidates to report any late contributions of $1,000 or more within 48 hours of receiving them. Pre-election disclosure of last-minute contributions is likewise mandated by several state laws. The strongest of these appears to be that of Alaska, where contributions exceeding $250 made within one week before the election must be reported within 24 hours. ¹²

The ease and quality of public access to campaign finance information varies throughout the country.

Some states require legislative candidates to file their reports only at local offices, which in turn must send copies to a central state agency. In New Mexico, for example, county clerks who receive campaign reports of state legislative candidates are required to transmit copies to the Secretary of State within 24 hours. Following the last election, however, Damacio Lopez, Research Director of the non-profit organization Re-Visioning New Mexico, found that the reports of several candidates had not been forwarded to the Secretary of State as many as 15 days after the reporting deadline had passed. In an effort to obtain complete legislative campaign data, Mr. Lopez had to drive to county seats all across the state.

Campaign finance information reported under public disclosure laws should be available to anyone upon request. In jurisdictions where members of the public are allowed to handle original candidate reports, individuals are asked to identify themselves for security reasons. While security concerns are legitimate, in one state, Illinois, identification requirements are so onerous they might work to chill public access to campaign finance information. There, the public has access only to microfiche copies of campaign finance reports. Nevertheless, state law requires anyone requesting a copy to fill out a form, in triplicate, stating his name, address, occupation, employer, and the reason he wants to see the document. One copy of the form is then forwarded to the candidate or committee whose report is requested.

A survey of state disclosure offices also found a wide range of photocopying rates, from two cents per page in Vermont to $5 per page (for the first 10 pages) in Wyoming. Mr. Lopez, from New Mexico, found that many county offices charged copying costs that were twice those of the Secretary of State.

An increasing number of jurisdictions are seeking ways to receive, store, and provide the public with disclosure data in an electronic format. Although relatively few have done so to date, the trend toward computerized campaign finance information is definitely taking hold. The Texas Ethics Commission, created by popular initiative in 1991, is required by law to maintain a database of campaign finance reports and to provide public access to the electronic data. The New York City Campaign Finance Board is similarly required to maintain a disclosure database.

In 1993, San Francisco became the first jurisdiction to mandate electronic filing of disclosure reports by candidates. In 1995, the Hawaii and Missouri legislatures followed suit. New laws in Washington and Ohio give disclosure agencies the authority to mandate electronic filing, if the agencies choose. The Washington Public Disclosure Commission will require 1996 gubernatorial candidates to submit their reports on computer diskette. The Ohio Secretary of State's office has not yet exercised its new authority. Florida and Kentucky require electronic filing under new rules adopted by disclosure agencies in those states.

Meanwhile, electronic filing measures were recently rejected in Connecticut, Maryland, and New York state. The California legislature also rejected a bill mandating electronic filing, but it established a task force of public officials, members of the press, and campaign finance researchers to develop recommendations regarding electronic filing. The task force recently issued its final report, recommending a mandatory electronic reporting system.

RECOMMENDATIONS

The laws governing campaign finance reporting largely determine how successfully the principle of full public disclosure is met. In the post-Watergate era, the laws in some jurisdictions have undergone periodic review and reform, while in others they have remained basically static.

The recommendations that follow are intended to highlight particular areas of disclosure law that need to be strengthened in the states. The most important advance is the use of electronic technology to speed the delivery of data to voters and the press. The computerization of campaign finance information is addressed in the recommendations below. The use of electronic technology to improve campaign disclosure is discussed in greater detail in Chapters Two and Three of this report.

Since campaign finance agencies are authorized to prescribe forms and procedures for complying with the disclosure laws, the implementation of a campaign finance database, mandatory electronic reporting, and public access to computerized campaign finance data may be accomplished in many jurisdictions by agency rule rather than legislation. However, obtaining a legislative mandate can solidify the state's commitment to a fully computerized disclosure system, including the appropriation of funds necessary to carry it out.

Suggested statutory language is provided in Appendix I. In 1991, the Council on Governmental Ethics Laws (COGEL) developed "A Model Law for Campaign Finance, Ethics, and Lobbying Regulation." Because COGEL's recommendations for campaign finance disclosure are so extensive, they are included in this report as a comprehensive guide for drafting law. The Center for Responsive Politics thanks COGEL for permitting us to reprint the campaign disclosure portion of their Model Law in this report.¹³ For those recommendations that are not covered in the COGEL model - specifically, recommendations on computerization, electronic filing, and public access - we provide statutory language in Appendix II.

1. LOBBYISTS SHOULD BE REQUIRED TO DISCLOSE THEIR CAMPAIGN CONTRIBUTIONS.

The potentially corrupting effect of large contributions by those seeking to influence the actions of public officials calls for the fullest disclosure. The campaign disclosure reports of lobbyists can be cross-checked with the reports of their lobbying expenditures and activities to provide a more complete picture of the relationship between money and legislative or executive decision-making.

2. DISCLOSURE REPORTS SHOULD IDENTIFY THE OCCUPATION AND EMPLOYER OF LARGE CONTRIBUTORS.

Identification of the contributor's occupation, and most especially his or her employer, is critical to determining the economic interests that are funding a particular campaign or political party. To ensure that the requirement is met, responsibility for compliance with the law should be shared: Donors should be required to provide this information along with their contributions; and the recipient candidate, PAC, or political party should be required to disclose it in their reports.

3. WHEN REPORTING EXPENDITURES TO CONSULTANTS, INTERMEDIARY CONTRACTORS, OR CREDIT CARD COMPANIES, FILERS SHOULD BE REQUIRED TO ITEMIZE PAYMENTS MADE BY THOSE ENTITIES ON THE CAMPAIGN'S BEHALF.

Reporting of so-called second-party payments is necessary for a more complete and accurate picture of campaign spending by candidates, parties, and PACs. This is especially important where public funds are involved, to ensure their use is in compliance with the law.

4. CAMPAIGN REPORTING RULES SHOULD REQUIRE THAT EXPENDITURE CODES BE USED IN ADDITION TO A CLEAR, FREE-FORM EXPLANATION OF THE PURPOSE.

Here again, accurate reporting can aid in monitoring for compliance with laws that prohibit the misuse of campaign funds. It can also have a deterrent effect on would-be violators. Expenditure reporting is an area where administrative rules can and should be used to promote compliance with the spirit of the disclosure law. Agencies should use their rulemaking authority to define expenditure codes, limiting the number to no more than 25. Rules should also prescribe the way in which the short explanation of the expenditure is reported. For example, as noted earlier, Federal Election Commission rules provide a list of terms prohibited as too vague and inadequate to meet the law's requirements. An example of the expenditure codes used by the Washington Public Disclosure Commission is provided as Appendix III.

5. INDIVIDUALS AND GROUPS SHOULD BE REQUIRED TO REPORT THEIR INDEPENDENT EXPENDITURES. INDEPENDENT EXPENDITURES MADE AFTER THE FINAL REPORTING DATE BEFORE AN ELECTION SHOULD BE REPORTED TO THE DISCLOSURE AGENCY AND TO THE AFFECTED CANDIDATE(S) WITHIN 24 HOURS.

The ability to spend unlimited amounts of money¹⁴ in support of or opposition to a candidate makes independent expenditures a tempting way to circumvent contribution limits. This problem alone calls for complete disclosure of such activity. In the case of last-minute expenditures in the form of "attack" ads, the candidate who is the object of the ads should be given notice and a fair chance to respond prior to election day.

6. IN AN ELECTION YEAR, DISCLOSURE REPORTS SHOULD BE FILED QUARTERLY, ALONG WITH A 10-DAY PRE-ELECTION REPORT. MONTHLY REPORTS SHOULD BE MANDATED FOR CANDIDATES WHO RECEIVE PUBLIC FUNDS AND MAY BE AN OPTION FOR OTHER FILERS. IN NON-ELECTION YEARS, SEMI-ANNUAL REPORTS ARE SUFFICIENT.

Quarterly reporting would make information available to the public early and often enough to assist voters with their decision at the polls. Where public funds are involved, even closer scrutiny by both the public and the campaign enforcement agency is warranted. In races with a high volume of campaign finance transactions, optional monthly reporting can ease the burden on both the candidates and the disclosure agency.

7. LARGE CONTRIBUTIONS RECEIVED AFTER THE LAST PRE-ELECTION REPORT BUT BEFORE ELECTION DAY SHOULD BE REPORTED WITHIN 24 HOURS BY THE CANDIDATE.

In the final days of a hotly contested race, candidates often receive a flurry of large contributions, as each side makes an all-out effort to get his or her message to the voters. The public ought to know who is paying for that last-minute blitz. Twenty-four hour reporting of late contributions also deters delaying donations in order to avoid disclosure of the information until after the election.

8. DISCLOSURE REPORTS SHOULD BE FILED SIMULTANEOUSLY WITH A CENTRAL AGENCY AND A LOCAL GOVERNMENT OFFICE IN THE DISTRICT OF THE OFFICE BEING SOUGHT.

Information which is reported under the campaign disclosure laws should be made available in a way that affords the widest possible public access. Reporters and others reviewing all legislative races, for example, should be able to obtain the data in one central location; while individual voters wishing to see the local candidates' reports should be able to do so without having to travel, in some cases hundreds of miles, to the state capital.

9. SO AS NOT TO CHILL PUBLIC ACCESS, INDIVIDUALS SHOULD BE PERMITTED TO VIEW CAMPAIGN FINANCE INFORMATION ANONYMOUSLY.

Under no circumstances should the law require that candidates be notified of each person who asks to view their reports. To do otherwise is contrary to the spirit of the public disclosure laws.

10. COSTS FOR PHOTOCOPYING DISCLOSURE REPORTS SHOULD BE KEPT LOW.

Copying costs should not discourage research or hamper access to campaign finance data. Agencies should charge no more than local commercial vendors for photocopies.

11. CAMPAIGN FINANCE DATA SHOULD BE STORED ELECTRONICALLY, IN A DATABASE FORMAT.

Questions of public access - including timeliness, usefulness of the data, even cost - are favorably resolved when disclosure agencies make use of electronic technology to store, process, and transmit campaign finance information. Data which is stored in electronic form may be viewed by several users simultaneously and without risk to candidates' original report forms. When maintained in database format, the material may be sorted and searched in a variety of ways by journalists and researchers, enabling a much fuller view of the flow of political money.

12. CANDIDATES, PACS, AND POLITICAL PARTY COMMITTEES WHICH RAISE OR SPEND ABOVE A SPECIFIC THRESHOLD AMOUNT SHOULD BE REQUIRED TO FILE THEIR REPORTS ELECTRONICALLY WITH THE AGENCY. IN ADDITION, ANY COMMITTEE THAT USES A COMPUTER TO PREPARE ITS DISCLOSURE REPORTS SHOULD BE REQUIRED TO FILE ELECTRONICALLY.

The enormous advantages of storing campaign finance data in computerized form compel a change from paper filings to electronic transmission of disclosure reports by candidates and committees to the disclosure agency. It makes little sense for an agency to accept paper reports, often prepared by computer, and hand-enter the information back into electronic form. The threshold for electronic filing should be set so that the majority of financial activity is provided to the agency in an electronic format.

13. THE INFORMATION ON CAMPAIGN DISCLOSURE REPORTS SHOULD BE MADE AVAILABLE TO THE PUBLIC IN ELECTRONIC, AS WELL AS PAPER, FORMAT.

Agencies can make the electronic information available in a variety of ways, on everything from in-house terminals to transmission by modem. Voters should be able to obtain information about their candidates on terminals at local libraries or other public buildings, or in their homes.