February 19, 2002
1245 31st Avenue
San Francisco, CA 94122
Dear Mr. Dudum:
Re: Request for Opinion Concerning Campaign Finance Reform Ordinance
Dear Mr. Dudum:
You requested the Ethics Commission's interpretation of the Campaign Finance Reform Ordinance, San Francisco Campaign and Governmental Conduct Code section 1.100 et seq. ("CFRO").
The Ethics Commission provides two kinds of advice: written formal opinions and informal advice. S.F. Charter § C3.699-12. Written formal opinions are available to individuals who request advice about their responsibilities under local laws. Formal opinions provide the requester immunity from subsequent enforcement action if the material facts are as stated in the request for advice, and if the District Attorney and City Attorney concur in the advice. See id. Informal advice does not provide similar protection. See id.
Because you seek advice regarding specific actions that you may take in the future, the Commission is treating your question as a request for a formal opinion.
You asked the Ethics Commission to consider the following questions:
1. What are the "legal limitations" of using the same FPPC number and bank account that you used in your November 2000 campaign for a seat on the Board of Supervisors for your November 2002 campaign for the same seat?
2. Does the answer to question #1 change if you seek public financing for your November 2002 campaign?
3. What are the Ethics Commission's "recommendations" regarding the bookkeeping for both campaigns?
1. You must establish a separate campaign contribution trust account for your prospective November 2002 campaign.
2. The answer to question #1 applies regardless of whether you seek public financing of your November 2002 campaign.
3. Each committee must maintain its own separate, detailed and complete records of contributions received and expenditures made.
You provided the following information: You ran for a seat on the Board of Supervisors in November 2000 and you are considering a run for the same seat in November 2002. You have approximately $10,000 of debt remaining from your previous campaign; you also have on hand a quantity of letterhead and campaign signs. You are not in a position to retire your debt at this time. You would like to use the "FPPC identification number"1 and bank account that you set up for your 2000 campaign for your 2002 campaign.2
You wish to use the same campaign committee that you set up to run for a seat on the Board of Supervisors in 2000 to run for the same office in 2002. By doing this, you hope to avoid the procedural steps of setting up a new committee, opening a new bank account, and transferring funds from the old committee, if any, to the new committee. For the reasons discussed below, the Commission determines that you may not use your 2000 campaign trust account for your prospective 2002 campaign.
1. You must set up a separate campaign bank account for your 2002 campaign.
a. A candidate for City elective office must use his or her campaign trust account only for the purposes related to the City elective office specified in the declaration of intention to become a candidate.
Local law establishes the following requirements for candidates who run for City elective office,3 including candidates for the Board of Supervisors:
_ Each candidate who seeks election to City elective office must file a declaration of intention to become a candidate for the specific City elective office before soliciting or accepting contributions. S.F. Campaign and Governmental Conduct Code § 1.122.
_ An individual may be a candidate for only one City elective office at one time. Id.
_ Each committee treasurer must establish a campaign contribution trust account for the candidate, from which all expenditures for the candidate must be made. Id., § 1.108.
_ Contributions solicited or accepted must be expended only on behalf of the candidate for the office specified in the declaration of intention.4 Id., § 1.122.
Taken together, the Ethics Commission interprets these provisions to mean that if you are a candidate for a City elective office, the campaign contribution trust account that you establish must be used only for the specific office listed in your declaration of intention to become a candidate. In other words, if you filed a declaration of intent to become a candidate for the Board of Supervisors in the November 2000 election, you may use the campaign bank account established pursuant to that candidacy only for purposes related to the November 2000 Board of Supervisors election. The CFRO does not permit you to use your November 2000 campaign trust account for any other purpose. Therefore, if you file a declaration of intention to become a candidate in the November 2002 election, you must set up a new campaign contribution trust account for your 2002 campaign.
b. All contributions received by a candidate are subject to limits under the CFRO.
The prohibition against using your 2000 campaign bank account for your 2002 campaign is supported by the CFRO's provisions related to contribution limits. Under the CFRO, the amount that a person may contribute to a candidate is limited to $500 during the general election. S.F. C&GC Code § 1.114(a)(1). The general election period for the office of Board of Supervisors extends from "January 1 of the first year of an election cycle up to and including the date of the general election." Id., § 1.104(f). An "election cycle" means "a four-year period preceding a term of office as defined by the San Francisco Charter, beginning on January 1, and ending on December 31 of the fourth year thereafter." Id., § 1.104(g).5
In other words, regardless of when a person makes a contribution to a candidate during the election cycle, that person's contribution counts towards the amount that a candidate may receive from that one person for the election. In this way, all funds coming into a campaign account are subject to the statutory contribution limits.
As a consequence, you must ensure that no contributor gives more than $500 to either your 2000 or 2002 campaigns. You must track contributions you receive to retire your 2000 debt and contributions you receive to fund your 2002 election. You must also track your expenditures to ensure that they are used for and attributed to the proper campaign. No matter how careful you are in keeping your books, having one trust account to serve both campaign purposes invites mistakes, however inadvertent, making it difficult to track your contributions correctly. Accordingly, you must set up a new campaign contribution trust account for your 2002 campaign.
c. Having separate account numbers will simplify bookkeeping, facilitate law enforcement, and advance public disclosure of contributions and expenditures.
If two committees share the same bank account, not only may it be difficult to track contributions and expenditures, but in your case, there will be no way for the public to know what funds were received to retire the 2000 debt or what funds were received to fund the 2002 campaign. Nor will the Ethics Commission know about the funds unless it conducts an audit, which, if it occurs, will occur at least several months after the fact. In addition, if the committee does not keep accurate records, any investigation of the committee's activities may be limited. Although a record-keeping violation may be charged, there may be more serious violations that will not be discovered. Requiring separate accounts for each committee will provide an immediate paper trail in the bank records as well as result in clearer records. These policy reasons are well served by the rule that you set up a separate bank account.
2. The rule against using the same bank account for separate committees applies to all candidates who seek City elective office, whether or not they seek public financing.
Using one bank account to serve two different purposes will create confusion among contributors as to the purpose of their contributions. To avoid this confusion, candidates must establish separate bank accounts for separate elections. Separation is particularly important for candidates who seek public financing. To be eligible to receive public financing, a candidate for the Board of Supervisors must receive at least $7,500 in qualifying contributions from at least 75 contributors and be able to prove that expenditures made with public funds are used for qualified campaign purposes only. S.F. C&GC Code § 1.140. All candidates who receive public financing will be audited by the Ethics Commission. Id., § 1.150. These provisions were enacted not only to ensure that publicly financed candidates meet eligibility requirements and use public funds appropriately, but that they also maintain records that accurately reflect their contributions and expenditures. Requiring separate accounts for separate committees will help ensure proper tracking of public funds.
3. Each committee must maintain separate and accurate records of contributions received and expenditures made.
As discussed in section 1 above, local law requires that you establish a separate campaign contribution trust account for your November 2002 campaign. As you know, under State law, each committee is required to maintain detailed accounts, records, bills and receipts that are necessary to prepare campaign statements and to comply with the provisions of the Political Reform Act. Cal. Gov't Code § 84104. These State law requirements have been incorporated into local law; accordingly, you must maintain separate, accurate and detailed records for each committee.
For the reasons stated above, the Ethics Commission finds that you may not use the campaign trust account of your 2000 campaign committee to your 2002 campaign committee.
I hope this information is responsive to your inquiry. Please do not hesitate to contact me if you have additional questions.
By: Mabel Ng
Deputy Executive Director
1 The "FPPC identification number" refers to the identification number issued to your committee by the California Secretary of State when your committee filed its Statement of Organization (Form 410) under California Government Code section 84101. The issuance of FPPC identification numbers is governed by state law. Because the Ethics Commission cannot provide advice regarding state law, you may wish to contact the Fair Political Practices Commission for advice on whether you may use the same FPPC number you used for your 2000 campaign for your 2002 campaign.
2 Subsequent to receipt of your letter, the FPPC has adopted and will notice regulations to disallow "re-designation," whereby a candidate seeking re-election to the same office at a future date may use his or her existing campaign committee for that future election by simply amending the committee's statement of organization and the campaign bank account statement to apply to the new election. The proposals will require candidates to file a new statement of organization and to set up a new campaign bank account and new campaign committee for re-election to the same office; these regulations will apply to candidates for state office.
3 "City elective office" means the offices of Mayor, Member of the Board of Supervisors, City Attorney, District Attorney, Treasurer, Sheriff, Assessor, Public Defender, Member of the Board of Education of the San Francisco Unified School District and Member of the Governing Board of the San Francisco Community College District. SF C&GC Code § 1.104(c).
4 Unexpended contributions held by a candidate after the date of the election may be returned on a pro rata basis to those persons who made the contributions, donated to a charitable organization, donated to the General Fund of the City, or as contributions to a candidate or committee acting on behalf of a candidate, transferred to any legally constituted committee established by or on behalf of the candidate. SF C&GC Code § 1.122. These exceptions do not apply to the fact situation you raised.
5 All eleven seats of the Board of Supervisors were up for election in November 2000. Because this was the first election under district elections, the term of office was determined by lot when the new board took office. For even-numbered districts, the term of office is two years, with seats up for election in November 2002. For this one time, the "election cycle" for these offices runs from January 1, 2001 to December 31, 2002.