Ethics Commission
City and County of San Francisco

Advice Letter – June 17, 2002 – Peter A. Bagatelos – Campaign Finance Reform Ordinance

 

June 17, 2002

Peter A. Bagatelos

Law Offices of Bagatelos & Fadem, LLP

380 West Portal Avenue, Suite F

San Francisco, California 94127

Dear Mr. Bagatelos:

You requested the Ethics Commission’s advice on whether a candidate who was elected to office may use funds remaining in his or her campaign account for expenses related to holding office. In addition, you have inquired whether the candidate may use funds raised for a future candidacy to pay for the expenses of holding a current office.

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 the responsibilities of a local officeholder under the San Francisco Campaign and Governmental Conduct Code, the Commission is treating your question as a request for a formal opinion.

BRIEF ANSWERS

With respect to your first question, we conclude that campaign funds may be used to pay officeholder expenses, subject to the restrictions imposed by State law. State law requires that any such expenditure be reasonably related to a governmental or legislative purpose, and directly related to such a purpose if the expenditures confer a substantial benefit on the candidate.

With respect to your second question, we conclude that campaign funds raised for a future office may not be used to pay offiiceholder expenses related to a current office. Local law restricts the expenditure of campaign funds to the candidacy for which they were raised.

DISCUSSION

I. Use of Campaign Funds for Officeholder Expenses

State law expressly authorizes the use of campaign funds for the expenses of holding the office to which the candidate was elected. Although local law is more ambiguous, we conclude that local law also permits such a use of campaign funds. The Commission recently endorsed amendments to local law that will clarify this issue.

A. State law.

The California Political Reform Act provides that funds in a campaign account “are held in trust for expenses associated with the election of the candidate to the specific office for which the candidate has stated . . . that he or she intends to seek or expenses associated with holding that office.” Cal. Gov’t Code § 89510(b) (emphasis added). Consistent with this trust requirement, campaign funds may be expended to seek office if they are “reasonably related” to a political purpose. Cal. Gov’t Code § 89512. Campaign funds may be spent in connection with holding the office to which the candidate is elected if the expenditure is reasonably related to a legislative or governmental purpose. Id. A more stringent test applies when an expenditure of campaign funds (either for seeking office or for officeholder expenses), will confer a substantial personal benefit on the candidate. In such circumstances, the expenditure must be “directly related” to a political, legislative or governmental purpose. Id.

Thus, under State law, a local officeholder may spend campaign funds on expenses associated with holding office, provided that the expenditures are reasonably related to a legislative or governmental purpose. If the expenditures confer a substantial personal benefit on the candidate, they must be directly related to a legislative or governmental purpose.

B. Local law.

Local law also provides that campaign funds may be used only on behalf of the candidacy for the office for which the funds were raised, but does not specifically refer to expenses associated with holding the office. Section 1.122 of the Campaign and Governmental Conduct Code provides:

* * * Except as provided below, any contributions solicited or accepted under this Section shall be expended only on behalf of the candidacy for the office specified in [the] declaration of intention to become a candidate. Contributions solicited or accepted under this section for one individual shall not be expended for the candidacy of any other individual or in support of or opposition to any measure. If an individual ceases to be a candidate or fails to qualify under the provisions of the Charter for an office for which contributions have been solicited or accepted, then all unexpended contributions shall be returned on a pro rata basis to those persons who have made said contributions or donated to the General Fund of the City and County of San Francisco.

Unexpended contributions held by a candidate or committee after the date of the election in which said candidate or measure appeared on the ballot may be returned on a pro rata basis to those persons who have made said contributions, donated to a charitable organization, donated to the General Fund of the City and County of San Francisco as contributions to a candidate or a committee acting on behalf of a candidate, transferred to any legally constituted committee established by or on behalf of the candidate.

S.F. C&GC Code § 1.122.

Section 1.200 of the Campaign and Governmental Conduct Code also imposes some restrictions on campaign funds. It prohibits an officeholder from maintaining a separate account for officeholder expenses. S.F. C&GC Code § 1.200. All money raised by a local officeholder must be deposited in a single campaign account, subject to local contribution limits. See id.

Thus, unlike State law, local law does not expressly authorize the expenditure of campaign funds on officeholder expenses. However, despite some ambiguities in section 1.122, we conclude that section permits use of campaign funds for officeholder expenses.

In any case involving statutory interpretation, the fundamental task is to determine the legislative intent in order to effectuate the law’s purpose. White v. Ultamar, Inc. (1999) 21 Cal. 4th 563, 572. In determining such intent, we must look first to the words of the statute themselves, giving the language its usual, ordinary import and according significance, if possible to every word phrase and sentence in pursuance of the legislative purpose.” Dyna-Med, Inc. v. Fair Employment and Housing Commission (1987) 43 Cal. 3d 1379, 1386-1387. The literal meaning of a statute, however, must be in accord with the statute’s purposes. See Delaney v. Superior Court (1990) 50 Cal. 3d 785, 798. Accordingly, we must consider “the object to be achieved and the evil to be prevented by the legislation.” Horwich v. Superior Court (1999) 21 Cal.4th 272, 276.

Section 1.122 states that except as provided elsewhere in the section “any contributions solicited or accepted under this Section shall be expended only on behalf of the candidacy for the office specified.” The rest of the section allows campaign funds to be returned to contributors, donated to charity or the General Fund, or given to one of the candidate’s other committees. Read in isolation, the statute could be viewed as precluding any other uses, including the use of campaign funds for officeholder expenses. However, we believe that conclusion to be inconsistent with the purpose and history of this section.

The purpose of section 1.122 is to ensure that campaign funds be spent only for the candidate to which the donors provided the funds. Thus, the section expressly prohibits the use of such funds “for the candidacy of any other individual or in support of or opposition to any measure.” S.F. C&GC Code § 1.122. The section allows campaign funds to be used in several additional ways not inconsistent with this purpose, such as donating the funds to the General fund or a charity. Section 1.122 is therefore similar to State law, which restricts the use of “surplus funds,” or funds remaining in an account when a candidate leaves office or is defeated in an election. SeeGov’t Code § 89519 (specifying uses of surplus funds).

Allowing a candidate to spend campaign funds on officeholder expenses for the office to which the candidate was elected is consistent with the section’s purpose. A contributor who supported the candidate’s election would not likely be surprised or troubled that the contributions would continue to support the candidate to which they were donated.

Although San Francisco C&GC Code section 1.200 was later adopted to preclude the use of friends accounts to raise money for officeholder expenses, we do not believe that section can be read as intending to prevent the use of campaign funds for officeholder expenses. Prior to the adoption of section 1.200, candidates did spend their campaign funds on officeholder expenses, notwithstanding that section 1.122 was in effect. However, they did so by placing the funds in “friends accounts,” which were not subject to the same regulations as campaign funds. Section 1.200 prohibited friends accounts, by requiring that all funds raised by a campaign be kept in a single account subject to the campaign contribution limits. However, nothing in the history of section 1.200 suggests that it was intended to amend 1.122 to prohibit the use of campaign funds on officeholder expenses.

The City has observed on several occasions that campaign funds may be used to pay for officeholder expenses. With respect to the elimination of officeholder accounts, the City Attorney’s office has stated that section 1.200 requires that funds be deposited into a single account and be subject to the campaign contribution limits, but does not prohibit raising funds for officeholder expenses. See City Attorney Letter to Jim Lazarus (Mar. 30, 1994) (“The $500 per election contribution now applies to contributions to finance campaigns for City elective officer as well as contributions used to `pay for expenses incurred directly in connection with carrying out the usual and necessary duties of holding office.”); City Attorney Letter to Keith Jackson (Dec. 1995) (fundraising for officeholder expenses not prohibited, as long as those funds were placed in the campaign account and the officer complied with the restrictions applicable to all contributions).

Accordingly, we conclude that section 1.122 does not prohibit the expenditure of campaign funds on officeholder expenses. Such expenditures are subject to the state law requirements that they be “reasonably related” to a legislative, governmental, or public policy purpose. If such expenditures confer a personal benefit on the candidate, then they must be “directly related” to a legislative or governmental purpose.

II. Funds In A Future Campaign Account.

Section 1.122 prohibits the use of campaign funds for purposes other than seeking election to the office for which the funds were raised. Accordingly, using funds from a future campaign account to pay for expenses related to acurrent office is prohibited. Nonetheless, the Commission recognizes that campaign funds may be expended as long as they are reasonably or directly related to a political purpose. Some expenses, such as the purchase of tickets to fundraisers for a community organization, may be related to a governmental or legislative purpose as well as appear to relate to the duties of holding a current office. Other expenditures, such as the purchase of supplies for use in the officeh
older’s current office, are not directly related to a political purpose and could not be made from a future campaign account. Whether an expense is permissible or not depends on the specific facts and circumstances of the expenditures. If you have questions about specific expenditures, please contact the Ethics Commission for further advice.

State law does not expressly permit the use of campaign funds raised for a future election for officeholder expenses associated with a current office. However, because we conclude that local law does not permit the use of campaign funds for this purpose, we do not need to address whether State law permits it. If you are interested in pursuing whether State law permits such a use, you may wish to contact the Fair Political Practices Commission.

I hope you find this information helpful. Please do not hesitate to let me know if you have further questions.

Sincerely,

Ginny Vida

Executive Director

By: Mabel Ng

Deputy Executive Director

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