To: Members of the Ethics Commission
From: LeeAnn Pelham, Executive Director
Subject: Agenda Item 9 – Executive Director’s Report for the June 2019 Commission Meeting
Summary
This report provides various programmatic and operational highlights to date since the last monthly Executive Director’s Report.
Action Requested
No action is required by the Commission, as this item is for informational purposes only.
Welcome to New Ethics Commissioner
All of us on the staff join in welcoming civil rights attorney Lateef H. Gray to the Commission. Commissioner Gray was confirmed by the Board of Supervisors on June 4 and sworn in on June 11 as the Commission’s newest member. The oath of office was administered by Elections Director John Arntz in City Hall and was held during a brief lunch break between sessions conducted in office by Commission staff to provide Commissioner Gray with initial overviews of the Commission’s programs and operations. Commissioner Gray is in practice with the Law Firm of John L. Burris in Oakland and was appointed by the Board for the seat that was vacated by Commissioner Quentin L. Kopp, who resigned on March 5th with a term expiring February 1, 2023.
Budget Update
As the first day of annual departmental budget hearings on the Mayor’s proposed FY20 budget got underway, Deputy Director and Chief Programs Officer Gayathri Thaikkendiyil and I made a presentation at the Board of Supervisors’ Budget and Finance Committee on June 12th under Agenda Item 7. The Committee is comprised of Supervisors Fewer (Chair), Ronen, Stefani, Mandelman, and President Yee. The operating budget line items proposed by the Mayor for the Ethics Commission include $203,807 in items we requested and total approximately $4.75 million in FY20, a roughly 8 percent increase over our FY19 budget. A copy of the presentation appears as Attachment 1 and the hearing can be viewed on the video-on-demand site for the Budget & Finance Committee. The Budget Committee continued its hearings throughout last week and is scheduled to hear public comment on the Mayor’s proposed budget on June 24. Further updates on FY20 budget actions will be provided as developments warrant.
Engagement & Compliance Updates
In ongoing support of the November 5, 2019 election, Staff have been continuing to provide a number of updated campaign-related resources for candidates, treasurers, and the public.
On June 6, Engagement & Compliance Principal Program Manager Rachel Gage led a candidate information session, with additional support from Audit and Policy staff. The presentation can be accessed through the Commission’s “Running for Office” compliance information web page for candidates seeking office in November 2019 election, or directly here.
On June 11th, the nominating period for Mayoral and Board of Supervisor candidates for the November 5, 2019 Consolidated Municipal Election was closed. According to the Department of Elections website and summarized in the table below, six Mayoral candidates have been certified to be on the November ballot, and four candidates have qualified to appear as candidates in the District 5 Supervisorial race. Under a recent change to City law, you will recall, candidates are required to electronically file a Statement of Participation or Non-Participation (“Statement”) in the City’s public campaign financing program with the Ethics Commission no later than the third day following the deadline for filing nomination papers. That deadline occurred on June 14th. Statements may not be amended after the deadline, and candidates who do not file a Statement by the required deadline are not eligible for participation in the program. Table 1 below shows the public financing program status for each of the 10 ballot-qualified candidates in these races for the November 2019 election.
Table 1. Public Financing Status of Mayoral and District 5 Candidates, November 5 2019 Election
| Ballot-Qualified Mayoral Candidates | ||
|---|---|---|
| Name | Participation or Non-Participation Statement Filed? | Status |
| London Breed | Filed 6/13/2019 | Declined to participate. |
| Robert Jordan | Filed 1/4/2019 | Opted to participate. |
| Wilma Pang | No filing as of 6/14/2019 | No Statement filed by June 14 statutory deadline; candidate ineligible to participate in public financing program for November 2019 election. |
| Paul Robertson | Filed 6/12/2019 | Opted to participate. |
| Joel Ventresca | Filed 6/6/2019 | Declined to participate. |
| Ellen Lee Zhou | Filed 1/16/2019 | Opted to participate. |
| Ballot-Qualified Candidates, Board of Supervisors District 5 | ||
| Name | Participation or Non-Participation Statement Filed? | Status |
| Vallie Brown | Filed 4/22/2019 | Opted to participate. Has been certified as eligible. Has qualified to receive the $152,500 maximum amount of public funds available under the law to a participating incumbent. |
| Nomvula O’Meara | No filing as of 6/14/2019 | No Statement filed by June 14 statutory deadline; candidate ineligible to participate in public financing program for November 2019 election. |
| Dean Preston | Filed 5/23/2019 | Opted to participate. Has been certified as eligible. Has qualified to receive public funds totaling $112,450 to date. |
| Ryan Lam | Filed 6/14/2019 | Opted to participate. |
Data visualizations for public financing disbursements in the 2019 election have been prepared by Tyler Field of the Electronic Disclosure & Data Analysis team and now appear online, linkable through the campaign dashboard page for the November 5, 2019 election. The 2019 campaign dashboards will continue to evolve and be updated as new data comes in with future reporting deadlines.
Audits
Under the Commission’s authority in SF Campaign & Governmental Conduct Code Sec. 1.150, the Ethics Commission audits committees active in City elections to promote transparency and accountability in campaign activities and ensure committee activities are conducted and reported in compliance with applicable laws. Audits are required for campaigns in which candidates have received public financing in their campaigns, and “targeted” or random audits are discretionary for other committees. In addition to its audit function, the Commission’s audit division also has responsibility for administering the qualification and claim review process to determine candidate eligibility for public campaign financing and public fund disbursements.
The 25 committees being audited for the 2018 election cycle are listed on the 2018 Audit Selection page of the Commission’s website. Fourteen of the committees are those of publicly financed candidates from the 2018 elections and therefore subject to mandatory audit. With the assistance of the Controller’s Office, this work is being conducted through the external audit team that also conducted the 2016 public financing audits on behalf of the Commission. Another 11 campaign committees were selected for discretionary audit according to an objective criteria standard from a pool of 168 other committees that were active in elections during 2018. These 11 committees are being audited directly by Ethics Commission staff and are: 1) recipient committees active in San Francisco’s 2018 elections that were 2) not controlled by a candidate and that 3) each reported spending more than $1 million in their campaigns. Together, the $34.3 million in reported spending by these 11 committees accounted for 61 percent of the $56.4 million reported overall in the 2018 election cycle.
The audits of all 12 committees of publicly financed candidates and audits of 12 of the 15 committees selected for discretionary campaign audit from the 2016 election cycle are finalized and posted on the Audits 2016 page of the Commission’s website; three audits remain underway and are expected to be completed by the end of this month. Audits of the 14 publicly financed candidates for the 2018 election cycle are underway and expected to be completed by the end of 2019. The 11 other committees selected for discretionary audit for the 2018 election cycle were notified of their upcoming audit in May, with audit work expected to begin following receipt of committees’ records at the end of this month.
For context, Table 2 and Chart 1 show the percentages of Committees and overall money audited in each audit cycle since 2011.
Table 2. Campaign Audits, 2011-2018
| Election | # Mand |
# Non-Mand |
# Comtes in Audit pool | # Comtes Audited | Percent of # Audited | $ in Audit Pool | $ Audited | Percent of $ Audited | Selection Method for Discretionary Audits |
|---|---|---|---|---|---|---|---|---|---|
| 2018 | 14 | 11 | 182 | 25 | 14% | $56,421,625 | $43,037,323 | 76% | Objective Criteria |
| 2016 | 12 | 15 | 114 | 27 | 24% | $70,583,714 | $56,747,648 | 80% | Objective Criteria |
| 2015 | 2 | 11 | 55 | 13 | 24% | $26,732,569 | $3,254,387 | 12% | Random selection |
| 2014 | 3 | 9 | 62 | 12 | 19% | $23,845,821 | $1,937,818 | 8% | Random selection |
| 2013 | 0 | 5 | 32 | 5 | 16% | $5,829,075 | $3,755,062 | 64% | Random selection |
| 2012 | 12 | 7 | 83 | 19 | 23% | $15,740,796 | $4,466,222 | 28% | Random selection |
| 2011 | 9 | 5 | 75 | 14 | 19% | $23,100,113 | $11,442,015 | 50% | Random Selection |
Chart 1. Percent of Campaign Committee and Percent of Campaign Funds Audited, by Election 2011-2018.
As noted in a 2017 report to the Commission in which the use of objective criteria for the selection of discretionary campaign audits was first detailed, City law also provides for lobbyists to be audited by the Ethics Commission. Effective July 26, 2014, Sec. 2.135(c)provides that “[o]n an annual basis, the Executive Director shall initiate audits of one or more lobbyists selected at random.” Unlike campaign audits, no date exists in statute or regulations by which the audit of a lobbyist randomly selected must begin. Random selection of lobbyist audits for 2015 occurred at the Commission’s March 2016 regular meeting, with four lobbyists identified for audits, and prior to that four lobbyists had been randomly selected in 2015 for audits related to their 2014 activities. Due changes in the lobbying law that voters enacted in November 2016 and continuing significant staff resource constraints, however, lobbyist audits have not been pursued given the competing demands in the audit division related to its ongoing campaign audit work and public financing activities in the recent 2018 and 2019 elections. With the position of Principal Program Manager for Audits recently filled, however, focused staff attention is now being directed toward the lobbying audit program and the establishment of goals to resume that program in the coming fiscal year.
Revenues Report
Table 3 shows the revenues received by the Commission during the fiscal year that began on July 1, 2018, as of June 21, 2019.
Table 3- Summary of FY 2018-19 Revenues
| Source | FY 18-19 Budgeted Amount | FY 18-19 Receipts as of June 21, 2019 |
|---|---|---|
| Lobbyist Registration Fees | $85,000 | $99,750 |
| Lobbyists Fines | $2,000 | $2,165 |
| Campaign Consultants Fees | $7,000 | $8,950 |
| Contact Lobbyist and Other e.g., copies made by public | $2,450 | $2,514 |
| Statement of Economic Interests Filings-Late Fees | $1,250 | $220 |
| Campaign Consultant Fines | $2,000 | $750 |
| Campaign Finance Fines (includes late fees and forfeitures) | $50,000 | 71,900 |
| Ethics, Other/ Administrative Fines Levied by the Commission | $7,500 | $28,720 |
| Major Developer Fee | $0 | $4,500 |
| Total | $157,200 | $219,469 |
I look forward to answering any questions you might have at the upcoming Commission meeting.