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1989-17: Claiming Matchable and Threshold Contributions on BOE Forms

April 06, 1989

The question has been raised to what extent Board of Elections forms may be used to comply with the disclosure requirements of the Campaign Finance Act and Campaign Finance Board's regulations.

The New York City Campaign Finance Act provides for the disclosure of details of participating candidates' campaign finances for two reasons:

1) to allow the Campaign Finance Board and the public to monitor candidates' compliance with the terms and conditions of candidates' participation in the Campaign Finance Program, including their compliance with contribution and expenditure limits; and

2) to permit candidates to demonstrate that they have received threshold and matchable contributions and are therefore qualified to receive matching public funds.

For the first purpose, that of disclosure, the principal committee of the participating candidate is required to report to the Board "to the best of its knowledge" for every contribution, the "full name, residential address, occupation, employer and business address" of the contributor and the intermediary for the contribution. Administrative Code §3-703(6) (emphasis added).

For the second purpose, that of demonstrating that contributions are qualified for treatment as threshold and matchable contributions, additional information must be disclosed. The contribution must be shown to have been made by a natural person resident in New York City; the amount applied toward the threshold and for matching public funds may not exceed $500 in total from a person, his or her spouse, and unemancipated children in any one election; and the amount of the contribution used for threshold or matching purposes must be reduced by the "reasonable value of any goods or services provided the contributor in connection with the contribution." Thus, information relating to all these items must be presented to the Board. The section of the Act which define "threshold" and "matchable" contributions require that these contributions be reported to the Board "in full". Administrative Code §3-702(2),(3) (emphasis added).

In regulations adopted on February 8, 1989, the Board provided for the reporting of campaign financing information for the period before the Act became law on February 29, 1988. Various reports, including the pre-effective date campaign financing report (or short-form pre-effective date report), the report on liabilities incurred in other campaigns, and the transfers report, are required so that the Board can monitor candidate compliance with the limitations on the use of pre-effective date contributions (Administrative Code §3-703(1) (g)) and with the contribution limits (Administrative Code §3-703(1) (f)) . Campaign Finance Board Regulations §301, 304, 311, 321. Thus, for purposes of demonstrating compliance, the principal committee of a participating candidate who accepted contributions or made expenditures before the Act took effect must disclose "to the best of its knowledge" the information requested in these reports. This obligation necessarily entails a good faith effort to obtain and report all requested information.

In developing regulations governing the reports required to demonstrate compliance, the Board received public comments that suggested that the objectives of the Act's disclosure requirements could be met, and the reporting burden on candidates ameliorated, if the Board accepted legible copies of the financial disclosure reports previously filed with the City or State Board of Elections for the relevant reporting period. See, e.g., Letter of Peter Vallone, Vice Chairman of the City Council, dated January 1, 1989. The Board thereafter adopted regulations which permit the submission of these Board of Elections reports as a part of the pre-effective date reports, "together with any additional information required under the regulations..., in a form and manner to be determined by the Board." Campaign Finance Board Regulations §303(d), 304(g), 311(d) , 321(e).

The Board has also proposed rules for claiming threshold and matchable contributions. These rules were published for public comment on February 25, 1989 and will be the subject of a public hearing on April 10, 1989. Because contributions received before the Act became law may qualify as threshold or matchable contributions for elections held in 1989, see Administrative Code §3-703(1) (g), the Board has proposed that candidates may use the pre-effective date report for the purpose of claiming contributions accepted in the pre-effective date period as threshold or matchable contributions.

The question raised, to what extent Board of Elections forms may be used in place of the Campaign Finance Board's forms, must be addressed separately with respect to the issues of disclosure and of qualifications for threshold and matching purposes.

It is the Campaign Finance Board's view that the financial disclosure forms designed by the State Board of Elections are sufficient for demonstrating compliance with the limitations that apply to the use and acceptance of pre-effective date contributions, provided that the principal committee treasurer supplements these State forms with all other information required to be disclosed to the Board under the "best of knowledge" standard. Administrative Code §3-703(6) . It appears that this may be accomplished, for the most part, with the use of marginal notations on legible Board of Elections forms. No countervailing considerations have been presented that suggest the use of Board of Elections forms for this purpose would be inadequate.

The Board of Elections forms, however, are entirely inadequate for purposes of demonstrating whether a contribution qualifies as a threshold or matchable contribution under Local Law No. 8 of 1988, because these forms were simply not designed to provide sufficient information for that or any similar purpose.

The Board of Elections forms do not indicate the contributors primary residential address; they do not show whether or what amount of contributions from the contributor's spouse or unemancipated children have previously been made; and they do not provide any information about goods or services provided to the contributor in connection with a contribution. Indeed, candidates are not even required to itemize contributions of less than $100 on the Board of Elections forms. Under Local Law 8, contributions of less than $100 may qualify as threshold or matchable contributions if fully reported to the Board.

The Board of Elections forms are inadequate to determine any claim that a candidate has accepted contributions which meet the requirements for threshold or matchable contributions. The Board, therefore, cannot accept these claims unless the necessary information is reported in full on a form designed by the Campaign Finance Board for the purpose of evaluating the claims. Even if a coding system could be developed for use with the Board of Elections forms together with separate submissions providing the necessary supplemental information, the processing of candidates' data for computerization and disclosure would be significantly hampered. It would create an unacceptable likelihood of error in data compilation and entry by the candidates and by Board staff. To allow for the submission of Board of Elections forms, however supplemented, for the purpose of claiming public funds for pre-effective date contributions would not fulfill the Boards responsibility to ensure that payments from the Campaign Finance Fund are made only to those who clearly demonstrate that they are qualified to receive funds.

Furthermore, a procedure allowing Board of Elections forms to be used for demonstrating eligibility for public funds would discriminate unfairly against candidates who did not engage in fundraising before the Act took effect. The City Council forcefully stated in the Act's legislative findings that:

It is vitally important to democracy in the City of New York to ensure that citizens, regardless of their personal wealth, access to large contributions or other financial connections, are enabled and encouraged to compete effectively for public office...

Local Law No. 8 of 1988, §1. A system which, in effect, permits candidates who accumulated contributions before the Act became law to make their first claim for public funds with less than full disclosure, or by fulfilling less onerous filing requirements, while holding to a higher disclosure burden candidates who were perhaps first encouraged to undertake a campaign precisely because of the Act's adoption, is contrary to the spirit of the New York City Campaign Finance Act. The burden to candidates who have pre-effective date funds at their disposal of filling out new forms to demonstrate qualification for threshold or matching purposes simply does not outweigh the competing interests of public disclosure, equal treatment of candidates participating in the public financing program, and the necessity of submitting data to the Board in a form that lends itself to proper review and data entry.

For purposes of determining compliance, the Board has determined that, should its proposed rules allowing for claims of threshold or matchable contributions in the pre-effective date reports be adopted following the public hearing on April 10, 1989, disclosure of contributions on Board of Elections forms, while adequate for compliance purposes, will not be considered adequate for purposes of determining threshold or matchable eligibility. Candidates filing these reports may claim threshold and matchable contributions only by reporting them in full on the appropriate Campaign Finance Board form.

Pre-effective date reports are first due on May 1, 1989. The Board will consider written applications for an extension of the reporting deadline for good cause shown, for a period not to exceed one month, if those applications are received by the Executive Director of the Campaign Finance Board not later than the close of business on Friday, April 14, 1989.