Undisclosed

Introduction

Nearly half the states received a failing grade for the campaign finance disclosure required of state-level political party organizations, according to an exhaustive analysis by the Center for Public Integrity released today.

The poor disclosure at the state level will become an even more critical issue when the Bipartisan Campaign Reform Act goes into effect in November, as corporations and other special interests divert huge contributions from the national parties to the states.

The three-month study found that loopholes, widely divergent reporting standards and weak enforcement allow millions of dollars in political contributions and expenditures at the state level to go undisclosed to the public.

State-wide political parties raise and spend millions of dollars each year to help get their candidates elected to public office. They pay for everything from campaign workers’ salaries to expensive television and radio advertising. But in 15 states, parties are not required to disclose all the contributions they receive. In 24 states, when parties make expenditures on behalf of a candidate, they do not have to identify that candidate.

Such key information—which the Federal Election Commission (FEC) requires state parties to report when money is spent to support candidates for federal office—is not disclosed by all parties at the state level.

The Center analyzed state requirements regarding public access to documents, thoroughness of financial information and other important standards for keeping the public informed about how elections are paid for.

This study is part of the Center’s “State Secrets” project—funded by a grant from The Pew Charitable Trusts—which tracked $570 million in contributions to and expenditures by 225 major state-level political organizations in all 50 states.

State Secrets revealed that state political parties have become the back-channel of political giving, a role that is likely to grow when the Bipartisan Campaign Reform Act, which takes affect on Nov. 6, prohibits national parties from raising the unregulated and unlimited “soft money” contributions from individuals, corporations and labor unions.

While the new campaign finance law will dramatically change the way the national Democratic and Republican committees raise money, lax and loophole-ridden state regulations remain unchanged. And campaign finance experts around the country widely agree that big donors will turn even more attention to state party organizations.

“In those states with loose laws and little regulation, there is going to be an influx of money after the November elections. We know it, the Congress knows it, the states know it,” said Larry Sabato, an elections analyst and political scientist at the University of Virginia.

The state of the states

The Center studied election laws in 50 states to determine which had the weakest standards of disclosure and enforcement for state political parties. The Center interviewed hundreds of elections officials nationwide. Arcane, and often vague, statutes were evaluated and compared state by state. The Center used criteria that were based on the depth and frequency of reporting requirements for contributions and expenditures, public access to disclosure documents, and the strength of enforcement.

Here is what we found:

• Twenty-four states received failing scores because political parties are not required to report all of the contributions they receive; because political parties in those states are not required to report all of the expenditures they make; or because the state election oversight agency lacks the power to audit party committee books.
• Sixteen states received barely passing scores because there were gaps in the information parties had to report, and some states in this group made public access to these records difficult.
• Ten states received scores that were satisfactory to excellent, largely because these states require political parties to fully disclose all contributions and expenditures, and a government agency has the authority to review the disclosure reports for accuracy. These states also make campaign finance reports easily accessible by computer, either through online databases, databases that can be downloaded to a home computer, or via copies of the actual reports which can be viewed online.

Oregon topped the list, largely because of the strong enforcement powers and practices of the Secretary of State’s Elections Division. Political committees are required to file reports at least 10 times during an election year, and each report is subject to review within 10 days of filing. The Elections Division carries the authority to subpoena the records of the party organizations and to audit the books.

“Overall, my impression is that they do a pretty good job of enforcement,” said Janice Thompson, executive director of the Money in Politics Research Action Project, which analyzes campaign contributions data. “Even so, there are inadequacies. Otherwise organizations like this would not exist.”

Indeed. Even the most stringent campaign finance laws can mask problems. Washington and California were tied, after Oregon, in the Center’s rankings. In Washington, a party’s records can be subpoenaed by elections officials. Political committees must file no fewer than 12 reports during an election year.

Still, during the 2000 election year, millions of dollars in soft money—the unlimited, unregulated contributions made to the national political parties—were transferred to the Washington State Democratic Party and were improperly disclosed, or never reported at all.

State officials in Washington say the case illustrates a deep-rooted problem faced by virtually every campaign finance regulatory agency, regardless of the quality of their state laws: insufficient funding from the legislature.

“If the legislature wanted us to be more aggressive, they’d fund us more, and they don’t,” said Doug Ellis, spokesman for the Washington Public Disclosure Commission.

But the absence of available information is not always an oversight, the Center found. Neither Arkansas nor North Dakota require political parties to disclose any information about how they spend their money.

In West Virginia, which ranked 45th out of 50, the state requires regular disclosure reports, and the Elections Division has the power to audit a party committee’s finances. Still, that means little if a party fails to properly report what it should.

“The reality is that we don’t have a lot of teeth to do the enforcement,” said Terri Helmick of the West Virginia Elections Division. “We have the power to prosecute for ‘grossly inaccurate’ filings, but that is not defined in the law.”

At least 18 other states permit political parties to hide significant sums of money in part because contributions or expenditures categorized as “administrative” or “operating” costs of doing business are not disclosed.

By the most conservative estimates, millions of dollars go unaccounted for every year simply because a party organization designates an expense as “administrative” or “operational.” As a result, the public cannot be certain of exactly how much money is invested in the state political party system.

“The one thing everybody seems to agree on is [that] disclosure is fundamental,” Sabato said. “… [State] parties have been perfectly clear in suggesting that anytime there is any question, any gray area, they will come down on the side of not disclosing.”

The “gray areas” of disclosure abound. Here are a few of key findings:

• Political party committees in 17 states do not disclose contributors’ occupations or employers. See Dispersion sidebar.
• Political party committees in 24 states do not have to file a report for contributions received just before an election, until after that election is over.
• Political party committees in six states are not subject to a regular review for accuracy and completeness of documents they file.

Gaps in disclosure

Nevada’s major party committees raised $10.2 million during the 2000 elections, according to reports filed with the Elections Division. The following year, party committees did not have to report receiving a dime. That does not mean the organizations did not raise and spend money. Nothing was reported because, under most circumstances, state law allows them to avoid making public disclosures during non-election years. They end up reporting activity that occurs in non-election years, in effect retroactively, on the filings made in each election year. “The public’s right to know is foremost,” said Deputy Secretary of State Susan Bilyeau, “that’s why we’d like to see more filings and disclosure.”

If Nevada’s campaign financial disclosure laws were like federal statutes, expenditures and contributions in non-election years would be made public in a timely fashion.

In fact, the federal government demands that state party committees that spend money to assist candidates for federal office detail that activity in FEC disclosures. State parties are not required to report spending for candidates for state or local offices to the FEC, however. See Primer sidebar.

Federal statutes are often considered the standard by which campaign finance disclosure requirements are measured, so the Center evaluated the quality of federal laws that apply to state political parties.

Using the same criteria and methodology applied to the state statutes, the federal government received a passing score in the Center’s survey.

Though the Federal Election Commission imposes relatively strict reporting requirements on state party organizations that spend money on federal campaigns, the state-level disclosures rarely measure up.

In part, that’s because there are 50 sets of regulations, few of which are uniform across state lines. Terminology differs dramatically from state to state—so much so that even the definition of a “contribution” can differ from state to state.

There is no panacea, even among states that scored well in the Center’s evaluation. Despite federal campaign finance reforms, states implement whatever disclosure laws they see fit, leaving loopholes for raising and spending money, and a huge hole in public disclosure and accountability.

See Detailed Findings for a brief summary of all results.

Related links:

Federal Election Commission
Pew Charitable Trusts
University of Virginia Politics Dept.
Oregon Elections Division
Money in Politics Research Action Project
Washington State Democrats
Washington Public Disclosure Commission
West Virginia Elections Division
Nevada Elections Division

Gifty Boateng, Phillip Caston, Eric Marx and Susan Schaab contributed to this report. MaryJo Sylwester was the “State Secrets” project manager. In August, she joined the USA Today sports department as database editor.