The Center for Public Integrity

The National Republican Senatorial Committee sent more unregulated soft money to the Republican Party of Florida than to any other state party this election cycle, despite the fact there is no Senate race there this year.

The NRSC, which aids party candidates running for U.S. Senate, transferred a total of $3.2 million from its soft money account over five days to the soft money account of the Republican Party of Florida. Soon after each transfer, the Florida GOP transferred slightly lesser amounts of federally regulated hard money $2.7 million in all back to the NRSC in Washington. On three separate occasions, the funds moved on the same day, records show.

While Florida does not have a Senate race, the contest between Democrat Bill McBride and Gov. Jeb Bush, the Republican incumbent and brother of President George W. Bush, is a close race.

The transactions between the NRSC in Washington and the Republican Party of Florida are beneficial on both sides. Under Florida election law, direct contributions to candidates are limited, but there are no limits on soft money transfers to the state parties.

Meanwhile, the NRSC is able to transfer the hard dollars from Florida to battleground states around the country. The stakes in this year's midterm election are particularly high given that Democrats hold a majority in the Senate by a single vote.According to state records, the top recipient of the state GOP's money* is the MPGH Agency, a Falls Church, Va., political communications consulting firm that has been producing advertising for Jeb Bush. The firm received a little over $8 million through August, according to state campaign spending records.

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.

The Center for Public Integrity conducted a nationwide survey of state agencies that collect and monitor campaign finance reports. The survey focused on the reporting, filing, public access and enforcement of campaign finance reports filed by state-wide political party committees. Each of the 23 questions used in the survey had multiple-choice answers with numerical values. Answers that promote openness, accountability and public access were assigned higher values. The resulting total score for each state is listed below, including their ranking compared to other states.

Scores of 80 and higher are considered satisfactory to excellent. Scores of 60 to 79 are considered barely passing. Scores below 60 are considered failing.

Clicking on any state name will show how that state answered each question. 

Even where disclosure laws are among the strongest in the country, political party committees have succeeded in keeping millions of dollars in receipts off the books and hidden from public view.

In the 2000 election cycle, the Washington State Democratic Central Committee failed to properly report nearly $6 million in soft money transferred to from national parties during the 2000 elections, the Center for Public Integrity reported on June 25.

Yet Washington earned the second-highest ranking among the states in the Center's survey of campaign finance disclosure laws.

The Washington Public Disclosure Commission, the state election regulatory agency, has also found accounting problems at the Washington Republican State Committee. The PDC identified nearly $6 million in alleged illegal transfers from the Republican National Committee and affiliated committees to the state GOP, and has asked that Republicans turn the money over to the state's general fund.

The Center first documented the reporting discrepancies in "State Secrets" this summer. The study, conducted jointly with the Center for Responsive Politics and the National Institute for Money in State Politics, found that state parties raised $570 million in the 2000 elections, with nearly half of that coming in the form of unregulated, unlimited "soft money" transfers from the accounts of the national party committees.

Since the Republican National Committee and the Democratic National Committee must report soft money transfers to the Federal Election Commission, those federal records were analyzed, as well.

Four states explicitly permit political parties to maintain financial accounts where unlimited donations can be received with no disclosure to the public. And a total of 18 states allow party organizations to shield some aspect of their financial activity – the identity of donors or how money is spent – from public inspection.

Even by conservative estimates, millions of dollars in political donations and expenditures go unreported each year by state political party organizations.

Alaska, Michigan, Ohio and South Carolina state election regulations make explicit exceptions to disclosure requirements for any money earmarked for so-called operating or administrative expenses. The exception is a gaping loophole that permits parties and donors to avoid public scrutiny.

Party organizations use money in their operating accounts to pay for routine administrative expenses – staff salaries, maintenance and other day-to-day costs. The definition of an operating expense has expanded over the years to include spending that promotes the party and its platform, but, technically, does not endorse an individual candidate.

In other states, such as Iowa, operating accounts may not be mentioned in statutes, but officials know they exist. Some states — including Kentucky, Maryland, New York, Rhode Island, Tennessee, Texas,Washington and Wyoming — actually know about the operating accounts and call on party organizations to disclose contributions and spending to and from the accounts. Nonetheless, vaguely drafted laws often allow political organizations to avoid reporting millions of dollars simply by declaring that the money was raised and spent, ironically enough, on “non-political” activities

Federal campaign finance laws are generally considered to be the standard against which similar laws in the states are measured. But the Center for Public Integrity survey shows four states—Washington, Oregon, California, and North Carolina—have more stringent laws than those used to govern federally regulated party committees. See FEC Report Card below.

Every state divides all its political dollars into non-federal and federal activity. Non-federal spending is used to help candidates for offices other than Congress and the president. Spending on candidates for governor, state legislature and local office is considered non-federal. That political activity is reported to state elections or ethics agencies.

Federal activity—spending to help candidates for Congress or the presidency —must be disclosed to the Federal Election Commission (FEC).

The Center surveyed the type of information political party committees must report to state oversight agencies. State reporting usually covers only non-federal spending. But state parties also participate in federal elections and are required to abide by FEC rules. To provide context, Center researchers applied its disclosure ranking survey questions to the federal law.

Why didn't the FEC get a perfect score?

The Center survey included 23 questions with weighted points totaling 100. It focused on five areas of campaign finance regulation: extent of disclosure of contributions and disclosure of expenditures; frequency of filing; barriers to access; and enforcement. The FEC laws received 87 points.

On the whole, federal law demands more than state law, though it would have ranked fifth in the nation, behind Oregon, Washington, California (which were tied), and North Carolina.

The FEC lost points on several questions:

Gaps in state disclosure laws, incomplete reporting and problems obtaining campaign finance reports make it difficult to track the money coming in and out of state political party coffers.

These disclosure flaws could pose even more serious problems if national political parties rely more heavily on their state affiliates after federal soft money is banned under the Bipartisan Campaign Reform Act.

As part of a year-long study of contributions and expenditures reported by political party committees in all 50 states, the Center for Public Integrity, the Center for Responsive Politics and the National Institute on Money in State Politics created a comprehensive database based on campaign finance records filed with state agencies. The study also found that those records in the states are rife with flaws that make public accessibility and accountability difficult.

Among the most serious problems were:

• Millions of dollars in contributions and expenditures that were not reported due to loopholes in state disclosure laws.


• Handwritten reports, missing details that are legally required, incorrect information and state agencies ill-equipped to monitor the content of committee filings are problems in nearly every state. This results in poor quality of the information that is available.


• In at least 30 states, significant problems exist for simply obtaining campaign finance reports from state agencies.


• Electronic databases, which states have increasingly adopted to make public access to records easier, have not improved the quality of campaign finance reporting.

"We're pushing many problems from the national level to the state level where state agencies are ill equipped to deal with it," said Ray LaRaja, a political science professor at the University of Massachusetts who has studied state political parties.

Among the 50 states, only Connecticut has a campaign finance law that prevents the national parties from flooding its elections with transfers of unregulated, soft money donations.

Like the Bipartisan Campaign Reform Act, which will take effect after the November 2002 elections, Connecticut's law bans all corporate and union contributions and limits the amount individuals and political actions committees (PACs) can give. Connecticut's law explicitly bans soft money transfers to state parties under the guise of "party building activities" from the "nonfederal accounts" (that is, the accounts that fall outside the regulatory authority of the Federal Election Commission) maintained by the half-dozen party committees of the national Democratic and Republican parties.

While the Bipartisan Campaign Reform Act closes the soft money loophole at the federal level, without state laws like Connecticut's that bar transfers into states from non-federal accounts, money will still be able to move across state lines.

Alaska is a case in point.

A group called Campaign Finance Reform Now! gathered signatures from more than 32,000 Alaska voters for a ballot initiative that threatened to cut politicians off from most of their campaign cash sources. Unless the legislature passed a similar reform measure, Alaskans would have decided the issue for themselves in the voting booth.

In 1996—two years before the Connecticut bill was enacted—the Alaska state legislature passed a campaign finance reform measure that was the strictest in the nation, and imposed a complete ban on direct corporate and union contributions to parties and candidates. Moreover, it lowered from $1,000 to $500 the annual limit on contributions from an individual or PAC to a candidate, and placed a $5,000 limit on individual contributions to political parties.

Campaign funds in the U.S. political party system are divided into two categories—"federal" and "non-federal." Federal "hard" money is spent on campaigns for federal office. Contributions are limited and disclosed. The McCain-Feingold election reform law actually doubles the amount of hard money an individual can contribute in an election.

Non-federal money is supposed to be used to elect state and local officials and is regulated by state laws. It is also used to fund the "grass roots" activities of political parties. Since it is not regulated at the federal level, non-federal money is not supposed to be used to influence federal elections. When it is used for that purpose, it commonly becomes known as "soft money."

Soft money was born in 1978 when the Federal Elections Commission gave the Kansas Republican State Committee permission to use corporate and union funds (both legal under state law) to pay for a voter drive benefiting both state and federal candidates. The FEC allowed the state party to use a combination of federal money and non-federal money to pay for the drive.

The exemption was granted with good intentions. Following the post-Watergate campaign finance reforms, many state party committees became strapped for cash. The reforms made it more difficult to raise money for traditional party building activities—like voter registration drives—that inevitably benefit both state and federal candidates.

The national party organizations, like the Democratic National Committee and the Republican National Committee, began setting up non-federal accounts of their own. The accounts allowed corporations and labor unions to make unlimited contributions to national parties, something that is strictly illegal under the hard money system.