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.
Gaps in Disclosure
One of the most pervasive problems in state campaign finance reports is how money is documented when it moves between federal and nonfederal accounts.
National parties transfer money to state parties, and state parties move money from accounts used solely to fund state-related expenses, to another that can be used for expenses related to federal elections. Documenting these money transfers is important to understanding the soft money system and how parties move money around to influence federal elections.
However, it's impossible to track this money using only state party campaign finance reports because so much information is either not reported, or reported incorrectly on the reports submitted to state agencies. Comparing the state filings to information reported to the Federal Election Commission makes this clear.
Reports that state parties filed in their states did not always list all of the money they received from national parties. Some states don't require this information to be reported. In those states that do, state parties sometimes failed to report money they'd received from national parties.
Some committees actually overstated the amount of money they had received by combining both the hard and soft money from national parties—rather than reporting the amounts separately on state and FEC filings.
These inconsistencies made it particularly difficult to compare how much one party or one state received compared to another.
A similar problem exists when looking at the money state parties use to influence both federal and state elections—called "joint activity." State parties must pay for joint activity with a ratio of hard and soft money and report it to the FEC. In state records, by contrast, the only record left by a committee engaged in joint activity is the transfer of the soft money portion to the committee's federal account.
But some states, such as Georgia and Texas, don't require disclosure of intra-party transfers, and others such as Utah don't report activity that affects federal elections. In Michigan, Ohio and South Carolina most of this "soft" money comes from the parties' operating accounts—which are not subject to any disclosure.
Those same parties report to the FEC about their federal accounts. Sixteen state party committees that reported no transfers at the state level reported $48 million worth of transfers to the FEC. And, because reporting standards are inconsistent, many committees may have underreported the amount of money they shifted from one account to another.
Laws in Michigan, South Carolina and Ohio require parties to report contributions and expenditures made to influence an election, but are silent about other party expenses that don't affect a specific election. As a result, parties are able to pay for administrative or generic party-building expenses—and raise unlimited amounts to do so—through a separate bank account that is not reported on campaign finance forms.
Reports that state and national parties file with the FEC provide a sliver of information about these "operating accounts," but these are hints rather than a full accounting. For example, the Michigan Republican and Democratic parties each spent at least $15 million from their operating accounts in the 2000 election cycle, according to FEC filings. How much more they spent on the state level, and from where that money came, is something neither party is required to report.
Seventeen states don't require parties to identify the occupation or employer of any contributors, while most of the others only require this information for donors that give in aggregate above a certain threshold. Typically the threshold is $50 or $100. Only New Jersey requires employer disclosure for all contributions.
Knowing a contributor's employer or occupation is key to studying the influences on the political parties. Are they receiving large sums from employees of a particular company? Or do they get more from attorneys than those who work in real estate?
Nearly 60 percent of the contributions that came from individuals in the State Secrets database did not include employer or occupation.
The problem doesn't entirely lie with lax disclosure laws, however.
Contributors frequently give only a generic description, such as "consultant" or "CEO," and most state agencies don't have the resources to audit these details.
Missouri requires the disclosure of a donor's employer for anyone who gives $100 or more during an election cycle. About 28 percent of contributions meeting that threshold have either a generic occupation or nothing listed. Almost half of those were from donors who gave more than $1,000 in a single contribution.
Spending reported by political party committees clearly receives little attention from both regulatory agencies and the public. Several states have serious gaps in disclosure laws pertaining to expenditures, while agencies in other states pay little attention to this portion of the reports.
Arkansas and North Dakota don't require political parties to report any expenditure information, not even summary totals. South Dakota only requires itemization of expenditures that are made directly to or on behalf of a candidate or committee. Other expenses—primarily administrative—are summed under generic categories such as "salaries."
Nebraska's campaign finance form design makes it impossible to match the expenditure with its purpose or description, rendering the information almost useless. David Hunter, who monitors the political party filings for the Nebraska Accountability and Disclosure Commission, acknowledged the form's shortcomings, but said his agency was more concerned with getting the committees to file timely reports.
Even when information is legally required, it wasn't always filled out completely or accurately. Many records were missing information, including vital facts such as the contributor's name, address, date of transactions, and the purpose of the expenditure or employer of the contributor. Handwritten entries in a number of states compounded the problem.
Even totals listed on summary pages are not exempt from mistakes. Dozens of reports listed the wrong total for either contributions or expenditures. One such discrepancy resulted in the Nevada Republican Party filing amended reports for the 2000 election due to more than $87,000 in unreported expenditures.
Compounding the problem, the state agencies that monitor and maintain campaign finance records are understaffed and lack the resources or regulatory backing to ensure committees file accurate and complete reports. Nearly every state agency had a few or even just one overworked staff member responsible for monitoring the filing of campaign finance reports—sometimes for all candidates, PACs and committees.
For many of these state officials, the priority is simply to obtain all of the reports, and the papers are filed away until someone requests a copy. In Wisconsin, the state agency had not noticed two pages missing from a Wisconsin Republican Party report until asked about it two years after the report was filed. In a similar vein, a Minnesota Republican Party report contained miscellaneous pages that didn't belong.
State officials repeatedly said they would like to be more vigilant about the quality of the reports, but they don't have auditing authority. This limits their power to force committees to file amendments when problems are uncovered.
"The lack of auditing authority is frustrating," said Renee Parker, chief deputy for the Nevada Secretary of State. "Even if we see an obvious omission, we can't do anything about it."
In at least 30 states, we encountered difficulties obtaining the campaign finance reports we requested. In these states, we either had to submit multiple requests or make repeated phone calls to the state agency after we discovered incomplete information—either missing reports or pages. Even the electronic data that we requested were not immune to these problems. In rare cases, this was the result of committees not filing the information.
Geoff Ward, a lobbyist and policy analyst for Common Cause who has dealt with gathering campaign finance data in multiple states, pointed out that "most states have the information, but it is hard to find."
Clearly, a citizen or journalist trying to access this information in even one state is likely to run into deterrents that will be frustrating and time-consuming.
Collecting approximately 45,000 pages of campaign finance reports and electronic data for thousands of other pages took more than a year. The expenditure records alone cost roughly $4,000 to obtain, not including costs for data entry and the time it took staff to make the requests and ensure the information was complete.
Our experience in Virginia is a fairly typical example that shows that obtaining paper records requires persistence and patience. Ultimately, it took 12 weeks, at least a dozen phone calls or e-mails and about $120 to get all of the 1999-2000 reports filed by 10 political committees:
- December 12, 2001: We e-mail and fax our initial request. Eight days later, the agency tells us our request cannot be filled until after the first of the year.
- January 10, 2002: The campaign finance division of the State Board of Elections in Virginia informs us they are working on getting the copies, but ask that we re-email our request.
- January 15: A pile of reports arrives, but it contains reports from 2001, which we did not request, and nothing from 1999. Some, but not all of the 2000 reports are included. The agency tells us they will send the correct reports.
- January 29: We call the agency and are informed the remainder has been sent. Another pile arrives three days later-still missing reports.
- February 19: A state agency employee tells us the 1999 reports that we are missing have been sent to the Library of Virginia Archives Division the previous week and that we must now request these documents from the archives division.
- February 26: The director of the archives division informs us that they can only photocopy 25 pages per day (our request would consist of hundreds of pages) and we would need to go to the archive division's office (in Richmond) to get the documents. Otherwise, it would take about one week and we would have to pay a 300 percent surcharge to get all of them copied at once.
- February 27: We contact the director of the campaign finance division to inform her of our difficulties. Two days later we had everything we requested.
Many states made significant strides during or just before the 2000 election to provide searchable databases or downloadable reports on their Web sites as a way to make campaign finance information more readily accessible.
A handful of states provide downloadable copies of their entire campaign finance database—a service that is particularly useful for journalists wishing to understand the financial activity for many committees or candidates.
Lacking a searchable database, some states have posted the campaign filings in PDF format or as an image file on their Web sites. Users can view, download or print the actual paper forms.
This study incorporated electronic data from 25 states. However, in most cases the data was incomplete, and needed to be supplemented with additional paper reports. For example, states such as Alaska, California and Pennsylvania had data from calendar year 2000 in a database, but the 1999 reports remained on paper. Other states only had data for the contribution portion of the reports or for those committees that filed electronically—which sometimes is voluntary.
Many states seem to be in the infant stage of being data providers to the public. They provide little if any documentation to understand the fields in their database or potential pitfalls in working with their data. At least two states put information from both original and amended reports in their databases, but provided no way of determining which record was the original and which the corrected version.
The fact that campaign finance databases have problems is indicative of the limited resources states have put toward them, according to Brant Houston, executive director of Investigative Reporters and Editors and The National Institute for Computer-Assisted Reporting. "Despite all the problems, electronic filing is a great step forward," he said. "It's going to continue to be tough for journalists to track the money and where it's going, though."
Some of the same problems encountered with paper reports—missing and incorrect information—is an issue with virtual reports, as well. About 30 percent of the records in Arizona's expenditure data did not contain key information such as purpose of the expense and address of the recipient. Spreadsheet files available on North Carolina's web site were missing several reports filed by the North Carolina Republican Party. After we alerted a state official, a state intern typed the reports into the database.
About 225 records in the Indiana database were missing contributor information, which we had to investigate and correct with the help of the state agency.
In Michigan, spreadsheet files containing expenditure records did not include the purpose of each expense—a key component of the State Secrets analysis. This information is stored in the full database which was used to create the spreadsheets, however. State officials refused to create a new file from the database, unless we paid their outside vendor to reconfigure the Web page where the downloadable file was located. They would have charged a per-hour rate for the contractor's time.
California provided all of the 2000 data electronically, but the file was excessively difficult to work with. In addition, the documentation provided to decipher the database was not easy to understand and the outside vendor responsible for the database provided inaccurate information about its contents.
A common problem was amended reports that were added to state campaign finance databases without replacing the original information. As a result, there would be duplicate records for the same contribution or expenditure.
Mechanisms in databases in Indiana, Illinois and California either failed to separate the duplicates or simply were not used. Informed of the problem, Illinois corrected the problems with its database. Indiana has not fixed its database, saying it will cost the state $10,000.
California's data includes a field that flags which records are the most current versions. However, there were millions of dollars in transactions that were not flagged properly. As a result, we spent several weeks downloading and typing paper reports for some committees to ensure that we got the appropriate information.
Kim Alexander, the founder and president of California Voter Foundation, said the poor quality of the electronic data in California prompted her non-profit organization to build their own version of the state's campaign finance reports. "You can't rely on the [California] secretary of state's office to do this job adequately," she said.
Yet, when the Bipartisan Campaign Reform Act takes effect after the November election, state agencies around the country will become an increasingly important source of information on the role of money in politics. Whether the states will be able to do that job adequately remains an open question.