Spending Continues Long After Political Campaigns End

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Office parties, conferences, and donations to civic organizations are among the ways local politicians use campaign funds leftover after an election. The bulk of the remaining money, however, usually goes to paying political consultants.

Laws regarding what politicians are allowed to do with excess funds vary depending on whether they win election or not, vacate their seat or hold city or state office.

“They have a lot of discretion as to what they can do, but as long as it is for governmental and political purposes it’s okay,” said Bob Stern, author of the Political Reform Act, a proposition passed by voters in 1974 that’s the basis for the state’s campaign finance laws.

Stern, an advocate for political transparency, believes the Act has held up well in 43 years. A search of the state’s Fair Political Practices Commission database shows only a handful of expenditure-related violations in recent years, most of which are procedural in nature, including bookkeeping errors or failure to handle or deposit donations properly or promptly.  Still, according to Stern, “There are a few who take advantage.”

One of the keys to understanding the law is differentiating between “surplus” funds, a legal definition, and excess money left-over. “Surplus funds means any money remaining in the candidate’s bank account at the time the candidate leaves elective office or after the defeat of the candidate,” explained Shaista Shaikh, assistant deputy director of the San Francisco Ethics Commission.

In the case of a defeat, funds aren’t designated as surplus until the first expenditure report is filed after the election. Such accounts, detailing donations and spending, have to be filed semi-annually; June 30 would be the latest allowable date after an election. State law is identical, other than adding an extra 90 days after that reporting period. Financial books can remain open indefinitely, but upon closure must have a zero balance.

Once funds are designated as “surplus” there are strict spending rules. Under City law, the monies can be returned to donors on a last-in, first-out basis; donated to charity; used to pay outstanding campaign debts and accrued expenses; or pay costs associated with terminating the campaign committee.

They also can be donated to the City and County of San Francisco, Shaikh said, “This is one I haven’t seen.”

Once deemed “surplus,” state law prohibits funds from being rolled over into a subsequent election, something a candidate who continues to hold office is allowed to do. Office holders, under City law, can use excess assets for expenses associated with their positions, provided the expenditures are for legislative, governmental or political purposes. Monies can’t be expended to support ballot measures or other candidates unless they’re involved in a ranked choice election. In that case, a candidate can give money to a rival if by so doing it’ll further the candidate’s own campaign. This differs from state law, which allows funds to be expended on others’ campaigns as long as they’re for federal office or a seat outside California.

Most of the excess money generated by four politicians who represent San Francisco’s Southside neighborhoods has been dedicated to paying for services from political consulting firms, some of which have provided personnel to campaigns. District 10 Supervisor Malia Cohen, City Attorney Dennis Herrera and State Senator Scott Wiener engaged Stacy Owens, of the Henry Levy Group, to be their campaign treasurer. Andrew Sinn, of 50+1 Strategies, was Assembly member David Chiu’s treasurer. Jessica Lovejoy, Cohen’s former campaign manager, is also associated with 50+1 Strategies.

Payments to these firms continued post-election.  According to Nicole Derse, co-founder, of 50+1 Strategies, the company provides a variety of services to candidates, including fundraising, communications, and compliance with reporting requirements. 

Wiener terminated his committee for reelection to the Board of Supervisors, which dated from his 2014 run, only after he was elected to the State Senate last fall. After the 2014 race, he had $40,8000 remaining in his war chest. Over the last two years, he used the account mostly for Uber rides, with larger payments reserved for attending dinners and conferences and payments to the Henry Levy Group. There also was a sprinkling of Web-related costs and public storage fees.

Wiener spent $2.5 million for his Senate campaign in 2016, and had $56,768 remaining in that account at the end of last year, according to his latest statement.

In contrast, Cohen terminated her committee for 2014 reelection just eight months after the election. Heading into the final month of that race she had $165,821 left. Those funds were dispersed mainly to consulting firms, in addition to $37,098 paid to Pacific Print Resources, an Emeryville-based print and mail order company. She also spent $1,250 to pay off services to NGP VAN, a company that provides technology to Democratic and progressive campaigns.

Cohen’s not having money left over after paying bills is the norm for municipal races. Dogpatch resident Herrera had $183,000 to spend with less than two weeks to go in his 2011 mayoral campaign; that dwindled to just $1,896 by the end of the year after bills came due. The remaining funds went to the Henry Levy Group to bring his balance to zero and close the account.

Herrera’s reelection as City Attorney in 2015, however, left his campaign with a more bountiful $66,204, according to a June 2016 statement. As of January, he still had $46,119 remaining.  Outside of paying consultants, most of the money over those last six months went toward a variety of office parties. He held five retirement parties from June to November, costing from $433 to $3,782 each, and ran a $4,300 tab for a holiday party at Don Ramon’s Mexican Restaurant in December. An additional $5,700 in expenses for those parties was paid on behalf of the committee which didn’t come directly from the reelection account.

While Herrera couldn’t be reached for comment – his office stated that they cannot discuss campaign financing while at work – Stern said hypothetically these expenses are allowed as being part of the duties of holding the office.

Chiu had money left over after his last run for supervisor; his statement two months after the 2012 election showing a balance of $27,557. Chiu terminated the account in April 2015, the year after being elected to the State Assembly. In contrast to the other politicians, Chiu largely spread the funds to a dozen civic or political organizations, including more than $3,000 to the San Francisco Democratic Party, $3,500 to the Alice B. Toklas LGBT Democratic Club, $1,000 to the San Francisco Women’s Political Committee and $750 each to the Noe Valley Democratic Club and the Jewish Community Relations Council. According to Derse, whose organization did compliance work for Chiu, most of these payments were for events and fundraisers, and thus allowed as being for political purposes.

Chiu also had $33,494 left over from his 2014 Assembly run. The account was closed in October, 2015, with money primarily going to technology costs, $12,078, 50+1 Strategies, $9,297, legal and accounting fees, $6,056, and office expenses, $2,926.