2016 Election Year Update

New PAC Reporting and Disclaimer Requirements

By Diane M. Fishburn, Lacey E. Keys and Emily A. Andrews
Olson, Hagel & Fishburn LLP

 

Time for a PAC Checkup!

As we begin to move swiftly through an election year, it is an opportune time to pause for a moment to give your association PAC a quick compliance checkup and to review the reporting, disclaimer and other requirements that apply to your association’s political activities. Heightened scrutiny and enforcement by the Fair Political Practices Commission (FPPC) as well as an increase in the number of complaints filed with the FPPC mean that a PAC must be in compliance with these requirements to be politically effective and also to guard against significant fines and penalties.

New PAC Reporting Requirements Effective January 1, 2016

A PAC is required to file a minimum of two reports each year (FPPC Form 460) on the semi-annual filing schedule, regardless of activity. A PAC triggers pre-election reports (FPPC Form 460) and 24-hour reports (FPPC Form 496 and 497) based on its expenditures. Under the recent legislation, the supplemental independent expenditure report (FPPC Form 465) and the supplemental pre-election report (FPPC Form 495) were eliminated, and the pre-election reporting periods were revised.

For the average PAC, this means that it will file between four and six reports (FPPC Form 460) in 2016: two semi-annual reports and one to four pre-election reports, depending on the nature and timing of its political activities. Twenty-four-hour reports (FPPC Forms 496 and 497) will also be required for any independent expenditure or contribution of $1,000 or more made during the 90-day period prior to an election. The PAC treasurer should check the FPPC website for the reporting deadlines (www.fppc.ca.gov), and then calendar reporting reminders for all association officers and members involved in the planning or implementation of campaign activities. 

Revised Disclaimer Requirements for PAC Independent Expenditures

Effective October 10, 2015, the law was changed for disclaimers that must appear on independent expenditure communications (mailers, ads, flyers, email, etc.). The following disclaimer must now appear on all such communications in at least 14 point, bold, sans serif type font. (See sample below.)

On a mass mailing that qualifies as an independent expenditure, the statement “This advertisement was not authorized or paid for by a candidate for this office or a committee controlled by a candidate for this office” must be located within 1/4 inch of the recipient’s name and address as printed on the mailer, and must be contained in a box with an outline that has a line weight of at least 3.25 pt. In addition, at least three different colors are required because the inside of the box must contrast with the background on the mailer and both the font and box outline must contrast with both the inside of the box and the background of the mailer. (See example on next page.)

On a mailer, the “paid for by” statement and the sender’s complete address must also appear on the outside of the mailer.

If your association is working with a consultant on its political communications, these requirements should be reviewed with the consultant, and all communications should be reviewed carefully by at least two persons prior to distribution. Additional information on the disclaimer requirements is available on the FPPC website.

PAC Qualification Threshold Raised to $2,000 in a Calendar Year

Another important change in the law primarily affects small law enforcement associations that do not currently have PACs. Effective January 1, 2016, the PAC registration threshold has increased from the receipt of $1,000 in contributions in a calendar year to $2,000 in a calendar year.

PAC Compliance Checkup

In addition to reviewing the FPPC’s updated campaign manual and reporting forms for general purpose committees to familiarize yourself with the general requirements, your association’s treasurer and assistant treasurer should take the following quick steps:

1. Update PAC registration: Review the current Statement of Organization (FPPC 410) on file with the Secretary of State and your local filing officer to make sure the information is up to date, including the treasurer and other principal officers, as well as the PAC’s name and address.
2. Verify PAC filing status: FPPC rules require quarterly reviews of a PAC’s activities to confirm its filing status as a general purpose committee, and whether the PAC files its reports with the state, county or city. In general, if a PAC makes more than 70% of its expenditures in one city over a 24-month period or since January 1 of the last odd-numbered year, then it files its reports with the city clerk. Similarly, if a PAC makes more than 70% of its expenditures within one county (including all local jurisdictions within that county), then it will be a county filer. All other PACs are state filers and file with the Secretary of State. For more detail on these requirements, see Campaign Disclosure Manual 4 (for general purpose committees) on the FPPC website.
3. Review PAC funding: If the PAC is funded through a portion of member dues, this is a good time to verify that the PAC funding has been established through the association bylaws or by association board resolution, and that the funds designated for the PAC are being transferred on a regular basis (at least monthly) from the association general account to the PAC account. It may also be a good time to review the funding to determine if it should be changed to meet the PAC’s anticipated funding needs for the year.
4. Calendar PAC reporting deadlines: The association officers and the PAC treasurer should calendar the reporting deadlines and review the PAC’s proposed actvities for the year to ensure timely and complete reporting prior to the election and, particularly, to identify the pre-election and 24-hour reporting requirements that may apply to the activities.

About the Authors

Diane Fishburn, Lacey Keys and Emily Andrews are attorneys with Olson, Hagel & Fishburn LLP in Sacramento. The firm has served as PORAC’s PAC counsel for many years. Keys and Andrews will be discussing the new law as well as other requirements related to associations’ PAC activities and reporting at the Advanced Political Action seminar to be held by PORAC later this year.