Under existing law, a nonprofit organization that regularly organizes and hosts travel for elected officials and spends more than $10,000 in a calendar year, or more than $5,000 in a calendar year for a single person, for travel by an elected state officer or local elected officeholder, must disclose to the Fair Political Practices Commission the names of donors who, in the preceding year, donated more than $1,000 to the nonprofit organization and accompanied an elected state officer or local elected officeholder for any portion of the travel, as specified. Under existing law, this requirement applies only if the sum of the organizations expenses relating to travel, study tours, or conferences, conventions, and meetings, was greater than one-third of the organizations total expenses, as specified.

This bill would instead require any person that regularly organizes and hosts travel for elected officials and spends more than $10,000 in a calendar year, or more than $5,000 in a calendar year for a single person, for travel by an elected state officer or local elected officeholder, to file certain disclosures with the commission. A violation of the Political Reform Act of 1974 is punishable as a misdemeanor. By creating a new crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The Political Reform Act of 1974, an initiative measure, provides that the Legislature may amend the act to further the acts purposes upon a ²/₃ vote of each house of the Legislature and compliance with specified procedural requirements.

This bill would declare that it furthers the purposes of the act.

The Political Reform Act of 1974 requires certain disclosures relating to campaign contributions, including in-kind contributions. The act requires any candidate or committee that makes a late contribution that is an in-kind contribution to notify the recipient in writing of the value of the in-kind contribution within 24 hours of the time the contribution is made.

This bill would make technical, nonsubstantive changes to this provision.

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1422 (Allen) - Disclosures: Travel DISCLOSE Act

Bill Summary:

SB 1422 would require any person that regularly organizes and hosts travel for elected officials and spends more than $10,000 in a calendar year, or more than $5,000 in a calendar year for a single person, to file certain disclosures with the Fair Political Practices Commission (FPPC), as specified.

Fiscal Impact:

FPPC indicates that it would incur first-year costs of $189,000, and $182,000 annually thereafter, to implement the provisions of the bill (General Fund).

Background:

Current law provides that a nonprofit organization that regularly organizes and hosts travel for elected officials and spends more than $10,000 in a calendar year, or more than $5,000 in a calendar year for a single person, for travel by an elected state officer or local elected officeholder, must disclose to FPPC the names of donors who, in the preceding year, donated more than $1,000 to the nonprofit organization and accompanied an elected state officer or local elected officeholder for any portion of the travel, as specified. Under existing law, this requirement applies only if the sum of the organization’s expenses relating to travel, study tours, or conferences, conventions, and meetings, was greater than one-third of the organization’s total expenses, as specified.

In 2015, the Legislature enacted SB 21 (Hill), which required nonprofit organizations that pay for specified types of travel for elected officeholders to disclose the names of donors responsible for funding the travel. The bill also required an official who receives a gift of a travel payment from any source to report the travel destination on their statement of economic interests.

A CalMatters inquiry in May 2023 found that two disclosure forms have been filed during the nine years since SB 21’s enactment. After contacting several organizations, CalMatters noted that many of those groups contended that they do not meet the eligibility requirements for disclosure. The article explained that many organizations meet the monetary thresholds, but that ambiguity existed on how spending for travel, study tours and conferences, conventions and meetings related to elected officials account for at least one-third of its total expenses was calculated.

Proposed Law:

This bill would, among other things, do the following:

• Apply the disclosure requirement to all nonprofit entities that spend at least $10,000, or $5,000 for a single person, in a calendar year for organizing and hosting travel, as specified.
• Provide that the disclosure requirement described above only would apply to donors who knew or had reason to know that the donation would be used for a payment, advance, or reimbursement for travel by an elected state officer or local elected officeholder, as specified. Provide that the disclosure requirement does not apply to a government, a governmental agency, a foreign government, a governmental authority, or a bona fide public or private educational institution of collegiate grade, as specified.
• Require the person who made payments, advances, or reimbursements for travel to one or more elected officers to disclose the following for each travel event: (1) the travel destination or destinations, (2) the dates of the travel event, (3) the names of the elected state officers or local elected officers for whom the person made payments, advances, or reimbursements for travel relating to the event, and (4) the names of any donors for which the donor, or an agent, employee, or representative of the donor, accompanied an elected state officer or local elected officeholder for any portion of travel event.

Related Legislation:

SB 21 (Hill, Chapter 757, Statutes of 2015) required nonprofit organizations that pay for specified types of travel for elected officeholders to disclose the names of donors responsible for funding the travel. The bill also required an official who receives a gift of a travel payment from any source to report the travel destination on their statement of economic interests.

Staff Comments: FPPC notes that the number of new individuals/entities subject to the reporting requirement is unknown. The Commission anticipates costs for education materials, outreach, and resolution of potential complaints.

Any local government costs resulting from the mandate in this measure are not state-reimbursable because the mandate only involves the definition of a crime or the penalty for conviction of a crime.

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SENATE COMMITTEE ON

ELECTIONS AND CONSTITUTIONAL AMENDMENTS

Senator Catherine Blakespear, Chair

2023 - 2024 Regular

Bill No: 1422 Hearing Date: 4/16/24

Subject:

DIGEST

This bill requires any person that regularly organizes and hosts travel for elected officials and spends more than $10,000 in a calendar year, or more than $5,000 in a calendar year for a single person, to file certain disclosures with the Fair Political Practices Commission (FPPC), as specified.

ANALYSIS

Existing law:

1. Creates the Fair Political Practices Commission (FPPC), and makes it responsible for the impartial, effective administration and implementation of the Political Reform Act (PRA).
2. Provides that payments, advances, or reimbursements for travel, including actual transportation and related lodging and subsistence that is reasonably related to a legislative or governmental purpose, or to an issue of state, national, or international public policy, are not prohibited or limited if either of the following applies:
   1. The travel is in connection with a speech, as specified.
   2. The travel is provided by a government, a governmental agency, a foreign government, a governmental authority, a bona fide public or private educational institution, a nonprofit organization, or by a person domiciled outside the United States who substantially satisfies the requirements for tax-exempt status, as specified.
3. Requires a nonprofit organization that regularly organizes and hosts travel for elected officials and that makes payments, advances, or reimbursements that total more than $10,000 in a calendar year, or more than $5,000 in a calendar year for a single person, to disclose to the FPPC the names of donors who did both of the following in the preceding year:
   1. Donated $1,000 or more to the nonprofit organization.
   2. Accompanied an elected state officer or local elected officeholder, either personally or through an agent, employee, or representative, for any portion of travel, as specified.
4. Provides that a nonprofit organization “regularly organizes and hosts travel for elected officials” if the sum of the nonprofit organization’s expenses that relate to any of the following types of activities with regard to elected officials was greater than one-third of its total expenses reflected on the nonprofit organization’s Internal Revenue Service Form 990, or the equivalent, filed most recently within the last 12 months:
   1. Travel.
   2. Study tours.
   3. Conferences, conventions, and meetings.
5. Does not preclude a finding that a nonprofit organization is acting as an intermediary or agent of the donor. Provides that if the nonprofit organization is acting as an intermediary or agent of the donor, all of the following apply:
   1. The donor to the nonprofit organization is the source of the gift.
   2. The donor is identified as a financial interest, as specified.
   3. The gift is required to be reported, as specified.
   4. The gift is subject to the limitations on gifts, as specified.
6. Provides that a nonprofit organization include an organization that is exempt from taxation under Section 501(c)(3) or Section 501(c)(4) of the Internal Revenue Code.

This bill:

1. Removes the requirement in 4) above and applies the disclosure requirement to all entities that spend at least $10,000, or $5,000 for a single person, in a calendar year for organizing and hosting travel, as specified.
2. Provides that the disclosure requirement described above only apply to donors who knew or had reason to know that the donation would be used for a payment, advance, or reimbursement for travel by an elected state officer or local elected officeholder, as specified. Provides that the disclosure requirement does not apply to a government, a governmental agency, a foreign government, a governmental authority, or a bona fide public or private educational institution of collegiate grade, as specified.
3. Requires the person who made payments, advances, or reimbursements for travel to one or more elected officers to disclose the following for each travel event:
   1. The travel destination or destinations.
   2. The dates of the travel event.
   3. The names of the elected state officers or local elected officers for whom the person made payments, advances, or reimbursements for travel relating to the event.
   4. The names of any donors for which the donor, or an agent, employee, or representative of the donor, accompanied an elected state officer or local elected officeholder for any portion of travel event.

BACKGROUND

Political Reform Act of 1974. In 1974, California voters passed Proposition 9, an initiative commonly known as the PRA. Proposition 9 created the FPPC and codified significant restrictions and prohibitions on candidates, officeholders, and lobbyists. The Legislature is permitted to amend the PRA, but the amendments must further the purposes of the PRA and requires a two-thirds vote of both houses of the Legislature.

Additionally, some travel payments are not subject to the $590 gift limit but are reportable on an official’s statement of economic interests. This includes certain travel in connection with a speech, panel or seminar and certain travel provided by specified nonprofit organizations.

Previous Legislation. In 2015, the Legislature passed and Governor Brown signed SB 21 (Hill), Chapter 757, Statutes of 2015. SB 21 required nonprofit organizations that pay for specified types of travel for elected officeholders to disclose the names of donors responsible for funding the travel. The bill also required an official who receives a gift of a travel payment from any source to report the travel destination on their statement of economic interests.

CalMatters Reporting. In May of 2023, CalMatters reported that following the passage of SB 21 two disclosure forms were filed. After contacting several organizations, CalMatters noted that many of those groups contended that they do not meet the eligibility requirements for disclosure. The article explained that many organizations meet the monetary thresholds, but that ambiguity existed on how spending for travel, study tours and conferences, conventions and meetings related to elected officials account for at least one-third of its total expenses was calculated.

COMMENTS

1. According to the author: California disclosure laws require interest groups that sponsor travel for legislators to disclose if any donors to the organization also attended the trip. These disclosures improve transparency and accountability for the public to know what outside groups are paying to sponsor travel for legislators. However, according to May 2023 reporting by CalMatters, a review of disclosure filings with the FPPC revealed that only two disclosures have been filed in the 9 years since this law was enacted in 2015.

Provisions of that law require disclosure only if one-third of the organization’s yearly expenditures were dedicated to sponsoring the travel of legislators. This loophole inadvertently allows the most well-resourced organizations to circumvent travel disclosures if they spend more on other activities. SB 1422 seeks to close this loophole by removing the one-third expenditure provision. The bill also further increases transparency by requiring disclosure of the amount a donor contributed to an interest group for travel purposes and how many trips the donor attended.

1. Argument in Support. In a letter supporting SB 1422, former Senator Jerry Hill stated, in part, the following:

I strongly support SB 1422’s new requirements, informed by experience since the initial law’s passage, to ensure the public’s transparency needs are met.

The most impactful change removes the secondary threshold in current law. Currently, nonprofits only report when travel payments for elected officials make up over one-third of their total expenses. While this aimed to capture nonprofits focused primarily on travel funding, experience has shown it leaves the public unaware of donors behind larger nonprofits that may spend heavily on elected official travel. Larger nonprofits should not get out of disclosure of the travel they pay for just because they have larger budgets.

SB 1422’s expansion to encompass all non-governmental entities is equally important. The initial law focused on non-profits (501(c)(3) and (c)(4) organizations), but as CalMatters exposed in 2022, two trade associations exceeding the spending threshold claimed exemption due to this limitation. This needs to change. Public knowledge of travel funded by trade associations, unions, corporations, or individuals is as crucial as that of travel funded by nonprofits.

Finally, I commend SB 1422 for expanding disclosure requirements to include travel locations, dates, participating elected officials, and accompanying donors. Additionally, identifying donors who knowingly funded elected official travel and their contribution amounts is crucial. It makes a difference whether they have $1,000 or $50,000.

As a former State Senator, I recognize the potential education benefits of travel for elected officials. However, public awareness of trip funders and participants is equally important – just like knowing who is making campaign contributions and spending on political ads.

RELATED/PRIOR LEGISLATION

SB 21 (Hill), Chapter 757, Statutes of 2015, required nonprofit organizations that pay for specified types of travel for elected officeholders to disclose the names of donors responsible for funding the travel, as specified. SB 21 also required an officeholder who receives a gift of a travel payment from any source to report the travel destination on their statement of economic interests.

POSITIONS

Sponsor: California Clean Money Campaign

Support: Former State Senator Jerry Hill

350 Conejo

350 South Bay LA

350 Southland Legislative Alliance

350 Ventura County Climate Hub

Acterra

Ballona Institute

Ban Sup

California Alliance for Community Energy

California Climate Voters

California for Disability Rights

California for Energy Choice

Center for Biological Diversity

Clean Coalition

CleanEarth4Kids.org

Coastal Lands Action Network

Consumer Federation of California

Consumer Watchdog

Courage California

Courageous Resistance of the Desert

Custom Power Solar

Defend Ballona Wetlands

Endangered Habitats League

Extinction Rebellion San Francisco Bay Area

Glendale Environment Coalition

Habitable Designs

Hammond Climate Solutions

Hang Out Do Good

Indivisible California Green Team

Indivisible CA: StateStrong

Local Clean Energy Alliance

Long Beach Alliance for Clean Energy

Long Beach Environmental Alliance

Money Out People In

Money Out Voters In

Progressive Democrats of America, California

Progressive Democrats of the Santa Monica Mountains

Recolte Energy

RootsAction.org

San Joaquin Valley Democratic Club

San Jose Community Energy Advocates

San Luis Obispo Mothers for Peace

Silicon Valley Youth Climate Action

SoCal 350

Sonoma County Democratic Party

Sustainable Systems Research Foundation

The Climate Alliance of Santa Cruz County

Unrig LA

Valley Women’s Club Environmental Committee

Voices for Progress

Voters Right to Know

Women’s Energy Matters

Oppose: None received

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