The Political Reform Act of 1974 provides for the comprehensive regulation of campaign financing, including requiring the reporting of campaign contributions and expenditures and imposing other reporting and recordkeeping requirements on campaign committees. Under existing law, the Fair Political Practices Commission has primary responsibility for the impartial, effective administration and implementation of the Political Reform Act of 1974. Existing law makes a knowing or willful violation of the Political Reform Act of 1974 a misdemeanor and subjects offenders to criminal penalties. Under existing law, a person who files an original statement or report after a deadline imposed by the Political Reform Act of 1974 is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified. Existing law authorizes a filing officer to not impose this liability if the officer determines that the late filing was not willful and that enforcement of the liability will not further the purposes of the act, except as specified. Existing regulation directs the commission to develop a diversion program to allow for the education of a person who commits a minor violation of the act, as specified.

This bill would authorize the commission to establish and administer a political reform education program as an alternative to an administrative proceeding, as specified. The bill would establish eligibility requirements for the political reform education program, including that the person has little or no experience with the act and that the violation resulted in minimal or no public harm. If a person meets the requirements to participate in the political reform education program and completes the program, this bill would exempt the person from administrative, civil, or criminal penalties for the applicable violation of the Political Reform Act of 1974, as specified. The bill would authorize the commission to impose additional eligibility requirements for participation in the program. The bill would authorize the commission to charge a fee to program participants in an amount not to exceed the reasonable cost to administer the political reform education program. The bill would require the fee be paid to the General Fund. The bill would express the intent of the Legislature to appropriate funds annually to the commission to administer the political reform education program. The bill would prohibit a filing officer from imposing the $10 per day liability if the person who filed the late report or statement was unable to timely file due to serious illness or hospitalization or if the person completes the political reform education program, as specified.

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.

This bill would declare that it is to take effect immediately as an urgency statute.

The Political Reform Act of 1974 provides for the comprehensive regulation of campaign financing, including requiring the reporting of campaign contributions and expenditures and imposing other reporting and recordkeeping requirements on campaign committees. Under existing law, the Fair Political Practices Commission has primary responsibility for the impartial, effective administration and implementation of the Political Reform Act of 1974. Existing law makes a knowing or willful violation of the Political Reform Act of 1974 a misdemeanor and subjects offenders to criminal penalties. Under existing law, a person who files an original statement or report after a deadline imposed by the Political Reform Act of 1974 is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified. Existing law authorizes a filing officer to not impose this liability if the officer determines that the late filing was not willful and that enforcement of the liability will not further the purposes of the act, except as specified. Existing regulation directs the commission to develop a diversion program to allow for the education of a person who commits a minor violation of the act, as specified.

This bill would authorize the commission to establish and administer a political reform education program as an alternative to an administrative proceeding, as specified. The bill would establish eligibility requirements for the political reform education program, including that the person has little or no experience with the act and that the violation resulted in minimal or no public harm. If a person meets the requirements to participate in the political reform education program and completes the program, this bill would exempt the person from administrative, civil, or criminal penalties for the applicable violation of the Political Reform Act of 1974, as specified. The bill would authorize the commission to impose additional eligibility requirements for participation in the program. The bill would authorize the commission to charge a fee to program participants in an amount not to exceed the reasonable cost to administer the political reform education program. The bill would require the fee be paid to the General Fund. The bill would express the intent of the Legislature to appropriate funds annually to the commission to administer the political reform education program. The bill would prohibit a filing officer from imposing the $10 per day liability if the person who filed the late report or statement was unable to timely file due to serious illness or hospitalization or if the person completes the political reform education program, as specified.

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.

This bill would declare that it is to take effect immediately as an urgency statute.

The Political Reform Act of 1974 provides for the comprehensive regulation of campaign financing, including requiring the reporting of campaign contributions and expenditures and imposing other reporting and recordkeeping requirements on campaign committees. Under existing law, the Fair Political Practices Commission has primary responsibility for the impartial, effective administration and implementation of the Political Reform Act of 1974. Existing law makes a knowing or willful violation of the Political Reform Act of 1974 a misdemeanor and subjects offenders to criminal penalties. Under existing law, a person who files an original statement or report after a deadline imposed by the Political Reform Act of 1974 is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified. Existing law authorizes a filing officer to not impose this liability if the officer determines that the late filing was not willful and that enforcement of the liability will not further the purposes of the act, except as specified. Existing regulation directs the commission to develop a diversion program to allow for the education of a person who commits a minor violation of the act, as specified.

This bill would authorize the commission to establish and administer a political reform education program as an alternative to an administrative proceeding, as specified. The bill would establish eligibility requirements for the political reform education program, including that the person has little or no experience with the act and that the violation resulted in minimal or no public harm. The bill would prohibit the commission from pursuing administrative action against a person if they completed the political reform education program, as specified. If a person meets the requirements to participate in the political reform education program and completes the program, this bill would exempt the person from administrative, civil, or criminal penalties for the applicable violation of the Political Reform Act of 1974, as specified. The bill would authorize the commission to impose additional eligibility requirements for participation in the program. The bill would authorize the commission to charge a fee to program participants in an amount not to exceed the reasonable cost to administer the political reform education program. The bill would require the fee be paid to the General Fund. The bill would express the intent of the Legislature to appropriate funds annually to the commission to administer the political reform education program. The bill would prohibit a filing officer from imposing the $10 per day liability if the person who filed the late report or statement was unable to timely file due to serious illness or hospitalization or if the person completes the political reform education program, as specified.

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.

This bill would declare that it is to take effect immediately as an urgency statute.

The Political Reform Act of 1974 provides for the comprehensive regulation of campaign financing, including requiring the reporting of campaign contributions and expenditures and imposing other reporting and recordkeeping requirements on campaign committees. Under existing law, the Fair Political Practices Commission has primary responsibility for the impartial, effective administration and implementation of the Political Reform Act of 1974. Existing law makes a knowing or willful violation of the Political Reform Act of 1974 a misdemeanor and subjects offenders to criminal penalties. Under existing law, a person who files an original statement or report after a deadline imposed by the Political Reform Act of 1974 is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified. Existing law authorizes a filing officer to not impose this liability if the officer determines that the late filing was not willful and that enforcement of the liability will not further the purposes of the act, except as specified. Existing regulation directs the commission to develop a diversion program to allow for the education of a person who commits a minor violation of the act, as specified.

This bill would authorize the commission to establish and administer a political reform education program as an alternative to an administrative proceeding, as specified. The bill would establish eligibility requirements for the political reform education program, including that the person has little or no experience with the act and that the violation resulted in minimal or no public harm. The bill would prohibit the commission from pursuing administrative action against a person if they completed the political reform education program, as specified. The bill would authorize the commission to impose additional eligibility requirements for participation in the program. The bill would authorize the commission to charge a fee to program participants in an amount not to exceed the reasonable cost to administer the political reform education program. The bill would require the fee be paid to the General Fund. The bill would express the intent of the Legislature to appropriate funds annually to the commission to administer the political reform education program. The bill would prohibit a filing officer from imposing the $10 per day liability if the person who filed the late report or statement was unable to timely file due to serious illness or hospitalization or if the person completes the political reform education program. program, as specified.

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.

This bill would declare that it is to take effect immediately as an urgency statute.

The Political Reform Act of 1974 provides for the comprehensive regulation of campaign financing, including requiring the reporting of campaign contributions and expenditures and imposing other reporting and recordkeeping requirements on campaign committees. Under existing law, the Fair Political Practices Commission has primary responsibility for the impartial, effective administration and implementation of the Political Reform Act of 1974. Existing law makes a knowing or willful violation of the Political Reform Act of 1974 a misdemeanor and subjects offenders to criminal penalties. Under existing law, a person who files an original statement or report after a deadline imposed by the Political Reform Act of 1974 is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified. Existing law authorizes a filing officer to not impose this liability if the officer determines that the late filing was not willful and that enforcement of the liability will not further the purposes of the act, except as specified. Existing regulation directs the commission to develop a diversion program to allow for the education of a person who commits a minor violation of the act, as specified.

This bill would authorize the commission to establish and administer a political reform education program as an alternative to an administrative proceeding, as specified. The bill would establish eligibility requirements for the political reform education program, including that the person has little or no experience with the act and that the violation resulted in minimal or no public harm. The bill would prohibit the commission from pursuing administrative action against a person if they completed the political reform education program, as specified. The bill would authorize the commission to impose additional eligibility requirements for participation in the program. The bill would authorize the commission to charge a fee to program participants in an amount not to exceed the reasonable cost to administer the political reform education program. The bill would require the fee be paid to the General Fund. The bill would express the intent of the Legislature to appropriate funds annually to the commission to administer the political reform education program. The bill would prohibit a filing officer from imposing the $10 per day liability if the person who filed the late report or statement completes the political reform education program.

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.

This bill would declare that it is to take effect immediately as an urgency statute.

 UNFINISHED BUSINESS  

Bill No: SB 29

Author: Glazer (D), et al.

Amended: 6/22/23

Vote: 27 - Urgency

SENATE ELECTIONS & C.A. COMMITTEE: 7-0, 3/21/23

AYES: Glazer, Nguyen, Allen, McGuire, Menjivar, Newman, Umberg

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/18/23

AYES: Portantino, Jones, Ashby, Bradford, Seyarto, Wahab, Wiener

SENATE FLOOR: 40-0, 5/25/23

AYES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ASSEMBLY FLOOR: 79-0, 9/6/23 - See last page for vote

SUBJECT: The Political Reform Act of 1974: Fair Political Practices Commission: political reform education program

SOURCE: Author

DIGEST:

This bill codifies a political reform education program (PREP) into the Political Reform Act of 1974 (PRA) for low-level violations of the PRA as an alternative to an administrative proceeding, as specified.

Assembly Amendments

specify that if a person completes PREP, then the person is not subject to administrative, civil, or criminal penalties under the PRA. The amendments also add a coauthor and make minor changes.

ANALYSIS:

Existing law:

1. Creates the Fair Political Practices Commission (FPPC), and makes it responsible for the impartial, effective administration and implementation of the PRA.
2. Requires the FPPC, in addition to its other duties, to do all of the following:
   1. Prescribe forms for reports, statements, notices, and other documents required by the PRA.
   2. Prepare and publish manuals and instructions setting forth methods of bookkeeping and preservation of records to facilitate compliance with and enforcement of the PRA, and explaining the duties of persons and committees under the PRA.
   3. Provide assistance to agencies and public officials in administering the provisions of the PRA.
   4. Maintain a central file of local campaign contribution and expenditure ordinances forwarded to it by local government agencies.
   5. Annually publish a booklet no later than March 1 that sets forth the provisions of the PRA and includes other information the FPPC deems pertinent to the interpretation and enforcement of the PRA, as specified.
3. Requires the FPPC to issue an order that may require the violator to do all or any of the following when the commission determines, on the basis of the hearing, that a violation has occurred:
   1. Cease and desist the violation of the PRA.
   2. File any reports, statements, or other documents or information required by the PRA.
   3. Pay a monetary penalty of up to $5,000 per violation to the General Fund of the state. Provides that when the FPPC determines that no violation has occurred, it shall publish a declaration so stating.
4. Provides that if any person who files an original statement or report or copy of a statement or report after any deadline imposed by the PRA is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified.

This bill:

1. Permits the FPPC to establish and administer PREP for persons who violate the PRA as an alternative to an administrative proceeding under the PRA, as specified.
2. Provides that requirements for eligibility in PREP include, but are not limited to, all of the following:
   1. The person has little or no experience with the section of the PRA that the person violated.
   2. The underlying violation resulted in minimal or no public harm.
   3. The person has not been ordered to pay a penalty for the same type of violation in the previous five years.
   4. There is no evidence of an intent to violate or conceal a violation of the PRA.
3. Permits the FPPC to impose additional eligibility requirements for participation in PREP.
4. Provides that if a person meets the requirements to participate in PREP and completes the program, as specified by the FPPC, then the person shall not be subject to administrative, civil, or criminal penalties for that same violation and not be deemed as a prior violation of the PRA in any subsequent administrative proceeding against the person. Provides that if a person fails to complete PREP, then the FPPC may pursue an administrative action for that violation.
5. Permits the FPPC to charge a fee to a person who participates in PREP that does not exceed the reasonable cost to the FPPC to administer PREP in order to offset the costs of PREP. Requires the fee be payable to the General Fund.
6. States that it is the intent of the Legislature that funds be appropriated annually to the FPPC to administer PREP and that this funding shall not supplant or offset funding appropriated to the FPPC to discharge its other duties under the PRA.
7. Provides that liability shall not be enforced by the filing officer if the person who filed a late statement or report was unable to timely file the statement or report due to serious illness or hospitalization. Additionally, provides that liability shall not be enforced by the filing officer if the person completes PREP.
8. Contains an urgency clause in order to allow the FPPC to commence administration of the full version of PREP as soon as possible.

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.

Enforcement and Administrative Actions. The Enforcement Division within the FPPC is tasked with fairly, effectively, and efficiently enforcing the provisions of the PRA. According to the FPPC, the Enforcement Division analyzes and processes over 1,500 complaints and referrals per year about potential violations of the PRA. Complaints and referrals are received from citizens, other government agencies, and the media. The Enforcement Division also investigates on its own initiative. The Division also operates a campaign audit program of both mandatory and discretionary audits. A matter will be fully investigated if there is sufficient information to believe that a violation of the Act has occurred.

A violation of the PRA can be pursued in three ways: (1) administrative proceedings by the Enforcement Division; (2) criminal prosecution by a local district attorney or the state attorney general; or (3) a civil action by the public, certain government agencies, or the Enforcement Division. A majority of cases are handled through administrative proceedings.

When cases are resolved without the issuance of an administrative penalty, the Enforcement Division will issue a letter to the individual(s) complained about to conclude the case. There are three types of letters used and they are the following:

• Warning Letters: A Warning Letter is issued if a violation of the PRA is found but the seriousness of the offense is low, public harm is minimal, and/or other mitigation is found so that a monetary fine is not warranted. Since no administrative penalty is imposed, these letters are issued by the Enforcement Division and do not require approval by the FPPC. 
• Advisory Letters: If there is insufficient evidence to prosecute a case but the person complained about appears to need information about the PRA to ensure future compliance, the Enforcement Division closes the case with an advisory letter.
• No Action Closure Letters: A No Action Closure letter will be issued for circumstances including: insufficient evidence to prosecute, further information would not be helpful to move forward, the allegation has been disproven, the potential violations lack sufficient public harm to pursue, or the potential violations are being addressed in another forum. 

In 2021, the FPPC resolved 1,590 cases with 266 settlements and $472,248 in total fines. In 2022, the FPPC resolved 1,075 cases with 161 settlements and $617,548 in total fines.

Current Regulation. Within the regulations of the FPPC, there are provisions related to the creation of a political reform education program, such as the one this bill attempts to place in statute. Added in 2020, Regulation 18360.1 states “The Commission will develop a diversion program as soon as feasible to allow for education of respondents who have little or no experience with the Political Reform Act and commit minor violations, in lieu of monetary penalties.”

Comments

1. Author’s statement. According to the author, SB 29 enshrines an education and training program for low-level violations in the PRA. Since 1999, the FPPC has implemented a streamline program to create a standardized and efficient procedure for lesser violations. The current streamline program is generally available for violations considered minor that have minimal public harm and meet other qualifying factors. The FPPC recognized an opportunity to further the PRA’s purposes of education and enforcement through a new program that will provide training on the PRA’s requirements. This program would be in lieu of a streamline enforcement action and penalty. It will be open to individuals who committed a violation with minimal public harm, and have a low level of experience and sophistication with the applicable provision of the PRA. Additionally, this program will provide individuals with a new opportunity to learn how to comply with the PRA, remediate the violation, and avoid a mark on their record. SB 29 codifies the FPPC’s education and training program in statute and authorizes FPPC to collect a small fee from participants. By codifying this program, SB 29 provides an important and beneficial service to the regulated community.
2. What’s the fee? This bill permits the FPPC to charge a fee to a person participating in the program to help offset the overall costs of the program. Even though there are provisions specifying that the fee shall not exceed the reasonable costs to the FPPC to administer the program, the bill does not specify an amount or a range of possibilities for the potential fee. If the FPPC establishes a fee for specific courses within the program, then the FPPC should consider creating a fee that is reasonable within the context of the violation. For example, if a violation occurs where the penalty is $100, then the fee to enroll in PREP should be substantially less than $100. FPPC staff has indicated that the fee would be $50 for Statements of Economic Interests training and $100 for all other training and subjects.  

Related/Prior Legislation

SB 1483 (Glazer, 2022) was substantially similar to this bill and would have created PREP. SB 1483 was held on the Senate Appropriation Committee’s Suspense File.

SB 1025 (Johnson, Chapter 855, Statutes of 1999), among other provisions, required the FPPC to annually publish a booklet setting forth the provisions of the PRA with other information the FPPC deems pertinent to the interpretation and enforcement of the PRA.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee:

1. Costs of approximately $455,000 in the first year and $421,000 annually thereafter to the FPPC for three additional positions to establish and administer PREP (GF). Although these three positions were included in the Budget Act of 2023, there could be future GF cost pressures to the extent program implementation requires additional resources, as this bill declares the intent of the Legislature to fund the program without supplanting or offsetting funds appropriated to the FPPC to discharge its other duties. However, these costs may also be offset if the FPPC charges a sufficient program participation fee.
2. Costs of approximately $295,000 in the first year and $285,000 annually thereafter to the Secretary of State (SOS) for two additional positions to process an anticipated increase of approximately 2,000 waiver requests (GF). The SOS notes each of these requests must be thoroughly evaluated to determine whether the fine imposed for violating the PRA should be manually waived or reduced.

SUPPORT: (Verified 9/6/23)

California Common Cause

California Special Districts Association

Fair Political Practices Commission

OPPOSITION: (Verified 9/6/23)

None received

ASSEMBLY FLOOR: 79-0, 9/6/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Grayson

Prepared by: Scott Matsumoto / E. & C.A. / (916) 651-4106

9/6/23 18:15:40

**** END ****

SENATE THIRD READING

STR Bill Id:SB 29

Author:(Glazer)

As Amended Ver:June 22, 2023

2/3 vote. Urgency

SUMMARY

Permits the Fair Political Practices Commission (FPPC) to develop an educational program that may be completed by persons who commit low-level violations of the Political Reform Act (PRA), in lieu of being subject to an enforcement proceeding. Allows the FPPC to charge a fee for participating in such a program.

Major Provisions

1. Permits the FPPC, as an alternative to an administrative enforcement proceeding under the PRA, to establish and administer a political reform education program (PREP) for violations of the PRA that result in minimal or no public harm, as specified.
2. Provides that if a person completes PREP, the person shall not be subject to penalties for that same violation and the violation shall not be deemed a prior violation of the PRA in any subsequent proceeding against the person.
3. Permits the FPPC to charge participants a fee for PREP that does not exceed the reasonable cost to the FPPC to administer the program, in order to offset the costs of the program. Requires the fee to be payable to the General Fund (GF).
4. Permits a filing officer to waive a $10 per day penalty that applies to persons who file statements or reports required by the PRA after the relevant deadline, and prohibits a filing officer from enforcing a $10 per day penalty that applies to persons who fail to file a copy of a report or statement that is required by the PRA, under specified circumstances, if the person completes PREP for the late filing violation or if the late filing was due to serious illness or hospitalization.
5. Contains an urgency clause, allowing this bill to take immediately upon enactment.

COMMENTS

Violations of the PRA generally are subject to administrative, civil, and criminal penalties. Civil and criminal enforcement actions are rare, however, and enforcement actions for violations of the PRA typically are brought through the FPPC's administrative enforcement process.

To prioritize its resources for cases that involve greater public harm and to align the penalties it imposes with the seriousness of violations of the PRA, the FPPC has multiple ways to close an enforcement case in which it found a violation without the need for an administrative enforcement hearing. Between 2018 and 2022, in about 64% of cases that were closed where the FPPC found that the PRA was violated, the case was closed with a warning letter. Over that same period, in cases where the FPPC imposed a monetary fine for a PRA violation, 78% were handled through a streamlined process for violations involving a lesser degree of public harm. That process generally features reduced monetary fines and a more abbreviated and standardized process for resolving the case.

In January 2021, the FPPC approved regulations to expand and adjust its streamlined settlement and warning letter programs. As part of that action, the FPPC also adopted regulatory language that required the FPPC to "develop a diversion program as soon as feasible to allow for education of respondents who have little or no experience with the [PRA] and commit minor violations, in lieu of monetary penalties." In response to the mandate to develop a diversion program, the FPPC created PREP, and made it available for public officials who committed certain violations of state law related to a statement of economic interests (SEI) where the violation resulted in minimal public harm. According to the FPPC, since June 2022, the PREP program has received 96 referrals for the SEI course, and 79 learners have completed the course. As of June 14, 2023, 14 learners are enrolled but have yet to complete the course. In order to sustain the program long term and expand it to other types of violations, additional funding is needed.

The state budget for the 2023-24 fiscal year included a $455,000 general fund appropriation to continue to develop, administer, and expand the PREP program.

California voters passed an initiative, Proposition 9, in 1974 that created the FPPC and codified significant restrictions and prohibitions on candidates, officeholders, and lobbyists. That initiative is commonly known as the PRA. Amendments to the PRA that are not submitted to the voters, such as those contained in this bill, must further the purposes of the initiative and require a two-thirds vote of both houses of the Legislature.

According to the Author

"SB 29 enshrines an education and training program for low-level violations in the PRA. Since 1999, the FPPC has implemented a streamline program to create a standardized and efficient procedure for lesser violations. The current streamline program is generally available for violations considered minor that have minimal public harm and meet other qualifying factors. The FPPC recognized an opportunity to further the PRA's purposes of education and enforcement through a new program that will provide training on the PRA's requirements. This program would be in lieu of a streamline enforcement action and penalty. It will be open to individuals who committed a violation with minimal public harm, and have a low level of experience and sophistication with the applicable provision of the PRA."

Arguments in Support

The sponsor of this bill, the FPPC, writes in support, "The FPPC recognized an opportunity to further the [PRA's] purposes through a new education program that provides training on the [PRA's] requirements, in lieu of an enforcement action. In June of 2022, the FPPC launched a limited pilot program version of the program on the subject of statements of economic interests, which has been very successful. The program creates multiple benefits. Individuals in the regulated community who participate in the program will learn how to comply with the [PRA], while also avoiding a mark on their record and any monetary penalties. Within the FPPC, by redirecting low-level violations into the education program, the FPPC's enforcement division will be able to focus its resources on more serious violations with higher public harm, helping to bring these cases to a faster resolution."

Arguments in Opposition

None received.

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. Costs of approximately $455,000 in the first year and $421,000 annually thereafter to the FPPC for three additional positions to establish and administer PREP (General Fund (GF)). Although these three positions were included in the Budget Act of 2023, there could be future GF cost pressures to the extent program implementation requires additional resources, as this bill declares the intent of the Legislature to fund the program without supplanting or offsetting funds appropriated to the FPPC to discharge its other duties. However, these costs may also be offset if the FPPC charges a sufficient program participation fee.
2. Costs of approximately $295,000 in the first year and $285,000 annually thereafter to the Secretary of State (SOS) for two additional positions to process an anticipated increase of approximately 2,000 waiver requests (GF). The SOS notes each of these requests must be thoroughly evaluated to determine whether the fine imposed for violating the PRA should be manually waived or reduced.

VOTES

SENATE FLOOR: 40-0-0

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ASM ELECTIONS: 8-0-0

YES: Bryan, Lackey, Bennett, Essayli, Lee, Low, Pellerin, Blanca Rubio

ASM APPROPRIATIONS: 16-0-0

YES: Holden, Megan Dahle, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Sanchez, Soria, Weber, Wilson

UPDATED

VERSION: June 22, 2023

CONSULTANT: Ethan Jones / ELECTIONS / (916) 319-2094 FN: 0001467

Date of Hearing: August 16, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

SBPCA Bill Id:SB 29

Author:(Glazer) – As Amended Ver:June 22, 2023

Urgency: Yes State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill authorizes the Fair Political Practices Commission (FPPC) to administer a political reform education program as an alternative to an administrative proceeding for violations of the Political Reform Act (PRA).

Specifically, this bill:

1. Establishes eligibility requirements for the program, such as requiring the underlying violation to have resulted in minimal or no public harm.
2. Exempts a person who completes the program from otherwise applicable administrative, civil, or criminal penalties, including the $10 per day liability for a late report or statement. This bill also exempts from the $10 per day liability a person unable to timely file due to serious illness or hospitalization.
3. Authorizes the FPPC to charge a fee to program participants, paid to the General Fund (GF).
4. Declares the intent of the Legislature to annually appropriate funds to the FPPC to administer the program.

FISCAL EFFECT:

1. Costs of approximately $455,000 in the first year and $421,000 annually thereafter to the FPPC for three additional positions to establish and administer the Political Reform Education Program (PREP) (GF). Although these three positions were included in the Budget Act of 2023, there could be future GF cost pressures to the extent program implementation requires additional resources, as this bill declares the intent of the Legislature to fund the program without supplanting or offsetting funds appropriated to the FPPC to discharge its other duties. However, these costs may also be offset if the FPPC charges a sufficient program participation fee.
2. Costs of approximately $295,000 in the first year and $285,000 annually thereafter to the Secretary of State (SOS) for two additional positions to process an anticipated increase of approximately 2,000 waiver requests (GF). The SOS notes each of these requests must be thoroughly evaluated to determine whether the fine imposed for violating the PRA should be manually waived or reduced.

COMMENTS:

1. Purpose. According to the author, this bill “codifies the FPPC’s education and training program in statute and authorizes FPPC to collect a small fee from participants.” The author contends “this program will provide individuals with a new opportunity to learn how to comply with the PRA, remediate the violation, and avoid a mark on their record.” This bill is sponsored by the FPPC and supported by the California Special Districts Association and California Common Cause.
2. PREP. In January 2021, the FPPC adopted regulatory language to “develop a diversion program as soon as feasible to allow for education of respondents who have little or no experience with the [PRA] and commit minor violations, in lieu of monetary penalties.” Accordingly, the FPPC created PREP, which the FPPC’s website describes as “similar to traffic school.” Since 2022, PREP has received 96 referrals to its singular course for violations of the Statement of Economic Interests (SEI), which has been completed by 79 participants. However, additional funding is needed to sustain the program and expand it to other types of violations. This bill codifies PREP and authorizes the FPPC to charge participants a fee (the program is currently offered free of charge). This bill does not specify a fee amount, but the FPPC anticipates charging $50 for SEI training and $100 for all other subjects, which could include courses for candidate or committee campaigns, behested payment reports, lobbying reports, and advertising and mass mailing disclosures.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: June 21, 2023

ASSEMBLY COMMITTEE ON ELECTIONS

Isaac G. Bryan, Chair

SBPCA Bill Id:SB 29

Author:(Glazer) – As Amended Ver:March 9, 2023

SENATE VOTE: 40-0

SUBJECT: The Political Reform Act of 1974: Fair Political Practices Commission: political reform education program.

SUMMARY: Permits the Fair Political Practices Commission (FPPC) to develop an educational program that may be completed by persons who commit low-level violations of the Political Reform Act (PRA), in lieu of being subject to an enforcement proceeding. Allows the FPPC to charge a fee for participating in such a program. Specifically, this bill:

1. Permits the FPPC, as an alternative to an administrative enforcement proceeding under the PRA, to establish and administer a political reform education program (PREP) for persons who violate the PRA, as specified. Provides that requirements for eligibility in PREP include, but are not limited to, the following:
   
   1. The person has little or no experience with the section of the PRA that the person violated.
      
   2. The underlying violation resulted in minimal or no public harm.
      
   3. The person has not been ordered to pay a penalty for the same type of violation in the previous five years.
      
   4. There is no evidence of an intent to violate the PRA or to conceal a violation.
      
2. Permits the FPPC to impose additional eligibility requirements for participation in PREP.
   
3. Provides that if a person meets the requirements to complete PREP, the FPPC shall not pursue an administrative action for that same violation and the violation shall not be deemed a prior violation of the PRA in any subsequent administrative proceeding against the person.
   
4. Provides that if a person fails to meet the requirements to complete PREP, the FPPC may pursue an administrative action for that violation.
   
5. Permits the FPPC to charge participants a fee for PREP that does not exceed the reasonable cost to the FPPC to administer the program, in order to offset the costs of the program. Requires the fee to be payable to the General Fund (GF).
   
6. Permits a filing officer to waive a $10 per day penalty that applies to persons who file statements or reports required by the PRA after the relevant deadline, and prohibits a filing officer from enforcing a $10 per day penalty that applies to persons who fail to file a copy of a report or statement that is required by the PRA, under specified circumstances, in either of the following circumstances:
   1. The person who filed the late statement or report or copy was unable to timely file due to serious illness or hospitalization.
      
   2. The person who filed the late statement or report or copy completes PREP for that late filing violation.
7. Declares the intent of the Legislature that funds be appropriated annually to the FPPC to administer PREP. Provides that this funding shall not supplant or offset funding appropriated to the FPPC to discharge its other duties under the PRA.
8. Contains an urgency clause, allowing this bill to take immediately upon enactment.

EXISTING LAW:

1. Creates the FPPC, and makes it responsible for the impartial, effective administration and implementation of the PRA. (Government Code §§83100, 83111)
2. Makes violations of the PRA subject to administrative, civil, and criminal penalties. (Government Code §§83116, 91000-91005.5)
3. Imposes a $10 per day penalty on any person who files an original statement or report after any deadline imposed by the PRA for each day after the deadline until the statement or report is filed, in addition to any other penalties or remedies established by the PRA. Provides that liability need not be enforced by the filing officer if on an impartial basis the filing officer determines that the late filing was not willful and that enforcement of the liability will not further the purposes of the PRA, but provides that no liability shall be waived if a statement or report is not filed within 30 days for a statement of economic interest (SEI), other than a candidate’s SEI, five days for a campaign statement required to be filed 12 days before an election, and 10 days for all other statements or reports, after the filing officer has sent specific written notice of the filing requirement. Imposes a $10 per day penalty on any person who files a copy of a statement or report after any deadline imposed by the PRA, starting 10 days, or 5 days in the case of a campaign statement required to be filed 12 days before an election, after the officer has sent specific written notice of the filing requirement and until the statement is filed. Requires the filing officer to deposit any funds received into the general fund of the jurisdiction of which the filing officer is an officer. Limits liability under these provisions to the greater of the cumulative amount stated in the late statement or report, or $100, whichever is greater. (Government Code §91013)
   
4. Requires the FPPC to develop a diversion program as soon as feasible to allow for education of respondents in enforcement cases who have little or no experience with the PRA and commit minor violations, in lieu of levying monetary penalties against those respondents. (Code of California Regulations, Title 2, §18360.1)
   

FISCAL EFFECT: According to the Senate Appropriations Committee:

• The FPPC indicates that it would incur first-year costs of $455,000, and $421,000 annually thereafter, to implement the provisions of the bill (General Fund). These costs would be offset to some extent by new fee revenue. These FPPC costs would fund three positions, and are included in the Governor’s 2023-24 budget proposal.
  
• The bill would result in increased annual costs to the Secretary of State (SOS) of $277,000 (General Fund).
  

COMMENTS:

1. Purpose of the Bill: According to the author:

SB 29 enshrines an education and training program for low-level violations in the PRA. Since 1999, the FPPC has implemented a streamline program to create a standardized and efficient procedure for lesser violations. The current streamline program is generally available for violations considered minor that have minimal public harm and meet other qualifying factors. The FPPC recognized an opportunity to further the PRA’s purposes of education and enforcement through a new program that will provide training on the PRA’s requirements. This program would be in lieu of a streamline enforcement action and penalty. It will be open to individuals who committed a violation with minimal public harm, and have a low level of experience and sophistication with the applicable provision of the PRA. Additionally, this program will provide individuals with a new opportunity to learn how to comply with the PRA, remediate the violation, and avoid a mark on their record. SB 29 codifies the FPPC’s education and training program in statute and authorizes FPPC to collect a small fee from participants. By codifying this program, SB 29 provides an important and beneficial service to the regulated community.

1. Enforcement for Violations of the PRA: Violations of the PRA generally are subject to administrative, civil, and criminal penalties. Civil and criminal enforcement actions are rare, however, and enforcement actions for violations of the PRA typically are brought through the FPPC’s administrative enforcement process.
   
   According to a 2023 annual report by the FPPC detailing its workload, between 2018 and 2022, the FPPC opened an average of about 1,340 enforcement cases and closed about 1,280 cases per year. In about 75% of the closed cases, the FPPC determined that a violation of the PRA had occurred.
   
   To prioritize its resources for cases that involve greater public harm and to align the penalties it imposes with the seriousness of violations of the PRA, the FPPC has multiple ways to close an enforcement case in which it found a violation without the need for an administrative enforcement hearing. Between 2018 and 2022, in about 64% of cases that were closed where the FPPC found that the PRA was violated, the case was closed with a warning letter. By contrast, only about 27% of cases where the FPPC found a violation of the PRA resulted in the FPPC imposing a monetary fine.
   
   In cases where the FPPC imposes a fine for a violation of the PRA, there are multiple processes under which the fine can be imposed. According to a May 11, 2015 staff memo prepared for the FPPC, in 1999, the FPPC’s Enforcement Division proposed handling violations of the PRA involving a lesser degree of public harm “through a streamlined procedure where the fines are reduced and the [Stipulation] presented to the [FPPC] are more abbreviated and standardized.” Between 2018 and 2022, about 78% of cases where the FPPC imposed a monetary penalty were handled through this streamlined process.
   
   In January 2021, the FPPC considered and approved regulations to expand and adjust its streamlined settlement and warning letter programs. As part of that action, the FPPC also adopted regulatory language that required the FPPC to “develop a diversion program as soon as feasible to allow for education of respondents who have little or no experience with the [PRA] and commit minor violations, in lieu of monetary penalties.” According to the staff memo prepared for the discussion of that regulatory action, the diversion program was “anticipated to apply to first-time, inexperienced parties who attempted to comply in good faith and were unfamiliar with the filing requirements but were cooperative with the [FPPC’s] Enforcement Division when contacted.”
   
   In response to the mandate to develop a diversion program, the FPPC created PREP. The FPPC’s website gives the following information about PREP:
   

The purpose of PREP is to allow for the education of Respondents who have little or no experience with the Political Reform Act and commit minor violations, in lieu of monetary penalties.

What are the Benefits of the Program?

1. Similar to traffic school, PREP allows Respondents to learn how to comply with the law while avoiding a monetary penalty and a mark on their record.
2. Respondents who successfully complete PREP will have their Enforcement case closed with a No Action Closure Letter.
3. Completion of PREP will not be considered a prior record of violations of the Political Reform Act pursuant to Regulation 18361.5(e)(7) when considering a future violation committed by the Respondent.

How do you Complete the Program?

Respondents who enter into the PREP Agreement will be required to:

• Complete a selected Course;
• Pass the applicable test;
• Complete a survey providing feedback regarding the Course; and
• File any outstanding statements or reports.

What Courses are Available?

• Statement of Economic Interests Course

Currently, PREP offers a Statement of Economic Interests Course, which is available at no cost for a limited time for testing purposes.

Who Qualifies for the Program?

The Enforcement Division may refer a Respondent to PREP if they meet the following general requirements for eligibility:

• Violations committed by the Respondent appear to be the result of low level of experience and sophistication of the party;
• Violations committed by the Respondent resulted in minimal public harm; and
• The Respondent has not paid a penalty to the Commission for the same type of violation occurring within the last five years. Respondents who received a Warning Letter for the same type of violation occurring within the last five years may still qualify for PREP.
  

What are the Exclusions from the Program?

A Respondent does not qualify for PREP if any of the following exclusions apply:

• Any evidence of an intent to conceal or violate the Political Reform Act or regulations relating to the Act.
• Respondents presented the FPPC false or altered evidence.
• Respondents made false statements to the FPPC regarding material facts.
• Evidence of intentional interference with a witness in the FPPC matter.
• Respondents have other violations under review for prosecution that do not qualify for a streamline penalty.
• The Respondent does not qualify for a streamline penalty based on specific exclusions listed in Regulation 18360.1 or 18360.3.
• The Respondent completed PREP for the same type of violation occurring within the last five years.

According the FPPC, since June 2022, the PREP program has received 96 referrals for the Statement of Economic Interests course, and 79 learners have completed the course. As of June 14, 2023, 14 learners are enrolled but have yet to complete the course. In order to sustain the program long term and expand it to other types of violations, additional funding is needed. Once the full program is launched, the FPPC anticipates that 300-400 participants will be eligible for the program each year.

While the PREP program currently is being offered free of charge to participants, this bill would allow the FPPC to charge participants a fee. While this bill does not specify an amount or a range of possibilities for the potential fee, FPPC staff indicates that the anticipated fee would be $50 for Statements of Economic Interests training and $100 for all other training and subjects.

1. FPPC Budget for PREP: The Governor’s proposed budget for the 2023-24 fiscal year included a $455,000 general fund appropriation in 2023-24, and $421,000 in 2024-25 and ongoing, along with 3.0 positions to continue to develop, administer, and expand the PREP program. According to documents prepared in connection with that budget item, the FPPC identified the following courses that could potentially be offered as part of the PREP program in the future if sufficient funding was provided:

• Campaign Course for Candidates and Candidate-Controlled Committees (Local)
• Campaign Course for General Purpose and Primarily Formed Committees (Local)
• Campaign Course for Independent Expenditure and Major Donor Committees (Local)
• Campaign Course for Candidates and Candidate-Controlled Committees (State)
• Campaign Course for General Purpose and Primarily Formed Committees (State)
• Campaign Course for Independent Expenditure and Major Donor Committees (State)
• Behested Payment Reports Course
• Lobbying Reports Course
• Advertising and Mass Mailing Disclosures Course

Both the Assembly and the Senate Budget Committees approved the proposal to fund the PREP program as proposed by the Governor. At the time of the preparation of this committee analysis, however, a state budget for the 2023-24 fiscal year had not been signed into law, so it is unclear whether the FPPC will have the necessary budget to expand the PREP program.

1. Suggested Amendments: The provisions of this bill expressly prohibit the FPPC from pursuing an administrative action against a person for a violation if that person has completed the PREP program for that violation. However, as detailed above, violations of the PRA are subject to civil and criminal enforcement actions in addition to administrative enforcement actions brought by the FPPC. In order to ensure that people who complete the PREP program for violations that have minimal public harm are not potentially subject to more substantial penalties for those violations through civil or criminal actions, committee staff recommends that this bill be amended to specify that a person shall not be subject to administrative, civil, or criminal enforcement actions for a violation if the person has completed the PREP program for that violation. Additionally, committee staff recommends technical amendments to clarify that the protection from a subsequent enforcement action applies only to a person who completes the PREP program. To effectuate these recommendations, committee staff recommends that the text of page 3, lines 17-26 of the bill be amended as follows:
   
   (c) (1) If a person meets the requirements to complete participate in the political reform education program specified by the commission, commission and completes the program, the commission shall not pursue an administrative action person shall not be subject to administrative, civil, or criminal penalties under this title for that same violation and it shall not be deemed a prior violation of this title in any subsequent administrative enforcement proceeding against the person.
   
   (2) If a person fails to meet the requirements to complete the political reform education program specified by the commission, the commission may pursue an administrative action for that violation.
   
2. Arguments in Support: The sponsor of this bill, the FPPC, writes in support:

The FPPC recognized an opportunity to further the [PRA’s] purposes through a new education program that provides training on the [PRA’s] requirements, in lieu of an enforcement action. In June of 2022, the FPPC launched a limited pilot program version of the program on the subject of statements of economic interests, which has been very successful.

The program creates multiple benefits. Individuals in the regulated community who participate in the program will learn how to comply with the [PRA], while also avoiding a mark on their record and any monetary penalties. Within the FPPC, by redirecting low-level violations into the education program, the FPPC’s enforcement division will be able to focus its resources on more serious violations with higher public harm, helping to bring these cases to a faster resolution.

SB 29 will help ensure the long-term sustainability of the program and consistency within the program over time.

1. Political Reform Act of 1974: California voters passed an initiative, Proposition 9, in 1974 that created the FPPC and codified significant restrictions and prohibitions on candidates, officeholders, and lobbyists. That initiative is commonly known as the PRA. Amendments to the PRA that are not submitted to the voters, such as those contained in this bill, must further the purposes of the initiative and require a two-thirds vote of both houses of the Legislature.

REGISTERED SUPPORT / OPPOSITION:

Support

Fair Political Practices Commission (Sponsor)

California Common Cause

California Special Districts Association

Opposition

None on file.

Analysis Prepared by: Ethan Jones / ELECTIONS / (916) 319-2094

 THIRD READING  

Bill No: SB 29

Author: Glazer (D), et al.

Amended: 3/9/23

Vote: 27 - Urgency

SENATE ELECTIONS & C.A. COMMITTEE: 7-0, 3/21/23

AYES: Glazer, Nguyen, Allen, McGuire, Menjivar, Newman, Umberg

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/18/23

AYES: Portantino, Jones, Ashby, Bradford, Seyarto, Wahab, Wiener

SUBJECT: The Political Reform Act of 1974: Fair Political Practices Commission: political reform education program

SOURCE: Author

DIGEST:

This bill codifies a political reform education program (PREP) into the Political Reform Act of 1974 (PRA) for low-level violations of the PRA as an alternative to an administrative proceeding, 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 PRA.
2. Requires the FPPC, in addition to its other duties, to do all of the following:
   1. Prescribe forms for reports, statements, notices, and other documents required by the PRA.
   2. Prepare and publish manuals and instructions setting forth methods of bookkeeping and preservation of records to facilitate compliance with and enforcement of the PRA, and explaining the duties of persons and committees under the PRA.
   3. Provide assistance to agencies and public officials in administering the provisions of the PRA.
   4. Maintain a central file of local campaign contribution and expenditure ordinances forwarded to it by local government agencies.
   5. Annually publish a booklet no later than March 1 that sets forth the provisions of the PRA and includes other information the FPPC deems pertinent to the interpretation and enforcement of the PRA, as specified.
3. Requires the FPPC to issue an order that may require the violator to do all or any of the following when the commission determines, on the basis of the hearing, that a violation has occurred:
   1. Cease and desist the violation of the PRA.
   2. File any reports, statements, or other documents or information required by the PRA.
   3. Pay a monetary penalty of up to $5,000 per violation to the General Fund of the state. Provides that when the FPPC determines that no violation has occurred, it shall publish a declaration so stating.
4. Provides that if any person who files an original statement or report or copy of a statement or report after any deadline imposed by the PRA is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified.

This bill:

1. Permits the FPPC to establish and administer PREP for persons who violate the PRA as an alternative to an administrative proceeding under the PRA, as specified.
2. Provides that requirements for eligibility in PREP include, but are not limited to, all of the following:
   1. The person has little or no experience with the section of the PRA that the person violated.
   2. The underlying violation resulted in minimal or no public harm.
   3. The person has not been ordered to pay a penalty for the same type of violation in the previous five years.
   4. There is no evidence of an intent to violate or conceal a violation of the PRA.
3. Permits the FPPC to impose additional eligibility requirements for participation in PREP.
4. Provides that if a person meets the requirements to complete PREP, as specified by the FPPC, then the FPPC shall not pursue an administrative action for that same violation and shall not deem it as a prior violation of the PRA in any subsequent administrative proceeding against the person. Provides that if a person fails to meet the requirements to complete PREP, then the FPPC may pursue an administrative action for that violation.
5. Permits the FPPC to charge a fee to a person who participates in PREP that does not exceed the reasonable cost to the FPPC to administer PREP in order to offset the costs of PREP. Requires the fee be payable to the General Fund.
6. States that it is the intent of the Legislature that funds be appropriated annually to the FPPC to administer PREP and that this funding shall not supplant or offset funding appropriated to the FPPC to discharge its other duties under the PRA.
7. Provides that liability shall not be enforced by the filing officer if the person who filed a late statement or report was unable to timely file the statement or report due to serious illness or hospitalization. Additionally, provides that liability shall not be enforced by the filing officer if the person completes PREP.
8. Contains an urgency clause in order to allow the FPPC to commence administration of the full version of PREP as soon as possible.

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.

Enforcement and Administrative Actions. The Enforcement Division within the FPPC is tasked with fairly, effectively, and efficiently enforcing the provisions of the PRA. According to the FPPC, the Enforcement Division analyzes and processes over 1,500 complaints and referrals per year about potential violations of the PRA. Complaints and referrals are received from citizens, other government agencies, and the media. The Enforcement Division also investigates on its own initiative. The division also operates a campaign audit program of both mandatory and discretionary audits. A matter will be fully investigated if there is sufficient information to believe that a violation of the Act has occurred.

A violation of the PRA can be pursued in three ways: (1) administrative proceedings by the Enforcement Division; (2) criminal prosecution by a local district attorney or the state attorney general; or (3) a civil action by the public, certain government agencies, or the Enforcement Division. A majority of cases are handled through administrative proceedings.

When cases are resolved without the issuance of an administrative penalty, the Enforcement Division will issue a letter to the individual(s) complained about to conclude the case. There are three types of letters used and they are the following:

• Warning Letters: A Warning Letter is issued if a violation of the PRA is found but the seriousness of the offense is low, public harm is minimal, and/or other mitigation is found so that a monetary fine is not warranted. Since no administrative penalty is imposed, these letters are issued by the Enforcement Division and do not require approval by the FPPC. 
• Advisory Letters: If there is insufficient evidence to prosecute a case but the person complained about appears to need information about the PRA to ensure future compliance, the Enforcement Division closes the case with an advisory letter.
• No Action Closure Letters: A No Action Closure letter will be issued for circumstances including: insufficient evidence to prosecute, further information would not be helpful to move forward, the allegation has been disproven, the potential violations lack sufficient public harm to pursue, or the potential violations are being addressed in another forum. 

In 2021, the FPPC resolved 1,590 cases with 266 settlements and $472,248 in total fines. In 2022, the FPPC resolved 1,075 cases with 161 settlements and $617,548 in total fines.

Current Regulation. Within the regulations of the FPPC, there are provisions related to the creation of a political reform education program, such as the one this bill attempts to place in statute. Added in 2020, Regulation 18360.1 states “The Commission will develop a diversion program as soon as feasible to allow for education of respondents who have little or no experience with the Political Reform Act and commit minor violations, in lieu of monetary penalties.”

Prepared to Launch. According the FPPC, they currently has a pilot program that is open only for Statements of Economic Interests violations. This initial version will be free to participants. Since June 2022, PREP received 62 referrals for the Statement of Economic Interests course, and 49 learners have completed the course. As of February 13, 2023, 12 learners are enrolled but have yet to complete the course.

In order to sustain the program long term and expand it to other types of violations, additional funding is needed. Once the full program is launched, the FPPC anticipates that 200-300 participants will be eligible for the program each year.

Comments

1. Author’s statement. According to the author, SB 29 enshrines an education and training program for low-level violations in the PRA. Since 1999, the FPPC has implemented a streamline program to create a standardized and efficient procedure for lesser violations. The current streamline program is generally available for violations considered minor that have minimal public harm and meet other qualifying factors. The FPPC recognized an opportunity to further the PRA’s purposes of education and enforcement through a new program that will provide training on the PRA’s requirements. This program would be in lieu of a streamline enforcement action and penalty. It will be open to individuals who committed a violation with minimal public harm, and have a low level of experience and sophistication with the applicable provision of the PRA. Additionally, this program will provide individuals with a new opportunity to learn how to comply with the PRA, remediate the violation, and avoid a mark on their record. SB 29 codifies the FPPC’s education and training program in statute and authorizes FPPC to collect a small fee from participants. By codifying this program, SB 29 provides an important and beneficial service to the regulated community.
2. What’s the fee? This bill permits the FPPC to charge a fee to a person participating in the program to help offset the overall costs of the program. Even though there are provisions specifying that the fee shall not exceed the reasonable costs to the FPPC to administer the program, the bill does not specify an amount or a range of possibilities for the potential fee. Unless it is specified in this bill or a subsequent bill, if the FPPC establishes a fee for specific courses within the program, then the FPPC should consider creating a fee that is reasonable within the context of the violation. For example, if a violation occurs where the penalty is $100, then the fee to enroll in PREP should be substantially less than $100. FPPC staff has indicated that the fee would be $50 for Statements of Economic Interests training and $100 for all other training and subjects.  

Related/Prior Legislation

SB 1483 (Glazer, 2022) was substantially similar to this bill and would have created PREP. SB 1483 was held on the Senate Appropriation Committee’s Suspense File.

SB 1025 (Johnson, Chapter 855, Statutes of 1999), among other provisions, required the FPPC to annually publish a booklet setting forth the provisions of the PRA with other information the FPPC deems pertinent to the interpretation and enforcement of the PRA.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• FPPC indicates that it would incur first-year costs of $455,000, and $421,000 annually thereafter, to implement the provisions of this bill (General Fund). These costs would offset to some extent by new fee revenue.
• This bill would result in increased annual costs to the Secretary of State of $277,000 (General Fund).

SUPPORT: (Verified 5/18/23)

California Common Cause

California Special Districts Association

Fair Political Practices Commission

OPPOSITION: (Verified 5/18/23)

None received

Prepared by: Scott Matsumoto / E. & C.A. / (916) 651-4106

5/20/23 12:37:44

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 29 (Glazer) - The Political Reform Act of 1974: Fair Political Practices Commission: political reform education program

Bill Summary:

SB 29 would codify a political reform education program (PREP) into the Political Reform Act of 1974 (PRA) for low-level violations of the PRA as an alternative to an administrative proceeding, as specified.

Fiscal Impact:

• The Fair Political Practices Commission (FPPC) indicates that it would incur first-year costs of $455,000, and $421,000 annually thereafter, to implement the provisions of the bill (General Fund). These costs would offset to some extent by new fee revenue.
• The bill would result in increased annual costs to the Secretary of State (SOS) of $277,000 (General Fund).

Background:

In 1974, California voters passed Proposition 9, commonly known as the Political Reform Act (PRA). The PRA created FPPC and codified significant restrictions and prohibitions on candidates, officeholders, and lobbyists. The Legislature may amend the PRA, but the amendments (1) must further the purposes of the PRA, and (2) require a two-thirds vote of both houses of the Legislature.

FPPC’s Enforcement Division is tasked with fairly, effectively, and efficiently enforcing the provisions of the PRA. FPPC data indicate that its Enforcement Division analyzes and processes over 1,500 complaints and referrals per year regarding potential PRA violations. Complaints and referrals are received from citizens, other government agencies, and the media. The Enforcement Division also investigates on its own initiative. The Division also operates a campaign audit program of both mandatory and discretionary audits. A matter will be fully investigated if there is sufficient information to believe that a violation of the Act has occurred.

A violation of the PRA can be pursued in three ways: (1) administrative proceedings by the Enforcement Division, (2) criminal prosecution by a local district attorney or the state attorney general, or (3) a civil action by the public, certain government agencies, or the Enforcement Division. A majority of cases are handled through administrative proceedings.

When cases are resolved without the issuance of an administrative penalty, the Enforcement Division will conclude a case issue by issuing a letter to the relevant individual(s). There are three types of letters used:

• Warning Letters: A Warning Letter is issued if a PRA violation is found but the seriousness of the offense is low, public harm is minimal, and/or other mitigation is found so that a monetary fine is not warranted. Since no administrative penalty is imposed, these letters are issued by the Enforcement Division and do not require approval by the FPPC.
• Advisory Letters: If there is insufficient evidence to prosecute a case but the person complained about appears to need information about the PRA to ensure future compliance, the Enforcement Division closes the case with an advisory letter.
• No Action Closure Letters: A No Action Closure letter will be issued for circumstances including: insufficient evidence to prosecute, further information would not be helpful to move forward, the allegation has been disproven, the potential violations lack sufficient public harm to pursue, or the potential violations are being addressed in another forum.

In 2021, the FPPC resolved 1,590 cases with 266 settlements and $472,248 in total fines. The following year, FPPC resolved 1,075 cases with 161 settlements and $617,548 in total fines.

Under FPPC regulations, provisions exist related to the creation of a diversion program, such as the one this bill would codify. Specifically, Regulation 18360.1 (added in 2020) states, “The Commission will develop a diversion program as soon as feasible to allow for education of respondents who have little or no experience with the PRA and commit minor violations, in lieu of monetary penalties.”

Under existing law, a person who files an original statement or report after a deadline imposed by the PRA is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified. Existing law authorizes a filing officer to not impose this liability if the officer determines that the late filing was not willful and that enforcement of the liability will not further the purposes of the PRA, except as specified.

FPPC indicates that it currently has a pilot program that is open only for Statements of Economic Interests violations. This initial version will be free to participants. Since June 2022, PREP received 62 referrals for the Statement of Economic Interests course, and 49 learners have completed the course. As of February 13, 2023, 12 learners are enrolled but have yet to complete the course.

Proposed Law:

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

• Permit FPPC to establish and administer PREP for persons who violate the PRA as an alternative to an administrative proceeding under the PRA, as specified.
• Provide that requirements for eligibility in PREP include, but are not limited to, all of the following: (1) the person has little or no experience with the section of the PRA that the person violated, (2) the underlying violation resulted in minimal or no public harm, (3) the person has not been ordered to pay a penalty for the same type of violation in the previous five years, and (4) there is no evidence of an intent to violate or conceal a violation of the PRA.
• Permit FPPC to impose additional eligibility requirements for participation in PREP.
• Provide that if a person meets the requirements to complete PREP, as specified by FPPC, then FPPC shall not pursue an administrative action for that same violation and shall not deem it as a prior violation of the PRA in any subsequent administrative proceeding against the person. Provides that if a person fails to meet the requirements to complete PREP, then FPPC may pursue an administrative action for that violation.
• Permit FPPC to charge a fee to a person who participates in PREP that does not exceed the reasonable cost to administer PREP in order to offset the costs of PREP. Fee revenue would be deposited into the General Fund.

Related Legislation:

• SB 1483 (Glazer, 2022) was substantially similar to this bill and would have created PREP. The bill was held under submission on the Suspense File of this Committee.
• SB 1025 (Johnson, Chapter 855, Statutes of 1999), among other provisions, required FPPC to annually publish a booklet setting forth the provisions of the PRA with other information the FPPC deems pertinent to the interpretation and enforcement of the PRA.

Staff Comments:

The FPPC costs cited above would fund three positions, and are included in the Governor’s 2023-24 budget proposal.

As noted previously, this bill would permit FPPC to charge a fee to a person participating in the education program to help offset its costs. The bill does not specify an amount or a range of possibilities for the potential fee. FPPC staff indicated for SB 1483 that that the fee would be $50 for Statements of Economic Interests training and $100 for all other training and subjects.

Staff notes that the education program could potentially free up existing resources within the Enforcement Division if respondents are able to enroll in this program rather than have matters adjudicated in a potentially more lengthy proceeding.

SOS indicates that the bill would result in additional waiver requests. While an exact number of potential waiver requests is unknown, SOS notes that each of these waivers must be thoroughly evaluated for a decision to be made for the fine to be manually waived or reduced. SOS would require two new positions to accommodate the anticipated increase in resulting workload.

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SENATE COMMITTEE ON

ELECTIONS AND CONSTITUTIONAL AMENDMENTS

Senator Steven Glazer, Chair

2023 - 2024 Regular

Bill No: SB Hearing Date: 3/21/23

Subject: The Political Reform Act of 1974: Fair Political Practices Commission: political reform education program

DIGEST

This bill codifies a political reform education program (PREP) into the Political Reform Act of 1974 (PRA) for low-level violations of the PRA as an alternative to an administrative proceeding, 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 PRA.
2. Requires the FPPC, in addition to its other duties, to do all of the following:
   1. Prescribe forms for reports, statements, notices, and other documents required by the PRA.
   2. Prepare and publish manuals and instructions setting forth methods of bookkeeping and preservation of records to facilitate compliance with and enforcement of the PRA, and explaining the duties of persons and committees under the PRA.
   3. Provide assistance to agencies and public officials in administering the provisions of the PRA.
   4. Maintain a central file of local campaign contribution and expenditure ordinances forwarded to it by local government agencies.
   5. Annually publish a booklet no later than March 1 that sets forth the provisions of the PRA and includes other information the FPPC deems pertinent to the interpretation and enforcement of the PRA, as specified.
3. Requires the FPPC to issue an order that may require the violator to do all or any of the following when the commission determines, on the basis of the hearing, that a violation has occurred:
   1. Cease and desist the violation of the PRA.
   2. File any reports, statements, or other documents or information required by the PRA.
   3. Pay a monetary penalty of up to $5,000 per violation to the General Fund of the state. Provides that when the FPPC determines that no violation has occurred, it shall publish a declaration so stating.
4. Provides that if any person who files an original statement or report or copy of a statement or report after any deadline imposed by the PRA is liable in the amount of $10 per day after the deadline until the statement or report is filed, as specified.

This bill:

1. Permits the FPPC to establish and administer PREP for persons who violate the PRA as an alternative to an administrative proceeding under the PRA, as specified.
2. Provides that requirements for eligibility in PREP include, but are not limited to, all of the following:
   1. The person has little or no experience with the section of the PRA that the person violated.
   2. The underlying violation resulted in minimal or no public harm.
   3. The person has not been ordered to pay a penalty for the same type of violation in the previous five years.
   4. There is no evidence of an intent to violate or conceal a violation of the PRA.
3. Permits the FPPC to impose additional eligibility requirements for participation in PREP.
4. Provides that if a person meets the requirements to complete PREP, as specified by the FPPC, then the FPPC shall not pursue an administrative action for that same violation and shall not deem it as a prior violation of the PRA in any subsequent administrative proceeding against the person. Provides that if a person fails to meet the requirements to complete PREP, then the FPPC may pursue an administrative action for that violation.
5. Permits the FPPC to charge a fee to a person who participates in PREP that does not exceed the reasonable cost to the FPPC to administer PREP in order to offset the costs of PREP. Requires the fee be payable to the General Fund.
6. States that it is the intent of the Legislature that funds be appropriated annually to the FPPC to administer PREP and that this funding shall not supplant or offset funding appropriated to the FPPC to discharge its other duties under the PRA.
7. Provides that liability shall not be enforced by the filing officer if the person who filed a late statement or report was unable to timely file the statement or report due to serious illness or hospitalization. Additionally, provides that liability shall not be enforced by the filing officer if the person completes PREP.
8. Contains an urgency clause in order to allow the FPPC to commence administration of the full version of PREP as soon as possible.

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.

Enforcement and Administrative Actions. The Enforcement Division within the FPPC is tasked with fairly, effectively, and efficiently enforcing the provisions of the PRA. According to the FPPC, the Enforcement Division analyzes and processes over 1,500 complaints and referrals per year about potential violations of the PRA. Complaints and referrals are received from citizens, other government agencies, and the media. The Enforcement Division also investigates on its own initiative. The division also operates a campaign audit program of both mandatory and discretionary audits. A matter will be fully investigated if there is sufficient information to believe that a violation of the Act has occurred.

A violation of the PRA can be pursued in three ways: (1) administrative proceedings by the Enforcement Division; (2) criminal prosecution by a local district attorney or the state attorney general; or (3) a civil action by the public, certain government agencies, or the Enforcement Division. A majority of cases are handled through administrative proceedings.

When cases are resolved without the issuance of an administrative penalty, the Enforcement Division will issue a letter to the individual(s) complained about to conclude the case. There are three types of letters used and they are the following:

• Warning Letters: A Warning Letter is issued if a violation of the PRA is found but the seriousness of the offense is low, public harm is minimal, and/or other mitigation is found so that a monetary fine is not warranted. Since no administrative penalty is imposed, these letters are issued by the Enforcement Division and do not require approval by the FPPC. 
• Advisory Letters: If there is insufficient evidence to prosecute a case but the person complained about appears to need information about the PRA to ensure future compliance, the Enforcement Division closes the case with an advisory letter.
• No Action Closure Letters: A No Action Closure letter will be issued for circumstances including: insufficient evidence to prosecute, further information would not be helpful to move forward, the allegation has been disproven, the potential violations lack sufficient public harm to pursue, or the potential violations are being addressed in another forum. 

In 2021, the FPPC resolved 1,590 cases with 266 settlements and $472,248 in total fines. In 2022, the FPPC resolved 1,075 cases with 161 settlements and $617,548 in total fines.

Current Regulation. Within the regulations of the FPPC, there are provisions related to the creation of a political reform education program, such as the one this bill attempts to place in statute. Added in 2020, Regulation 18360.1 states “The Commission will develop a diversion program as soon as feasible to allow for education of respondents who have little or no experience with the Political Reform Act and commit minor violations, in lieu of monetary penalties.”

Prepared to Launch. According the FPPC, they currently has a pilot program that is open only for Statements of Economic Interests violations. This initial version will be free to participants. Since June 2022, PREP received 62 referrals for the Statement of Economic Interests course, and 49 learners have completed the course. As of February 13, 2023, 12 learners are enrolled but have yet to complete the course.

In order to sustain the program long term and expand it to other types of violations, additional funding is needed. Once the full program is launched, the FPPC anticipates that 200-300 participants will be eligible for the program each year.

COMMENTS

1. According to the author: SB 29 enshrines an education and training program for low-level violations in the PRA. Since 1999, the FPPC has implemented a streamline program to create a standardized and efficient procedure for lesser violations. The current streamline program is generally available for violations considered minor that have minimal public harm and meet other qualifying factors. The FPPC recognized an opportunity to further the PRA’s purposes of education and enforcement through a new program that will provide training on the PRA’s requirements. This program would be in lieu of a streamline enforcement action and penalty. It will be open to individuals who committed a violation with minimal public harm, and have a low level of experience and sophistication with the applicable provision of the PRA. Additionally, this program will provide individuals with a new opportunity to learn how to comply with the PRA, remediate the violation, and avoid a mark on their record. SB 29 codifies the FPPC’s education and training program in statute and authorizes FPPC to collect a small fee from participants. By codifying this program, SB 29 provides an important and beneficial service to the regulated community.
2. What’s the fee? This bill permits the FPPC to charge a fee to a person participating in the program to help offset the overall costs of the program. Even though there are provisions specifying that the fee shall not exceed the reasonable costs to the FPPC to administer the program, the bill does not specify an amount or a range of possibilities for the potential fee. Unless it is specified in this bill or a subsequent bill, if the FPPC establishes a fee for specific courses within the program, then the FPPC should consider creating a fee that is reasonable within the context of the violation. For example, if a violation occurs where the penalty is $100, then the fee to enroll in PREP should be substantially less than $100. FPPC staff has indicated that the fee would be $50 for Statements of Economic Interests training and $100 for all other training and subjects.  
3. Argument in Support. In a letter sponsoring SB 29, California Common Cause states, in part, the following:

The establishment of PREP acknowledges and addresses the complicated nature of the law and creates a more fair process for handling minor violations, like incomplete forms or late filings, in lieu of administrative penalties that establish a permanent record. By ensuring inexperienced candidates are not disadvantaged for their lack of institutional knowledge, California politics will become more equitable and accessible to all citizens. The education program in SB 29 will also likely enable FPPC staff to prioritize prosecuting egregious offenders of the law instead of uninformed candidates.

We additionally hope that the educational and training products produced by the program will be freely accessible on the FPPC’s website to members of the public who wish to utilize them.

RELATED/PRIOR LEGISLATION

SB 1483 (Glazer) of 2022 was substantially similar to this bill and would have created PREP. SB 1483 was held on the Senate Committee on Appropriation’s Suspense File.

SB 1025 (Johnson), Chapter 855, Statutes of 1999, among other provisions, required the FPPC to annually publish a booklet setting forth the provisions of the PRA with other information the FPPC deems pertinent to the interpretation and enforcement of the PRA.

POSITIONS

Sponsor: Fair Political Practices Commission

Support: California Common Cause

Oppose: None received

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