BILL ANALYSIS                                                                                                                                                                                                    





          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1349 (Hertzberg) - Political Reform Act of 1974:  Secretary  
          of State:  online filing and disclosure system
          
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          |Version: April 18, 2016         |Policy Vote: E. & C.A. 4 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: April 25, 2016    |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.


          


          Bill  
          Summary: SB 1349 would require the Secretary of State, in  
          consultation with the Fair Political Practices Commission  
          (FPPC), to develop and certify for public use a new online  
          filing and disclosure system for statements and reports that  
          provide public disclosure of campaign finance and lobbying  
          information in a user-friendly, easily understandable format.


          Fiscal  
          Impact: 
                 Secretary of State's Office (SOS) indicates that it  
               would incur one-time costs of $11.6 million and ongoing  








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               annual costs of $2.8 million related to information  
               technology (General Fund).

                 Costs to FPPC would increase by $131,000 in the first  
               year, and $124,000 ongoing (General Fund) to allow it to  
               interface with the new system developed by SOS.  
               Additionally, FPPC would experience unknown, but probably  
               minor, costs to update forms, and modify regulations to  
               reflect the new IT system. 



          Background: Cal-Access was created in 1999 and is the database and filing  
          system currently used by SOS to make much of the lobbying and  
          campaign finance information available online at no cost to  
          users. On November 30, 2011, Cal-Access went down, and the  
          system was unavailable for most of the following month.  
          Subsequently, concerns have been expressed regarding Cal Access'  
          current state and usefulness.  
          In 2012, the Legislature later enacted SB 1001 (Yee, Ch. 506 of  
          2012), which imposed a $50 annual fee on political committees  
          that are required to file disclosure reports pursuant to the PRA  
          and increased the fee on lobbying firms and lobbyist employers  
          from $25 to $50 per year per lobbyist.  The revenue generated is  
          deposited into the Political Disclosure, Accountability,  
          Transparency, and Access Fund (Fund), and is available to be  
          used to update or replace Cal-Access.  It is estimated that  
          these fees result in approximately $450,000 of new revenue  
          yearly for the Fund.  




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

                 Require SOS, in consultation with the FPPC, to develop  
               and certify for public use a new online filing system for  
               statements and reports that provide public disclosure of  
               campaign finance and lobbying information in a  
               user-friendly, easily understandable format.

                 Provide that the new system shall enable a user to  
               comply with all of the disclosure requirements within the  
               PRA.







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                 Require the new system to include a data-driven means or  
               method that allows filers to submit required filings free  
               of charge and does all of the following:

                  o         Enable a filer to comply with current-law  
                    disclosure requirements, including by entering or  
                    uploading requisite data or by indicating that the  
                    filer had no reportable activity during a particular  
                    reporting period.

                  o         Retain previously-submitted data so that a  
                    filer can access that data to amend disclosures or  
                    prepare future disclosures.

                  o         Ensure the security of data entered and stored  
                    in the system.

                 Require the new system to include the definition of a  
               nonproprietary standardized record format or formats using  
               industry standards for the transmission of the data that is  
               required of those persons and entities required to file  
               online and that conforms with the disclosure requirements  
               of the PRA.

                 Provide that SOS accept test files from software vendors  
               and others wishing to file reports electronically for the  
               purpose of determining whether the file format is in  
               compliance with the standardized record format developed  
               pursuant to this bill and is compatible with the SOS's new  
               system for receiving the data. SOS shall publish and make  
               available to the public a list of the software and service  
               providers who have submitted acceptable test files.  A  
               filer shall submit acceptably formatted files in order to  
               meet the requirements of this chapter.

                 Require the SOS to do all of the following: 

                  o         Make the data filed available on the Internet,  
                    as specified.

                  o         Develop a procedure for filers to comply  
                    electronically with the requirement to sign their  
                    submissions under penalty of perjury.  The electronic  
                    signature procedure shall allow the filer to file with  







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                    the SOS and shall not require an original signature to  
                    be filed.

                  o         Maintain all filed data online for at least 10  
                    years after the date it is filed, and then archive the  
                    information in a secure format.

                  o         Provide assistance to those seeking public  
                    access to the information.

                  o         Implement sufficient technology to seek to  
                    prevent unauthorized alteration or manipulation of the  
                    data.

                  o         Provide the FPPC with necessary information to  
                    enable it to assist agencies, public officials, and  
                    others in complying with and administering this title.

                 Provide that, in consultation with the FPPC, the SOS  
               shall, no later than July 31, 2017, hold at least one  
               public hearing to receive input on development of the  
               online filing system and record format.

                 Require that SOS make the new online filing system  
               available for use no later than February 1, 2019.  SOS may  
               extend this date to a date no later than December 31, 2019,  
               as specified.

                 Provide that the SOS may accept any funds, services,  
               equipment or grants to further the goals of this bill. 



          Related  
          Legislation: SB 3 (Yee & Lieu of 2013), would have required,  
          among other things, the SOS to develop a feasibility study  
          report to outline the technology requirements and the costs of a  
          new statewide electronic campaign filing and disclosure system.   
          SB 3 was vetoed by Governor Brown.  In his veto message, the  
          Governor stated that other provisions of the bill were "costly  
          and unnecessary," but also acknowledged that the current  
          campaign filing and disclosure system needed to be upgraded and  
          he directed the Government Operations Agency (GOA) to consult  
          the FPPC and the SOS and make recommendations on the best way to  
          improve campaign disclosure.  One of the options presented in  







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          the GOA report was to replace Cal-Access.
          SB 1442 (Lara of 2013), would have required, among other things,  
          the SOS, in consultation with the FPPC, to develop a new  
          statewide Internet-based system for the electronic filing and  
          public display of all records filed pursuant to the PRA with  
          search capabilities that are data-driven and user-friendly for  
          members of the public.  SB 1442 was also vetoed by Governor  
          Brown.  In his veto message, the Governor stated that before an  
          additional information technology project is authorized, the SOS  
          should complete the two other projects that were underway at the  
          time.




          Staff  
          Comments: SOS would incur one-time costs of $11.6 million and  
          ongoing annual costs of $2.8 million to create the online filing  
          and disclosure system. Increased staff ($2.2 million) and  
          software customization ($6 million) comprise the majority of the  
          one-time costs. Ongoing costs related to increased staff would  
          total $1.3 million annually.

          FPPC would incur first-year costs of $131,000, and ongoing costs  
          of $124,000 annually to assist SOS in documenting its business  
          requirements and implementation of the system as it relates to  
          its duties and mission. Additionally, FPPC would experience  
          unknown, but probably minor costs to update forms, and modify  
          regulations to reflect the new IT system.


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