BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:   June 15, 2016


                  ASSEMBLY COMMITTEE ON ELECTIONS AND REDISTRICTING


                                Shirley Weber, Chair


          SB  
          1349 (Hertzberg) - As Amended April 18, 2016


          SENATE VOTE:  38-0


          SUBJECT:  Political Reform Act of 1974:  Secretary of State:   
          online filing and disclosure system.


          SUMMARY:  Requires the Secretary of State (SOS), 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 provides public  
          disclosure of campaign finance and lobbying information in a  
          user-friendly, easily understandable format, as specified.   
          Specifically, this bill:  


          1)Makes the following Legislative findings and declarations:

             a)   Advances in technology have made it necessary for the  
               State of California to develop a new, data-driven online  
               filing and disclosure system that provides public  
               disclosure of campaign finance and lobbying information in  
               a user-friendly, easily understandable format.

             b)   Members of the public, including voters, journalists,  
               and researchers, should be able to access campaign finance  








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               and lobbying information in a robust and flexible manner,  
               including through searches and visual displays such as  
               graphs and maps.

          2)Requires the SOS, in consultation with the FPPC, to develop an  
            online filing and disclosure system for use by persons and  
            entities that are required to file statements and reports with  
            the SOS in accordance with Political Reform Act (PRA).  

          3)Requires the system to enable a user to comply with all the  
            disclosure requirements of the PRA and, at a minimum, include  
            all of the following:

             a)   A data-driven means or method that allows filers to  
               submit required filings free of charge in a manner that  
               facilitates public searches of the data and does all of the  
               following:

               i)     Enables a filer to comply with all of the disclosure  
                 requirements of the PRA, including by entering or  
                 uploading requisite data or by indicating that the filer  
                 had no reportable activity during a particular reporting  
                 period;

               ii)    Retains previously submitted data so that a filer  
                 can access that data to amend disclosures or prepare  
                 future disclosures;

               iii)   Ensures the security of data entered and stored in  
                 the system; and, 

               iv)    Is compatible, to the extent feasible, with  
                 potential future capability to accept statements from  
                 filers who are candidates for and holders of specified  
                 local offices, elected members of the Board of  
                 Administration of the Public Employees' Retirement  
                 System, elected members of the Teachers' Retirement  
                 Board, and their controlled committees, and committees  
                 formed or existing primarily to support or oppose these  








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                 candidates or elected officials.  

             b)   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 that are required to file online and that  
               conforms with the disclosure requirements of the PRA.

          4)Requires the SOS to do all the following with respect to the  
            online filing and disclosure system developed pursuant to this  
            bill:

             a)   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 system for receiving  
               the data.  Requires the SOS to publish and make available  
               to the public a list of the software and service providers  
               who have submitted acceptable test files.  Requires a filer  
               to submit acceptably formatted files in order to meet the  
               requirements of this bill.

             b)   Make the data filed available on the Internet as  
               follows: 

               i)     In a user-friendly, easily understandable format  
                 that provides the greatest public access, including  
                 online searches and machine-readable downloads of all  
                 data contained in the system, as specified;

               ii)    Free of charge and as soon as possible after  
                 receipt, or, in the case of late contribution, late  
                 in-kind, and late independent expenditure reports, as  
                 defined in current law, within 24 hours of receipt;

               iii)   In a form that does not contain the street name or  
                 building number of the persons or entity representatives  
                 listed on the electronically filed forms or any bank  








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                 account number required to be disclosed pursuant to the  
                 PRA; and, 

               iv)    In a manner that allows the public to track and  
                 aggregate contributions from the same contributor across  
                 filers using a permanent unique identifier assigned by  
                 the SOS for this purpose.  Requires the SOS to assign  
                 this identifier to, at minimum, to each contributor who  
                 makes contributions totaling ten thousand dollars  
                 ($10,000) or more in a calendar year to, or at the behest  
                 of, candidates or committees that file electronically  
                 with the SOS, pursuant to existing law, or who is  
                 registered with the SOS as a major donor committee  
                 pursuant to current law. 

             c)   Develop a procedure for filers to comply electronically  
               with the requirement to sign their submissions under  
               penalty of perjury pursuant to current law.  Requires the  
               electronic signature procedure to allow the filer to file  
               with the SOS and shall not require an original signature to  
               be filed.

             d)   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.

             e)   Provide assistance to those seeking public access to the  
               information.

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

             g)   Provide the FPPC with the necessary information to  
               enable it to assist agencies, public officials, and others  
               in complying with and administering the PRA.

          5)Requires the SOS to do all of the following with respect to  
            developing the online filing and disclosure system and record  
            format pursuant to this bill:








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             a)   Consult with the Assembly Committee on Elections and  
               Redistricting, the Senate Committee on Elections and  
               Constitutional Amendments, the FPPC, users, filers, and  
               other stakeholders, as appropriate, about functions of the  
               online filing and disclosure system;

             b)   Hold at least one public hearing, in consultation with  
               the FPPC, no later than July 31, 2017, to receive input  
               about developing the online filing and disclosure system  
               and record format; and, 

             c)   Submit a report, no later than December 31, 2017, to the  
               Assembly Committee on Elections and Redistricting and the  
               Senate Committee on Elections and Constitutional Amendments  
               that includes a plan for the online filing and disclosure  
               system, describes how members of the public will be able to  
               query and retrieve data from the system, and includes a  
               plan for integrating statements from other specified  
               fliers. 

          6)Requires the SOS to make the online filing and disclosure  
            system available for use no later than February 1, 2019.   
            Permits the SOS to extend this date to a date no later than  
            December 31, 2019 after consulting with the Assembly Committee  
            on Elections and Redistricting and the Senate Committee on  
            Elections and Constitutional Amendments and providing to those  
            committees a report that explains the need for the extension  
            and includes a plan for completion.

          7)Permits the SOS to accept any funds, services, equipment or  
            grants to further the provisions of this bill provided that  
            the SOS notifies the Assembly Committee on Elections and  
            Redistricting and the Senate Committee on Elections and  
            Constitutional Amendments upon accepting any amount valued at  
            one hundred thousand dollars ($100,000) or more.

          8)Exempts the SOS from various information technology  
            requirements, and from project and funding approvals, for the  








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            purposes of implementing this bill as expeditiously as  
            possible.  Requires the SOS to consult with the Department of  
            Technology, as appropriate, in developing the online filing  
            and disclosure system.  

          9)Requires the SOS, in consultation with the FPPC, before making  
            the system available for public use, to test the system to  
            ensure its functionality and then certify that the system  
            meets all the requirements of this bill.  Permits the SOS to  
            consult with the Department of Technology as needed to fulfill  
            these testing requirements.

          10)Provides that after the system developed pursuant to this  
            bill is certified, the previous system developed pursuant to  
            existing law shall no longer accept reports and filings,  
            unless otherwise directed by the SOS and the FPPC.  Requires  
            the previous system to continue to allow public access to past  
            disclosures unless the SOS migrates that data into the new  
            system.  

          EXISTING LAW:   


          1)Requires the SOS, in consultation with the FPPC, to provide  
            online and electronic filing processes for use by specified  
            political committees, lobbyists, lobbying firms, and lobbyist  
            employers pursuant to the PRA.  This online reporting and  
            disclosure system is commonly referred to as the Cal-Access  
            system.

          2)Requires the SOS to make all the data filed using the online  
            and electronic filing process available on the Internet for  
            public viewing in an easily understood format.

          3)Requires the SOS to provide a means or method whereby entities  
            that are required to file statements or reports online or  
            electronically with the SOS can submit those required filings  
            free of charge.









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          4)Requires all state candidates and state political committees  
            that are required to file campaign reports to file those  
            reports online or electronically if the cumulative amount of  
            contributions received, expenditures made, loans made, or  
            loans received is $25,000 or more.

          5)Provides that the Department of Technology and the Department  
            of General Services maintain specified oversight  
            responsibilities regarding state informational technology  
            procurements.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, the Secretary of State's Office indicates that it  
          would incur one-time costs of $11.6 million and ongoing 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 information technology  
          system.


          COMMENTS:  


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


               In the 2014 election cycle, major donor and  
               independent expenditure committees spent over $80  
               million in California, an amount that increases each  








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               cycle. The [PRA] requires campaign contributors who  
               reach specified contribution thresholds to file  
               regular reports with the [SOS] of their contributions  
               and expenditures. In addition to candidates for  
               office, "major donors" and "independent expenditure  
               committees" are required to file reports. 





               Converting filed reports into a user-friendly database  
               has proved to be an ongoing challenge. The [SOS's]  
               current campaign finance database, Cal-Access, does  
               not allow the public to easily access records for  
               contributions made by major donors and independent  
               expenditure committees. For example, one committee may  
               use variations in the spelling of its name each year,  
               making it almost impossible to track contributions  
               over time. Secretary of State Alex Padilla has called  
               Cal-Access "a Frankenstein's monster of code" that is  
               in need of "a complete rebuild." It undermines  
               democracy when the public cannot easily access  
               information about campaign and lobbying disclosures.


          2)Political Reform Act and Cal-Access:  In 1974, California  
            voters approved Proposition 9, also known as the Political  
            Reform Act of 1974, which among other things, requires the  
            disclosure of campaign contributions and expenditures and  
            state lobbying activities.  The requirements are intended to  
            ensure, among others, that "Receipts and expenditures in  
            election campaigns [are] fully and truthfully disclosed in  
            order that the voters may be fully informed and improper  
            practices may be inhibited," and that "The activities of  
            lobbyists [are] regulated and their finances disclosed in  
            order that improper influences will not be directed at public  
            officials."  









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          In 1997, the Legislature passed and Governor Pete Wilson signed  
            SB 49 (Karnette), Chapter 866, Statutes of 1997, which amended  
            the PRA and established the Online Disclosure Act of 1997.  SB  
            49 required the SOS, in consultation with the FPPC, to develop  
            and implement, by the year 2000, an online filing and  
            disclosure system for reports and statements required to be  
            filed under the PRA, as specified.  As a result, the SOS  
            created and deployed a system called the California Automated  
            Lobby Activity and Campaign Contribution and Expenditure  
            Search System, commonly referred to as Cal-Access.

          3)Cal-Access Status:  As mentioned above, Cal-Access is a  
            database and filing system the SOS has used to make much of  
            the lobbying and campaign finance information available online  
            at no cost to users.  According to the SOS, the Cal-Access  
            system is fueled by a complex array of computer applications  
            written in 14 different programming languages including  
            hardware, firmware, and software - some no longer supported by  
            their vendor - that are beyond their useful age.  As a result,  
            the Cal-Access system has denied public access, gone offline,  
            and put strain on SOS staff resources.  In November 2011, the  
            Cal-Access system went down, and the system was unavailable  
            for most of the month of December.  

            Although the system has remained online since the cause of the  
            failure was addressed, frequent concerns have been expressed  
            by users and other observers regarding the current state and  
            usefulness of Cal-Access.  In an effort to modernize the  
            Cal-Access system, this bill requires the SOS, in consultation  
            with the 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, as specified.  


           4)MapLight Partnership:  Last year, the SOS announced the launch  
            of Power Search, a privately developed, open source campaign  
            finance search engine available on the SOS's website.  Power  








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            Search allows anyone to access electronically-reported,  
            state-level campaign contribution raw data from 2001 to the  
            present reported to the SOS's Cal-Access campaign finance  
            filing and disclosure system.

          Power Search can be used to quickly search for contributions to  
            candidates and ballot measures and contributions from  
            individuals, businesses and other campaign committees. It can  
            also be used to search for independent expenditures made to  
            support or oppose candidates or ballot measures.  However,  
            only electronically-reported, state-level, campaign  
            contribution and independent expenditure data is provided  
            through Power Search at this time. 
           
           5)Technology Oversight Exemption:  This bill exempts the  
            development of the new online filing and disclosure system  
            from existing information technology procurement requirements  
            and project and funding approvals, for the purposes of  
            implementing this bill as expeditiously as possible.   
            Additionally, this bill requires the SOS to consult with the  
            Department of Technology, as appropriate, in developing the  
            online filing and disclosure system.  The provisions that  
            exempt the SOS from various information technology procurement  
            requirements are similar to provisions of SB 397 (Yee),  
            Chapter 561, Statutes of 2011, which permitted online voter  
            registration to begin prior to the completion of a new  
            statewide voter registration database. 
           
           6)Funding for Replacing Cal-Access:  In 2012, the Legislature  
            passed and the Governor signed SB 1001 (Yee), Chapter 506,  
            Statutes of 2012, which imposed a $50 annual fee on specified  
            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.   
            Additionally, SB 1001 required the revenue generated to be  
            deposited into a newly-created Political Disclosure,  
            Accountability, Transparency, and Access Fund (PDATA Fund) in  
            the State Treasury and be used to update or replace  
            Cal-Access.  It is estimated that these fees will result in  








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            approximately $490,000 of new revenue yearly for the PDATA  
            Fund.



          In a letter dated March 11, 2016, Senator Hertzberg, the author  
            of this bill, requested a budget augmentation to allow the SOS  
            to modernize the Cal-Access system.  In that letter, Senator  
            Hertzberg stated that the SOS estimated the cost of replacing  
            the system at $13.5 million.  The letter, however, does not  
            address existing and anticipated moneys from the PDATA Fund.

          The Governor's May revision to the 2016-2017 budget proposed  
            $757,000 for the procurement of contracted services for the  
            improvement of Cal-Access.  Additionally, the Assembly  
            proposed an augmentation to the Governor's Cal-Access proposal  
            with an additional $1 million.  The budget conference  
            committee adopted the Assembly's proposal to provide  
            additional funding for the replacement of the Cal-Access  
            system.

          7)Previous 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 the GOA report was to replace Cal-Access.


            SB 1442 (Lara) of 2014, 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  








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            with search capabilities that are data-driven and  
            user-friendly for members of the public.  SB 1442 was 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.



          8)Arguments in Support:  In support of this bill, the FPPC  
            writes:

               The bi-partisan Commission unanimously voted to  
               support [SB 1349] because the current campaign and  
               lobbying reporting system, also known as Cal-Access,  
               no longer meets the needs of the [PRA] and greatly  
               limits the Commission's ability to fulfill its  
               mission.



               The current Cal-Access was built in 2000 and has  
               remained substantially unchanged to date.  The  
               system's limitations have forced the Commission to  
               update regulations and propose legislation according  
               to the system's capacity rather than the best public  
               policy.  This agency is greatly dependent on a  
               reliable, flexible, and streamlined database that will  
               assist in the administration and enforcement of the  
               [PRA].



          9)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,  








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            must further the purposes of the initiative and require a  
            two-thirds vote of both houses of the Legislature.

          REGISTERED SUPPORT / OPPOSITION:




          Support


          Political Reform Act Modernization Coalition (co-sponsor)


          Secretary of State Alex Padilla (co-sponsor)


          AARP
          American Sustainable Business Council 


          Business Council of San Joaquin County


          CA Voices for Progress 


          CalChamber


          California Alliance for Retired Americans


          California Business Roundtable  


          California Church IMPACT  










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          California Clean Money Campaign  


          California Common Cause  


          California Forward  


          California Labor Federation  


          California League of Conservation Voters  


          California LULAC


          California Newspaper Publishers Association 


          California OneCare


          California Political Treasurers Association 


          California Professional Firefighters  


          California School Employees Association  


          California State Council of the Service Employees International  
          Union  


          California Teachers Association









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          Cal Innovates


          CALPIRG  


          Campaign Legal Center  


          Courage Campaign  


          Equality California


          Fair Political Practices Commission 


          First Amendment Coalition 


          Fresno Business Council


          Fresno Chamber of Commerce


          Howard Jarvis Taxpayers Association 


          Innovate Your State
          Insurance Commissioner Dave Jones


          League of Women Voters of California  


          Los Angeles County Federation of Labor








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          MapLight  


          National Institute on Money in State Politics  


          NFIB


          Public Citizen  


          Sierra Club California


          Small Business Majority  


          Sunlight Foundation


          UFCW Western States Council




          Opposition


          None on file.




          Analysis Prepared by:Nichole Becker / E. & R. / (916)  
          319-2094









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