Debts owed by publicly-funded presidential committees are generally not treated differently than debts owed by authorized committees of non-publicly funded candidates.
In order to receive public funding in the primary or general election, eligible presidential candidates agree to comply with all FEC regulations, including those governing contribution limitations and prohibitions. This includes the regulations governing raising funds to retire debts, as well as certain provisions of the public funding rules.
Retiring primary election debts
Even if they no longer campaign actively in primary elections, presidential primary candidates may continue to request public funds to pay off campaign debts until the first Monday of March of the year following an election. However, to qualify for matching funds, contributions must be deposited in the campaign account by December 31 of the election year. Eligible candidates may receive public funds equaling up to half of the national spending limit for the primary campaign.
Net Outstanding Campaign Obligations (NOCO Statement)
Entitlement to matching fund payments on or after the date of ineligibility depends on the existence of net outstanding campaign obligations on that date. Campaigns seeking public funding must submit a statement of Net Outstanding Campaign Obligations (NOCO statement): a formula for computing a candidate’s financial status at the date of ineligibility. Under this formula, the campaign’s obligations for qualified campaign expenses including winding down costs are balanced against total of the campaign’s cash-on-hand, the value of capital assets, and amounts owed to the campaign.
Transfers or contributions from a current publicly-funded presidential committee to another publicly funded committee of the same candidate for a previous election cycle to pay debts from the earlier campaign are not qualified campaign expenses and are not includable in the candidate’s NOCO statement. However, such payments could be made from excess campaign funds once the audit process is concluded and any repayment or possible penalty obligations have been satisfied. See AO 1988-05.
Liquidation of obligations
A publicly funded primary election candidate may retain matching fund payments for a period not exceeding six months after the matching payment period to pay qualified campaign expenses incurred by the candidate. After all obligations have been liquidated, the candidate shall so inform the Commission in writing.
Retiring general election debts
In the general election, a major party presidential candidate who wishes to receive a grant of public funding must pledge not to accept private contributions for the campaign. Private contributions may be accepted for a special account maintained exclusively to pay for legal and accounting expenses related to complying with campaign finance law. Although minor and new party candidates may supplement public funds with private contributions and may exempt some fundraising costs from their expenditure limit, they are otherwise subject to the same spending limit and other requirements that apply to major party candidates.
A minor or new party candidate, or a major party candidate in the event of a deficiency in the payments received from the Presidential Election Campaign Fund, whose outstanding debts exceed the cash-on-hand after the end of the expenditure report period as determined under 11 CFR 9002.12, may dispose of assets acquired for fundraising purposes in a sale to a wholesaler or other intermediary who will in turn sell such assets to the public provided that the sale to the wholesaler or intermediary is an arms-length transaction. Sales made under this subsection will not be subject to contribution limitations and prohibitions under the Act.
Net Outstanding Campaign Obligations (NOCO Statement)
As in the primary election, publicly funded general election presidential candidates must file a NOCO statement. Unlike the presidential primary regulations, however, the regulations for general election funding set different deadlines for candidates who withdraw, candidates seeking post-election funding and all other candidates. Candidates seeking post-election funding in the general election must file a preliminary statement to aid in determining their entitlement to public funds as well as a statement at the time other candidates must submit theirs.
Publicly funded presidential committees may settle debts if no other committee authorized by the same candidate has permissible funds available to pay the amounts outstanding. The indebted publicly funded presidential campaign committee is subject to the same requirements and procedures as other political committees eligible to settle debts. Publicly-funded presidential candidates may not settle repayment obligations arising under 26 U.S.C. chapters 95 and 96 (the statutes governing presidential public financing).
Settling primary election debts
The original amounts of primary debts will continue to be counted against the committees' spending limits. The settlement of debts also reduces the indebted presidential campaign committee’s remaining entitlement to matching funds on its statement of net outstanding campaign obligations, which could affect the committee’s repayment obligations.
A repayment may be required if the Commission determines that a committee received public funds in excess of the amount to which it was entitled (for example, received matching funds for contributions that were later determined to be non-matchable or received amounts beyond that necessary to pay campaign debts).
Preparing for termination
While an authorized committee that qualifies as a terminating committee and has no remaining cash-on-hand may assign its debts to another authorized committee of the same candidate, if either committee is an authorized committee of a presidential candidate receiving public funding, the assignment may not take place until after the audit, repayment and enforcement processes have ended.