AO 2010-14: Using recount funds to pay recount expenses before Election Day
The Democratic Senatorial Campaign Committee (DSCC) may use its recount funds before the general election to pay expenses incurred preparing for possible general election recounts. Additionally, the DSCC may allocate the cost of certain expenses that are attributable to both recount and campaign activities between its principal campaign account and its recount fund.
Background
The DSCC asks if it may make disbursements from its recount fund before the date of the general election to prepare for potential recounts and election contests that may occur in connection with the results of the general election. Such planned expenses include retaining the services of attorneys and staff to research state laws on recounts and election contests, developing plans and budgets for anticipated recounts and recruiting volunteers to help with the recount process. All of these disbursements, and the activities funded with these disbursements, will be dedicated solely to post-election recounts and contests, and will not be usable for any pre-election campaign activities, such as get-out-the-vote activity, voter registration and polling. The DSCC also asks if it may use recount funds to defray the costs of soliciting donations to its recount fund.
Additionally, the DSCC asks if it may allocate the cost of certain expenses that are attributable to both recount activities and campaign activities between its principal campaign account and its recount fund. These expenses consist of: (1) the payment of salaries and benefits to staff who will divide their time between working on campaign activities and preparing for possible recounts or contests, and (2) the expenses of fundraising attributable to the solicitation of both recount funds and campaign funds. The DSCC asks whether it may allocate the fundraising expenses on a “funds received” basis. See, e.g. 11 CFR 106.1(a) and 106.7(d)(4).
Analysis
The DSCC may use recount funds before the date of the general election to retain attorneys and staff for possible recounts and election contests, to pay for legal and other research in preparation for a recount or election contest and to defray the costs of soliciting contributions to the recount fund. Additionally, the DSCC may allocate expenses attributable to the solicitation of recount funds and campaign funds based on the “funds received” formula in 11 CFR 106.1(a), and may also allocate the salary and benefits of staff who work on both recount and campaign activities. However, none of these activities, or their results, may be used for campaign activity before Election Day, and the DSCC must account for and report the use of these funds according to the procedures set forth below.
In 2009, the Commission concluded that the DSCC could create a recount fund and use that fund to pay for expenses incurred in connection with recounts and election contests of federal elections. Neither the Federal Election Campaign Act (the Act) nor Commission regulations and advisory opinions address when recount funds may be raised or spent. On its face, the exclusion of donations and disbursements “made with respect to a recount of the results of a Federal election, or an election contest concerning a Federal election” from the definitions of “contribution” and “expenditure” is not limited to the post-election period. 11 CFR 100.91, 100.151.
In contrast, Commission regulations do speak to the time frame during which other types of funds may be spent, such as the requirement that general election contributions be refunded if a candidate does not become a candidate in the general election. 11 CFR 102.9(e)(3). However, the Commission has, in limited circumstances, approved disbursements similar to those at issue here. In 1986, the Commission concluded that a candidate may spend general election funds prior to the date of his or her primary election in cases where it was “necessary to make advance payments to vendors for services that [would] be rendered . . . with respect to the [potential] general election” and that would not “influence the primary election or nominating process or . . . [be] for goods or services to be used in both the primary and general elections.” AO 1986-17. [FN1] Likewise, the DSCC proposes to retain the services of attorneys and staff to conduct research and make preparations for a potential recount or contest that will take place (if at all) after the general election. Accordingly, the DSCC may use recount funds to pay recount-related expenses incurred before Election Day.
Commission regulations generally permit—and occasionally require— the proceeds of fundraising activities be used to defray the costs of those activities. For example, a joint fundraising committee is required to deduct the participants’ allocable share of expenses before distributing proceeds from the event. 11 CFR 102.17(c)(7)(i)(A). The DSCC may therefore use recount funds to defray the costs of soliciting donations to the recount fund. However, when holding fundraising events at which the DSCC will raise contributions and recount funds, the recount solicitations must clearly state the purpose of the fund and note that no donations to the fund will be used to influence any federal election. See, e.g. 11 CFR 9003.3(a)(1)(A).
Neither the Act nor Commission regulations and advisory opinions address the allocation of expenses incurred for both recount and campaign activities. However, Commission regulations do generally permit (and in some cases require) the allocation of expenses attributable to more than one purpose. 11 CFR 102.5(a), Part 106, Part 300, and 9003.3(a)(2)(ii). Although these regulations do not apply here, they generally stand for the proposition that allocation is appropriate when funding activities with multiple purposes.
The DSCC’s proposal to allocate its fundraising costs based on the ratio of funds received for its principal campaign account to its total receipts from each fundraising program or event is appropriate. See, e.g., 11 CFR 106.7(d)(4). The DSCC may make an initial payment for all of the fundraising expenses, both campaign-related and recount-related, from its principal campaign account, and then reimburse its principal campaign account from the recount fund for the proportion of the total fundraising expenses attributable to recount activities. The reimbursement must be made within sixty days after payment is made from the principal campaign account.
The allocation of salaries and wages between federal and nonfederal accounts of state and local party committees is determined by the percentage of time each employee spends in connection with a federal election, as shown in monthly logs. The DSCC’s proposal to allocate staff salary and benefits between the recount fund and principal campaign account based upon a monthly log is permissible, so long as the DSCC keeps records indicating which duties are considered recount activities and which are considered election contest activities and a monthly log recording the percentage of time each employee spends on campaign activities as opposed to recount activities. See 11 CFR 106.7(d)(1) and 9003.3(a)(2) (ii)(C).
Reporting
The DSCC must report all disbursements from its recount fund in accordance with 2 U.S.C. § 434(a) and (e) and 11 CFR 104.3 and 300.13(a). When reporting allocated activities, the DSCC must disclose the entire amount paid by the principal campaign account for the cost of fundraising and the salaries and benefits of employees who spend some of their time on recount activities and some of their time on campaign activities, as well as the reimbursement from the recount account.
FOOTNOTES:
1 Such advance payments are limited to goods or services that are provided or rendered after a candidate has established his or her candidacy for the general election. AO 1986-17.
AO 2010-14: Date issued: August 26, 2010; Length: 8 pages.