Commission holds hearing on amending candidate salary regulations
On March 22, 2023, the Commission heard testimony from two panels about proposed changes to regulations concerning the use of campaign funds by a principal campaign committee to pay compensation to the candidate.
Background
The Federal Election Campaign Act (the Act) and Commission regulations prohibit a campaign from converting its funds to “personal use,” defined as the use of campaign funds to “fulfill any commitment, obligation or expense of a person that would exist irrespective of the candidate’s election campaign or duties as a Federal Officeholder” (the “irrespective test”). The Act provides a non-exhaustive list of such personal uses. The Commission has in the past concluded that the payment of a salary to a non-incumbent candidate satisfies the irrespective test because “but for the candidacy, the candidate would be paid a salary in exchange for services rendered to an employer.
The Commission included in its regulations at 11 CFR 113.1(g) various conditions designed to prevent abuse, including:
- The salary paid to the candidate must not exceed the lesser of either the minimum salary paid to a federal officeholder or the earned income; received by the candidate in the year preceding his or her candidacy;
- Any earned income the candidate receives from salary outside the campaign counts against the minimum salary paid to a federal officeholder;
- Campaign funds cannot be used to pay a candidate's salary before the filing deadline for access to the primary election ballot for the office sought by the candidate; and
- Salary payments must be computed on a pro-rata basis and cannot be paid to candidates who are also federal officeholders.
On March 23, 2021, the Commission received a petition from former Congressional candidate Nabilah Islam asking the Commission to amend 11 CFR 113.1(g) to:
- Extend the date on which a candidate may begin drawing a salary to at least 180 days before the primary election;
- Establish a minimum candidate salary of no less than an annualized salary of $15 per hour; and
Expressly permit a candidate to use campaign funds to pay the cost of any health benefit plan already provided to other campaign employees beginning on the candidate's eligibility date for a campaign salary.
On December 12, 2022, the Commission published a Notice of Proposed Rulemaking (NPRM) seeking comments on the proposals raised by the petition and by public comments on the petition. (87 Fed. Reg. 75945) The proposed changes include various alternatives that would:
- Prohibit federal officeholders from receiving compensation as candidates from campaign funds.
- Cap the amount of compensation that a candidate could receive from campaign funds.
- Define "compensation" for purposes of candidate salaries.
- Require a candidate's committee to reduce the maximum amount of compensation the candidate could receive from campaign funds by the amount of any earned income the candidate receives from other sources while concurrently receiving compensation from the campaign.
- Lengthen the eligibility period during which a candidate may receive compensation from campaign funds, extending the period to as early as the first day of the campaign and ending as late as the date a winning candidate is sworn into office.
- Prohibit a candidate's principal campaign committee that seeks to settle debts for less than their full value from paying compensation to the candidate or satisfying a debt to the candidate for compensation.
- Require a candidate to provide evidence of earned income from prior years upon request of the Commission in certain circumstances.
Hearing
The hearing was divided into two panels, the first consisting of a Member of Congress, a former FEC Commissioner and four other witnesses, and the second consisting of five former Congressional candidates.
Apart from Brad Smith, the former Commissioner testifying on behalf of the Institute for Free Speech, the first panel largely agreed that the candidate salary should be untethered from previous earnings, that the date of eligibility should be moved to when the candidate becomes a candidate under the Act, and that candidates should be eligible to receive benefits from their campaign funds. Rep. Maxwell Frost (D-FL), a freshman Member of Congress, noted that during the year leading up to his election, he had only been able to draw a paycheck for four months as running for office became a full-time job.
Laurence Gold, representing the AFL-CIO, and Daniel Weiner, from the Brennan Center for Justice at NYU, both stated that candidates should be allowed to receive the same benefits as campaign employees. Mr. Weiner, Mr. Gold and Jacquelyn Lopez, representing the Democratic Senatorial Campaign Committee (DSCC), all agreed that candidates should be permitted to draw a salary from the campaign beginning on the date they trigger FEC filing and ending on the date of loss or the date they take office.
Neil Makhija, from the University of Pennsylvania Carey Law School, agreed with the others that being a candidate was “very much a job” in the vein of selling a campaign’s ideas to the voters. He noted that even should the candidate seek a salary, the campaign would have a strong internal debate about paying a salary vs. paying for advertising.
Mr. Smith argued that the payment of candidate salary is a violation of the personal use ban, and that the Commission “made a mistake” by permitting the payment of salary in the first place. He further stated that even if it is a good policy prescription, it does not fall under Commission jurisdiction to adopt a regulation that is counter to the text of the statute. He echoed a concern offered by Commissioner Dickerson that perhaps it is the purview of Congress to amend the Act to permit campaign salaries, rather than that of the Commission to offer regulations based on what he sees as a misinterpretation of the law.
Commissioner Trainor asked when Presidential candidates who did not qualify for the ballot in every state would be allowed to pay themselves a salary of up to $400,000 per year (the minimum salary for the office sought). Mr. Weiner stated that it would be defensible to cap the salary to that of the minimum salary for a Member of Congress and noted that the unique issues of ballot access for presidential candidates – the rolling deadlines for ballot access as well as the question of access in each state – were illustrative of the difficulty in applying existing time period rules.
The second panel featured five former candidates for federal office. Matthew Hoh, who was prevented from accepting a salary as a candidate because his VA disability pension was considered unearned income, stated that the benefit to opening up the campaign salary restriction outweighed any potential for abuse, a sentiment echoed by his fellow panelists. Nabilah Islam, the petitioner responsible for this rulemaking, campaigned for over a year before she was able to draw a salary from her campaign, as did Odessa Kelly, who had to stop working entirely to run an effective campaign. Shrina Kurani, another candidate who ran in 2022, wasn’t even aware she could accept a salary. All panelists argued in favor of extending the eligibility period for accepting a salary from the campaign and untethering candidate salary from the previous year’s earned income. Ms. Islam urged the Commission to cap candidate salary at 50% of that of the office sought.
Liuba Gretchen Shirley, a candidate in 2018 and founder of VoteMama, received an advisory opinion that granted her permission to use campaign funds for childcare while campaigning. She and the other members of the second panel all supported extending the ability to receive benefits from the campaign; however, she went a step further and asked that even incumbents – whose health coverage is already paid for as Members of Congress – be allowed to receive a dependent care benefit from the campaign.
Several Commissioners raised concerns about the potential for unscrupulous and unserious candidates to raise funds solely to pay themselves from donations. None of the former candidates thought this was realistic, due to the amount of work involved in fundraising and getting oneself on the ballot. Additionally, nearly every candidate on the panel felt that public disclosure requirements discouraged most candidates from taking a salary. Scrutiny of reports, noted Ms. Shirley, made it so that all expenditures by the campaign were politicized.
When asked if candidates should be permitted to draw a salary during the winding down phase of an unsuccessful campaign, nearly all agreed; however, as Ms. Islam noted, most challenger campaigns would be out of money and unable to pay the candidate in any case.
Chair Lindenbaum closed the meeting by asking for supplemental comments from the public and the panelists by Wednesday, March 29.