Federal Election Commission Annual Report 1986 Federal Election Commission Washington, D.C. 20463 Commissioners Scott E. Thomas, Chairman Thomas J. Josefiak, Vice Chairman Joan D. Aikens Lee Ann Elliott Danny L. McDonald John Warren McGarry Ex Officio Commissioners Donnald K. Anderson, Clerk of the House Walter J. Stewart, Secretary of the Senate Statutory Officers John C. Surina, Staff Director General Counsel The Annual Report 1986 was written and published by the Com­ mission's Information Services Division. FEDERAl ElECTION COMMISSION WASHINGTON, D.C. 20463 June 1, 1987 The President of the United States The U.S. Senate The u.s. House of Representatives Dear Sirs: We submit for your consideration the 12th annual report of the Federal Election Commission, as required by the Federal Election Campaign Act of 1971, as amended. The Annual Report 1986 describes the activities performed by the Comm1ss1on 1n carrying out its duties under the Act. It also includes a number of legislative recommendations adopted by the Commission in February 1987. Respectfully, Scott E. Thomas Chairman 4 Presidential Election Campaign Fund Tax Checkoff (as of December 31, 1986) Tax Returns Disbursements Year-End Fund Calendar Year Check-Off Dollars RepaJments to Indicating Checkoff , Deposited In Fund und from Fund Balance 2 1975 not available $31 ,656,525 $0 $2,590,502 $59,551,245 3 1976 27.5% 33,731,945 0 69,467,521 23,805,659 1977 28.6% 36,606,008 1,037,029 521,124 60,927,571 1978 25.4% 39,246,689 163,725 6,000 100,331 ,986 1979 27.4% 35,941,347 23,474 1,050,000 135,246,807 1980 28.7% 38,838,417 1,094,098 101,427,116 73,752,205 1981 27.0% 41,049,052 202,288 630,256 114,373,289 1982 24.2% 39,023,882 58,400 1,070 153,454,501 1983 23.7% 35,631,068 21,899 11,786,486 177,320,982 1984 23.0% 35,036,761 505,807 120,149,768 92,713,782 1985 23.0% 34,712,761 61,840 1,617,842 125,870,541 1986 not available 35,753,837 61,641 5,596 161,680,423 Source: FEC Press Office handout, "Presidential Fund-Income Tax Check-Off Status," based on information provided by the U.S. Department of Treasury and the Internal Revenue Service. ,These percentages are based on returns processed during a fiscal year. The percentages, therefore, are not directly comparable to the calendar year figures. 2Fund balances for 1975 and 1976 have not been verified. 3The fund balance•at the end of 1975, the first year money was disbursed, includes dollars checked off in 1973 and 1974. Tax forms in 1973 gave taxpayers the opportunity to check off tax dollars for 1972 and 1973. Revised Regulations The notice specifically requested comments on As in past Presidential election cycles, the Commis­ several areas of the public financing provisions: sion began redrafting its public funding rules to • Debt settlement and extensions of credit; resolve issues that had emerged during the previ­ • Administration of the matching fund program; ous election. The agency also wanted to make revi­ • Statements of net outstanding campaign obliga­ sions that would improve the efficiency of the tions; matching fund and audit processes and ease the • Administrative costs of seeking media reimburse­ burden of complying with the law. Draft rules, ment; which covered both primary matching funds and • Definition of a qualified campaign expense; general election funding, were published for public and comment in the Federal Register on August 5, • Repayment issues. 1986.2 (The notice of proposed rulemaking also After reviewing comments received on the notice, sought comments on bank loans, an area affecting the agency held a hearing on the proposed public both Presidential and Congressional candidates. funding rules on December 3, 1986, at which the For a summary of the agency's work on bank treasurer of the Reagan-Bush '84 General Election loans, see "Regulations," Chapter 2.) Committee presented testimony. The Commission continued to discuss possible revisions to the regu­ lations during public meetings in December and planned to publish final rules in 1987. 251 Fed. Reg. 28154. Table of Contents Page Introduction 1 Chapter 1 Presidential Public Funding 3 1984 Public Funding: Audits and Repayments 3 Preparations for 1988 3 Legal Issues 5 Chapter 2 Administration of the Law 9 Disclosure 9 Assistance to Committees and the Public 11 Review of Reports 12 Regulations 12 Enforcement 14 Legal Issues 18 Clearinghouse on Election Administration 28 Chapter 3 Campaign Finance Statistics 31 Chapter 4 The Commission 37 Commissioners 37 Administrative Activities 37 FEC Budget, Fiscal Year 1986 38 FEC Budget, Fiscal Year 1987 38 Personnel and Labor Relations 39 Chapter 5 Legislative Recommendations 41 Appendices 1. Biographies of Commissioners and OO~ffi ~ 2. Chronology of Events, 1986 59 3. FEC Organization Chart 63 4. FEC Offices 65 5. Statistics on Commission Operations 69 6.. The FEC's Budget 73 7. Revised Regulations on Contribution Um~ ~ 8. Computer Indexes 79 9. Clearinghouse Studies 83 10. FEC Federal Register Notices, 1986 85 Introduction During 1986, the Commission oversaw the cam­ The agency had to make major reductions in pro­ paign financing of the 1986 Congressional elections grams that were not mandated by law when, in and continued to fulfill its other duties mandated January 1986, it was confronted with severe budget under the law. One major accomplishment was the cuts. The Gramm-Rudman-Hollings Deficit Reduc­ agency's overhaul of the regulations on contribution tion Act coupled with a prior cut in personnel funds limits. Only after careful scrutiny of public com­ reduced the FEC's fiscal year 1986 appropriation ments and months of deliberation did the FEC by $858,000, almost 7 percent. Although the approve the revisions, which resolve issues that agency froze employment levels, curbed general had arisen since the regulations were first support services, limited outreach efforts and prescribed in 1977. The agency intends to reduced funding for Clearinghouse projects, these announce the effective date of the new rules in savings measures did not cover the full amount of spring 1987. the budget reductions. The balance of the cuts was In carrying out its mandated duties, the Commis­ achieved by reducing the computerized disclosure sion also began to prepare for the 1988 Presiden­ program. The Commission decreased the amount tial public funding program. Plans for administering of historical data available on line and cut back on the program were well under way in 1986. the computer entry of itemized information taken A number of significant legal issues were from 1986 reports. The agency anticipated, addressed during the year as the agency fulfilled its however, that an adequate appropriation for fiscal statutory responsibility to issue advisory opinions year 1987 would enable the Commission to begin and to defend and enforce the law. Of particular capturing much of the 1986 data that had not been interest was the landmark decision by the Supreme computerized. And, in-house data processing of Court in FEC v. Massachusetts Citizens for Life, some reported information helped offset the cut­ which ruled on constitutional issues and interpreted backs. certain legal definitions. 3 Chapter 1 Presidential Public Funding This chapter describes the Commission's Presiden­ Matching Fund Activity of Publicly Funded tial activity during 1986, first reporting on the 1984 1984 Presidential Primary Campaigns public funding program, then describing prepara­ (as of December 31, 1986) tions for the 1988 program. The chapter ends with summaries of recent advisory opinions concerning Gross Total Net Matching Repay- the pre-candidacy activities of possible 1988 Candidate Matching Funds menta Funds Presidential candidates. Received Made 1 Received 1984 Public Funding: Audits Reubin Askew $976,179 $5,074 $971,105 Alan Cranston 2,113,736 4,140 2,109,596 and Repayments John Glenn 3,325,383 0 3,325,383 Gary Hart 5,333,785 1,296 5,332,489 The Federal campaign finance law requires the Ernest Hollings 821,600 15,606 805,994 agency to audit all publicly funded Presidential can­ Jesse Jackson 3,053,185 0 3,053,185 didates to ensure that Federal funds are spent in Sonia Johnson 193,735 0 193,735 Lyndon LaRouche 494,146 0 494,146 compliance with the law. If they are not, the cam­ George McGovern 612,735 67,727 545,008 paign may have to repay public funds to the U.S. Walter Mondale 9,494,921 29,640 9,465,281 Treasury. The Commission determines repayments Ronald Reagan 10,100,000 344,893 9,755,107 by using a formula based on the ratio of Federal funds to total funds received by the campaign. Totals $36,519,405 $468,376 $36,051,029 In conducting audits of the 1984 primary candi­ dates, Commission auditors: verified each cam­ 1Repayments of primary matching funds are returned to the paign's total reported receipts and disbursements; Presidential Election Campaign Fund. See table below. examined the required supporting documentation; analyzed campaign debts and obligations; reviewed Preparations for 1988 the campaign's compliance with the contribution and expenditure limits; and applied other audit During 1986, the Commission laid the groundwork procedures to ascertain whether repayment of pub­ for the 1988 public financing program, the first lic funds was required. As a result of these audits, Presidential election under the public funding provi­ the Commission requested the return of $1,070,274 sions in which the incumbent President would not in public funds by the end of 1986. be a candidate. This promised to increase the num- · The first table below summarizes matching fund ber of primary candidates requesting matching activity of the 1984 primary campaigns that funds and, as a result, to increase the agency's received public funding.