Bill Text: CA AB2318 | 2015-2016 | Regular Session | Introduced

California Assembly Bill 2318 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Nonprofit organizations: use of public resources.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2016-09-29 - Chaptered by Secretary of State - Chapter 825, Statutes of 2016. [AB2318 Detail]

Download: California-2015-AB2318-Introduced.html
BILL NUMBER: AB 2318	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Low

                        FEBRUARY 18, 2016

   An act to amend Sections 54964.5 and 54964.6 of the Government
Code, relating to campaign activity.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2318, as introduced, Low. Fair Political Practices Commission:
enforcement: use of public resources.
   (1) Existing law prohibits the use of public funds for campaign
activities. Existing law prohibits a nonprofit organization or an
officer, employee, or agent of a nonprofit organization from using,
or permitting another to use public resources received from a local
agency for campaign activity, as defined, and not authorized by law.
Existing law defines, among other terms, "public resources" to mean
any property or asset owned by a local agency and funds received by a
nonprofit organization which have been generated from any activities
related to conduit bond financing by those entities subject to
specified conduit financing and transparency and accountability
provisions, and "nonprofit organization" to mean an entity
incorporated under the Nonprofit Corporation Law or a nonprofit
organization that qualifies for exempt status under the federal
Internal Revenue Code of 1986, except as specified. Existing law
authorizes a civil cause of action for a violation of these
prohibitions and damages that include, but are not limited to, 3
times the value of the unlawful use of the public resources. Existing
law authorizes the Attorney General, a district attorney, and a city
attorney of a city having a population in excess of 750,000 to seek
these civil remedies.
   This bill additionally would authorize the Fair Political
Practices Commission to bring a civil action or to commence an
administrative action for violation of these provisions.
   (2) Existing law requires qualifying individuals and political
organizations to report specified information, including, but not
limited to, political contributions, in statements filed with the
Fair Political Practices Commission. Existing law requires a
reporting nonprofit organization that engages in campaign activity to
deposit into a separate bank account all "specific source or sources
of funds" it receives and to pay for all campaign activity from that
separate bank account. Existing law defines, among other terms,
"reporting nonprofit organization" to mean a nonprofit organization
for which public resources from one or more local agencies account
for more than 20% of the nonprofit organization's annual gross
revenue, as specified, and "specific source or sources of funds" to
mean any funds received by the reporting nonprofit organization that
have been designated for campaign activity use or any other funds
received by the nonprofit organization.
   Existing law requires a reporting nonprofit organization that
engages in campaign activity of specified amounts or more to
periodically disclose to the Franchise Tax Board, and post on its
Internet Web site in a certain manner, the identity and amount of
each specific source or sources of funds it receives for campaign
activity, a description of the campaign activity, and the identity
and amount of payments the organization makes from the required
separate bank account. Existing law authorizes the Franchise Tax
Board to conduct an audit of any reporting nonprofit organization and
requires the board to conduct an audit of any reporting nonprofit
organization that engages in campaign activity in excess of $500,000
in a calendar year. Existing law requires the board to issue a
written audit report and to transmit the report to the Attorney
General and the district attorney for the county in which the
reporting nonprofit organization is domiciled. Existing law
authorizes the Attorney General or the district attorney for the
county in which the reporting nonprofit organization is domiciled to
assess a monetary civil penalty of up to $10,000 against a reporting
nonprofit organization for each violation of these disclosure
requirements.
   This bill would change the term "reporting nonprofit organization"
to "publicly funded multipurpose organization," described as a
multipurpose organization as defined in the Political Reform Act for
which public resources from one or more local agencies account for
more than 20% of the multipurpose organization's annual gross
revenue, as specified. This bill would redefine "specific source or
sources of funds" to mean payments or funds that meet specified
criteria received by the publicly funded multipurpose organization
from donors that are for, or may be used for, contributions or
expenditures, as specified, or any other funds received by the
publicly funded multipurpose organization within a two-year period
that are used for campaign activity. This bill would shift the
Franchise Tax Board's duties under these provisions to the Fair
Political Practices Commission and would authorize the Fair Political
Practices Commission, in addition to the Attorney General or the
district attorney, to impose the civil penalty of up to $10,000
against a publicly funded multipurpose organization for each
violation.
   The Political Reform Act of 1974, an initiative measure, provides
that the Legislature may amend the act to further the act's purposes
upon a 2/3 vote of each house and compliance with specified
procedural requirements.
   This bill would declare that it furthers the purposes of the act.

   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 54964.5 of the Government Code is amended to
read:
   54964.5.  (a) A nonprofit organization or an officer, employee, or
agent of a nonprofit organization shall not use, or permit another
to use, public resources, received from any local agency for any
campaign activity not authorized by law.
   (b) As used in this section and Section 54964.6, the following
terms shall have the following meanings:
   (1) "Ballot measure" means a state or local initiative,
referendum, or recall measure certified to appear on a regular or
special election ballot or other measure submitted to the voters by
the Legislature or the governing body of a local agency at a regular
or special election.
   (2) "Campaign activity" means a payment that is used for
communications that expressly advocate for or against the
qualification of a clearly identified ballot measure, the approval or
rejection of a clearly identified ballot measure, or the election or
defeat of a clearly identified candidate by the voters, or that
constitutes a campaign contribution.
   (A) "Campaign activity" does not include the costs of adopting a
position or a resolution supporting or opposing a clearly identified
ballot measure or candidate, including, but not limited to, posting
the position or resolution on the nonprofit organization's Internet
Web site, communicating the position or resolution to members of the
nonprofit organization, or issuing a press statement.
   (B) "Campaign activity" does not include incidental or minimal use
of public resources.
   (C) "Campaign activity" does not include incidental costs related
to the establishment or administration of a sponsored committee as
defined in Section 82048.7. A reasonable accounting method may be
used to determine the use of nonpublic resources to pay for that
cost. "Establishment and administration" means the cost of office
space, telephones, salaries, utilities, supplies, legal and
accounting fees, and other expenses incurred in establishing and
operating a sponsored committee.
   (3) "Candidate" means an individual who has qualified to have his
or her name listed on the ballot, or who has qualified to have
write-in votes on his or her behalf counted by elections officials,
for nomination or election to an elective office at any regular or
special primary or general election, and includes any officeholder
who is the subject of a recall election.
   (4) "Expenditure" means a payment used for communications that
expressly advocate the approval or rejection of a clearly identified
ballot measure, or the election or defeat of a clearly identified
candidate, by the voters or that constitutes a campaign contribution.

   (5) "Local agency" shall have the same meaning as that term is
defined in paragraph (4) of subdivision (b) of Section 54964 and
shall also include a public entity created pursuant to the Joint
Exercise of Powers Act (Chapter 5 (commencing with Section 6500) of
Division 7 of Title 1) by one or more entities described in Section
54964.
   (6) "Nonprofit organization" means any entity incorporated under
the Nonprofit Corporation Law (Division 2 (commencing with Section
5000) of Title 1 of the Corporations Code) or a nonprofit
organization that qualifies for exempt status under Section 115 or
501(c) of the Internal Revenue Code, provided, however, that
"nonprofit organization" does not include any nonprofit organization
that qualifies for tax-exempt status under Section 501(c)(3) of the
Internal Revenue Code.
   (7) "Public resources" means the following:
   (A) Any property or asset owned by a local agency, including, but
not limited to, cash, land, buildings, facilities, funds, equipment,
supplies, telephones, computers, vehicles, travel, and local
government compensated work time that is provided to a nonprofit
organization, except funds received in exchange for consideration for
goods or services.
   (B) Funds received by a nonprofit organization which have been
generated from any activities related to conduit bond financing by
those entities subject to the conduit financing and transparency and
accountability provisions of Chapter 10.7 (commencing with Section
5870) of Division 6 of Title 1, whether or not those funds are
received by the nonprofit in exchange for consideration for goods or
services.
   (8) "Use" means a use of public resources from one or more local
agencies that is substantial enough to result in a gain or advantage
to the user or a loss to any local agency for which any monetary
value may be estimated.
   (c) This section does not prohibit the use of public resources for
providing information to the public about the possible effects of
any ballot measure on the activities, operations, or policies of the
state or a local agency, provided that the informational activities
meet both of the following conditions:
   (1) The informational activities are not otherwise prohibited by
the California Constitution or the laws of this state.
   (2) The information provided constitutes an accurate, fair, and
impartial presentation of relevant facts to aid the electorate in
reaching an informed judgment regarding the ballot measure.
   (d) (1) Any person who intentionally or negligently violates this
section is liable for a civil penalty not to exceed one thousand
dollars ($1,000) for each day on which a violation occurs, plus three
times the value of the unlawful use of public resources. The penalty
shall be assessed and recovered in a civil action brought in the
name of the people of the State of California by the 
Attorney General   Fair Political Practices Commission,
the Attorney General,  or by any district attorney or any city
attorney of a city having a population in excess of 750,000. If two
or more persons are responsible for any violation, they shall be
jointly and severally liable for the penalty. If the action is
brought by the  Fair Political Practices Commission or the 
Attorney General, the moneys recovered shall be paid into the General
Fund. If the action is brought by a district attorney, the moneys
recovered shall be paid to the treasurer of the county in which the
judgment was entered. If the action is brought by a city attorney,
the moneys recovered shall be paid to the treasury of that city. 
No more than one judgment on the merits with respect to any
violation may be obtained under this   paragraph. 
   (2) A civil action alleging a violation of this section shall not
be commenced more than four years after the date of the alleged
violation. 
   (3) The Fair Political Practices Commission shall have the
jurisdiction to commence an investigation for a violation of this
section in the manner described in Section 83115. No civil action may
be filed or prosecuted under paragraph (1) with regard to any person
for any violation of this section after the Fair Political Practices
Commission has issued an order in the manner described in Section
83116 against that person for the same violation. 
  SEC. 2.  Section 54964.6 of the Government Code is amended to read:

   54964.6.  (a) A  reporting nonprofit  
publicly funded multipurpose  organization that engages in
campaign activity, either directly or through the control of another
entity, shall deposit into a separate bank account all specific
source or sources of funds received and shall pay for all campaign
activity from that separate bank account.
   (b) As used in this section, the following terms shall have the
following meanings:
   (1)  "Reporting nonprofit organization" means a nonprofit
organization for which public resources   "Publicly
  funded multipurpose organization" means a multipurpose
organization, as defined in subdivision (a) of Section 84222, for
which public resources, as defined in paragraph (7) or subdivision
(b) of Section 54964.5,  from one or more local agencies account
for more than 20 percent of the  nonprofit 
multipurpose  organization's annual gross revenue in the current
fiscal year or either of the previous two fiscal years. A 
reporting nonprofit   publicly funded multipurpose 
organization shall not include a  nonprofit  
multipurpose  organization that sponsors a committee, as defined
in Section  82048.7 of the Government Code,  
82048.7,  if the  nonprofit   multipurpose
 organization reports all  contributions it 
 specific sources of funds  received and all 
expenditures it made   campaign activities  on
campaign disclosure statements filed by the sponsored committee and
the  nonprofit   multipurpose  organization
makes no payments from its general treasury to the sponsored
committee other than payments for contributions by donors earmarked
for the sponsored committee. For purposes of this subdivision,
"earmarked" means a payment by a donor to a  nonprofit
  multipurpose  organization subject to a
condition, agreement, or understanding that the payment will be used
for making contributions or independent expenditures by the sponsored
committee of the sponsoring  nonprofit  
multipurpose  organization.
   (2) "Specific source or sources of funds" shall mean any 
funds received by the reporting nonprofit organization that have been
designated for campaign activity use or any other funds received by
the nonprofit organization that are used, in whole or in part, within
a two-year period from receipt for campaign activity.  
of the following:  
   (A) Payments the publicly funded multipurpose organization
solicits and receives from donors in an amount equal to or greater
than the amount identified in subdivision (a) of Section 82013 for
the purpose of making contributions or expenditures.  
   (B) Payments the publicly funded multipurpose organization
receives from donors in an amount equal to or greater than the amount
identified in subdivision (a) of Section 82013 subject to a
condition, agreement, or understanding with the donor that all or a
portion of the payments may be used for making contributions or
expenditures.  
   (C) Existing funds of the publicly funded multipurpose
organization from a donor and a subsequent agreement or understanding
is reached with the donor that all or a portion of the funds may be
used for making contributions or expenditures in an amount equal to
or greater than the amount identified in subdivision (a) of Section
82013. The date of the subsequent agreement or understanding is
deemed to be the date of receipt of the payment.  
   (D) Any other funds received by the publicly funded multipurpose
organization within a two-year period that are used for campaign
activity. 
   (3) Unless otherwise defined herein, the definitions found in
subdivision (b) of Section 54964.5 shall apply to this section.
   (c) Thirty days after the end of each quarter, a 
reporting nonprofit   publicly funded multipurpose 
organization that engages in campaign activity of fifty thousand
dollars ($50,000) or more related to statewide candidates or ballot
measures or engages in campaign activity of two thousand five hundred
dollars ($2,500) or more related to local candidates or ballot
measures, either directly or through the control of another entity,
at any point during that quarter shall disclose the following
information for that quarter:
   (1) The name and amount of each specific source or sources of
funds used for campaign activity, provided that the aggregate amount
of funds received since January 1 of the most recent odd year by a
 reporting nonprofit   publicly funded
multipurpose  organization from that specific source or sources
of funds is at least  two hundred fifty dollars ($250).
  one thousand dollars ($1,000).   The publicly
funded multipurpose organization shall report all sources of funds
that satisfy the criteria of paragraph (2) of subdivision (b) and for
the balance of its campaign activities paid from the separate bank
account. The publicly funded multipurpose organization shall report
sources of funds based on a last in, first out accounting method. For
purposes of this section, "last in, first out accounting method"
means an accounting method by which contributions and expenditures
are attributed to the multipurpose organization's contributors in
reverse chronological order beginning with the most recent of its
contributors or,   if there are any prior contributions or
expenditures, beginning with the most recent contributor for which
unattributed contributions remain. 
   (2) The name of the payee and amount of all payments aggregating
two hundred fifty dollars ($250) or more made from the single bank
account required under subdivision (a).
   (3) A description of each campaign activity.
   (d)  Thirty days after   By January 31
following  the end of each even year, a  reporting
nonprofit   publicly funded multipurpose 
organization that engages in campaign activity of one hundred
thousand ($100,000) or more related to statewide candidates or ballot
measures or engages in campaign activity of ten thousand dollars
($10,000) or more related to local candidates or ballot measures,
either directly or through the control of another entity, at any
point during that even year or the prior odd year shall disclose all
the following information for those two calendar years:
   (1) The name and amount of any specific source or sources of funds
used for campaign activity, provided that the aggregate amount of
funds received since January 1 of the most recent odd year by a
 reporting nonprofit   publicly funded
multipurpose  organization from that specific source or sources
of funds is at least  two hundred fifty dollars ($250).
  one thousand dollars ($1,000). 
   (2) The name of the payee and amount of all payments 
aggregating two hundred fifty dollars ($250) or more  made from
the single bank account required under subdivision (a).
   (3) A description of each campaign activity.
   (e) Each  reporting nonprofit   publicly
funded multipurpose  organization that engages in campaign
activity, either directly or through the control of another entity,
shall provide to the  Franchise Tax Board   Fair
Political Practices Commission  and display on its Internet Web
site the information it is required to disclose under this section.
The information shall be clearly described and identified on a
separate Internet Web page, which shall be linked from the homepage
of the organization's Internet Web site. The link to this Internet
Web page from the homepage shall be as visible as all similar links.
   (f) The  Franchise Tax Board   Fair Political
Practices Commission  may  conduct  
require  an audit of any  reporting nonprofit 
 publicly funded multipurpose  organization that is required
to provide records to the  board   Fair
Political Practices Commission  pursuant to this section. The
 Franchise Tax Board   Fair Political Practices
Commission  shall  conduct   require 
an audit of any  reporting nonprofit   publicly
funded multipurpose  organization that engages in campaign
activity in excess of five hundred thousand dollars ($500,000) in a
calendar year. The  reporting nonprofit  
publicly funded multipurpose  organization shall provide records
to the  Franchise Tax Board   Fair Political
Practices Commission  that substantiate the information required
to be disclosed by this section. The  Franchise Tax Board
  Fair Political Practices Commission  shall
determine whether the organization complied with the requirements of
Section 54964.5 and this section, issue a written audit report, and
transmit the written audit report to the Attorney General and the
district attorney for the county in which the  reporting
nonprofit   publicly funded multipurpose 
organization is domiciled.
   (g) If the  Franchise Tax Board   Fair
Political Practices Commission  determines at the conclusion of
an audit that a  reporting nonprofit   publicly
funded multipurpose  organization has violated Section 54964.5
or this section, the  Attorney General   Fair
Political Practices Commission, the Attorney General,  or the
district attorney for the county in which the  reporting
nonprofit   publicly funded multipurpose 
organization is domiciled may impose a civil fine upon the 
reporting nonprofit   publicly funded multipurpose 
organization in an amount up to ten thousand dollars ($10,000) for
each violation.
  SEC. 3.  The Legislature finds and declares that this bill furthers
the purposes of the Political Reform Act of 1974 within the meaning
of subdivision (a) of Section 81012 of the Government Code.