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2006-1: In the Matter of Friends of Green 2001

February 06, 2013

The New York City Campaign Finance Board (the "Board") has considered the Rule 5-02(a) petition filed by the Friends of Green 2001 (the "Campaign") on April 5, 2006 (the "Petition"), together with the supplemental letters submitted by the Campaign on May 10, 2006 and July 26, 2006, and the presentation made to the Board at its July 12, 2006 meeting. The Board has determined that the Petition is denied and that the Campaign must return $71,902 in public funds. This determination was announced by the Board at its September 14, 2006 meeting.

In the Petition, the Campaign asserts, among other things, that: 1) the Campaign has no money remaining in its bank account, and thus cannot be required to "repay" unspent campaign funds; 2) the "plain language" of Admin. Code § 3-710(2)(c)supports the argument that a campaign is required to return "‘excess funds'" only if it has money remaining in its bank account; 3) the $71,902 in unspent funds, which represents.397% of the Campaign's receipts, is an "immaterial" amount, in light of the "total funds that flowed through the [Campaign];" and 4) the Board should consider "mitigating circumstances" here, including the Campaign's "exemplary compliance," pursuant to Rule 5-03(e).

Unspent campaign funds are calculated mechanically by subtracting all of a campaign's reported disbursements from all of its reported receipts, with certain adjustments called for by law.1 See Admin. Code § 3-710(2)(c) and Board Rule 5-03(e)(1). Here, as set forth in the Campaign's March 6, 2006 final audit report, the Campaign reported $18,147,806 in adjusted total receipts and $18,075,904 in adjusted total disbursements, for a difference of $71,902. The amount of money remaining in a campaign's bank account is irrelevant to the unspent funds repayment calculation.

The Campaign argues that the "plain language" of Admin. Code § 3-710(2)(c) does not impose any payment obligation on the Campaign because the phrase "such excess funds" refers to funds left in a campaign's treasury. The Campaign's interpretation of the provision is contradicted by the plain language of Admin. Code § 3-710(2)(c), which makes clear that "excess funds" refers to the difference, if any, between a campaign's total amount of receipts and total amount of expenditures, not the amount of funds left in the campaign's bank account.2

Further, the legislative purpose of Admin. Code § 3-710(2)(c) supports the principle that unspent funds are measured by the difference between receipts and expenditures, not by cash on hand. The intent of Admin. Code § 3-710(2)(c) is to ensure that a candidate has not received any more public funds than he or she actually needed. If Admin. Code § 3-710(2)(c) were construed in the manner that the Campaign argues it should be, campaigns would have an incentive to spend every last dollar in their bank accounts, regardless of necessity, cost, or even purpose. To adopt this regulatory scheme would benefit candidates at the expense of the taxpayers who fund the Program and encourage wasteful spending.

Even if the $71,902 that the Campaign owes in unspent funds could be considered relatively insignificant in proportion to the amount of money that the Campaign received, the Board has always demanded that these funds be returned to the taxpayers, regardless of the absolute amount or relative percentage of unspent funds owed.

Further, for the 2001 elections, numerous candidates had unspent funds repayment obligations. For many of these candidates, the amount of unspent funds owed to the Board exceeded the amount of money remaining in their bank accounts. In asking the Board to treat the $71,902 owed as de minimis, the Campaign is arguing that it ought to be treated differently from the numerous other candidates whom the Board has required to repay unspent funds.

Finally, the Campaign has misconstrued Rule 5-03(e)(1) in arguing that the Board should consider "mitigating factors" such as the Campaign's "exemplary compliance" when requiring campaigns to repay unspent funds obligations. Rule 5-03(e)(1)says nothing about mitigating factors, and the Campaign offers no support for the suggestion that the Board ever contemplated consideration of such factors. Indeed, the clear lack of any reference to "mitigating factors" is in keeping with the purpose of the rule: protecting the public fisc by preventing campaigns from decreasing their unspent funds obligations through invalid expenditures.


1 For example, such adjustments might be made to reflect uncashed checks or duplicate reporting. In large part, any adjustments made to the Campaign's unspent funds calculation here were in the Campaign's favor.

2 The Board's Rules also explicitly confirm that unspent funds determinations under Admin. Code § 3-710(2)(c) are "based upon" the participant's receipts and expenditures. For example, Rule 5-03(e)(1) provides in pertinent part that:

[p]ursuant to § 3-710(2)(c) of the Code….[t]he participant shall promptly pay to the Board any additional unspent campaign funds based upon a determination made by the Board at a subsequent date. Unspent campaign funds determinations made by the Board shall be based upon the participant's receipts and expenditures.

Emphasis added. See also Rule 1-02 (defining "[u]nspent campaign funds" under Admin. Code § 3-710(2)(c) as receipts minus disbursements).