Most Arkansans would probably be surprised to learn that when a candidate files a campaign finance report, there is not a clear process to review their disclosures for compliance. Instead the reports are made into public documents, and it is up to the public to examine the reports for themselves.
The Arkansas Secretary of State is charged only with receiving the documents and making them public. This is accomplished primarily by posting them to a website where pdf copies of the reports can be accessed or made available upon request.
The Arkansas Ethics Commission is the state organization charged with ensuring compliance.
“The mission of the Arkansas Ethics Commission is to serve as the compliance and enforcement agency under Arkansas’ standards of conduct and disclosure laws concerning candidates for public office, state and local public officials, lobbyists and committees, and individuals involved with initiatives, referendums and other matters referred to the voters,” the Commission’s mission statement says. “The Commission promotes openness and accountability in government through a balanced approach to its statutory duties of interpreting, investigating compliance with and issuing sanctions for proven violations of Arkansas’ ethics and public disclosure laws.”
REACTIVE, NOT PROACTIVE
The problem is that the Commission does not have a significant proactive process in place to review all campaign finance reports that are filed. Instead the Commission relies heavily on citizen complaints before investigating whether filed reports are in compliance. The procedure for filing a complaint requires a citizen to sign a notarized document detailing specifically “under penalty of perjury” the violation they believe occurred.
Such a system relies in part on watchdogs in the media, but even more heavily on groups that have an interest in exposing candidates who are in violation of the law. Of course, the main source of this type of complaint stems from political opponents and the opposing political party of a candidate.
The two-fold problem with this is that most complaints – both valid and frivolous – are primarily politically motivated. At the same time, candidates without opposition often escape scrutiny.
Sen. Paul Bookout (D-Jonesboro) ran unopposed every time he ran for the State Senate since 2006. It is likely because of this that he escaped scrutiny until a conservative activist from his home district filed a complaint earlier this year. Other elected officials were in reporting periods that offered little reason to scrutinize their documents, too.
This system is not the fault of the Commission. Rather the system is working as it is designed by the state Legislature, which controls the funding, and the public that created the Commission through a citizen’s initiative in the early 1990s.
Graham Sloan, director of the Arkansas Ethics Commission, said he has five members of his nine-member staff actively engaged in enforcement.
“We’re spread pretty thin. We spend most of our time making people who are required to file to file,” Sloan said. “It doesn’t leave us much time to audit contents.”
Sloan said his agency reviews 100% of all filings related to complaints made with the commission. But being more aggressive with reviews from filings without complaints would require a huge manpower effort. Not only do legislators and constitutional officers file hundreds of reports annually, but the Ethics Commission also has oversight over lobbyist reports, agency director disclosures, and county, municipal and school board candidates and officials.
In total, this amounts to tens of thousands of reports that could be reviewed by the Ethics Commission, which Sloan says would be nearly impossible without major resources.
“Who are you going to audit?” Sloan asked.
Still, some changes might be doable.
Talk Business Arkansas has discussed with legislators, accountants and auditors, and the Arkansas Ethics Commission potential reforms to prevent the type of misuse, mistakes and questions brought to light in the Bookout and constitutional officers’ reports.
One proposed reform for this would be to create a position or positions at the Ethics Commission that would be in charge of reviewing reports as they are filed. This would allow a neutral ombudsman to apply standard audit review procedures in a non-partisan manner on a timely basis.
The review would determine if follow-up was needed with the candidate, if an amended report was needed to fully or properly disclose the financial activity of the campaign, and if action or further investigation was needed by the Commission.
Some checkpoints to quickly monitor on report filings would include:
- Were all contributions under the $2,000 per contributor limit?
- Was all information complete?
- Were there a large amount and/or percentage of non-itemized contributions or expenses?
- Do any of the expenditures appear to be for personal or non-campaign related items?
- Are balances properly tallied?
- Are loans to campaigns properly documented and detailed?
Sloan said there would have to be a system that prioritized which filings would be reviewed. For instance, would constitutional officers take a higher priority over state lawmakers? Would lobbyist report reviews be ahead of municipal official filings? Would a random audit system that reviewed 10% of all levels of filings be best?
“The Commission would be very receptive to have additional staff and funding,” he said. “Give us some resources and we’d figure out how to allocate them.”
Talk Business Arkansas conducted a test review by examining the campaign financial filings of all seven constitutional officers. The project performed a review of contributions, expenditures, cash balances, loan disclosures, and other general information for these seven elected officials, which include three Republicans and four Democrats. Officials were given the opportunity to respond to the findings from this review, if warranted. You can read more on the subject here.
Sen. Jonathan Dismang (R-Beebe) will lead the State Senate in the 2015 regular session, but he sees a path to working on reforms earlier than that.
“I think these recommendations are a good idea. I think it would be beneficial to catch this stuff early on,” said Dismang. “I don’t think it’s the intent of most candidates or elected officials to do anything malicious or illegal.”
He said it may be difficult to pass comprehensive ethics reform legislation in a fiscal session, but he touted other avenues for making changes.
“I think there’s some things we could do through Senate and House rules that would provide more clarity and strengthen some areas that are gray,” he said.
He also said there is interest from members to form a task force that could hold hearings in the interim or during a fiscal session to start working on reforms for the 2015 regular session.
Rep. Warwick Sabin (D-Little Rock), the leader of the House Freshman Caucus who has championed ethics reform, says the reforms are a start and he’s supportive of additional efforts.
“I support any efforts to strengthen the Ethics Commission and give it more enforcement power, and I think these recommendations are helpful,” Sabin tells Talk Business. “I would go further by increasing the Commission’s scope of work and the penalties associated with violations of the ethics rules. I look forward to working with my colleagues on a bi-partisan basis to pass a package of serious ethics reforms during the next legislative session. Those reforms should also include the bills I sponsored with Sen. Bruce Maloch to address certain ambiguities in current campaign finance laws.”
Sabin is referring to SB59 and SB109 from the 2013 legislative session. Those bills would have prohibited campaign funds being spent on other candidates’ fundraisers and would have restricted campaign contributions from business entities with the same majority owners. Both bills died in committee.
House Speaker Davy Carter (R-Cabot) said the recommendations presented above have merit, but he wants to guard against committing to any non-fiscal issues in the upcoming fiscal session.
“These are good suggestions. I’m sure over the coming weeks and months many people will come forward with ideas such as these to be vetted,” Carter said.