Campaign expenditures aren’t as transparent as contributions, analysis finds

California touts itself as a leader in election transparency and it indeed goes to great lengths to ensure that candidates and campaigns disclose timely and complete information about political donations and donors.

As many capitol denizen know, California law requires campaigns to report late contributions using the Form 497. And even a casual spin through campaign finance disclosures on the Secretary of State’s website Cal-Access shows that the vast majority of campaigns are diligent about reporting numerous details about the contributions they receive, including the donor’s name, occupation and employer, city and state of residence, and the amount and date of the contribution.

But while California campaigns and election regulators like the California Fair Political Practices Commission have generally succeeded in providing transparency to the contribution side of the campaign finance ledger, they’ve fallen comparatively short when it comes to expenditures.

“It’s important to know where the money is going,” said Ann Ravel, former commissioner on the Federal Election Commission and former FPPC chairwoman. “It just is.”

Not long ago, Capitol Weekly published a story about the money campaign consultants have earned so far through the election cycle. While reporting that story, which required us to examine a lot of campaign expenditure data from Cal-Access, we discovered some gaping holes in payment disclosures.

For example, Form 460, the main document in which campaigns report their expenditures, allows campaigns the option to either categorize their expenditures by predetermined codes (“CNS” for campaign consultants, “FND” for fundraising events, etc.) or to briefly describe the payment in their own words.

Just by giving campaigns that option, it makes it incredibly difficult to accurately compare expenses across campaigns, because not every campaign makes the same choice. Many use the predetermined codes, but some write up their own descriptions, significantly complicating apples-to-apples comparisons.

While California campaigns and election regulators like the California Fair Political Practices Commission have generally succeeded in providing transparency to the contribution side of the campaign finance ledger, they’ve fallen comparatively short when it comes to expenditures.

Aggregating all of the currently available expenditure data thus far from campaigns during the current election cycle, Capitol Weekly found more than 2,500 expenditures (out of roughly 27,000) in which no standardized code was used to categorize the payment.

That’s nearly 10 percent of all expenditures – enough certainly to skew totals.

There are some instances, however, in which campaigns described those un-coded expenditures using the standardized codes, which does provide some additional transparency.

In just one random example, Assemblywoman Laurie Davies, R-Laguna Niguel described a $2039.50 payment on October 4, 2023 to the fundraising consultant K2 Fundraising Agency as “CNS, FND AND WEB,” which would mean the money went to campaign consultants, fundraising events and information technology costs (“WEB”).

But it’s impossible to know from that line item how much of the $2039.50 went to each of those three categories, thereby making comparisons to campaigns that did rely on those codes difficult. (Davies office didn’t respond to a request for comment.)

Then again, at least Davies used terminology with clear definitions.

Opaque expenditure descriptions we found written in by campaigns included “Administrative Services,” “Commission,” “Field Expenses,” “Research,” and “Walk Piece.” None of the aggregate total expenditures described with those vague labels amounted to more than $90,000, according to Capitol Weekly calculations. But they were another example of opacity in expenditure disclosures.

Another example: many campaigns apparently failed to date when expenditures were made. The Form 460 does not include a place on the form to list the date of an expenditure, but some campaigns clearly collect that information because when you bulk download their expenditure data from Cal-Access into a Microsoft Excel file dates are included.

Still, Capitol Weekly found more than 4,000 expenditures that were undated.

That’s not the only problem with Cal-Access’s bulk-download feature for expenditures. For those familiar with the Form 460, you know most expenditures are disclosed on Schedule E, “Payments Made,” although some are reported on Schedule G, which is for “Payments Made by an Agent or Independent Contractor (on Behalf of This Committee).”

The bulk download, however, only apparently captures data from Schedule E.

This presents a transparency problem when campaigns use credit cards. Consider Assemblyman Avelino Valencia, D-Anaheim. If you bulk download expenditures from his current campaign on Cal-Access, you’ll see that he reported making a “Credit Card Payment” of $83,809.80 to American Express on October 2, 2023.

That’s obviously not very helpful in understanding where all that money went. (Valencia declined to comment.)

But that’s not the assemblyman’s fault. Under the rules of the Form 460, he properly reported the $83,809.80 credit card payment on Schedule E, then on Schedule G broke out where that money went.

You can’t see a breakdown of the credit card payment on the Excel download of the assemblyman’s campaign. Instead, you have to look at the PDF copy of the Form 460 to see the line items of his credit card bill.

For those not intimately familiar with the vagaries of the Form 460, it’s all a bit confusing. But it doesn’t have to be that way.

The state could simply require campaigns to use the predetermined codes and to report credit card line items in the same schedule as all other expenses. It could also easily add a date field to the Form 460 for expenditures, so campaigns would have no excuse not to report that data point.

For those not intimately familiar with the vagaries of the Form 460, it’s all a bit confusing. But it doesn’t have to be that way.

“The FPPC should reconsider the code issue” versus allowing campaigns to describe expenditures on their own, Ravel said.

Former Democratic Assemblyman Lloyd Levine had a different take.

Sometimes forms “force you into categories that don’t fit,” he said, noting that technology evolves quickly. Existing expenditure categories might not accurately describe what a campaign spent money on.

He added that he couldn’t see any reason why a candidate would object to documenting the date when an expenditure was made. He also said he thought campaign finance data should be simple for the public to navigate.

“It should be easy for people to access the data,” Levine said.

While the FPPC regulates political disclosures, Cal-Access is a product of the California Secretary of State’s office. The FPPC, however, did not respond to requests for further clarification on other forms of disclosure that do fall under its purview.

Whatever the case, campaign expenditure data typically has not received nearly as much attention as contributor data. Political insiders and the media want to know who is receiving money from whom. Where candidates spend their campaign money is less a topic of conversation or news articles.

That, however, does not make expenditures any less important.

Last year, for instance, the FPPC fined former Republican Assemblyman William Brough of Dana Point $100,000 for misusing campaign funds to pay for personal expenses, including family vacations and his kids cell phone bills. (Brough’s attorney declined to comment.)

So, expenditures matter, even if campaigns and campaign watchdogs haven’t made their transparency a priority.