TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL YEAR 1981 TUESDAY, FEBRUARY 12, 1980 FEDERAL ELECTION COMMISSION WITNESSES COMMISSIONER ROBERT O. TIERNAN, CHAIRMAN COMMISSIONER FRANK P. REICHE, CHAIRMAN, TASK FORCE ON THE BUDGET ORLANDO B. POTTER, JR., STAFF DIRECTOR CHARLES N. STEELE, GENERAL COUNSEL Mr. STEED. The committee will be in order. The committee is in session today to take up the 1981 budget request for the Federal Election Commission. The appropriation to date is $8,646,000, with a pay increase supplemental pending of $393,000; bringing the total budget estimate to $9,039,000. The 1981 budget estimate is $9,400,000, an increase over 1980 of $361,000. We are very happy to have our friend the Chairman for the Commission, Mr. Tiernan. Would you like to introduce your colleagues for the committee, including your new Commissioner? Commissioner TIERNAN. To my left, Frank Reiche, the newest Commissioner; to his left, Orlando Potter, the staff director; to his left, Charles Steele, our new General Counsel, appointed December 6, 1979. Mr. Chairman, I would like to submit my complete statement for the record. [The information follows:] STATEMENT OF FEDERAL ELECTION COMMISSIONER ROBERT O. TIERNAN, CHAIRMAN Mr Chairman, members of the subcommittee, on behalf of the Federal Election Commission, Commissioner Reiche and I would like to express our appreciation for the opportunity to appear before the Subcommittee regarding the Federal Election Commission's appropriation request for fiscal year 1981. INTRODUCTION Fiscal year 1981 is critical for the Federal Election Commission. The fiscal year, from October 1, 1980 through September 30, 1981, includes the November 1980 presidential and congressional elections. The 1980 election will be the first presidential election for which the Federal Election Commission will have had an opportunity to fully prepare. As is well known, the Commission was established in mid-1975, and had very little lead time to hire and train staff. Then, early in 1976, the FEC had some of its power and authority suspended in the aftermath of the Supreme Court's decision in (1) Buckley v. Valeo. Reconstituted by the May 1976 amendments, the FEC was required to implement an entirely new statute in the middle of the election process. By and large, the Commission performed well during that difficult period, in spite of the fact that the Commission was not given sufficient funds to fully carry out all the statutorily mandated duties and responsibilities. Based upon experience gained in 1976 and 1978, the public, the Congress, and the media, have a right to expect a smooth, first rate effort by the FEC in the regulation and administration of the 1980 elections. To accomplish this goal, sufficient funds will be needed to implement the provisions of the Federal Election Campaign Act of 1971, as amended (FECA). The Commission's budget request for FY 1981 represents the resources necessary to thoroughly implement the FECA: to promote voluntary compliance with the FECA; to enhance full public disclosure of campaign finance activity; to certify and disburse matching funds in the presidential primaries; to certify and disburse federal funds to national nominating conventions; to certify and disburse federal funds for the presidential general election; to provide easy access to the public for all information on campaign finance activity; and to verify and enforce the provisions of the FECA through audits and enforcement actions, including conciliation and litigation, if necessary. Based on past experience, the Commission will require a budget of $11,530,160 and a staff of 309 permanent personnel to enforce the FECA in a fair, efficient, vigorous, and independent manner. IMPACT OF PUBLIC LAW 96-187 The Federal Election Commission submitted its original fiscal year 1981 budget request based upon the law in effect as of July of 1979. The Federal Election Campaign Act (FECA), as amended in 1976, was further amended in 1980. These amendments (Public Law 96-187) were subsequent to the Commission's submission of its budget request to the Office of Management and Budget and to the Congress. Therefore, the Decision Packages contained in this submission were prepared based upon the old legislation. We will address the impact of the recent amendments in our testimoy. In general, while the major thrust of the 1980 amendments was to reduce the reporting and filing requirements, the work of the Commission is not significantly altered in many respects. Further, with its limited resources, there are a number of provisions in the FECA which the Commission has been unable to fully implement. COMMITTEES FILING For example, during fiscal year 1979, the Commission had already reduced the resources allocated to its non-filing enforcement program. Due to limited resources in fiscal year 1980, the Commission's Management Plan further reduced resources allocated to this program. This was carried forward into the fiscal year 1981 budget request, which is in keeping with the 1980 amendments. It is true that the amendments do reduce, potentially, the number of candidates and committees filing with the Commission. However, this is somewhat offset by the requirement for separate segregated funds to register and report after activity of only one dollar. This is also the category of filers showing a most dramatic increase in new registrations over the past two years. Generally, the amendments reduce the number of reports filed with the Commission, particularly in an off-election year. However, for those reports filed, the amount of campaign finance activity remains the same over the two-year election cycle. REPORTING THRESHOLDS The change in reporting thresholds from $100 to $200 for receipts and disbursements will reduce the size of reports somewhat and consequently the volume of data entry. This will allow the Commission to review more reports by reducing the data entry requirements. Thus, the Commission will be able to shift resources from data entry to reports analysis. During fiscal year 1979 and 1980, the Commission was forced to shift resources in the opposite direction by imposing thresholds for review and analysis of disclosure reports in order to release resources needed for data entry functions. COMPLIANCE ACTIONS For compliance and other legal actions, the amendments will impose more burdens on the Commission and the staff. The Commission will now have to track and review statements from respondents in potential compliance actions, both at the time of the receipt of a complaint and at the stage when the Commission determines whether there exists probable cause to believe that a violation has occured. ADVISORY OPINIONS In addition, the imposition of deadlines on the issuance of advisory opinions will necessarily place a new burden on the legal policy staff. The Commission should be able to comply with the 60-day requirement (74 percent of all advisory opinion requests were answered within 60 days in 1979), but the 20-day response requirement 60 days prior to any election will create a new burden. During peak election periods, the legal staff will most likely be required to shift activity from other programs to assist in the issuance of advisory opinions. Request for such opinions will probably increase due to the changes in the FECA, and due to the relaxation of standards for standing for these opinions. The Commission is considering alternatives such as expedited procedures, but is limited in this respect by the Government in the Sunshine requirements. INFORMATION OUTREACH PROGRAMS The information and Press operations will be focused on updating and revising publications and on outreach efforts to interpret and explain the new statute and Regulations. While the Commission began rapidly updating several publications for use in the 1980 elections, the bulk of fiscal year 1981 will be spent further refining and revising publications. An aggressive outreach effort will help filers and regulated entities comply with the law in the 1982 elections. The information objectives of the Commission require continued outreach activitiy, which is only heightened by the changes in the statute. AUDIT PROGRAMS The Audit Division will be focusing its efforts on the completion of the audits of 1980 recipients of federal primary matching funds and general election funds. In addition, discretionary audits of candidate committees will begin in fiscal year 1981. The Audit and Reports Analysis Divisions will develop compliance thresholds to generate these discretionary audits. The new compliance thresholds, procedures, and revised audit policy will still require the requested resources; there will be new methods for determining the categories and numbers of committees to be audited. 1980 AMENDMENTS In sum, the impact of the 1980 amendments will be felt in fiscal year 1981 by all Offices and Divisions in the Commission. While there will be a reduction in resource requirements in some programs, there will be substantial increases in others. The level of funding requested will not be altered appreciably; rather the focus of efforts and priorities will shift. As has been stated previously, the 1980 amendments will in many cases allow resources to be shifted to areas of the law which have not previously been fully implemented. Therefore, the ameliorative effect of the amendments will, in some cases, simply allow the Commission to undertake tasks it was unable to accomplish previously due to limited resources. FISCAL YEAR 1981 REQUEST AND THE 1980 ELECTIONS A full appropriation in fiscal year 1981 is crucial for the successful regulation of campaign financing for the 1980 elections. The election itself, of course, takes place in fiscal year 1981. In addition, the three largest, and usually most significant, disclosure reports are filed in fiscal year 1981: the October 15 report, the 12-day preelection report, and the post-general election report. These reports are generally the largest in terms of activity, which requires greater review, coding, and data entry efforts. Furthermore, these reports disclose the activity closest to the actual election. PUBLIC RECORDS OFFICE The Public Records Office is usually the most busy in the time just preceding the election itself. The number of visitors and volume of information requests increases dramatically. The Commission responds to this increase through the addition of temporary help and expanded Public Records Office hours. In addition, during the time just prior to the election there is a large volume of complaints filed with the FEC. This requires a significant commitment of resources to speedily review all complaints received to enable the Commission to meet the 120-day statutory requirement to address matters brought to its attention. The legal staff must have the manpower to resolve these externally filed complaints in a timely fashion, and still be able to maintain staffing levels for defensive and offensive litigation. Of course, the advisory opinion and policy staff must also be able to maintain a quick turnaround time for advisory opinion requests, particularly in the pre-election period. Thses requests usually increase as the election approaches. This burden is increased by the provisions of Public Law 96-187 with its 20-day time limit for requests within 60 days to an election. This is one area in which the staffing requirements will most likely be higher than those requested in the original fiscal year 1981 budget request. The Commission is in the process of promulgating new regulations and developing procedures to facilitate compliance with the new statutory mandate. It is probable that more resources will be required than previously anticipated. INFORMATION PROGRAMS The Commission's Public Information and Press programs will operate at peak levels at the beginning of fiscal year 1981. The Public Information specialists will be manning the maximum number of toll-free "800" phone lines to provide rapid responses to questions from candidates and committees. These phone calls always "peak" during the time just prior to an election. The Press Office also handles a stepped-up number of calls and requests, including Freedom of Information requests, during the peak election period. CAMPAIGN FINANCE STATISTICS Fiscal year 1981 includes the peak period of election activity when the demands on most Commission programs and personnel will be the greatest. It also represents the end of a two-year election cycle. The Commission's statistical publications, the Report on Financial Activity (RFA), are based upon a two-year election cycle, in this case: 1979 and 1980. Thus, with the year-end disclosure reports filed in January 1981, the Commission performs the final data entry and review and analysis functions for the close of the election cycle. Reports Analysis Division staff must deal with the heavy activity and reporting periods just prior to the general election, then code, enter, and review data closing out the election cycle. Data Systems staff must maintain the Commission's disclosure data base, assist in computer aided compliance actions, and help produce the RFA. AUDIT PROGRAMS Finally, it is crucial that the Audit Division receive sufficient resources to rapidly close out the primary matching fund certification and audit processes. Also of great importance it the need to speedily complete the audits of the recipients of Federal funds in the general election campaigns. The Commission has committed significant resources to lay the groundwork for more efficient and timely completion of the 1980 presidential audits. Full funding of these efforts in fiscal year 1981 is necessary to complete this undertaking. For these reasons, it is imperative that the Commission receive its full budget request to provide for the orderly and impartial regulation of the election year activity. The details of the Commission's programs and procedures are contained in the justification and Decision Packages submitted to this committee in conformance with OMB circular A-11. What follows is a brief description of the Decision Packages and a justification for the resources requested. We once again strongly request the funding of the Commission's full appropriation request in order to thoroughly and effectively implement the provisions of the FECA in an election year. Full funding is necessary to maintain the staffing levels required to successfully enforce the FECA in an impartial and timely manner. OFFICE OF GENERAL COUNSEL The Office of General Counsel has two major objectives: interpretation of the FECA and the Commission's regulations and providing legal policy guidance to the Commission, the staff, candidates, committees and other persons covered by the FECA; and enforcement of the FECA and Commission determinations. Decision Packages Nos. 2, 5, 11 and 12 in the fiscal year 1981 Budget Request provide resources for the Office of General Counsel identical to the fiscal year 1980 level. Additional funds are requested to meet the increased enforcement and litigation caseload recently experienced, projected for the completion of the presidential election cycle, in Packages Nos. 17 and 18. ENFORCEMENT The Commission has experienced a steady increase in its enforcement caseload over the last few fiscal years. The number of enforcement cases opened in 1976 and 1977 combined was 410; 302 were opened in fiscal year 1978 alone, 391 in fiscal year 1979. In addition, the complexity and sophistication of cases is increasing. Evidence of this is that in 1976 the Commission found no reason to believe a violation had been committed in 70 percent of the cases opened that year, while in 1978 that determination was reached in only 50 percent of the cases, and in less than 20 percent in 1979. A major factor in the Commission's increased enforcement activities is the growth in the number of cases which arise in the normal course of the Commission's activities. In fiscal year 1978 the Commission generated three times as many enforcement actions from internal sources as in the previous two years-231 cases in fiscal year 1978 as opposed to between 70 and 80 each in 1976 and 1977. This increase in internal enforcement activity continued into fiscal year 1979, when the Commission opened 251 cases. Due to the continued growth in internal cases, the historical record of increased external complaints just prior to an election, and the increased sophistication of complaints, the Commission requests additional funds in fiscal year 1981 to maintain existing staff levels in external enforcement, yet increase staff to handle the expected internal enforcement cases resulting from a presidential election year. LITIGATION The first few years of the Commission's existence saw the legal staff devoting much effort to drafting and prescribing regulations. The majority of the Commission's enforcement efforts were allocated to the handling of externally generated complaints (i.e. from candidates, the public, and other interested parties) and satisfying the requirement that these complaints be addressed within 90 days (now 120 days in the new amendments). Most of the litigation efforts were devoted to defending the FECA, the Commission and its policies from legal challenges (defensive litigation). By 1977 and 1978, however, it became necessary for the Commission to commit more resources to offensive litigation (or litigation resulting from enforcement activity which cannot be resolved through conciliation). At the beginning of fiscal year 1978, only two such suits had been filed. Since then, the Commission has filed an additional 27 cases. The increasing sophistication of the review procedures has resulted in an increase in internally generated enforcement actions. In addition, as the Commission's discretionary audit policy was implemented, the amount of audit related enforcement activity has also increased. CONCILIATION AGREEMENTS All these factors have resulted in a heavy increase of internally generated cases. Logically, the end result of the Commission providing respondents with appropriate opportunity to voluntarily comply with the FECA through conciliation has also required additional resources. This attention to due process and voluntary conciliation has also resulted in lengthy lag times between initiation of an enforcement action and final litigation. It should be reemphasized that the Commission places a priority on facilitating voluntary compliance with the FECA. However, in instances where conciliation fails to successfully resolve enforcement matters, litigation must be an available option for the Commission to pursue. With limited resources, decisions as to which cases to litigate must be made on budgetary grounds, and possible selective enforcement can result. About 3% of all enforcement cases reach litigation, and the number of suits |