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2001-7: Improper Transfers between Committee's Primary/General Election Account and Runoff Account

Thursday, June 14, 2001

Re: Administrative Code §§3-703(1)(f), 3-705(5); Campaign Finance Board Rules 1-03(b), 1-04(q), 1-07(c), 2-06(c)(1), (2), 5-01(j); Advisory Opinion Nos. 1989-46, 1993-8, 1999-1, 1999-3, 2001-1; Op. No. 2001-7.

The Campaign Finance Board (the "Board") has received an informal request for guidance from Friends of Green whether candidates are required under the Campaign Finance Act (the "Act") to use an attribution methodology when transferring funds between a primary and/or general election account and a runoff account pursuant to Rule 2-06(c)(2).

On March 13, 2001, the Board determined that a Democratic mayoral primary runoff election was "reasonably anticipated" pursuant to Rule 1-04(q). See Advisory Opinion No. 2001-1 (March 13, 2001). Democratic mayoral candidates participating in the New York City Campaign Finance Program (the "Program") therefore are authorized to solicit and accept contributions for a runoff election in amounts of up to one-half of the applicable limitation for the primary and general election. See New York City Administrative Code ("Administrative Code") §3-703(1)(f). These candidates may accept contributions of up to $2,250 for the possible runoff election in addition to contributions, from the same individuals, of up to $4,500 for the primary and general elections combined. Candidates participating in a runoff election are also entitled to receive twenty-five cents for each dollar of public funds paid to them for the primary election. Administrative Code §3-705(5); Rule 5-01(j).

A number of restrictions apply to runoff contributions. These contributions are not matchable. See Administrative Code §3-705(5). Pursuant to Rule 1-04(q), these contributions must be deposited in a separate account. Further, until a primary election is held that results in a runoff primary election, each solicitation of runoff primary contributions must expressly state that the contributions are being solicited only for a runoff election that may not occur, and candidates must stop accepting contributions for a runoff "once it is no longer reasonable to anticipate such a runoff primary." Rule 1-04(q). See Advisory Opinion No. 1999-1 (January 7, 1999).

Pursuant to Rule 2-06(c)(1), "receipts accepted for a runoff primary shall not be: (i) commingled in any account with any receipts for any other election; or (ii) used for a primary or general election held in the year that the runoff primary is held or anticipated."

However, receipts can be transferred "from a primary and/or general election account to a runoff primary account... after the primary election so that the funds transferred may be spent in the runoff primary" and "from a runoff primary account to a primary and/or general election account... after the runoff primary is held so that the funds transferred may be spent in the general election." Rule 2-06(c)(2). Other rules apply in the event the runoff election does not take place.1

Contribution limits applicable to the primary and general elections are intended to limit the amount of money that a candidate can accept from a single contributor for these two elections. See Administrative Code §3-703(1)(f). Similarly, the runoff contribution limit is a separate limit designed to enable candidates participating in a runoff election to raise additional funds to be spent during the runoff election campaign. See Administrative Code §3-703(1)(f). The runoff contribution limit is not intended to raise the contribution limit effectively applicable to the primary and general elections merely because a runoff election occurs.

The transfer of receipts between a committee's primary and/or general election account and its runoff account would therefore constitute a violation of the Act if any of these transfers resulted in a contribution exceeding the applicable contribution limits for any election. The total amount of contributions from any one contributor in a primary and/or general account must not exceed $4,500, and the total amount of contributions from any one contributor in a runoff account must not exceed $2,250. Any other conclusion would encourage fund-raising that effectively circumvents the contribution limits for each election.

The Board will apply a "reverse chronological order" methodology to determine whether any transfers of funds made pursuant to Rule 2-06(c)(2) consist of over-the-limit contributions. Before making a transfer from or to a runoff account, the candidate must determine whether any portion of the funds sought to be transferred derives from over-the-limit contributions, as described in this opinion. If requested to do so, Board auditors will provide information on the "reverse chronological order" methodology that is used, equivalent to a first-in-first-out (FIFO) accounting for expenditures. The total sought to be transferred must be reduced by an amount equal to all over-the-limit contributions, if any, to which the total is attributable, in whole or in part, such that only a reduced amount may actually be transferable. While these bank account transfers are not reported on disclosure statements, participants are required to submit copies of the most recent bank statements for their runoff primary election accounts with each disclosure statement. See Rule 1-04(q)(4). When a bank transfer is made pursuant to this Advisory Opinion, the participant should note this on a cover memo submitted with these bank statements. Board auditors will review these transfers to ensure that the funds transferred do not exceed the applicable contribution limits under the Act. See Rule 1-07(c); Advisory Opinion No. 1999-3 (January 7, 1999).


1If a runoff election does not take place, the runoff election account is treated like an account established for an election not subject to the Act, in that its use in the primary and general elections is proscribed altogether, and the use of the account is frozen until the first January 12 after the election or the day the participating candidate extinguishes the last liability from the election, whichever is earlier. Rules 1-03(b), 2-06(c)(1)(ii); see Advisory Opinion Nos. 1989-46 (September 21, 1989), 1993-8 (July 20, 1993), 1999-1 (January 7, 1999).