Testimony of Amy Loprest to New York City Council Committees on Finance and Governmental Operations

May 17, 2018

Good afternoon to the Chairs of the committees, Councilmembers Cabrera and Dromm and to the other members of both committees gathered here today.

I am Amy Loprest, Executive Director of the New York City Campaign Finance Board. With me today is Eric Friedman, Assistant Executive Director for Public Affairs.

I want to thank you for the opportunity to lay out the CFB’s budget for fiscal year 2019 and to answer any questions you may have.

The CFB’s 2019 executive budget of $20.6 million is $36 million lower than in 2018. Most of that amount comes from reductions in our budget for the New York City Campaign Finance Fund and the Voter Guide.

Excluding those items, however, the agency has reduced its day-to-day operating expenses by 1.2 percent compared to fiscal year 2018. This reflects the Board’s real commitment to controlling costs in a non-city election year, while also fulfilling our mandate to engage all New Yorkers in the electoral process.

I will provide details on our budget in just a moment, but first I want to update you on the CFB’s activities, and the role the agency has played in the ongoing national discussion about campaign finance reform in the past year.

National Campaign Finance Reform Outlook

Over the 30-year history of New York City matching funds program, the City Council has routinely worked with the Board to craft legislation that has made our matching funds program into a nationally-recognized model. I am happy to report that there has been a sharp increase in successful reform efforts around the country that take their inspiration from our program.

In Montgomery County, Maryland 20 candidates have already received nearly $3 million in matching funds in a new program that is explicitly modeled on ours. The program includes some interesting tweaks that will be worth watching as voters head to the polls for the first publicly-funded primary election next month.

In Washington DC, the City Council passed and Mayor Muriel Bowser signed into law a matching funds system that will be in place for elections in 2020.

Closer to home, Suffolk County passed a matching funds program that will be in place for county legislative elections in 2021.

The Board is very encouraged, and the Council should be proud, that other jurisdictions continue to look to New York City for inspiration.

We should also be proud that our program continues to deliver strong results for and instill confidence in both candidates and voters.

Candidates continue to show confidence in the program, even in an election year that was notable for the high number of incumbents seeking re-election, by volunteering to participate at very high rates. For the September primary elections, 82 percent of candidates on the ballot joined the matching funds program. The Campaign Finance Board paid out slightly more than $17 million in public funds to 106 candidates. The 2017 mayoral race included four televised debates, two each before the primary and the general elections and both major party nominees accepted public financing for the second election in a row. These facts point to a program that remains very popular with candidates from all parts of the city and across the political spectrum.

The program provided real value to voters as well. Matching funds help encourage deeper participation in the political process by New Yorkers. Research clearly shows that individual contributors are willing to invest small contributions in city campaigns, knowing their support will be amplified by matching funds. This broad base of support at the contributor level helps ensure that diverse voices from every corner of the city have an opportunity to be heard.

The matching funds program provides every candidate with the opportunity to get their message before the voters and ensures that access to wealth is not the only path to electoral success. Because of the matching funds program, the 2017 elections were more competitive, small donors were empowered, and voters were better educated about their choices at the polls.

The Board looks forward to continuing our productive relationship with the City Council, especially over the coming year. CFB staff are working on the comprehensive review of the program and the work of the CFB that we prepare following every citywide election cycle. The report will include the Board’s legislative recommendations for the Council to consider. We appreciate the opportunity to partner with the Council to help ensure the Program continues to best serve the public and the candidates who choose to participate.

Fiscal Year 2019 Budget

Turning back now to our fiscal year 2019 budget. Overall, our budget is $36 million lower than last year, with the largest reductions in the Campaign Finance Fund and the Voter Guide.  For the matching funds, we are allocating $1 million to cover any potential special elections. For fiscal 2018, we budgeted $29 million for the Campaign Finance Fund. Please note that, as we have done following previous elections, the CFB returned unused Campaign Finance funds to the City’s General Fund in November 2017.

For the Voter Guide, we have allocated roughly $3.5 million in 2019 compared to $11 million in 2018. We anticipate printing a citywide Voter Guide for the general election on November 6th that will cover ballot proposals from Mayor de Blasio’s Charter Revision Commission.

Excluding the Campaign Finance Fund and the Voter Guide, the CFB has reduced spending on day-to-day operations by 1.2 percent compared to fiscal 2018. Specifically, we have reduced our non-personnel spending by more than $1 million, to reflect a reduced staff work load in a non-city election year.

We have increased staffing levels modestly, as you can see in our personal services line. The majority of the additional staff will join our Audit and Systems units.

New Audit staff will immediately help complete the post-election audits from the 2017 and begin laying the groundwork for what promises to be a very busy 2021 election cycle.

I would like to outline briefly some of the steps we have taken to streamline the Audit process. Audit staff implemented these changes for 2017 campaigns and we have already seen an impact on speeding up our post-election audit work.

In June 2017, we started providing campaigns in the matching funds program with a summary of where they stood from a compliance standpoint. The intention in sending this summary was to help campaigns understand and fix any compliance issues that might prevent them from receiving public funds. This is, in fact, the intention for most of the work that our Candidate Services and Audit staff perform. Each disclosure statement review is an opportunity for us to help candidates fix errors and resolve issues that might prevent payment. Our goal is to help candidates achieve compliance and receive public funds. Our goal is to enable citizens from all walks of life to run for office.

For the 2017 post-election audits that are now underway, Audit staff are issuing document requests that are tailored to each campaign and include more details on potential compliance issues than in previous years. These tailored requests should allow campaigns to directly respond to specific potential audit issues and resolve them. We piloted this approach during the special elections that were held for the City Council between 2015 and 2017. We found that the resulting draft audit reports were shorter and that campaigns had resolved many issues that otherwise would have been in the draft audit simply by responding to the CFB’s initial document request. Indeed, 13 of the 19 campaigns in those special elections that have completed the audit process did not receive any violations or penalties.

We are already seeing positive results from these and other changes we’ve made to the audit process. The CFB has issued draft audit reports to 68 campaigns, more than one-third of the total draft audits we anticipate sending for the 2017 cycle. At this point in 2014, we had not issued any draft audit reports to 2013 campaigns.

Making real progress in streamlining audits is one of our key goals, but it has practical implications as well. As I mentioned before, the 2021 elections promise to be the most competitive in a generation.

We estimate that 500 candidates will register with the CFB by the fall of 2021, a 45 percent increase in the number of candidates compared to 2017. We project there could be 44 open seats, 36 of which will be in the City Council, with open contests for all citywide and borough-level offices.

For comparison, in 2001, the first election under term limits, there were 44 open seat races and 526 candidates registered with the CFB. Thus far, 20 candidates have registered with us for the 2021 cycle; they will file their first disclosure statement in July. At this point in the 2001 election cycle, only five candidates had registered with the CFB.

In addition to the sheer volume of candidates and open seats, 2021 will present new challenges as the CFB prepares to implement new requirements in the program, including early payments. Preparing for those new requirements will mean additional work for Candidate Services and Audit, as well as new development to our information architecture.

Our Systems unit has also begun a comprehensive project to update the CFB’s Campaign Finance Information Systems or CFIS. Some of the additional staff we are adding for fiscal 2019 will assist with this work. CFIS is the backbone of our data, disclosure, and compliance systems. Improvements to CFIS, which communicates with CSMART, our candidate disclosure system, and virtually every other application that the CFB runs, will be critical to ensuring a smooth 2021 election.

We have an online candidate disclosure system that is the envy of every other campaign finance system in the country. But the bottom line is the underlying architecture needs to be modernized. At the end of this project, we anticipate having a brand new CFIS that significantly streamlines the interactions candidates have with the CFB.

In addition to the work on early payments and other new requirements, Systems staff is currently working to implement the online voter registration portal, following legislation passed by the Council last year.  We are very excited to release that portal in June 2019.

Before concluding, I would like to draw your attention to our 2018 Voter Assistance Report, which was delivered to all Councilmember offices at the end of April. The report addresses the many efforts we made in 2017 to increase voter participation through our NYC Votes campaign and outlines election reforms that should be adopted in Albany to increase voter turnout.

Thank you for the opportunity to testify today. I am happy to answer any questions you may have.