Gotham Gazette

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Campaign Finance Board Promises Faster Audits at City Council Hearing Examining 2021 Election Cycle

CFB executive director Beth Rotman (photo: John McCarten/NYC Council Media Unit)

Though it's been more than 13 months since the last city election cycle ended, the New York City Campaign Finance Board has yet to conclude any audits examining the fundraising and expenditure of more than 300 campaigns. At an oversight hearing of the City Council’s Committee on Governmental Operations on Tuesday, the CFB, under new leadership, promised Council members that it is taking steps to expedite those audits as it continuously works to improve the city’s campaign finance program. 

The CFB administers the city’s public matching funds program, which matches qualifying small dollar donations at an 8-to-1 ratio, in order to encourage candidate participation and limit the influence of wealthy donors in elections. The program was amended for the city’s massive 2021 election cycle by a City Charter Revision proposed by a commission and approved by voters in 2018, followed by additional changes made by the City Council and mayor in 2019. Those changes increased the matching rate for small dollar contributions, raised the amount of matching funds paid out to candidates and drastically reduced contribution limits, among other tweaks to the program.

In the 2021 election, 308 candidates took part in the program and were paid out a record-breaking $127 million in public funds, more than triple what the CFB paid out in the last citywide election featuring so many open seats, in 2013. New York State recently launched its own public campaign financing program partially modeled after the city’s. 

“While the current campaign finance program is by most measures extremely successful, we can always do better,” said Council Member Sandra Ung, a Queens Democrat and chair of the governmental operations committee, in her opening remarks. As is always the case, the City Council is full of elected officials with experience in the matching funds program and in dealing with the Campaign Finance Board, which runs campaign education programming, distributes marching funds, conducts campaign finance audits, tracks spending, and more.

CFB’s executive director Beth Rotman, who was appointed to the role two months ago, detailed the success of the public funds program but had few recommendations for changes. “That is largely because virtually every piece of the program changed,” she said, referring to the sweeping amendments made in this last election cycle. 

Rotman did, however, urge two changes that would have to occur at the state level, which were included in the CFB’s 2021 Post Election report, released in September. She recommended that the state prohibit cryptocurrency donations to campaigns, citing their “erratic valuations” and the fact that they are “designed for anonymity” rather than transparency. The city, she said, should not follow in the footsteps of the Federal Election Commission which has allowed Bitcoin donations since 2014. She also urged the state to take steps to prevent foreign actors from influencing ballot proposals – under current federal law, foreign donors cannot contribute to campaigns but the FEC ruled that the prohibition does not extend to ballot questions. 

Council members peppered Rotman with questions about the functioning of the campaign finance program – whether the qualifying thresholds should be changed, how credit card donations are verified, how audits are triggered, and the effects of inflation on spending limits. But the main concern seemed to be that campaign audits move far too slowly. Candidates have long complained about the CFB’s auditing process, that it can be lengthy, onerous, punitive, and often penalizes them years after their campaigns have concluded. 

“We are always looking for ways to make the process less stressful and I'm very happy to work with this committee and with you on that,” Rotman told Council Member Lynn Schulman, a Queens Democrat who questioned whether the CFB could do “spot audits” during campaigns to ensure compliance.  

Rotman did note later that the CFB was unable to do compliance visits during the election because of the ongoing COVID-19 pandemic, which delayed the auditing process. “We are always looking for ways to make the process quicker, more candidate friendly, and focusing on what we really care about, which is the risk to the public fisc,” Rotman said, adding that the CFB is in the process of implementing a “big strategic plan” using new technology to expedite audits.

“We're not trying to replace people with machines but we are trying to use machines to help us accelerate and innovate so that the process is more candidate friendly and involves less stress and certainly less stress sort of after the process,” she said. 

The harshest rebuke came from Council Member Kalman Yeger, a Brooklyn Democrat and former campaign compliance lawyer who has often criticized the CFB’s processes and practices. “An audit of a campaign takes a day. If somebody tells you that it takes more than a day they're lying to you,” he said. 

Council Members Ung and Lincoln Restler, a Brooklyn Democrat, both raised the question of whether the thresholds for qualifying for public funds should be changed. Currently, a City Council candidate is only required to raise a minimum of $5,000 from a minimum of 75 small contributions from within the district. “As long as somebody has shown that threshold level of support, which is part of the law, then I actually think it's great that so many people qualified” for the 2021 election, Rotman said. “So from the board's perspective, we don't recommend a change to the threshold.”  

But, considering the changes to the program, including increases in the matching rate as well as the maximum amount that is paid out, Allie Swatek, CFB’s director of policy and research said, “We are definitely planning to look at how the threshold has been, we think, impacted by the fact that the program expanded so greatly.”

“It's something that we've also asked ourselves, whether the threshold amount should be higher. So that's something that we're continuing to look at,” she added. 

Brooklyn Democratic Council Member Shahana Hanif, however, said she would be in favor of lowering the threshold, which she said was “daunting” for her as a first-time Council candidate last year “because I did not come from any political connections and although I was organizing in my neighborhood, the electoral process was not a familiar one.”

Ung also asked whether the CFB has considered raising spending caps in the wake of high inflation rates. “The board hasn't taken a position to eliminate it, but it's definitely something that we always have to look at because, you're right, things get more expensive,” Rotman said. 

Council Member Gale Brewer, a Manhattan Democrat, asked the CFB to consider newer forms of payments for campaign contributions such as ApplePay, Venmo, and PayPal, instead of continuing to rely on paper checks and credit cards. “It's something that might be able to be figured in because it will be easier to raise money…They're quicker and they're faster and I don't even know anybody who doesn't use them sometimes these days,” Brewer said.  

But the CFB officials said those transactions come with challenges, since they don’t collect information that is required under the law. “If the vendor is able to work with the board about the appropriate backup documentation, then yes,” Rotman said. 

The hearing also briefly touched on a pre-considered bill, introduced by Council Members Selvena Brooks-Powers, Amanda Farias, and Tiffany Caban, which would require independent spenders that attempt to influence the results of a ballot proposal to disclose their donors. Rotman said the CFB supports the bill.

by Samar Khurshid, senior reporter, Gotham Gazette

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