Table of Contents
- PUBLIC FUNDING
- GUIDE TO DETAILED RECORD KEEPING
Monetary Contributions:Control System
Accurate record keeping is necessary for compliance with the Michigan Campaign Finance Act. The treasurer of the Gubernatorial Candidate committee is responsible for keeping records of all bank accounts, contributions, expenditures, invoices, contracts, etc. to substantiate information reported on Campaign Statements. This information is necessary for preparation of Public Funding Applications as well as the Post-Election Audit. Committee records must be preserved for 5 years and shall be made available for inspection as authorized by the Secretary of State.
Contributions Limits for Candidates Receiving Public Funds
(MCL 169.269). A person shall not make or accept a contribution to a gubernatorial Candidate Committee which exceeds contribution limitations. The contribution limitations are per election cycle. A gubernatorial election cycle is the 4-year period beginning the day following the last general election in which the office of governor appeared on the ballot and ending on the day of the next general election in which the office of governor appears on the ballot.
The contribution limitations for a gubernatorial candidate committee receiving public funds are as follows:
|Individual or Political Committee||$7,150.00|
|State Central Political Party||$750,000.00|
|Congressional District/County Political Party Committee||$30,000.00|
|* Immediate Family||$50,000.00|
These limits apply to the cumulative contributions made during the 4-year election cycle. The fair market value of in-kind contributions (goods or services), endorsements or guarantees of loans to the committee, and contributions of money apply to the limit. A loan from any source other than a financial institution is considered a contribution until the loan is repaid.
Section 69(6) establishes the contribution limit for contributions from the gubernatorial candidate, the candidate for lieutenant governor and members of both candidates’ immediate families. If public funds are accepted the limit on contributions from the candidates and their combined families is $50,000.00 for the election cycle. For the purpose of this limit, “immediate family” is defined in Section 69(6) as “a spouse, parent, brother, sister, son or daughter.” To determine this limit, the contributions made by the gubernatorial candidate and his or her immediate family during the 4-year election cycle are added to contributions made by the lieutenant governor candidate and his or her immediate family after the lieutenant governor candidate is nominated at the convention. Each candidate must provide the Bureau of Elections with a list of all individuals who meet the definition of “immediate family” using the Immediate Family Form.
A committee is normally limited to one account as its official depository. However, for a gubernatorial candidate committees receiving public funds, it is necessary to maintain separate accounts for private and public funds. The first account opened will be used for the deposit of contributions and other receipts from private sources for the Primary Election. Once the committee receives its first payment of public funds from the State Campaign Fund, a second account must be established. Public funds and private funds may not be commingled in the same account.
A candidate who wins the Primary Election and receives public funds for the General Election must then establish a new account for the deposit of these funds. Public funds received for the primary election may not be commingled with public funds received for the general election. In addition, the committee must establish separate records for receipts and expenditures of private funds for the General Election. Although the committee will have only one private funds bank account, it will maintain two separate “accounts” on paper; one private funds account for the Primary Election and one private funds account for the General Election.
Funds may not be placed in stocks and bonds, mutual funds, money market accounts or land contracts. Funds may be deposited into checking or draft accounts, savings or share accounts or certificates of deposit, only after having been deposited in the committee’s official depository. Public funds may also be transferred to an interest-bearing account (keeping in mind the prohibition on commingling of public and private funds). Any interest earned from the public account may not be spent and must be returned to the State’s Campaign Fund. If the interest bearing account is located in a different bank, savings and loan association or credit union than the official depository, the Statement of Organization should be amended to report the location as a secondary depository. A secondary depository is established solely for the purpose of depositing contributions which must be immediately transferred to the committee’s official depository. Secondary depositories may not be used to make expenditures. Because of the stringent controls that must be maintained on receipts, we recommend that the committee establish a secondary depository only for the deposit of the proceeds from joint fundraisers.
A gubernatorial Candidate Committee that accepts public funds must establish the following bank accounts:
|Candidate involved in the:||Will have…||And…|
|Primary Election Only||1 Private Funds Bank Account||1 Public Funds Bank Account|
|General Election Only||1 Private Funds Bank Account||1 Public Funds Bank Account|
|Primary and General Elections||1 Private Funds Bank Account (Primary & General)||2 Public Funds Bank Accounts (1 Primary and 1 General)|
Private funds are contributions received from individuals, committees and unincorporated businesses. The private funds contribution records continue straight through the Primary and General Elections as they are subject to contribution limits that are on an “election cycle” basis. For a gubernatorial Candidate Committee, an “election cycle” begins the day following the last general election where the office of governor appeared on the ballot and ends on the day of the next general election where the office of governor appears on the ballot.
The record of expenditures from the private funds account must be recorded separately for the primary election and the general election. Although the committee inly permitted to have one private funds account, the committee must keep separate expenditure records for each election due to expenditure limitations.
The committee must create a separate record for each election to track financial activity in the private funds account. While private funds received for the Primary Election may be used for the General Election, and vice versa, this will constitute a “transfer between the two accounts” and must be recorded and reported as such in the committee’s records. For example, immediately after the Primary Election the committee will undoubtedly wish to use all or portion of the on-hand Primary Election private funds for General Election expenditures. The committee would therefore have th “transfer” funds from the Primary Election private funds “account” to General Election private funds “account.” This transfer would be reported as an “exempt miscellaneous” expenditure on the Primary Election private funds Schedule 1.1B and as an Itemized Other Receipt on the General Election private funds Schedule 1.2A.
Public funds are funds the committee receives from the State Campaign Fund after a Public Funding Application has been submitted by the committee and approved by the Bureau of Elections. Public funds received for the Primary Election can only be spent on goods and services for the Primary Election. Any leftover Primary Election public funds must be returned to the State Campaign Fund and may not be used for the General Election. Public funds received for the General Election may not be used to make expenditures for the Primary Election and therefore, cannot be used to pay unpaid debt from the Primary Election.
The $2 million expenditure limitation is “per election.” Therefore, the committee is required to have a public funds bank account for the Primary Election and a separate public funds bank account for the General Election.
Receipts will fall into one of three categories: contributions of money, in-kind contributions of goods or services, and other receipts. These are explained separately below:
For the gubernatorial Candidate Committee seeking public funding, there are two sets of requirements with which the committee must be concerned: the information required for Campaign Statements and the information required for Public Funding Applications. Although the requirements overlap, they are not entirely the same.
The record keeping system established by a committee must be meticulous. A contribution received for the Primary Election will be subject to the contribution limitation for the election cycle as well as to the total permissible qualifying contributions for the calendar year in which it was issued. When entering information regarding a contribution for purposes of preparing a Campaign Statement, it will be important to also enter additional information at that time that is necessary for a Public Funding Application, such as the issue date of a written instrument along with the receipt date.
Some types of contributions will have an impact on other recording and reporting requirements of the committee. For example, in-kind contributions, while not match-able for public funding purposes, count toward the contributor’s contribution limits. Also with the exception of loan guarantees, in-kind contributions also apply to the expenditure limitation. A loan from a person, other than a financial institution, is a contribution and will also affect the committee’s outstanding debt. Repayment of the loan will affect the committee’s expenditure records, reduce the debt, and reduce the cumulative contributions for that contributor. Such a repayment will not count toward the committee’s $2 million expenditure limitation.
The following are some guidelines for adequate record keeping for the purpose of complying with the Campaign Finance Act. Information that must be recorded for all contributions received by the committee:
a) Contributor’s Name. This is required to be reported for all contributors, regardless of the dollar amount.
b) Contributor’s Address. Include street address or mailing address. Indicate “new address” when a contributor’s address has changed from that previously submitted on a Public Funding Application.
c) Contributor’s Occupation, Employer Name and Principal Place of Business. The contributor’s occupation, the name of the business or other entity for which the contributor works and the address of the place where the contributor works is required on the Campaign Statement when a contributor’s cumulative contributions to a committee for an election cycle exceed $100.00.
d) Date of Receipt. A contribution is received by a committee on the date that the monetary funds, written instrument, or in-kind contribution of goods from the contributor have come into the physical possession of the candidate, committee treasurer, designated record keeper or other person acting as an agent of the committee. The receipt date is not the date the check or other written instrument was written or the date the contribution was deposited into the committee’s bank account. An in-kind contribution of services is considered to be received on the date the candidate, committee treasurer, designated record keeper or other person acting as an agent of the committee receives verbal or written notice from the contributor that the contribution has been made. The date of receipt must be reported for all contributions regardless of the amount.
e) Date of Issue. The date of issue is the date the check, money order or other written instrument was written, or the date a credit card contribution or other electronic means of transferring funds was authorized by the contributor. This date is required for a Public Funding Application as it determines for which year a qualifying contribution is matchable.
f) Amount of Contribution. The amount of the contribution must be reported for all contributions regardless of amount.
g) Cumulative Amount Contributed for Election Cycle. The contribution limit is based on the cumulative contributions during the election cycle. Therefore, the cumulative contributions for an election cycle must be reported for each contributor on Campaign Statements. The committee must keep careful records to insure that no contributor’s cumulative contributions exceed the contribution limit for an election cycle.
For Public Funding purposes, qualifying contributions accumulate both on a calendar year basis (based on the year the contribution is “issued,” and on an election cycle basis). Regardless of the total amount contributed by a person, only $100.00 given in a calendar year may be matched.
Committees may provide forms for contributors to complete and return with their contributions so that the committee will have available all of the information necessary to fulfill the Act’s requirements for Campaign Statements and Public Funding Applications. The committee is free to design similar forms or to photo copy the forms provided in this manual.
- Solicitation Form #1
General Information - All Contributors. The first part of Solicitation Form #1 asks the contributor to provide the information necessary for proper record keeping and reporting. Although the committee is not required to report the contributor’s occupation, employer and business address until the contributor has given a cumulative of more than $100.00 in an election cycle, it is to the committee’s advantage to secure this information as early as possible in the election cycle.
Cash Contributions. The second part of Solicitation Form #1 requests information required for cash contributions. The committee may accept a cash contribution from a contributor as long as no single cash contribution exceeds $20.00. However, such contributions are not matchable with public funds unless they are “reduced to writing.” Cash contributions may be “reduced to writing” if they are accompanied by a written statement that includes the name, address and signature of the payer, the name of the payee, the date, amount and purpose of the contribution.
- Solicitation Form #2
Joint Contribution Allocation. Solicitation Form #2 is for contributions drawn on a joint bank account (usually husband and wife). Such contributions are always attributed to the individual who signed the check unless the Solicitation form or something comparable is completed and signed.
A contribution made by a check drawn on a joint account may potentially exceed contribution limitations if it is attributed only to the signer of the check, but would be acceptable if properly attributed to both persons who are owners of the account. If the committee wishes to submit joint contributions on a Public Funding Application, the Joint Contribution Allocation Form or a similar allocation statement signed by both contributors must be provided to the Bureau in conjunction with the Application.
Joint contributions must not be reported as such (Mr. And Mrs. John Doe) in either the Campaign Statements or Public Funding Applications but as separate contributions from two separate entities (John M. Doe with address, receipt date, issue date and amount, and Jane S. Doe with address, receipt date, issue date and amount).
Example: On June 1, 2005 the Samuel Thomas for Governor Committee receives a check in the amount of $5000.00 drawn on the joint account of John M. and Jane S. Doe, signed by John M. Doe. An accompanying Allocation Statement indicates $3,400.00 is allocated to John M. Doe and $1,600.00 is to be allocated to Jane S. Doe. Both contributors sign the Allocation Statement. The contribution is reported on both the Campaign Statement and the Public Funding Application as $3,400.00 from John M. Doe and $1,600.00 from Jane S. Doe. Both are included on a Public Funding Application with $100.00 qualifying to be matched for 2005 for each contributor.
On January 2, 2006 the Samuel Thomas for Governor Committee receives a second check in the amount of $1,500.00 drawn on the joint account of John M. and Jane S. Doe, signed by Jane S. Doe and written “issue date” on January 1, 2006. Since John M. Doe has contributed the maximum contribution amount for the election cycle, the entire $1,500.00 is considered to be from Jane S. Doe and $100.00 qualifying contribution for 2006 can be included on a Public Funding Application. If an Allocation Statement indicated any amount for John M. Doe, it would be an excess contribution. If the date on the check was 2005, none of the $1,500.00 would qualify for matching in 2006.
- Solicitation Form #3
Partnership or Limited Liability Company Contribution Allocation. Unincorporated partnerships and limited liability companies are permitted to allocate contributions to individual partners or individual members of the company. Solicitation Form #3 provides space for the company to list the individual members from whom a share of the total contribution is to be reported. Only one signature is required on the Allocation Statement regardless of the number of partners or members to whom contributions are allocated.(*) When an authorized person completes the form, it is assumed that all of the partners or members have the same occupation. Each contributor’s name, address and amount should be reported separately on the Allocation Statement. The date of issue is the date indicated on the check.
(*) Signature requirements for Partnership or LLC contributions are currently under review.
Example: The Samuel Thomas for Governor Committee receives a check in the amount of $5000.00 from XYZ Partnership, signed by Jonas K. Doe. Accompanying the check is a Partnership Allocation form, signed by Jonas K. Doe, which lists the names and addresses of 35 partners who are allocated $114.29 each and 28 partners who are allocated $35.71 each. The committee’s Campaign Statement will include the names and addresses of each of the 63 partners with their allocated amounts. The committee can submit a Public Funds Application with all 63 partners’ names, addresses and amounts. The 35 partners who gave $114.29 will have qualifying contributions of $100.00 each and the remaining 28 partners will have qualifying contributions of $35.71.
When receiving contributions, care must be taken to avoid potential violations of the Act. Prohibited or questionable contributions should be caught before the money is deposited into the committee’s bank account.
Certain types of legal contributions may not be matchable with public funds. These contributions should be separated from the matchable contributions prior to deposit of the money. The committee must photocopy all written instruments for matchable contributions prior to deposit.
Described below is a procedure designed by the Bureau of Elections for handling the receipt of contributions. While use of this procedure is not mandatory, whatever procedure the committee uses must encompass all of the controls included in the suggested method.
Processing Contributions 1) Attach the solicitation form (if applicable) to the written instrument
2) Review the contributions and divide into three groups:
- Prohibited contributions
The committee must return a prohibited contribution to the contributor unless it is an anonymous contribution. If a prohibited contribution is returned before being deposited, there is no need to record it for reporting purposes since it “accepted.” The following are example of prohibited contributions:
a) Corporate or joint stock company contributions. Any check drawn on a corporate account. Often, but not always, the name of the contributing organization on the check may be followed by “Inc.,” “P.C.,” “Assoc.,” etc. It is permissible to accept a contribution from a corporation’s PAC (Political Committee or Independent Committee). The contribution should be immediately returned to the contributor.
b) Labor organization contributions. Any check drawn on the account of a union or labor organization. It is permissible to accept a contribution from the labor organization’s PAC. The contribution should be immediately returned to the contributor.
c) Domestic dependent sovereign contributions. Any check drawn on the account of an Indian tribe. It is permissible to accept a contribution from the Domestic Dependent Sovereign’s PAC. The contribution should be immediately returned to the contributor.
d) Excess contributions. Any single contribution that is more than $7,150.00 if from an individual or a committee that is registered as a Political Committee, or more than $71,500.00 if from a committee that is registered as an Independent Committee or a Political Party Committee is an excess contribution. Contributions that are themselves less than the limit, but cause the cumulative totals to exceed the limit, are discussed below. The committee has two choices. The committee may deposit the check and immediately write a check to the contributor to refund the amount that exceeds the contribution limit, or the committee may return the entire contribution. If the contribution is deposited, the entire amount must be reported as a contribution on the Campaign Statement that covers this period and the expenditure to refund the excess is also reported. If the entire contribution is returned without being deposited, there is nothing to report.
e) Contributions from other Candidate Committees. Another Candidate Committee is permitted to purchase tickets to a fund raising event sponsored by the Gubernatorial Candidate Committee with a limit of $100.00 in a calendar year. Any other contribution from another Candidate Committee is prohibited and must be refunded. Ticket purchases that exceed $100.00 in a calendar year must be refunded. A candidate, other than the gubernatorial candidate or the lieutenant governor candidate, may purchase tickets or make contributions from personal funds up to the $3,400.00 contribution limit.
f) Cash contributions over $20.00. The amount of the cash contribution that exceeds $20.00 must be returned to the contributor.
g) Incomplete written instrument. A contribution for which the check or other written instrument is incomplete; e.g., unsigned or not properly filled out must be returned to the contributor.
h) Contributions from Ballot Question Committees. A Ballot Question Committee is permitted to receive contributions from sources that are not permitted to contribute to a Candidate Committee. (Refer to the definition of a Ballot Question Committee in Sections 2(2) and 3(4) of the Campaign Finance Act.) Therefore, Ballot Question Committees are not permitted to make contributions to Candidate Committees or to any committees that support or oppose the nomination or election of candidates. The committee must immediately return any contribution received from a Ballot Question Committee.
i) Anonymous contributions. Anonymous contributions are those for which it is impossible to determine the identity of the contributor. The committee must give the anonymous contribution to a tax-exempt charitable institution and obtain a receipt for the committee’s records, which must be retained for 5 years.
j) Contribution from person holding a casino interest. If the committee is notified by the Department of State that it has received a contribution from a person having a casino interest in one of the three Detroit casinos, the committee must refund the contribution within 30 business days after the notification.
k) Contribution from a foreign national. Federal election law prohibits foreign nationals from making contributions or expenditures (including independent expenditures) in connection with any U.S. elections. It is also unlawful for any person to solicit, accept or receive a contribution from a foreign national. The committee should contact the contributor if the contributor’s address is a foreign address to determine whether the contributor is an American citizen. If the contributor is not an American citizen, the contribution must be returned.
- Questionable Contributions
Questionable contributions are contributions which may or may not be acceptable, or for which further information is required. These contributions, and the required actions concerning them, are as follows:
a) Possible foreign national contributions. Federal Election law prohibits foreign nationals from making contributions or expenditures (including independent expenditures) in connection with any U.S. elections. It is also unlawful for any person to solicit, accept or receive a contribution from a foreign national. The committee should contact the contributor if the contributor’s address is a foreign address to determine whether the contributor is an American citizen. If the contributor is not an American citizen, the contribution must be returned.
b) Possible corporate contributions. These are contributions from any business or organization, including sole proprietorships, partnerships, limited liability companies, etc., for which the corporate status is not obvious from the face of the written instrument. Corporate status may be determined by contacting the contributor, or by using the Michigan Department of Consumer and Industry Services, “Business Entity Search” at: www.michigan.gov/cis or by calling (517) 241–6470. The records of the Corporation Division of the Bureau of Commercial Services are open to the public. The records include the organization documents for limited partnerships, limited liability companies and corporations.
If it is determined that the contributor is incorporated, the committee must return it immediately to the contributor. If returned within 30 business days, no violation is considered to have occurred.
- If the contribution is not from a corporation, the committee may treat it as an acceptable contribution. When recording and reporting the contribution, a notation should be made (“not corp.” in the second address field) that the committee has verified that the contributor is not a corporation.
- A contribution from a business that is a sole proprietorship must be combined with any contributions received from the individual who is the owner of that business for purposes of determining whether contribution limits have been exceeded. A contribution from a partnership or limited liability company, made in the name of the company rather than allocated to the individual partners or members, is not combined with the contributions of the partners or members for contribution limits purposes.
c) Possible contributions from other Candidate Committees. These are contributions where the committee is unable to determine from the face of the written instrument whether the contribution is for the purchase of a fund raiser ticket. The committee should contact the contributing committee to determine the purpose of the contribution. If the purpose is not for purchase of a fund raiser ticket, the committee must return the contribution.
d) Missing information. These are contributions where the information required for complete and accurate record keeping and reporting is not provided. Attempts should be made by mail, by telephone and any other legal means available to obtain the requisite information.
If the information cannot be obtained, the contribution should be returned. If no information as to the identity of the contributor can be obtained, the contribution should be treated as an anonymous contribution and given to a charity and a receipt secured.
e) Contributions from out-of-state contributors (other than individuals and committees registered under the Act). Such contributions must be accompanied by a statement, certified as true and correct by an officer of the contributing group or organization, listing the full name and address along with the amount contributed, of each person who contributed to the total amount of the contribution. The occupation, employer, and principal place of business must be listed for each individual who contributed more than $100.00 to the total amount of the contribution. The certified statement shall also state that the contribution was not made from an account containing funds prohibited by Section 54 (corporations, labor unions or domestic dependent sovereigns).
- The recipient committee must retain the certification statement in its records.
- The list of contributors must be included (as memo itemizations) in the Campaign Statement filed by the recipient committee covering the period of time during which the contribution was received.
- If the committee is unable to obtain the certified list of names, the contribution must be returned.
f) Contributions from persons other than individuals or registered committees, such as unincorporated businesses or social groups, etc. While these contributions are acceptable, their acceptance may place a responsibility on the contributors of which they may be unaware. The Campaign Finance Act requires a person, other than an individual, who makes a contribution totaling less than $500.00 to provide the name, address, date and amount of contribution for any individual who contributed to the total amount of the contribution. If the individual gave more than $100.00, the occupation, employer and principal place of business must also be provided. If the person, other than an individual, contributed $500.00 or more, the person must register as a committee (Political or Independent) and is then subject to the reporting requirements of the Act.
g) Ordinarily acceptable contributions that become unacceptable. Acceptable contributions (including those questionable contributions that were determined to be acceptable) should be compared with the committee’s contribution files. Single contributions, together with previous contributions from the same persons, may cause those contributors to exceed their election cycle contribution limit. Contributions made after the general election are always considered to be for the next election cycle, unless specifically designated by the contributor, in writing, to be for a previous election cycle.
Contributions may be designated for a previous election cycle only to the extent necessary to repay debts or obligations incurred for that cycle and to the extent that the contributor has not exceeded the contribution limit for the cycle to which designation is intended. If the committee has no debts or obligations for a cycle, it may not accept a contribution designated to that previous cycle.
The committee must return to the contributor contributions that cause contributors to exceed their contribution limits.
- Acceptable Contributions
In the processing of contributions, qualifying contributions are separated from non-qualifying contributions. The committee will select qualifying contributions to include on Public Funding Applications. Types of qualifying contributions are listed below:
a) A contribution of $100.00 or less given by written instrument by an individual who is a Michigan resident as defined in Michigan Election Law (Act No. 116 of the Public Acts of 1954, being sections 168.1 to 168.992 of the Michigan Compiled Laws) to a Gubernatorial Candidate Committee after April 1 of the year preceding a year in which a governor is to be elected (Year 1). The contributor may make an additional qualifying contribution of $100.00 or less during the year of the gubernatorial election (Year 2).
b) A contribution from the candidate or a member of the candidate’s immediate family may also be a qualifying contribution if it meets the criteria in “a.” above.
c) A cash contribution of $20.00 or less that has been “reduced to writing” and meets the other criteria in “a.” above.
Non-qualifying contributions are contributions that cannot be matched with public funds. Non-qualifying contributions include all of the following:
a) A subscription, loan, advance, and deposit of money, in-kind contribution of goods or services, in-kind expenditures.
b) A contribution from a person who is a legal resident of a state other than Michigan.
c) A contribution from a committee, business, organization, association or any type of contributor other than an individual Michigan resident.
d) Any contribution that is unacceptable as described or was initially questionable and later determined to be unacceptable.
e) Funds obtained from the resale of entertainment tickets at their face purchase price by a Gubernatorial Candidate Committee which purchased the tickets at their face purchase price do not constitute qualifying contributions and are therefore not matchable with public funds. (Judgment by Ingham County Circuit Court, February 24, 1987, Jacobs v. Austin)
f) Transfers from another Candidate Committee of the gubernatorial candidate are not qualifying contributions and therefore are not matchable with public funds. (MCL 169.245(1).)
g) Contributions from persons who have already contributed the maximum qualifying contribution for the calendar year. A contributor may have made the maximum qualifying contribution for year 1, but has not done so for year 2. The date on which the check or money order was issued or written determines the matchable year.
- Processing Contributions
- Non-qualifying contributions should be processed as follows:
Batch the contributions and prepare a deposit slip. A “batch” consists of a deposit slip and all contributions listed on the deposit slip. When preparing the deposit slip, follow the procedure below:
- Qualifying contributions should be processed as follows:
Batch the contributions, prepare a deposit slip and follow the procedure below:
Record the number of the Application and the sequence number assigned to each qualifying contribution that is submitted on a Public Funding Application. After the review and certification by the Bureau of Elections, record whether the contribution was matched with Public Funds, and on which Application the contribution was submitted. For each contribution that was not matched, record the ineligible reason code assigned to it by the Bureau and whether it was resubmitted after correction of an error or provision of additional documentation and subsequently matched.
Categories of In-Kind Contributions
- In-Kind Contributions Subject to Expenditure Limitation
All in-kind contributions are subject to contribution limits except assets transferred from the Primary Election to the General Election. In addition, the value of the in-kind contribution may be subject to the expenditure limitation or exempt from the expenditure limitation, depending upon the nature of the contribution. If the goods or services contributed are such that, if the committee had paid for them directly, the expenditure would have been subject to the expenditure limitation, then the value of the goods contributed as an in-kind contribution also is subject to the limitation. These would include, but are not limited to, such things as the purchase of advertising time, signs, supplies, materials, donations of food or entertainment for fund raisers, etc., by a contributor on behalf of the committee.
Assets may be purchased by the committee for the Primary Election and subsequently used in the General Election campaign. If the value of the assets is not reimbursed to a Primary Election account, the value of those assets would constitute an in-kind expenditure from the Primary Election to the General Election for purposes of the expenditure limitations. This transfer is reported on the In-Kind Expenditure Schedule for the Primary Election and on the In-kind Contribution Schedule for the General Election. The value is a credit to the expenditure limitation for the Primary Election and is subject to the expenditure limitation for the General Election.
- In-Kind Contributions Exempt Pursuant to Rule 39a
If the goods or services contributed were such that, had the committee purchased them directly, they would have been exempt from the expenditure limitations based upon the provisions of Promulgated Rule 39a, then the value of the contribution is also exempt. This would include the goods or services specifically listed in Rule 39a, if a contributor paid for these goods or services on behalf of the committee. Following is a summary of the types of in-kind contributions that would qualify for exemption pursuant to Rule 39a:
- Payment, by a contributor, of security expenses billed to the committee by the Michigan State Police.
- Payment, by a contributor, of expenses for, or donation of free services for, legal and accounting expenditures incurred by the committee solely to insure compliance with the Campaign Finance Act.
- Payment, by a contributor, of expenses incurred by the committee in response to a written complaint filed against the committee pursuant to the Campaign Finance Act or the promulgated Rules, or in response to a Notice of Error or Omission initiated by the Secretary of State.
- Payment, by a contributor, of post-election winding down costs subsequent to the Primary Election for a Candidate Committee not participating in the General Election and subsequent to the General Election for a Candidate Committee participating in the General Election, including expenditures for record storage or for communications with contributors or other persons who assisted in the campaign, thanking them for their assistance, if the communications occur no more than 60 days after the election.
- Payment, by a contributor, of late filing fees assessed against the committee under the Campaign Finance Act.
- In-Kind Contributions Exempt Miscellaneous
This category is for in-kind contributions such as an endorsement or guarantee of a loan from a financial institution. Although an endorsement or loan guarantee would be exempt from the expenditure limitation, it would be subject to the contribution limitation and must also be reported with the debt on the debt schedule.
“Other receipts” are receipts of money that are not contributions. Generally, they will fall into one of six categories:
- a receipt of public funds from the State Campaign Fund,
- a loan of money from a financial institution in the ordinary course of its business,
- a refund or rebate of a deposit or overpayment,
- proceeds from the sale of the committee’s assets,
- interest earned on committee funds, or
- an entry to correct an error.
Depending upon the nature of the receipt, the money will be deposited in either the committee’s public funds account or private funds account for a particular election. Funds received from the State Campaign Fund must be deposited in the public funds account for the election for which the money is received. All loans must be deposited into the private funds account. Refunds, rebates, and proceeds from the sale of assets must be returned to the account from which the deposit, overpayment or purchase of assets was originally made.
Also, depending upon the nature of the receipt, the money received may be a credit to the committee’s expenditure limitations. This would be the case when there is a rebate or refund of an overpayment or a deposit (e.g., a security deposit on office space). If the original expenditure was subject to the expenditure limitations, the returned portion is a credit to the expenditure limitations. The same would be true when the receipt is from the sale of assets and the original purchase of the assets was subject to the expenditure limitation.
Monies received from the State Campaign Fund or from a loan to the committee have no effect upon the committee’s expenditure limitations until spent. Any receipt that is a refund, rebate, or proceeds from the sale of assets where the original expenditure was from public funds is a credit to the expenditure limitation.
An “other receipt” may have an impact on other committee records. If the receipt is a loan, it must also be reported as an outstanding debt. If the receipt is a refund or rebate which had previously been recorded as a debt or obligation owed to the committee, the receipt would reduce the debt.
Prohibited Expenditures from Public Funds (MCL 169.266(1).) Public funds may only be used for “qualified campaign expenditures.” These are expenditures “for services, materials, facilities or other things of value by the Candidate Committee to further the candidate’s nomination or election to office during the year in which the primary or general election is held.”
Public funds cannot be used for any of the following:
The candidate’s qualified expenditures may be paid from the committee’s Public Funds Account unless the account does not have a balance. Payment received from the State Campaign Fund for expenditures in one election shall not be used for expenditures in a subsequent election.
Expenditures Subject to $2 Million Expenditure Limitation (MCL 169.267(1).) A Committee that receives public funds may not make expenditures that exceed $2 million per election. “Per election” expenditures are all expenditures made on or before the date of the election and which are not applicable to a future or past election.
Post-election expenditures will be considered to be for the next election, except to the extent they are:
- For repayment of previously incurred debts or obligations,
- For “winding down” cost (i.e., those expenses such as staff salaries and office space necessary for maintaining the committee while it terminates its activities), or
- For expenditures made within 60 days after the election for the purpose of acknowledging the efforts of the committee’s staff.
Expenditures which are subject to the limitation include all of the following:
- All payments made by the committee of public or private funds. These include “election night” expenses and wage and withholding for staff, except those paid from private funds that qualify as exempt under Rule 39a. Also included are bank service charges. Extra charges that may be assessed for a canceled check option are exempt from the $2 million expenditure limitation.
- The fair market value of all in-kind contributions received by the committee.
- The fair market value of any in-kind expenditure made on behalf of a Ballot Question Committee.
- The total amount of debts or obligations owed by the committee other than a loan of money. Interest paid on a loan, however is subject to the expenditure limitation. The original amount of debt in which a settlement has been negotiated (with written approval from the Bureau of Elections) is the amount that is subject to the expenditure limitation.
- All expenditures made by the lieutenant governor committee for the general election.
The following transactions may result in a credit to the expenditure limitation:
- Receipt of refunds of deposits or rebates of overpayments where the original expenditure was subject to limitation. When such refunds or rebates are received they must be deposited into the account from which the original expenditure was made.
- Certain in-kind expenditures. These include the fair market value of assets purchased for one election and used for a later election, unless the account from which the purchase was made is reimbursed. These also include the fair market value of assets donated to a Political Party Committee, Ballot Question Committee, a tax-exempt charitable organization or returned to contributors upon termination of the committee.
- Exempt Expenditures – Private Funds
The following expenditures may qualify for one of the following exempt categories if made from private funds.
These include the following:
- Record storage required by Section 22 of the Act.
- Communications with contributors or other persons who assisted in the campaign, thanking them for their assistance, if these communications occur not more than 60 days after the election
- Late filing fee as assessed under the Act.
Exempt Miscellaneous. Certain expenditures may be exempt due to reasons other than the provisions of Rule 39a, such as to correct errors or for accounting transfers. These expenditures include the following:
a) Expenditures made from private funds for responding to an unfavorable media editorial. However, this exception applies only to one response for each editorial, and then only if free response time or space has been denied. (MCL 169.267(3).)
b) Expenditures made from private funds for repayment of a loan of money from a financial institution in its ordinary course of business. The committee must document that expenditures of the loan proceeds were subject to the $2 million limitation. Payment of interest on such a loan is subject to the $2 million limitation.
c) Expenditures made from private funds for return of prohibited contributions, such as excess contributions and contributions from a corporation, joint stock company, labor organization or domestic dependent sovereign.
d) For purposes of dissolving the committee, an expenditure from private funds to a Political Party Committee, Ballot Question Committee, Independent Committee, tax exempt charitable institution or to a contributor to the committee.
e) An expenditure that is an accounting transfer of funds from the primary election private funds account to the general election private funds account after the primary election.
f) An in-kind contribution which is a guarantee, co-signing or endorsement of a loan of money from a financial institution. (Note that all other in-kind contributions are subject to the expenditure limitation.)
g) An expenditure that is a transfer of funds between the committee’s private funds accounts due to an expenditure inadvertently made from the wrong account. This type of transfer must have the prior written approval of the Bureau of Elections.
h) An expenditure for photocopies of written instruments and other documentation necessary for processing of a Public Funds Application.
i) An expenditure for additional costs incurred for electronically filing Campaign Statements or Public Funding Applications.
- Exempt Expenditures – Public Funds
The following expenditures may qualify for one of the following exempt categories if made from public funds.
a) An expenditure which is a transfer of funds between the committee’s private and public funds accounts due to an expenditure inadvertently made from the wrong account. This type of transfer must have the prior written approval of the Bureau of Elections unless used for start up funds.
b) Any return of unexpended public funds to the State Campaign Fund.
c) Expenditures made from public funds for repayment of a bank loan if the committee provides documentation that:
Debt Limitation (MCL 169.268.) The committee, or any person, may not incur a debt for goods, service, facilities or anything of value which, when paid would cause the committee to exceed the expenditure limitations.
Because of the separate $2 million expenditure limitation for each election (primary vs. general), the committee must be careful to strictly identify expenditures as being for either the Primary Election or for the General Election and not to intermingle expenditures for one election with those for the other election. In addition, the committee must strictly separate public funds from private funds, as there are certain types of expenditures for which public funds may not be used. The committee’s record keeping system must be capable of providing the following information regarding expenditures:
- The name and address of each person to whom an expenditure was made, the date, amount and purpose of the expenditure.
- Detail information regarding expenditures that are subject to the $2 million expenditure limitation and the total of such expenditures.
- Detail information regarding expenditures that are exempt from limitation due to the provisions of Rule 39 or the miscellaneous exempt provisions and the total of such expenditures.
- Detail information regarding expenditures that were made with public funds and those that were made with private funds.
The committee must also keep track of funds that are transferred out of an account but are not reportable as such. A transfer between public and private funds accounts are reportable and may only occur with written approval from the Bureau of Elections to correct errors. Such transfers do not affect the committee’s overall cash balance, but do affect the balance of the individual accounts. Note: transfers from private to public accounts for start-up funds (minimum amount required to open bank account) do not require written approval, however, funds must immediately be transferred back to the private funds account once public funds have been received.
Private funds may be transferred to a petty cash fund or to interest bearing accounts (savings or certificates of deposit). Neither type affects the overall cash balance. Public funds may not be used to establish a petty cash fund. If the committee transfers public funds to an interest bearing account, any interest earned on public funds accrues to the State and cannot be spent by the committee.
The Act requires that the committee keep “all accounts, records, bill, and receipts” necessary to substantiate what is reported on Campaign Statements for 5 years after the statement was filed. The committee must obtain invoices, receipts or sales slips from each of its vendors. These should show the name and address of the business or person paid, the date and amount and a brief description of what was purchased.
The Secretary of State recommends that Gubernatorial Candidate Committees request a canceled check return system for its checking account. Please consult with your financial institution to determine what kind of canceled check return system, such as “substitute checks,” should be used by the committee. Any additional cost assessed by the bank for this feature may be classified as “Exempt Miscellaneous” and must be paid with private funds. A canceled check system will facilitate balancing of accounts and the subsequent audit of committee records by Department of State auditors.
All required information should be obtained at the same time or before the check is written for the expenditure. The category for an expenditure, the number of the check and from which account the check is being written (public funds or private funds) should be noted on the invoice, receipt or sales slip. It is possible that when multiple purchases are made from a single vendor some purchases may be subject to limitation, while others may be exempt from limitation. The committee treasurer should determine what portion of each payment is allocated to a given category and record such allocation in the committee’s records and on the invoice.
One instance where an expenditure will almost always encompass two categories is when a loan payment is made. The principal portion of the loan repayment is exempt from the expenditure limitation (exempt miscellaneous); whereas, the interest incurred is subject to the expenditure limitation. Therefore, the terms of the loan contract will determine, what portion of each payment is applied against principal as well as interest.
The committee is required to report expenditures made to independent contractors and additional detail information regarding expenditures made by the contractor on behalf of the committee. The committee is required to report the name and address of the contractor, the date, amount and purpose of the committee’s expenditure to the contractor. In addition, the committee must report the name, address, date, amount and purpose of any expenditures of $50.00 or more the contractor makes to any other person on behalf of the committee unless the contractor files a separate report of expenditures made on behalf of the committee. The information must be provided to the committee in time to be included in the same Campaign Statement in which the committee reports its expenditure to the contractor. An example of an expenditure to a Independent Contractor is when the committee pays an advertising agency for media advertising and the advertising agency pays radio and television stations on behalf of the committee. The committee reports the name, address, date, amount and purpose of the expenditure made to the agency and the names, addresses, dates, amounts and purpose of the expenditures made by the agency to the radio and television stations.
A Gubernatorial Candidate Committee’s payroll records are complicated by several factors. First, a Gubernatorial Candidate Committee may not use public funds to pay a wage or salary to an individual in excess of $5,000.00 per month. This does not mean that an individual may not be paid more than $5,000.00 per month; only that the portion of the wage that is paid with public funds may not exceed $5,000.00. However, “wage or salary” means gross pay, or the amount of pay before deductions (FICA, income tax, etc.) are subtracted. Therefore, merely keeping track of the amount of the check actually issued to an employee does not show whether the employee was paid in excess of $5,000.00 per month with public funds.
Secondly, payroll expenditures may be subject to expenditure limitation or exempt from limitation, depending upon the activities of the particular employee.
Finally, payments of withholdings are usually made as lump sums that represent the withholdings for several employees for one or more pay periods. If the committee has paid staff members, it should consult with the Internal Revenue Service, the Michigan Department of Treasury, and, where applicable, various city treasurers regarding withholding requirements. It should be emphasized that any payment of wages, salaries, or withholdings with public funds is subject to the expenditure limitation, regardless of the activities for which the payment was made.
The committee must determine early in the campaign what will constitute a pay period. Because the Act speaks of a “per month” limitation on payments of wages or salaries from public funds, it is best for the committee to establish monthly or semi-monthly pay periods (as opposed to weekly or biweekly). If weekly or biweekly pay periods are used, a month is considered to be equal to 4.33 weeks for purposes of determining individual per month wages or salaries. If an established pay period covered by individual payroll expenditures is not apparent, the Bureau, for compliance purposes, will consider all payments made to or on behalf of a particular individual within a calendar month to be for that month.
If the committee intends to pay any person in excess of $5,000.00 per month, and part of the payments will be from public funds, the committee must decide how the payments will be apportioned between public and private funds. There are a number of ways in which this may be done. For example, the net (take home) part might be paid from public funds and the withholdings paid from private funds, or vice versa, or simply to pay all wages from private funds. Whatever decision is made should be adhered to consistently in order to avoid confusion.
Under the Act, a committee may make cash expenditures of $50.00 or less. Often a committee will choose to establish one or more (if the committee has more than one office location) petty cash funds from which to make cash expenditures of $50.00 or less.
Expenditures of cash are subject to the same record keeping requirements as other expenditures; i.e., recording of names, addresses, dates, amounts, and purpose of expenditures. However, the committee is only required to report on a Campaign Statement an expenditure to establish the petty cash fund, and expenditures to replenish the fund. The committee may, but is not required to report the detailed information for the separate expenditures of cash out of the petty cash fund. The detailed petty cash information will be reviewed during the audit of the committee’s records. The cash expenditures will all fall into the “subject to limitation” category, because all “exempt” expenditures must be itemized and no public funds may be used for petty cash expenditures.
The person responsible for the petty cash fund must be made aware of the $50.00 limit on disbursements from the fund and of the record keeping requirements for all disbursements from the fund. A request for an amount greater than $50.00 should be referred to the committee treasurer so that a check may be issued.
TRANSFERS BETWEEN ACCOUNTS
The first type of transfer might occur when a deposit is erroneously made to, or an expenditure is erroneously made from, the wrong account. A correcting transfer may be made between the accounts, but only with the prior written approval of the Bureau of Elections. To obtain this approval, the committee must provide in writing the details of the erroneous transaction, including the dates and amounts involved. In addition, if the transaction was an expenditure, the committee must certify that the balance of the account from which the expenditure should have been made was sufficient at the time to cover the expenditure. Approval for a transfer will not be granted unless the committee can document that it was an erroneous transaction.
Note: a one time transfer from the private to public funds account for start-up funds (minimum amount required to open bank account) does not require written approval, however, funds must immediately be transferred back to the private funds account once public funds have been received.
For record keeping and reporting purposes, such a transfer should be categorized as an “exempt miscellaneous” expenditure from the account from which the transfer is made. For the recipient account, the transfer should be reported as an “itemized other receipt”.
The second type of transfer affects only those committees that participate in both the Primary and General Elections. Because public funds received for one election may not be used for a subsequent election, the committee must reimburse the Primary Election public funds account for the value of any on-hand assets purchased by the committee for the Primary Election with public funds and subsequently intended for use in the General Election. In effect, these assets must be “purchased” from the Primary Election public funds account. The committee may use either General Election public funds or General Election private funds to make the purchase. The purchase should be reported as an expenditure subject to limitation for the General Election and as an itemized “other receipt” that is a credit to the expenditure limitation for the Primary Election.
If the transferred asset was originally purchased with private funds, the allocation to the General Election is handled differently. Since there is only one private funds account, the transfer will be an in-kind transfer, merely transferring the assets as an in-kind expenditure from the Primary Election and an in-kind contribution to the General Election.
Because of the necessity of segregating expenditures by election, private funds received for one election and intended to be used to make expenditures for another election must be “transferred” between “accounts, although there is only one actual private funds bank account. This is an accounting transfer only. There can be no actual physical movement of private funds from the Primary Election bank account to a private funds bank account for the General Election. The accounting transfer is reported as an “exempt miscellaneous expenditure” on the Primary Election Campaign Statement and as an “itemized other receipts” on the General Election Campaign Statement.
The transfer transaction should occur after the Primary Election and should be reported on the Post-Primary Campaign Statement. The committee should transfer the entire ending balance of the private funds account unless there are outstanding debts for the primary that must still be paid, in which case a sufficient amount could be left to cover the amount of the debts. The transfer transaction will result in a zero ending balance in the private funds column of the Summary Page for the Primary Election, and a balance in the private funds column of the Summary Page for the General Election that includes the transferred amount.
In-kind expenditures consist of goods or services given by the committee to another person. The nature of in-kind expenditures is the same as that of in-kind contributions, except that the contribution is being made by the committee, rather than to the committee. In-kind expenditures will fall into one of two categories:
- Subject to the expenditure limitation
The only permissible in-kind expenditure that is subject to the expenditure limitation is an in-kind expenditure of goods or services to a Ballot Question Committee. Note that in-kind expenditures made to or on behalf of a Ballot Question Committee cannot be made with goods or services originally purchased with public funds.
- Credit to the expenditure limitation.
In-kind expenditures that are a credit to the expenditure limitation are limited to post-election disposition of the committee’s assets. This would be the case where assets were originally purchased for use in the Primary Election and were subsequently used in the General Election, and the value of the assets was not reimbursed to the Primary Election private funds account. With the transfer of the assets to the General Election, depreciated value of the assets is treated as an in-kind expenditure that is a credit to the Primary Election expenditure limitation. The depreciated value of the assets would also be an in-kind contribution subject to the General Election expenditure limitation. The other type of in-kind expenditure that would be a credit to the expenditure limitation would occur when the committee dissolves and donates its assets to a Political Party Committee, a Ballot Question Committee, an Independent Committee or a tax exempt charitable institution. This applies only to the donation of assets, and not to a sale of such assets. If the assets are sold, all proceeds from the sale are reported as “Itemized Other Receipts” that are credits to the expenditure limitation (if the original purchase was subject to the limitation). If the original purchase was exempt, the proceeds are not a credit to the limitation and would therefore be categorized as “other.”
THE IMPACT OF EXPENDITURES ON OTHER RECORDS
Certain types of expenditures will affect other records. Listed below are several types of expenditures and the records they will affect in addition to the expenditure records:
- Payment of a deposit. Affects debts owed to the committee.
- Repayment of a loan from a financial institution. Affects debt owed by the committee.
- Repayment of a loan from a person other than a financial institution. Affects debt owed by the committee and the person’s cumulative contributions for the election cycle.
- Return of a contribution. If the contribution has been deposited, return of the contribution will affect the contributor’s cumulative contributions for the election cycle. If the contribution has been submitted on a Public Funding Application and matched with public funds, the committee must refund the public funds received.
- Fund raiser expenditures. Affect both the expenditure schedule and the fund raiser schedule.
Expenditure limit exception (MCL 169.269(8)) A gubernatorial Candidate Committee that does not make application for public funds and accepts from the candidate and the candidate’s immediate family more than $340,000.00 during an election cycle must notify the Bureau of Elections within 48 hours after receipt of this amount. Within two business days after receiving notice, the Secretary of State must notify all other candidates who are either seeking the same nominations, in the case of the primary election, or election to the same office, in the case of the general election, informing those candidates that the expenditure limits for gubernatorial candidates who are receiving public funds are waived for the remainder of that election. The waiver has no effect on the determination of the amount of public funds for which a candidate qualifies under Sections 64 and 65.
INVENTORY OF ASSETS
The committee must maintain a record of all assets purchased. The record should indicate the purchase price and whether the purchases were made with public or private funds. The account from which the purchase was made becomes important when the committee sells any of its assets, as the proceeds from the sale must be deposited into the account from which the original purchase was made. Both the original price and the account are important factors for a committee participating in both the Primary and General Elections, as the value of the assets must be credited to the Primary Election expenditure limitation and applied to the General Election expenditure limitation. Also, if the assets were originally purchased with Primary Election public funds, that account must be reimbursed for the fair market value of the assets.
When the committee participates in both elections, the value of the assets at the time of the transfer or reimbursement must be determined. For this reason, a suggested Inventory Form is shown.
The Inventory Form was designed primarily to keep track of permanent assets (furniture, office equipment, etc). When an item is purchased, the committee records the date of purchase, a brief description of the item, and the amount of either public or private funds. Consumable supplies, such as paper, computer ink cartridges, etc., do not need to be recorded in this manner.
- The committee should use the Inventory form on two occasions. First, if the committee sells any of its permanent assets, the proceeds from the sale must be deposited into the account from which the original purchase was made. The committee will be able to determine the proper account for the deposit if the form has been properly maintained.
- Secondly, the committee should use the Inventory Form when assets are used in both the Primary and General Elections. The value of all such assets must be applied against the General Election expenditure limitation and credited to the Primary Election expenditure limitation. If originally purchased with Primary Election public funds, the committee must reimburse that account for the asset’s value.
The Inventory Form provides for three types of assets that may be allocated from the Primary Election to the General Election: 1) permanent assets, 2) consumable supplies, and 3) film and tape production cost.
The committee should depreciate the original value of permanent assets at the time of the allocation to the General Election. Use the rate specified in the chart found in Appendix D of this Manual to calculate the percentage of depreciation from the date of purchase to the date of allocation, with a fraction rounded down. Record the total percentage of depreciation in the indicated column on the Inventory Form. Indicate the depreciated value (original purchase price minus depreciation amount) in the appropriate column of the form, based upon which funds were used for the original purchase.
The Bureau of Elections recommends that the committee make a decision early in the campaign to make all purchases of consumable supplies from only one account. Then it will only be necessary to take an inventory of on-hand supplies at the time of the allocation, assign a reasonable value, and record this amount in the appropriate column of the form.
After the depreciated value of permanent assets and consumable supplies has been determined, the “current value” columns can be totaled. These totals are then transferred to the respective “Assets” lines in the “Transferred to General Election” section of the form.
Because of the requirements to strictly separate primary and general election expenditures due to per-election expenditure limitations, it is necessary to allocate film and tape production costs between the two elections. These are costs of production of radio and television tapes and film, shot or taped originally for the Primary Election campaign and of which some portion is to be used in the General Election campaign. The costs include those associated with the actual production of the film or tape; e.g., shooting, taping, developing, charges for editing or for purchase of air time are not included, but are expensed during the period in which they occur.
The committee must calculate the total production costs for the Primary (private and public); how many units (feet or seconds) of film or tape were used in the Primary Election; how many were used during the General Election (units produced but not used for the Primary); and finally, how many units were used in both elections.
After the above information has been obtained, the committee must calculate the cost-per-unit. This is achieved by dividing the total Primary production cost by the number of units actually used. This is the total of the units used during the Primary plus the units produced during the Primary and used only during the General campaign. The cost of film or tape that was used in both elections may be equally divided between the elections, but the full production costs of film or tape that was used only for the General Election campaign, although produced during the Primary, must be allocated to the General election.
If the committee used both Primary public funds and Primary private funds to pay for the production costs, it must make one further determination. Of the total amount allocated to the General Election campaign, the committee must determine which portion was originally paid for with public funds (which must be reimbursed to the Primary public funds account) and which portion was originally paid for with private funds (which must be treated as an in-kind expenditure for the Primary Election and an in-kind contribution for the General Election.) The formulas for determining this allocation are found in Appendix C of this manual.
After recording the transferable film and tape production costs to the inventory form, the committee adds the total to the transferable value of the other assets.
DEBTS AND OBLIGATIONS OWED TO THE COMMITTEE
When a debt is owed to the committee, it is usually the result of a previous expenditure made by the committee. When the debt is repaid, it will be an “itemized other receipt” for the committee and may also be a credit to the expenditure limitation.
- Debts and Obligations Owed to the Public Funds Account
Included in debts or obligations to the public funds account are deposits, such as a security deposit paid for use of an office or other facility, or for a utility, originally paid from the public funds account. Also included are known overpayments made from public funds for which a refund has not yet been received.
A third type of debt owed to the public funds account is money owed to the committee from the sale of committee assets that were originally purchased with public funds.
The committee should not include monies applied for but not yet received from the State Campaign Fund, as these are not debts owed to the committee.
- Debts and Obligations Owed to the Private Funds Account
Debts owed to the private funds account, are treated the same as those owed to the public funds account. Payment of a debt or obligation to the private funds account will be a credit to either the expenditure limitation or the exempt 39a category, depending upon the purpose of the original expenditure. For example, if the original expenditure was a deposit for a facility for a fund raising event that was subject to the expenditure limitation, the refund of the deposit would be a credit to the expenditure limitation.
DEBTS AND OBLIGATIONS OWED BY THE COMMITTEE
Debts or obligations owed by the committee may be subject to the expenditure limitation or exempt from limitation. If an expenditure of money would fall into a particular category, then a debt incurred for the same purpose would fall into the same category.
A debt or obligation that resulted from a loan to the committee was either a contribution from a person or a loan from a financial institution. A loan from a person is also considered to be a contribution and is subject to contribution limits. When the committee repays a loan from a person, the repayment results in a reduction of that person’s cumulative contributions. If a debt owed by the committee is forgiven or is repaid by someone other than the committee, the repayment or forgiveness becomes an in-kind contribution (also subject to the contribution limits) from the person repaying it or forgiving the debt. A debt owed by the committee to a corporation, labor organization, Indian tribe or a person holding more than a 1% interest in one of the Detroit casinos could not be forgiven because the forgiveness would then constitute a prohibited in-kind contribution. Also note that none of these entities is permitted to pay off a debt for a Candidate Committee.
Accrued wages and unpaid withholdings for FICA, FUTA, income taxes, etc., are also debts owed by the committee and must be reported by the committee on the Debts and Obligations Schedule. The category for the debt is determined by the duties of the committee employee. For example, the withholding for a person whose duties are strictly the preparation of campaign statements and public funding applications may be exempt under Rule 39a, as is the expenditure to pay that person’s wages.
The committee may repay debts or obligations that are subject to limitation with either public or private funds, or a combination of both. However, if the committee wants to categorize an expenditure as exempt from expenditure limitation, it must be made with private funds only. The only debt that can be repaid with public funds is a bank loan for which the committee has received special written permission from the Bureau of Elections. (See Exempt Miscellaneous.)