This is an explanation of some of the terms and concepts that you will run into when you look at campaign finance reform legislation. We have included a discussion of some of the constitutional constraints that apply to specific items. For those of you who are, like us, in California, we have provided brief descriptions of current California campaign finance law.

Contribution Limits

These are limits on the amount of money or services that can be given to a candidate for use in his or her campaign. Normally, specific monetary limits are placed on what can be given by members of particular categories of contributors. These categories include individual citizens, political action committees, corporations, labor unions, and political parties.

Contribution limits are usually set on a "per election" basis. This means that a contributor can give a certain amount during the primary election, and give that same amount again during the general election.

Contribution limits can be set on both an "individual" and an "aggregate" basis:

Individual Contribution Limits put a limit on what any individual or single entity can give to an individual candidate. For example, for Federal elections, an individual can give up to $1000 to any particular candidate. A single political action committee (PAC) can give up to $5000 to any particular candidate.

Aggregate Contribution Limits place a limit the total amount that can be received by a candidate from a particular category of contributors. For example, under Arizona law, a candidate for Governor can receive only a total of $64,000 from all PACs.

Aggregate limits can also be placed on contributors, so that an individual or single entity can give only a certain total amount to all candidates. For example, under Arizona law, an individual can give only a total of $25,000 to all legislative and statewide candidates.

Constitutional Constraints: In general, the courts have ruled that contributions may be limited to the extent necessary to eliminate corruption or the appearance of corruption in giving money to a candidate. Contribution limits that go beyond this are seen as an infringement of the free speech rights of the contributor. Exactly what constitutes the proper contribution limit for any given political race is subject to the interpretation of the courts.

Under current California law, there are no contribution limits for most political races. The only exception to this is for special elections to fill vacancies. California has no aggregate contribution limits.

Candidate to Candidate Transfers

Transfer as used here means the transfer of funds from one person's political campaign to another person's political campaign. For example, California's Speaker of the Assembly, Willie Brown (aka The Transfer Machine), raises much more money than he can use in his own campaign (about $5 million in the 1992 election cycle). He then distributes (or transfers) these funds to members of his party who he wishes to support. Transfers are a common practice among leaders of both parties.

People see two main problems with transfers. First, it makes the recipient of the transfer beholden to the giver of the transfer. Thus party leaders are more able to control individual legislators. Second, it obscures the true source of many campaign donations. A candidate can claim that he or she did not receive contributions from industry X, when in reality industry X provided the candidate funds through a transfer from another candidate. (See The Transfer Game from the San Jose Mercury News)

California currently has no limits or restrictions on candidate to candidate transfers.

Off-Year Fundraising

During an election cycle, fundraising activity falls into two phases. The first phase starts as soon as an elected official takes office and continues until 4-6 months prior to the primary election. This phase is known as non-election year fundraising or off-year fundraising. The second phase starts 4-6 months before the primary election and continues through the general election. This is election year fundraising.

This distinction is made between election year fundraising and off-year fundraising because there are important differences between the two. First, most challengers do not participate in off-year fundraising. Over 95% of the off-year money raised goes to incumbents. Second, small individual contributors do not participate in off-year fundraising. Off-year contributors are most commonly PACs, lobbyists, and those that hire lobbyists. Third, off-year fundraising occurs at a time when elected officials are making and voting on laws, not when they are out campaigning. Thus an elected official can be soliciting funds from an interest group at the same time he or she is voting on legislation that affects that group. Some feel that there is an inherent conflict of interest in this arrangement. (See Fund Raisers Open Door to Access)

Some states place limits on when contributions can be received by a candidate. Commonly, contributions are not allowed prior to six months before the primary election. This usually serves to eliminate fundraising during the off-year legislative session.

California currently has no limits on when contributions can be received.

Bundling

Bundling is the practice of taking a large number of individual contributions and "bundling" them into a single large contribution which is then given to a candidate. This practice is normally used to evade contribution limits. For example, the president of the XYZ Company can ask each of his employees to write a personal check to a certain candidate. He then takes those checks and gives them as a bundle to the candidate. In practice, employees are often reimbursed indirectly for their contributions, thus laundering corporate money through individual employees.

Spending Limits

Spending limits set a monetary limit on the total amount that a candidate can spend on his or her campaign during a political race. Those who favor spending limits see them as a way to end the "perpetual fundraising" aspect of the current political system. (See Shakedown from Mother Jones Magazine) In other words, if candidates' spending is limited to a certain amount, they can stop fundraising once they have received that amount. It is hoped that this would decrease the current emphasis on fundraising and give elected officials more time to do their jobs.

Importantly, the US. Supreme Court has ruled that mandatory spending limits are unconstitutional (see Constitutional Constraints below). Thus, spending limits can only be imposed if they are voluntary. This means that some incentive must be provided for candidates who agree to spending limits. This incentive can take several forms.

• Most commonly, candidates who agree to accept spending limits are provided with some public resources with which to run their campaigns. This can be in the form of matching funds or vouchers with which to purchase media ad time (see Public Financing below).
• Another incentive is "variable contribution limits" in which the individual contribution limits are raised for those candidates who agree to spending limits. For example, in Rhode Island, candidates for Governor normally can accept up to $1000 from individuals. This limit is raised to $2000 if the candidate accepts spending limits.
• A third incentive which is often added to one of the above is the disclosure of who accepts spending limits. Under the belief that the public will tend to support candidates who accept spending limits, candidates are allowed to highlight their acceptance of spending limits in their campaign advertising and literature.
• Finally, in at least one state, individual contributions given to candidates who accept spending limits are tax deductible, while those given to candidates who do not accept spending limits are not. This gives the public an additional financial incentive to monetarily support those candidates who agree to spending limits.

Constitutional Constraints: Because spending money to support a political candidate is considered a form of free speech, the courts have ruled that you cannot place a mandatory limit on campaign spending. Spending limits must be voluntary. In addition, the courts have said that the inducements to accept spending limits must be fair and reasonable. The advantage that the candidate gains by accepting the incentives must roughly balance what the candidate loses by agreeing to limit his or her spending. In other words, the incentives cannot be structured in a way that coerces candidates into agreeing to spending limits. As always, the exact definition of what constitutes coercion is subject to the judgment of the courts.

California currently has no spending limits in any statewide or legislative race. Some cities have implemented voluntary spending limits for local elections.

Independent Expenditures

Independent expenditures are expenditures made in support of or in opposition to a candidate that are made by a group that is not associated with any candidate or candidate's committee. For example, if the Gismo Makers Union strongly supports a candidate, they can produce and air their own advertisements in support of that candidate. The famous Willie Horton ad was the work of an independent expenditure committee.

Constitutional Constraints: Independent expenditures are very difficult to regulate. As stated above, spending money to support a political candidate is considered a form of free speech. Because independent expenditures do not involve giving money to a candidate, the courts have found that they do not represent a corrupting influence. Therefore, placing limits on independent expenditures has been found unconstitutional in most cases.

Public Financing

Public financing is the use of money obtained from the general public to finance all or part of a political campaign. Because this money is given by the public on a strictly nonpartisan basis, it is seen as being free of any corrupting influence. (See Public Financing (The Cheaper Solution) from Mother Jones Magazine)

In general, public financing falls into two broad categories:

• The first category is "public funding of candidates." This involves giving public money directly to the candidates who in most cases can use it in any manner they choose. The most common example of this is providing matching funds to candidates that agree to spending limits (as occurs in Presidential elections). Under this system, candidates are given a certain amount of money for every dollar they raise on their own. Certain thresholds and restrictions usually apply.
• The second category is "public funding of voter information." This involves publicly financing the distribution of information about the candidates by an independent body. An example of this is the California Voter Information Pamphlet, in which candidate statements are mailed to registered voters by the Secretary of State. Publicly financed debates are another example of this.

California currently provides no public funding of candidates. In fact, this form off public financing was outlawed in a provision of Proposition 73 which still stands. California does at times provide public funding of voter information through the Ballot Information Pamphlet.

Soft Money

In federal and most state elections, there are limits on the amount of money that can be given to a candidate. There is also a limit o the amount of money that can be given to political parties at the national level. In many states, however, there is no limit on the amount of money that can be given to the state political party. In theory, this money is to be used for general party activities such as voter registration and "get out the vote" campaigns. In practice, contributions to state parties are often funneled into advertising and support for specific candidates at both the state and national level. (See Soft Money: Clinton is King) This party money used for specific candidates is known as soft money.

Soft money is viewed as a problem because it allows individuals, PACs, and corporations to donate sums that vastly exceed contribution limits, often by hundreds of thousands of dollars. As with transfers, it is a form of money laundering that obscures the true source of donations to specific candidates.

Disclosure

Many campaign finance laws contain disclosure provisions. These are requirements that candidates disclose the sources of their contributions. Typically, candidates must disclose the name and occupation of the giver for any contributions above a certain amount. Total contributions received are also reported as is how the contributions are spent. This information is generally available to the public, though actually obtaining it can be difficult, time consuming, and expensive.

Disclosure can also involve the requirement that certain information be included in candidate advertising. Typically, the sponsor of an ad must be clearly identified, though this does not always identify the true source of the funding. For example, the "Committee for Good Government" could in reality represent anyone from a citizens group to the tobacco industry.

Severability

Severability is a provision often written into campaign finance reform bills that make multiple separate changes in the law. It means that if one specific item in the bill is found to be unconstitutional, the remaining parts of the bill are not affected and will become law. Conversely, if two parts of a bill are not severable and one of them is declared unconstitutional, they would both be invalidated.