In summary
The audit by the state’s Fair Political Practices Commission followed CalMatters’ revelations that a law requiring trip organizers to annually disclose their major donors had been used only twice in seven years — even as interest groups continued paying millions for lawmakers’ travel.
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A law meant to let the public know who is paying for California legislators’ sponsored travel is falling short, according to a new audit by the state’s campaign finance watchdog agency.
It recommends simplifying disclosure requirements to cover more interest groups that take lawmakers to policy conferences and on international study tours — a change that can only be made by those very same legislators.
The Fair Political Practices Commission audit followed CalMatters’ revelations that a 2015 law requiring such trip organizers to annually disclose their major donors had been used only twice in seven years — despite interest groups paying for millions of dollars in travel for lawmakers during that time.
Investigators reviewed the top-spending trip organizers, most of which had never filed a disclosure form, and concluded they followed the rules — but that the reporting threshold is too high.
“It can create gaps in reporting, as some organizations with significant donor activity may not meet the threshold and remain exempt from disclosure,” the commission’s audit division wrote in its findings.
Elected officials in California are allowed to accept unlimited free travel from a nonprofit organization, as long as the trip is related to policy issues, or they are giving a speech or participating on a panel. Officials must report the travel as a gift on their annual statements of economic interest filed with the Fair Political Practices Commission, but the nonprofits — often funded by corporations, unions and industry associations that lobby the Legislature and the state — are not obligated to reveal how much money they receive and from whom.
These trips have long generated criticism from opponents who believe they amount to unofficial lobbying, allowing interest groups to buy privileged access to lawmakers and regulators away from public scrutiny.
So in 2015, the Legislature approved a new law requiring “a nonprofit organization that regularly organizes and hosts travel for elected officials” to annually report any donors who gave more than $1,000 and also accompanied elected officials on any portion of a trip — provided that the nonprofit hits certain spending criteria.
Groups frequently fulfill the first threshold; their travel gifts to elected officials often total more than $10,000, or at least $5,000 to a single official, in a year. But almost none fulfill the second threshold, which mandates disclosure only if spending for travel, study tours, conferences, conventions and meetings related to elected officials account for at least one-third of the nonprofit’s total expenses, as reflected in its federal tax filings.
The audit recommends switching to a system in which trip organizers file the disclosure form if they exceed a flat amount of travel payments in a given year. One commissioner endorsed the proposal at their meeting Thursday, where the findings were presented.
“I do think it would be great to just make this a lot cleaner,” said Commissioner Catharine Baker, who voted for the law when she served in the Assembly in 2015. She also warned regulators to consider what other loopholes might get created: “Water goes where it can creep through, even with the well-intentioned folks.”
Ultimately, however, any changes to the law would need the Legislature’s approval — in effect, asking the beneficiaries of sponsored travel to once again sign off on more transparency. A bill introduced last year to tighten the reporting requirements, inspired by CalMatters’ story, was quickly killed for undisclosed reasons.
“Following our audit, the FPPC is working to identify an effective disclosure framework that ensures enforceable and meaningful transparency,” Adam Silver, the commissioner chairperson, said in a statement. “We look forward to working with the Legislature to make that a reality.”
Trip organizers and their sponsors do not love the additional scrutiny. Several organizations did not voluntarily cooperate with the audit, according to the final report, and the commission issued subpoenas to obtain their financial records, stretching out the investigation to more than a year.
But in that time, more disclosure forms were filed, including several retroactively. There are now eight forms in total for the past three years.
The Independent Voter Project, which told CalMatters during its original reporting that it never met the one-third of expenses threshold, accounts for half of those. The group organizes an annual conference at a luxury hotel in Maui, paid for by corporate sponsors, whose representatives then gather for a week of policy discussions and schmoozing with legislators.
The new forms provide the most comprehensive glimpse the public has ever received of who funds and attends the conference, which is a frequent lightning rod for concerns about the close relationship between lawmakers and interest groups that have business before the Legislature. Nearly 60 different entities paid to attend the 2023 conference, the most recent for which a disclosure form has been filed, alongside a bipartisan cohort of 14 lawmakers; the sponsors are primarily major companies and trade organizations such as AT&T, General Motors, Johnson & Johnson, Microsoft, Pfizer and Walmart.
“It was too complicated to try to figure out the forms and provide all of the information they wanted in order to be exempt,” Dan Howle, chairperson and executive chairman of the Independent Voter Project, said in an interview. “Quite frankly, they really pissed me off. They sent me a subpoena.”
Howle said he had worked with the author of the 2015 law to write requirements that would exempt the Independent Voter Project from disclosure, because he was angry that his event had become the poster child for sponsored travel for elected officials. But he no longer felt it was worth the hassle of proving that his organization is exempt, so he plans to file the form annually going forward.
“If the public wants to go look for that form and figure out who was there, be my guest,” he said. “I think everybody should do the same thing.”
