## ![](media/image1.png){width="1.9479166666666667in" height="1.9479166666666667in"}

FEDERAL ELECTION COMMISSION

BUDGET REQUEST

CONGRESSIONAL JUSTIFICATION

FOR FY 2007

PRESENTED TO THE CONGRESS AND OMB

PURSUANT TO GPRA AND OMB A-11

November 13, 2023

TABLE OF CONTENTS

Appropriation Language (Proposed).................................
................i

Federal Election Commission Budget
Request.....................................................1

Executive
Summary...........................................................................1

> Federal Election Commission
> Mission.................................\...1
>
> Program, Goals and
> Objectives............................................ 2
>
> Building on Past
> Successes.................................................2
>
> Impact of Continuing OMB
> Level.........................................5
>
> Summary of Request and Differences....................................
> 6
>
> FEC Staffing and
> Workload................................................9
>
> Overview of FEC
> Programs.............................................\...11
>
> Non-Personnel Cost
> Estimates..........................................\...13
>
> FEC
> History..................................................................14
>
> What the FEC
> Does......................................................\... 14
>
> How the FEC Achieves Its
> Goals.......................................\...18

Appendix A: FEC Strategic Plan FY 2004-2009

(FY 2005-2010 Strategic Plan currently being revised)

Appendix B: Unauthorized Appropriations Requests

Appendix C: Enforcement Profile, FY 1995-2005

> **APPROPRIATION LANGUAGE (PROPOSED)**

***FEDERAL ELECTION COMMISSION***

*SALARIES AND EXPENSES*

For necessary expenses to carry out the provisions of the Federal
Election Campaign Act of 1971, as amended, \$57,138,000, of which no
less than \$6,500,000 shall be available for internal automated data
processing systems, and of which not to exceed \$5,000 shall be
available for reception and representation expenses; Provided, That, the
FEC is authorized to establish, modify, charge, and collect registration
fees for FEC hosted conferences; Provided further, That notwithstanding
31 U.S.C. 3302, funds received from fees charged to attend the campaign
finance conferences shall be credited to and merged with this account,
to be available without further appropriation for the costs of carrying
out these conferences.

i

FEDERAL ELECTION COMMISSION

BUDGET REQUEST

EXECUTIVE SUMMARY

The Federal Election Commission (FEC) submits this performance budget
request of \$57,138,000 for FY 2007. FY 2007 request includes an
increase of \$2,985,000 (5.51%) over the enacted FY 2006 FEC
appropriation of \$54,153,000 (\$54,700,000 reduced by \$547,000 by the
one percent rescission). The FEC FY 2007 request conforms to the amount
agreed upon with OMB during the budget formulation process with the
understanding that the amount would not fully fund our 391 authorized
level. With this level of funding, our FTE staffing level will be 375, a
decrease of 16 FTE from our authorized level of 391. Staffing is reduced
to meet the increased costs of doing business at projected 2007 prices.
This staffing decrease is explained in more detail on pages

9-11.

This level of funding represents a continuation of FY 2006 operations,
as adjusted for inflation, salary, and benefits increases. As such, it
represents essentially a Current Services request for FY 2007. It
represents an overall increase of 8.48% for non-personnel costs with no
additional funds or staff for programs or new initiatives by the FEC.

  ------------------- ---------------- --------------- ---------------- -------------
  **TABLE 1: FY 2007                                                    
  PERCENTAGE                                                            
  INCREASE**                                                            

  **Category**        **FY 2006**      **Increase**    **FY 2007**      **Percent
                                                                        Increase**

  **Personnel Costs** 39,814,300       1,769,700       41,584,000       **4.44%**

  **Non-Personnel     14,338,700       1,215,300       15,554,000       **8.48%**
  Costs**                                                               

  **Total**           **54,153,000**   **2,985,000**   **57,138,000**   **5.51%**
  ------------------- ---------------- --------------- ---------------- -------------

Federal Election Commission Mission

**The mission of the FEC is to assure that the campaign finance process
is fully disclosed and that the rules are effectively and fairly
enforced, fostering the electorate\'s faith in the integrity of the
nation\'s political process.**

The integrity of the election process is key to public faith in the
policy decisions made by the elected and executive branches of
government. Desired outcomes from the successful achievement of the FEC
mission include providing the electorate with information about where
candidates for federal office derive their financial support, and
providing confidence that those who disregard the Federal Election
Cam­paign Act of 1971, as amended, (FECA) restrictions on campaign
financing and/or its requirements for public disclosure will suffer real
and evenhanded consequences for non-compliance.

In attaining these outcomes, the FEC strives to foster and maintain an
attitude of voluntary compliance with the rules of the campaign finance
process. The FEC realizes that voluntary compliance and public
confidence are necessary because limited budgetary resources preclude
massive efforts to enforce the FECA.

The FY 2007 budget request will enable the FEC to perform its statutory
mission and meet its program goals and objectives. The FEC budget
justification is structured to reflect its mission to administer and
enforce the three main components of the FECA:

-   The disclosure of campaign finance information;

-   The enforcement of campaign laws; and

-   The public financing of Presidential elections.

Programs, Goals and Objectives

To accomplish its mission, the FEC has established three core programs.
For each core program, the Commission has defined objectives and goals
that are achieved through several Commission line programs. The core
programs are listed below, followed by the dollar amount and FTE
required to achieve the objectives and goals under the FY 2007 Budget:

  ----------------------------------------------- -------------- -----------
  **TABLE 2: CORE PROGRAMS**                      **AMOUNT**     **FTE**

  Promoting Disclosure                            \$ 21,855,285  143.4

  Obtaining Compliance with FECA                  \$ 26,997,705  177.2

  Administering the Public Financing of           \$ 8,285,010   54.4
  Presidential Elections                                         

  **FY 2007 Request**                             **\$           **375**
                                                  57,138,000**   
  ----------------------------------------------- -------------- -----------

Building on Past Successes

In FY 2006, the FEC achieved major successes, including meeting
statutory and court deadlines for the BCRA implementation, legal
challenges to the BCRA, and enhanced compliance. These successes are the
result of FEC efforts and support from our Congressional oversight
committees. In addition, over the past several years, the Commission has
employed more flexible and more effective enforcement tools in order to
attain the goal of ensuring compliance with FECA. For example, the
standard enforcement program now processes matters more quickly, there
has been a strong and steady increase in the number of matters closed
with substantive action, and the amount of cumulative annual civil
penalties has remained at high levels for several years. Moreover, two
newer enforcement programs -- the Administrative Fine Program and
Alternative Dispute Resolution (ADR) -- continue to receive accolades
from the regulated community and have enabled the standard enforcement
program to focus on more complex matters.

[FEC Disclosure and Informational Outreach Programs]{.underline}

The FEC recognizes that with limited resources it must continue to
emphasize voluntary compliance with FEC rules and regulations. In
addition to fostering a belief that the campaign finance disclosure laws
will be enforced when significant violations occur, the Commission has
relied on effective outreach and informational programs to reduce
violations due to lack of understanding of the law. Generally, FEC
efforts, such as the 800 informational line, the campaign finance
workshops and seminars, and the campaign guides and brochures, have all
received high marks from the election community, the media, and the
public. It is important to advise Congress that our campaign finance
workshops and seminars for 2006 have been canceled due to unexpected
budget constraints. In order to preserve these conferences in the future
we are seeking legislative authority to charge and maintain registration
fees to host these conferences. If legislative authority is not granted,
we will require additional appropriated funds in order to host future
conferences.

A recent hearing on the FEC enforcement process held by the House
Administration Committee was noteworthy for the consistently high marks
given by members to the FEC staff and informational programs. The FEC
received high praise for its efforts to educate and inform the election
community. The responsiveness, professionalism, and accuracy of the
information provided by FEC staff was remarked upon numerous times.

In addition, the FEC disclosure programs are praised, and often FEC data
and reports provide the foundation for analysis and further study by the
media and elections interest groups. The FEC continues to operate a
storefront disclosure office in Public Records, but also increasingly
serves the media and the public through the FEC website and other
electronically provided data and publications. While the Commission will
continue to print and make available copies of brochures and
publications, increasingly the needs of the election community, the
public, and the press are served by electronically available data and
reports. In FY 2005, the FEC electronic disclosure database and website
received 4.5 million visits and 103 million hits by users seeking
campaign finance data and FEC documents. The FEC continues to upgrade
and enhance its website, the electronic filing system, and other
electronic systems, and to adapt to changes required by BCRA or any
other changes to the FECA.

The FEC, however, also continues to respond to many telephonic and
written requests for information, data, and assistance in filing
reports. The Information Division 800 line and the Reports Analysis
Division (RAD) analysts assigned to specific committees will continue to
be an integral part of the FEC's effort to inform and educate the public
and to foster voluntary compliance with the filing requirements of the
FECA. The FEC also utilizes the Internet and a monthly newsletter, *The
Record*, to provide notice to filers and general assistance in the
correct filing of reports.

There is recent evidence that the informational and educational outreach
efforts, as well as the standardized and regularized Administrative Fine
Program, have contributed toward the FEC reaching its goal of
encouraging compliance with the campaign finance laws. The result is
improved timeliness of filing of campaign finance reports and data. The
percentage of committees filing required reports and filing them on time
has improved during the last three election cycles. The FEC sees this as
evidence that the disclosure and compliance programs are achieving one
of our primary goals.

[FEC Compliance Program]{.underline}

Nearly one-half of Commission resources in terms of dollars and FTE
required to achieve the Commission's objectives and goals under the
proposed FY 2007 Budget are dedicated to its compliance programs. In
recent years, this has included an administrative fines program and
alternative dispute resolution program, in addition to the standard
enforcement program. Together, these three compliance programs have
allowed the FEC to handle significantly more cases than it did several
years ago.

The Commission's goal in using these three distinct compliance tools has
been to increase the effectiveness of the enforcement program by
activating more cases, closing more cases with substantive action,
resolving some cases that would otherwise have been dismissed, and
generally enforcing the law in a more thorough and efficient manner.
Today, the Commission focuses its legal resources on the more complex
enforcement matters, while using administrative processes to handle less
complex matters.

The standard enforcement program, which is the responsibility of the
Office of General Counsel, deals with the most complex cases and the
most significant violations of the law. The General Counsel has
undertaken a number of management and organizational initiatives in the
last five years to increase the efficiency of processing matters under
review (MURs). The results of these initiatives include a more current
caseload and higher civil penalties. Although a much larger percentage
of the Office's caseload now involves the most factually and legally
complex cases, MURs have been processed (analyzed, investigated,
conciliated) much more expeditiously. The Enforcement Profile at
Appendix C shows the improvement in the time it takes to close a case.
This is further demonstrated by the fact that a greater percentage of
the assigned (or active) caseload now involves the most recent election
cycle (i.e., 2003-2004). Moreover, the administrative fines and
alternative dispute resolution programs have also helped to expedite
resolution of less serious violations of the law.

This increased efficiency has not come at the cost of less effective
enforcement. One measure of effectiveness is the cumulative annual
amount of civil penalties and fines obtained. By this measure, the FEC's
effectiveness continues to grow, as illustrated by the following: In
1999, prior to the introduction of the administrative fines and
alternative dispute resolution programs, 262 cases were closed with
civil penalties totaling \$534,000. By FY 2004, approximately four years
after the implementation of the administrative fines and alternative
dispute resolution programs, 250 cases were closed with civil penalties
and fines totaling \$3.46 million. And in FY 2005, the FEC closed 372
cases with civil penalties and fines totaling \$2.0 million. Focusing on
the civil penalties obtained in the standard enforcement program, FY
2005 marks the fourth consecutive year with more than \$1 million in
penalties. A more detailed discussion is included in the FY 2005 FEC
Enforcement Profile included as Appendix C of this submission.

The ADR program affords both the FEC and the respondents the opportunity
to resolve cases more rapidly, and it provides an opportunity for the
Commission to resolve cases more substantively. Since the inception of
the program on October 1, 2000, through September 30, 2005, the ADR
Office concluded agreements with respondents and formally closed 214
cases, 150 with substantive action (70%). ADRO has negotiated
approximately \$310,000 in civil penalties since FY 2001. In FY 2005
alone, civil penalties negotiated through ADR totaled \$154,500. These
214 cases were generally closed within six months of referral to the
ADRO program.

The Administrative Fine Program has closed 1,223 cases since FY 2000 and
assessed civil penalties totaling \$2,309,454 in cases of late and
non-filed reports. In FY 2005, cases were closed on average 201 days
from when the reports were due to be filed at the FEC.

For the standard enforcement program itself, from FY 2001 to 2005, the
FEC closed 140 out of 456 cases with civil penalties (31%). Of
particular note is that the FEC's previous record of dismissing cases
due to "staleness" has been all but eradicated. From FY 1995 to 2000,
the FEC dismissed as "stale" 54% of cases. FY 2005 was the second year
in a row in which the FEC did not dismiss a single case as stale.
Clearly, from FY 2001 through 2005, the FEC has made significant
improvements in the compliance program.

Impact of Continuing the OMB Level for FY 2007

As previously mentioned, the FY 2007 budget represents minimal increases
from the final enacted funding for the Commission in FY 2006. This level
of funding is required to provide the Commission with the resources
necessary to perform its statutory responsibilities.

The funding level contained in this budget request will enable the
Commission to:

-   Continue to meet all requirements to implement and enforce the BCRA
    amendments;

-   Complete all Presidential audits within two years of the election;

-   Conduct 40-45 Title 2 "for cause" audits per election cycle;

-   Maintain a timely and enhanced campaign finance disclosure program;

-   Ensure that significant and timely efforts are made to enforce the
    FECA;

-   Maintain and enhance existing Commission educational and
    informational outreach programs designed to foster knowledge of the
    FECA and voluntary compliance with the disclosure and limitations
    provisions of the statute;

-   Continue disclosure programs that disseminate data and analytical
    reports to the media and private organizations for use in further
    analysis and more widespread disclosure of campaign finance
    information to the general public and the election community;

-   Continue the Administrative Fine and Alternative Dispute Resolution
    programs; and

-   Continue and enhance the automation of the reports review process.

To continue reaping the benefits of automation in our disclosure and
compliance programs, it is imperative that the Commission receive the
requested resources in FY 2007 to implement the remaining modules of the
automated review of financial disclosure reports, to continue
transforming our disclosure legacy systems into a new scalable
application environment, and to initiate the architectural integration
of enhanced systems to improve the accessibility of information.

Summary of Request and Differences from FY 2006

The following tables summarize the FY 2007 request and the differences
from FY 2006. As noted in the Executive Summary, the net increase in FY
2007 is 5.51% over FY 2006 for a \$2,985,000 increase. The FEC is a
personnel intensive agency with approximately 70% of our budget
dedicated to staff costs. The increase in personnel costs results
primarily from full funding of 375 FTE and the COLA. Although authorized
391 FTE in FY 2006, as spelled out in its FY 2006 Management Plan, the
FEC will strive to reach approximately 382 FTE, with the reduction
resulting from forced absorption of the full costs of the annualized FY
2006 COLA, the full cost of the FY 2007 COLA, and the
Congressionally-mandated rescission. The Commission also had to fund
some one-time unanticipated costs in FY 2006 that required it to take
immediate action to slow spending. One way we accomplished this is by
instituting an immediate hiring freeze, with exceptions for critical
hires only.

![](media/image2.wmf){width="6.727083333333334in"
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  ------------------------------- ---------------- ---------------- --------------- ----------------
  **TABLE 4: FEC BUDGET BY                                                          
  DIVISION/OFFICE**                                                                 

                                                                                    

  **Division/Office**             **FY 2005\       **FY 2006\       **Changes**     **FY 2007\
                                  Actual**         Planned**                        Request**

  Administrative Division         8,139,013        8,337,600        592,400         8,930,000

  Audit Division                  4,292,046        4,277,000        339,000         4,616,000

  Information Division            1,468,659        1,598,320        231,680         1,830,000

  Office of the General Counsel   14,606,642       15,411,500       603,500         16,015,000

  Clearing House                  977              \-               \-              \-

  Information Technology Division 11,056,593       10,375,480       1,084,520       11,460,000

  Disclosure Division             936,549          1,989,200        (246,200)       1,743,000

  Reports Analysis Division       3,690,253        3,817,565        142,435         3,960,000

  Office of the Commissioners     2,944,919        2,967,500        271,500         3,239,000

  Office of the Inspector General 567,927          723,946          (56,946)        667,000

  Office of the Staff Director    1,566,466        1,749,900        (82,900)        1,667,000

  Budget, Planning, and           226,018          401,208          46,792          448,000
  Management                                                                        

  Human Resources and Labor       813,865          874,000          78,000          952,000
  Relations                                                                         

  Press Office                    509,016          516,327          51,673          568,000

  Equal Employment Opportunity    151,639          406,700          (132,700)       274,000
  Office                                                                            

  Office of Alternative Dispute   355,715          372,754          36,246          409,000
  Resolution                                                                        

  Office of Administrative Review 320,928          334,000          26,000          360,000

  **COMMISSION TOTAL**            **51,647,225**   **54,153,000**   **2,985,000**   **57,138,000**
  ------------------------------- ---------------- ---------------- --------------- ----------------

  ------------------ ------------------------ ---------------- --------------- ----------------
  **TABLE 5: FY 2007                                                           
  CHANGES BY OBJECT                                                            
  CLASSIFICATION**                                                             

  **OBJECT                                    **FY 2006\       **Changes**     **FY 2007\
  CLASSIFICATION**                            Planned**                        Request**

  11.10              SALARIES                 30,258,837       1,451,163       31,710,000

  11.30              SALARIES - OTHER         530,000          (42,000)        488,000

  12.10              BENEFITS                 8,128,900        310,100         8,439,000

  12.10              TRANSIT SUBSIDY          360,000          40,000          400,000

  11.50              OVERTIME                 103,563          19,437          123,000

  11.52              CASH AWARDS              433,000          (9,000)         424,000

  **PERSONNEL                                 **39,814,300**   **1,769,700**   **41,584,000**
  COSTS**                                                                      

  21.01              TRAVEL                   399,980          80,020          480,000

  22.01              TRANS/THGS               40,000           10,000          50,000

  23.11              GSA SPACE                3,825,000        192,000         4,017,000

  23.21              COM. SPACE               70,000           5,000           75,000

  23.31              EQUIP RENT               202,465          19,535          222,000

  23.32              TELE LOCAL               190,000          20,000          210,000

  23.33              LDIST/TELEG              17,000           \-              17,000

  23.34              TELE INTCTY              21,600           3,400           25,000

  23.35              POSTAGE                  195,500          19,500          215,000

  24.01              PRINTING                 265,460          104,040         369,500

  24.02              MICROFILM                27,000           3,000           30,000

  25.11              TRAINING                 117,643          17,357          135,000

  25.12              ADMIN EXP                186,735          (81,735)        105,000

  25.13              DEP/TRANSC               50,000           10,000          60,000

  25.14              IT CONTRACTS             2,413,000        382,000         2,795,000

  25.21              CONTRACTS                1,258,737        (287,737)       971,000

  25.23              REPAIR/MAIN              3,000            \-              3,000

  25.24              TUITION                  4,347            5,653           10,000

  25.31              FED AGENCY               792,000          137,000         929,000

  25.32              FED TRAINING             60,425           46,575          107,000

  25.41              FACIL MAINT              71,000           5,000           76,000

  25.71              EQUIP/MAINT              247,394          15,606          263,000

  25.72              SFT/HRDWRE               1,858,000        51,000          1,909,000

  26.01              SUPPLIES                 251,500          21,500          273,000

  26.02              PUBLICATIONS             145,165          17,335          162,500

  26.03              PUB SERVICES             391,500          19,500          411,000

  31.01              EQP PURCH                68,249           (10,249)        58,000

  31.02              CAPITALIZED IT           1,115,000        410,000         1,525,000

  31.03              NON-CAPT IT              51,000           \-              51,000

  **NON-PERSONNEL                             **14,338,700**   **1,215,300**   **15,554,000**
  COSTS**                                                                      

  **TOTAL FEC**                               **54,153,000**   **2,985,000**   **57,138,000**
  ------------------ ------------------------ ---------------- --------------- ----------------

We ended FY 2005 with 378 FTE. This reduced FTE level allowed us to meet
the President's 2006 requested level, the one percent rescission
mandated by Congress, and assisted us in funding some of the
unanticipated costs we incurred. Further, with the improved efficiencies
and changes in workload and mission that have resulted from our IT
programs, we are able to further reduce FTE in certain areas. With
expected FY 2006 attrition, careful attention to filling only critical
vacancies, and through reorganization, our goal is to reach an FTE level
of 382 by the end of FY 2006. We hope to reach our goal of 375 FTE by
the end of FY 2007. We will adjust our activities to the reduced
resource levels in such a manner so as not to jeopardize our critical
mission of fostering the electorate's faith in the integrity of the
nation's political process.

**FEC Staffing and Workloads**

FY 2007 covers the 2006 general election peak period and most of the
post-election disclosure and enforcement work. Despite large increases
in Commission workloads because of increasing federal election-related
campaign finance activity, the FEC has relied on management initiatives
and information technology advancements to improve productivity to meet
the increasing workloads. Total disbursements (spending) in federal
elections increased by over 1500% since 1976: from \$310 million to
\$4.8 billion in the 2004 cycle. This has translated into workload
increases such as a 32% increase in documents filed per cycle from 1984
to 2004, and an increase of 465% in the number of transactions entered
into the database since the 1984 election cycle. The FEC has processed
these record-level workloads with modest staff increases.

![](media/image3.wmf){width="5.645138888888889in"
height="4.728472222222222in"}

As a result of the dramatic increase in activity, our available
resources dictate that we audit and investigate a relatively small
number of committees. With approximately 8,000 committees filing reports
each election cycle, the FEC audits about 45 committees per cycle, or
about .6% of the filing universe. With an average active caseload of
between 100 to 150 enforcement cases in any given month, on an annual
basis approximately 60% of the complaints received by the FEC are
activated.

The Commission has attempted to maximize the effectiveness of the
compliance and enforcement programs through the increased use of
technology and with management initiatives to better focus the resources
available. Because of the modest size of many of our compliance and
enforcement programs, any reduction in staffing below our revised
Current Services base will jeopardize our basic mission and objectives.

Total campaign finance activity for the 2004 cycle was \$4.8 billion in
total disbursements from 8,000 committees filing over 96,000 reports and
generating 2.8 million itemized transactions. The 2006 cycle, a
Congressional cycle, should be slightly lower in volume than the 2004
Presidential cycle. Nevertheless, total disbursements could exceed \$3
billion in 2006, with 8,000 committees filing 85,000 to 90,000 reports
and from 2.5 to 3 million itemized transactions.

Despite the prospect of continuing increases in campaign finance
activity in federal elections, the FEC has requested no additional
resources for the disclosure, compliance, and enforcement programs.
Given the total volume of money involved in the 2004 and 2006 election
cycles, we believe that the FEC request for FY 2007 is fully supported
and is a modest one.

**FEC Mission**

The FEC budget is results oriented and is based on the agency's mission
to administer and to enforce the three main components of the Federal
Election Campaign Act of 1971, as amended (FECA):

-   the disclosure of campaign finance information;

-   contribution limits and prohibitions; and

-   the public financing of Presidential elections.[^1]

    **Programs**

    To accomplish this mission, the FEC has established three core
    programs:

-   Promoting disclosure;

-   Obtaining compliance with FECA; and

-   Administering the public financing of Presidential elections.

    Within each of the core programs, the Commission has defined
    specific objectives. To achieve these objectives, the Commission
    must accomplish certain strategic goals. To the extent that the
    agency succeeds in reaching these goals and objectives, it will
    fulfill its fundamental mission.

    **Overview of FEC Programs**

    Table 7 provides an overview of the FEC budget by program and FTE
    for each program. The FEC management and administrative overhead
    costs, including information technology costs and FTE, are allocated
    pro rata to the three core programs and are included in Table 7.

  -------------------- -------------- ----------- -------------- ----------- -------------- ---------
  **TABLE 7: FUNDING                                                                        
  AND FTE BY PROGRAM**                                                                      

  **Programs**         **FY 2005**                **FY 2006**                **FY 2007**    

                       **Amount**     **FTE**     **Amount**     **FTE**     **Amount**     **FTE**

  Promoting Disclosure \$ 20,396,589  149.3       \$ 22,175,654  156.5       \$ 21,855,285  143.4

  Obtaining Compliance \$ 23,951,246  175.3       \$ 24,742,506  174.6       \$ 26,997,705  177.2

  Public Financing     \$ 7,391,797   54.1        \$ 7,234,841   51.1        \$ 8,285,010   54.4

  Elections            \$ 2,096       \-          N/A                        N/A            
  Administration                                                                            

  **Total**            **\$           **378.8**   **\$           **382.2**   **\$           **375**
                       51,741,728**               54,153,000**               57,138,000**   
  -------------------- -------------- ----------- -------------- ----------- -------------- ---------

**Personnel Allocations**

We have made some internal adjustments because of changes in workload
and mission. The proposed FY 2007 staffing follows below with an
explanation for the most significant changes only.

Staffing in the Public Disclosure Division would be reduced by two FTE,
from the base of 13 FTE, in recognition of a change in mission due to
reduced demands for direct service in Public Records and the public's
increased use of the Internet to obtain information from the FEC. The
Division is increasing its responsibility for providing content on the
FEC website. ITD will continue as the technical provider of the website,
but Disclosure will be responsible for updating and maintaining the
content for all documents other than the main disclosure database.

This proposed budget would also recognize the transfer of the data
coding and entry section of the IT Division to the Public Disclosure
Division. As proposed, the coding and entry staff of 16 FTE would be
transferred, as well as all equipment, furniture and related supplies.
This proposal would consolidate into one Division the document imaging
and processing staff with the document coding and entry staff, placing
all document processing functions in the same office.

The management of the Electronic Filing system will remain an ITD
responsibility. Disclosure will continue to scan paper reports and
documents into the system and perform all in-house coding and entry of
documents. In addition, it will be responsible for maintaining all
content on the website, with digital versions of FEC publications
provided by the Information Division. As a result, the combined FTE for
the newly constituted Disclosure Division will be 22 FTE. The actual
merging results in a reduction of seven FTE through attrition or
retraining for other positions that may become available within the
Commission.

The FY 2007 request reflects increased demands in ITD for programming
and analysis staff, with the data coding and entry staff transferred to
the Disclosure Division. The original total of 55 FTE in ITD, less the
data coding and entry, leaves a remaining programming and systems
analysis staff of 40 FTE in FY 2007.

While maintaining most of the BCRA-supplemented staffing in RAD at 53
FTE and OGC at 123 FTE the request includes a reduction of one position
in RAD and two positions in OGC. Neither RAD's nor OGC's ability to
fulfill its responsibilities will be impacted significantly by the loss
of these FTE. Of the original 27 FTE increase in staffing due to BCRA,
11 positions were allocated to RAD and 10 to OGC.

While the addition of staff in RAD after BCRA (as well as significant
overtime) helped to improve the timeliness of review for the 2004 cycle,
compared to the 2000 and 2002 cycles, the continued development of the
Automated Review Process should help us realize additional benefits in
FY 2007. Despite increasing total disbursements in federal elections and
more reports being filed, RAD should be able to maintain reports-review
timeliness with the 53 FTE authorized.

While OGC will lose two FTE from its FY 2006 level (four less than the
FY 2006 budget request), it will still be five FTE above the original
base staffing level of 118 FTE. At this new staffing level, it will
still be able to perform all of its responsibilities under the FECA.

**Non-Personnel Cost Estimates**

Key assumptions for non-personnel include the following:

-   The current lease on our building expires September 30, 2007. We
    have requested to remain at this location. This budget request
    assumes we will remain at 999 E Street, N.W., thus no moving costs
    have been requested in this budget. Should we be required to move,
    GSA advises we will need approximately \$1.2 to \$1.5 million in
    moving costs.

-   This request funds IT with \$6.5 million. This is the minimum amount
    we require for IT projects. This amount is a "lights on" level that
    supports the basic mission only. It forgoes some necessary upgrades
    and desirable improvements. In future fiscal years we will require
    additional resources to complete necessary IT infrastructure
    upgrades and to make needed improvements in our disclosure and
    review functions. Any savings realized through the course of the
    year will be applied to our IT programs.

-   Funds are included for the full financial audit required by the
    Accountability of Tax Dollars Act and support assistance to prepare
    for the Audit in FY 2007.

-   The FEC will receive legislative authority to charge, maintain and
    use registration fees to fund FEC educational and informational
    conferences in 2007. As noted earlier, the FEC canceled four
    conferences scheduled in 2006 due to budget constraints. If
    legislative authority is not received in FY 2007, additional funds
    will be needed in order to host those conferences.

-   Assumes continuation of the ADR and Administrative Fine Programs.

A Brief History of the Federal Election Commission

As early as 1905, President Theodore Roosevelt recognized the need for
campaign finance reform and called for legislation to ban corporate
contributions for political purposes. In 1907, he proposed public
funding of federal elections. Congress enacted several statutes between
1907 and 1966 to:

> **•** limit the disproportionate influence of wealthy individuals and
> special interest groups on the outcome of federal elections;

**•** regulate spending in federal campaigns; and

**•** deter abuses by mandating public disclosure of campaign finances.

In 1971, Congress consolidated its earlier reform efforts in the Federal
Election Campaign Act (FECA), instituting more stringent disclosure
requirements for federal candidates, political parties and political
action committees (PACs). It also set up the income tax check-off to
provide for the financing of Presidential general election campaigns and
national party conventions. Still, without a central administrative
authority, the campaign finance laws were difficult to enforce.
Authority was split between the then General Accounting Office and the
Clerk of the House and the Secretary of the Senate, with criminal
enforcement in the Department of Justice. However, there was no real
significant enforcement of campaign finance legislation for the most
part until the post-Watergate period, after the 1972 elections.

Following reports of serious financial abuses in the 1972 Presidential
campaign, Congress amended the FECA in 1974 to set limits on
contributions by individuals, political parties, and PACs. It
established the FEC as an independent agency to enforce the law,
facilitate disclosure and administer the Presidential Public Funding
Program. Amendments to the Internal Revenue Code that same year
established the matching fund program for Presidential primary
campaigns. Subsequent amendments in the late 1970's streamlined the
disclosure process and expanded the role of political parties.

The Bipartisan Campaign Reform Act of 2002 (BCRA) amended the FECA
further. It banned national parties from raising or spending non-federal
funds (often called "soft money"), restricted funding of so-called issue
ads, increased the contribution limits, and indexed certain limits for
inflation.

What the FEC Does

The FEC strives to provide the electorate with the capability to make
educated, informed decisions in the political process based, in part, on
where candidates for federal office derive their financial support, and
with the confidence that those who disregard the laws regarding campaign
financing and/or its requirements for public disclosure will suffer real
and even-handed consequences for noncompliance.

The Commission's disclosure database, which contains millions of
transactions, is available through the FEC's website. Last year, the FEC
redesigned its website to make it more user-friendly. Interested
citizens can select a profile of a committee's financial activity for
each election cycle. Citizens also can access information on
contributions by using a variety of search elements (e.g., donor's name,
recipient's name, date, amount, or geographic location).

The sheer volume of data available to the public is staggering. The
Commission defines its work in the context of election cycles, which
include the preceding and actual election years---i.e., calendar years
2003 and 2004 constitute the 2004 election cycle. In any election cycle,
nearly 8,000 committees file around 96,000 reports containing
information concerning between 2.5 to 3.0 million itemized
contributions, as well as millions of other itemized disbursements,
receipts, and other payments previously not entered into Commission
databases. These reports now are filed electronically, except for Senate
reports and other committees with less than \$50,000 in activity. At the
same time, the FEC has the resources to audit less than one percent of
the committees filing reports in any given cycle and only has the
capacity to actively pursue approximately two percent of total
committees through its compliance (enforcement) process at any given
time.

Campaign financing has skyrocketed since 1976, when the FEC regulated
the disbursement by federal candidates and committees of \$310 million
in the first publicly funded elections. For the 2004 Presidential and
Congressional elections, the FEC regulated \$4.8 billion in total
disbursements ---an increase of more than 1500% in just eight
Presidential election cycles.

Total disbursements by federal committees and candidates in federal
elections is the most significant measure of the total workload faced by
the Commission. The figures below depict total spending in recent
federal Presidential and Congressional election cycles. Spending in
Presidential cycles has more than tripled, and in Congressional cycles
it has nearly tripled.

**DISBURSEMENTS IN PRESIDENTIAL ELECTIONS**

(\$ Millions)

![](media/image4.wmf)

  ------------------------------ ---------- ---------- ---------- ---------- ----------
  **TABLE 8: TOTAL DISBURSEMENTS                                             
  IN PRESIDENTIAL ELECTIONS**                                                

  **Election Cycle**             **1988**   **1992**   **1996**   **2000**   **2004**

  Millions of Dollars -- Total   1,607      2,051      2,738      3,750      4,728

  Percent Increase - Total                  28%        33%        37%        26%

                                                                              

  Millions of Dollars -- Direct  368        366        426        520        804
  Spending                                                                   

  Percent Increase -- Direct                -1%        16%        22%        55%
  Spending                                                                   
  ------------------------------ ---------- ---------- ---------- ---------- ----------

**DISBURSEMENTS IN CONGRESSIONAL ELECTIONS**

(\$ Millions)

![](media/image5.wmf)

  ----------------------------- ---------- ---------- ---------- ---------- ----------
  **TABLE 9: TOTAL                                                          
  DISBURSEMENTS IN                                                          
  CONGRESSIONAL ELECTIONS**                                                 

  **Election Cycle**            **1986**   **1990**   **1994**   **1998**   **2002**

  Millions of Dollars           1,094      1,115      1,708      2,021      3,116

  Percent Increase                         2%         53%        18%        54%
  ----------------------------- ---------- ---------- ---------- ---------- ----------

The FEC strives to foster and maintain an attitude of voluntary
compliance with the rules of the campaign finance process through:

-   facilitating public disclosure of campaign finance activity;

-   providing information and policy guidance to the public, press,
    political committees, and elections officials on the law and
    Commission regulations;

-   enforcing the FECA through audits, investigations, and civil
    litigation; and

-   implementing the public funding programs for Presidential campaigns
    and conventions, including certification and audits of participating
    candidates and committees, and enforcement of public funding
    legislation.

**How the FEC Achieves Its Goals**

Improvements in productivity, aided by IT enhancements, generally have
enabled the FEC to keep pace with the large increases in federal
campaign finance activity during recent election cycles. This activity
has nearly doubled in the last 12 years. Total candidate and committee
disbursements for a non-Presidential election cycle have increased from
\$1.1 billion, in 1986, to \$3.1 billion for the 2002 Congressional
cycle, a more than 184 % increase. In Presidential election cycles,
spending reached \$4.8 billion for the 2004 Presidential election cycle,
compared to \$1.6 billion in the 1988 cycle.

The FEC receives information from approximately 8,000 committees filing
over 96,000 reports and generating 2-3 million itemized transactions
each cycle. Every election cycle since 1992 has seen a new record in
total spending in federal elections for Congressional and Presidential
elections. The FEC's electronic filing system offers the capability of
instantly updating the database and expanding the types of information
collected. The average annual cost is about \$1.5 million to maintain
the electronic filing system. With the passage of mandatory electronic
filing, FEC is beginning to see the benefits of timeliness and work
process improvements such a sophisticated system affords. For example,
since the institution of mandatory electronic filing, the median time to
process all documents has improved from 11 days (2000 cycle) to six days
(2002 cycle) to two days for the 2004 cycle, as of September 30, 2004.

  ------------- -------------- ------------------ ------------- -------------- -------------- -------------- --------------
  **TABLE 10:                                                                                                
  HISTORICAL                                                                                                 
  DATA BY                                                                                                    
  ELECTION                                                                                                   
  CYCLE**                                                                                                    

  **Election\   **Documents\   **Documents**                                   **Reports**                   
  Cycle**       Filed**                                                                                      

                               **Entered**        **Backlog**   **Percent**    **Reviewed**   **Backlog**    **Percent**

  **2004**      **58,757**     58,379             378           99%            50,190         8,567          85%

  **2002**      **49,245**     47,195             2,050         96%            34,574         14,671         70%

  **2000**      **49,700**     48,609             1,091         98%            32,173         17,527         65%

  ** **                                                                                                      

  **Election\   **Documents\   **Documents**                                   **Reports**                   
  Cycle**       Filed**                                                                                      

                               **Median\          **Days Until\ **Documents\   **Median\      **Days Until\  **Documents\
                               Days to\           95%\          \> 30 Days\    Days to\       95%\           \> 30 Days\
                               Process**          Complete**    Old**          Process**      Complete**     Old**

  **2004**      **58,757**     2                  17            42             2              17             42

  **2002**      **49,245**     6                  50            522            6              71             8

  **2000**      **49,700**     11                 42            157            10             45             \-

  ** **                                                                                                      

  **Election\   **Documents\   **Transactions**                                **Reports**                   
  Cycle**       Filed**                                                                                      

                               **Processed**      **Date        **Total**      **50,000\      **Processed\   **Reviewed\
                                                  Reached\                     Filed**        99%**          95%**
                                                  1.5 Million**                                              

  **2004**      **58,757**     2,146,177          31-May-04     3,064,055      30-Jul-04      29-Feb-04      31-Mar-05

  **2002**      **49,245**     1,475,684          31-Oct-02     2,445,253      31-Oct-02      31-May-03      30-Jun-03

  **2000**      **49,700**     1,649,941          31-Aug-00     2,454,413      31-Oct-00      31-Mar-01      30-Sep-01
  ------------- -------------- ------------------ ------------- -------------- -------------- -------------- --------------

**Program: Disclosure**

**Objectives**

With regard to the Disclosure Program, the FEC seeks to:

-   make reports filed with the FEC available to the public within 48
    hours;

-   review and process the financial reports filed by political
    committees accurately and timely;

-   respond to data requests from the press, public, and committees
    within 72 hours; and

-   educate the public, the media and the regulated community about the
    legal requirements pertaining to disclosure, contributions limits
    and prohibitions, and the public financing of Presidential
    elections---the core elements of federal election campaign finance
    law.

    **Goals**

    To achieve the above objectives, the FEC will strive to accomplish
    the goals listed below.

    *Review and Processing of Reports*

    To achieve the accurate and timely review and processing of all
    reports, the FEC will:

-   facilitate the electronic filing of reports by all political
    committees reaching a certain threshold, excluding Senate committees
    and the national parties' Senate campaign committees;

-   continue to meet the 48-hour deadline for placing reports filed by
    political committees on the public record;

-   review all reports filed for accuracy and complete disclosure;

-   encourage filers to correct the public record voluntarily by
    requesting additional information; and

-   code and enter into the FEC database the information contained in 95
    % of reports within 45 days of receipt at the FEC.

*Public Disclosure and Dissemination of Campaign Finance Data*

To ensure that campaign finance data are widely distributed, the FEC
will:

-   provide the public with Internet access to its disclosure database
    and digital images of the reports (except those of Senate
    candidates);

-   operate a Public Records Office where reports and data are available
    in paper, microfilm and digital images (scanned from original
    reports) and where the public can access the disclosure database;

-   operate a Press Office to assist the media in the wide disclosure
    and dissemination of campaign finance data; and

-   compile and release comprehensive statistical information based on
    the reports filed by political committees (e.g., using the Internet
    and news releases).

*Education About the Law*

To ensure that the public, the media, and the campaign community fully
understand the federal election law and that information about the law
is readily available, the FEC will:

-   operate a toll-free line and maintain a well-informed staff to
    answer phone inquiries about the FEC and federal election law;

-   produce educational and information brochures and booklets to
    supplement the FEC Annual Reports;

-   make FEC publications available to the public through the FEC
    website, an automated fax service, and the U.S. mail;

-   conduct technical workshops on the law throughout the country (note
    that the FEC has requested in this budget the legislative authority
    to charge, maintain and use registration fees to cover the costs of
    hosting these conferences);

-   provide policy guidance through the timely release of advisory
    opinions; and

-   review and revise FEC regulations to clarify federal election law.

    **Program: Compliance**

    **Objectives**

    The compliance program is based on the premise that the FEC's first
    responsibility is to foster a willingness on the part of the
    regulated community to comply voluntarily with the law's reporting
    requirements, fundraising restrictions, and public funding statutes.
    The FEC encourages voluntary compliance through education. To
    buttress its educational efforts, the Commission carries out a
    compliance program with the following objectives:

-   audit those committees whose reports fail to meet threshold
    requirements for substantial compliance with the FECA; and

-   enforce the law, in a timely and fair manner, against persons who
    violate the law.

    **Goals**

    For each of these objectives, the Commission defines the following
    goals:

    *Audits*

    The Commission will conduct 40-45 audits "for cause" for the 2004
    election cycle, pursuant to 2 U.S.C. §438(b), in those cases where
    committees have failed to meet the threshold requirements for
    substantial compliance with the FECA and have failed voluntarily to
    correct errors or omissions on their reports,

    The Commission's budget contains the resources added in FY 2001 to
    establish a "stand alone" Title 2 Audit "For Cause" Program. This
    enables the FEC to conduct approximately 40-45 Title 2 audits per
    cycle, as opposed to the previous 20-25 per cycle. This program,
    along with other procedural changes, allows the Commission to
    maintain the Title 2 audit program, even during Presidential
    election cycles.

    This budget also will allow the Commission to meet its goal of
    processing federal matching funds and completing the Title 26
    Presidential audits within two years after the Presidential
    elections (see Public Financing objective below).

    *Enforcement*

    Because the majority (65% since 1995) of the Commission's caseload
    arises from complaints filed by parties outside the agency, the
    total caseload figure is not singularly affected by the number of
    FTE in enforcement. The number of FTE affects the proportion of the
    total enforcement caseload that can be handled substantively, as
    well as the proportion of the caseload that is active vs. inactive.
    [^2]

    To reach the objective of enforcing the law in a timely and fair
    way, the Commission plans to:

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-   maintain a monthly average active caseload of at least 50% of the
    total caseload;

-   close an estimated 75-100 cases. The Commission will close at least
    60% of those cases through substantive Commission action;

-   initiate several civil actions in federal court under 2 U.S.C.
    437g(a)(6) to enforce the FECA/BCRA, and defend against several
    actions in federal court challenging the Commission\'s
    determinations under the Administrative Fine Program pursuant to 2
    U.S.C.437g(a)(4)(C)(iii). (It is impossible to predict the number of
    such actions in either category. In recent years, the Commission has
    initiated a maximum of six actions under 2 U.S.C. 437g(a)(6) in any
    given year, and defended a maximum of eight administrative fine
    determinations in any given year.); and

-   maintain the Enforcement Priority System (EPS),[^3] a system through
    which the Commission identifies and assigns the more significant
    enforcement cases to staff, disposes of the less significant cases
    rapidly, and manages limited staff resources.

    *Administrative Fine Program and ADR*

    Based on a legislative mandate, the FEC implemented an
    Administrative Fine Program in July 2000 to reduce the OGC staff
    resources required to enforce timely filing of disclosure reports.
    The Administrative Fine Program frees Commission resources for more
    complex, substantive enforcement actions.

    The Commission also implemented an Alternative Dispute Resolution
    (ADR) Program in FY 2001. The ADR Program is designed to promote
    compliance with the federal election law by encouraging settlements
    outside the traditional enforcement or litigation processes. The
    program aims to expedite resolution of enforcement matters and to
    reduce the cost of processing complaints, and, therefore, enhance
    overall FEC enforcement. This program also frees Commission
    resources for other, more significant, enforcement matters.

These two programs have allowed the Commission to expand the scope and
reach of the enforcement process and to streamline the case resolution
process for late and non-filer cases, as well as to expedite the
resolution of cases under ADR that might not have been activated under
the EPS process (and might never have reached substantive resolution
under the formal enforcement process). They help to ensure that
enforcement resources are focused on more substantive and significant
cases yet allow the Commission to pursue the successful resolution of
more cases. This is in response to recommendations stemming from a
formal review of the Federal Election Commission, and a desire by the
Commission to improve the timeliness of FEC compliance actions.

The Commission has set goals of activating more enforcement cases and
dismissing fewer cases without substantive action. The ultimate goals of
the ADR and Administrative Fine Programs, the Case Management System,
and other information technology enhancements to the enforcement program
are to speed up the resolution of cases and to increase the number of
cases closed with substantive Commission action.

**Program: Public Financing**

**Objectives**

Under the Public Financing Program, the Commission seeks to:

-   certify, on a timely basis, the eligibility of Presidential
    candidates and committees for payments;

-   ensure timely U.S. Treasury payments to certified committees; and

-   promote public trust by ensuring that all public monies are
    accounted for and expended in compliance with the FECA.

**Goals**

To reach the objectives described above, the Commission will:

-   complete all public funding audits within two years of the 2004
    Presidential general elections;

-   successfully resolve all enforcement cases within the statutory time
    limits; and

-   process the certifications quickly and accurately.

[^1]: Public funding of Presidential elections has three components:
    matching funds for qualified Presidential primary candidates; public
    grants for the Presidential nominees of major and minor parties; and
    public grants to major parties to run their national Presidential
    nominating conventions.

[^2]: A substantive finding is a finding based on the merits of the
    matter and includes findings of "no reason-to-believe" the FECA has
    been violated. The Commission can also dispose of a case through
    dismissal. There is a significant difference between "dismissal" and
    a finding of no "reason-to-believe" the law has been violated. A
    finding of no "no reason-to-believe" reflects affirmative Commission
    action based on its consideration of the merits of the particular
    matter. A dismissal, on the other hand, usually reflects action by
    the Commission based on an application of the Enforcement Priority
    System criteria to a particular case to determine whether the case
    merits the use of the Commission's resources.

[^3]: Under EPS, OGC evaluates enforcement cases based on carefully
    crafted, Commission-approved criteria to determine the relative
    significance of the allegations. EPS is a tool to match the
    seriousness of a particular case to the resources available to
    undertake an investigation of the matter.