**FEDERAL ELECTION COMMISSION**

**BUDGET REQUEST JUSTIFICATION**

**FOR FY 2004**

**PRESENTED TO THE CONGRESS**

**PURSUANT TO GPRA AND OMB A-11**

> **March 20, 2003**

# EXECUTIVE SUMMARY

The Federal Election Commission (FEC) submits a budget request of
\$50,440,000 and 391 FTE for FY 2004, an increase of only \$898,129
(1.8%) over our enacted FY 2003 appropriation of \$49,541,871 and 389
FTE. The FEC request conforms to the President's budget request for FY
2004 and is the result of an agreement reached with OMB during the FY
2004 budget preparation process.

The request continues the additional staff resources requested in our
amended FY 2003 budget request to comply with and implement the
Bipartisan Campaign Finance Reform Act (BCRA) amendments to the Federal
Election Campaign Act (FECA) that were enacted in 2002. This request
includes the 27 FTE required to meet the Commission's responsibilities
under BCRA, concludes the acquisition of space necessary to house the
additional staff, and also includes two FTE of temporary staff to
process matching fund submissions in the 2004 presidential election
cycle.

Other than the temporary staff for the matching funds processing, this
request represents a continuation of the FY 2003 funding level, as
adjusted for inflation and salary and benefits increases. As such it
represents essentially a Current Services request for FY 2004 with no
additional funds or staff for new programs or initiatives. As noted, the
FEC reached agreement with OMB on this request, after negotiations with
the OMB staff over the original FY 2004 pass back.

**Delays in FY 2003 Staffing and Space Acquisition**

When compared to FY 2003, the Commission request represents a 7.1%
increase for personnel costs attributable to the FY 2003 and 2004 COLAs,
and staffing of the full 27 FTE increment for BCRA implementation for
the entire fiscal year. Due to the almost six month delay in enacting
most of the government's FY 2003 appropriations, the FEC was unable to
acquire and make available space for the 27 FTE requested in FY 2003 for
BCRA implementation, and also was unable to hire the additional staff
for the entire fiscal year in 2003. Therefore, the Commission expects to
reach a cumulative FTE of only 373.2 FTE for FY 2003.

Much of the personnel increase in the FY 2004 budget therefore reflects
the full staffing to the 391 FTE requested, and the funding of the full
4.1% COLA effective in January 2003 for the entire fiscal year in FY
2004. Due to the inability to staff up to the full 389 FTE authorized in
FY 2003, the FY 2004 request represents an effective increase of 17.8
FTE based on our projections for staffing in FY 2003. In terms of the
requested FTE for both FY 2003 and 2004, the only requested increase in
authorized FTE is the two temporary positions for the matching funds
processing in the 2004 presidential election.

In addition, the FY 2004 request also represents an overall **decrease**
of 8.9% for non-personnel costs. This is due to a 19.1% decrease in
non-personnel items other than the rent and the IT initiatives and is
largely a factor of larger non-personnel costs required for BCRA
implementation in FY 2003 than in FY 2004. In addition, the lapse
incurred in staffing up to the authorized FTE level in FY 2003 has been
allocated to cover projected costs of the forced move and construction
costs to acquire the 5^th^ floor in our current building.

The FY 2003 FEC Management Plan allocates \$1.2 million in addition to
the funds allocated in FY 2002 to provide for forced move costs (moving
the Bureau of Public Debt or BPD out of our building) and all
construction costs to finish the 5^th^ floor and make adjustments to the
rest of the Commission space. The original plan assumed that the FEC
would occupy the entire 5^th^ floor for the complete fiscal year in FY
2004; we now are hoping to at least move into swing space and initiate
the construction by the close of FY 2003. GSA refused to implement the
forced move until the FY 2003 appropriations were enacted and was
satisfied that the FEC had sufficient funds to complete the move and the
necessary construction.

As a result, the FEC has lost the opportunity in FY 2003 to occupy the
space necessary to house additional staff requested to cover the BCRA
amendments to the FECA. Our FY 2003 Management Plan now reflects this
fact, and the FY 2004 budget covers the cost of rent for swing space and
finally the additional floor of space for the staff requested. As we
note below, because we were unable to hire additional staff due to the
delay in funding and the lack of the necessary space, we have had to
pull staff from other programs and use overtime and contract assistance
to implement the BCRA in FY 2003. The staff contained in the FY 2004
budget request would allow us to re-deploy staff and try to recover from
the impacts of the accelerated implementation of the BCRA amendments for
the 2004 election cycle.

The final result is a modest 1.8% increase over FY 2003, yet a request
that fills the needs of the agency in FY 2004 with respect to fully
implementing the BCRA required changes. The FEC request also includes
\$100,000 to enable the agency to meet the requirements of the recently
enacted The Accountability of Tax Dollars Act of 2002 that requires
federal agencies of the Commission's small size to prepare audited
financial statements.

![](media/image1.wmf)

**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 sanctity of the political 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 this
mission include providing the electorate with the capability to make
educated, informed decisions in the political process as to where
candidates for federal office derive their financial support, and the
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 2004 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 Federal Election Campaign Act
of 1971, as amended (FECA):

-   The disclosure of campaign finance information

-   The contribution limitations and prohibitions, and

-   The public financing of Presidential elections

Formerly, the Commission had the mandated responsibility to compile
information and review procedures related to the administration of
federal elections. That responsibility has been proposed for transfer to
the new Election Assistance Commission, which is funded in the
President's FY 2004 Budget.

**Programs, Objectives and Goals**

To accomplish its mission, the FEC has established six major programs.
For each program, the Commission has defined objectives and goals that
are achieved through several Commission line programs. The programs are
listed below, followed by the dollar amount and FTE needed to achieve
the objectives and goals under the FY 2004 Budget:

-   Promoting Disclosure (core) - \$10,988496 and 125.0 FTE

-   Obtaining Compliance with the Federal Election Campaign Act (core) -
    \$13,037,252 and 120.0 FTE

-   Administering the Public Financing of Presidential Elections
    (core) - \$3,723,103 and 37.0 FTE

-   Election Administration (core) - \$0 and 0 FTE for FY 2004

-   Special IT Projects (management) - \$6,389,900 and 13.5 FTE

-   Commission Policy and Administration (management) - \$16,031,248 and
    95.5 FTE

The following table depicts the increases for BCRA implementation by
Commission objective contained in the FY 2004 request. As expected, the
major increases are for the Disclosure and Compliance objectives, and
for the IT initiatives to make all IT-based disclosure processes
compliant with the BCRA amendments. The increase for Public Financing
reflects the two temporaries for matching funds certification.

![](media/image2.wmf)

**Election Assistance Commission**

The President's FY 2004 budget includes funding for the new Election
Assistance Commission (EAC) for grants and the administering of those
grants to improve state and local elections systems used for federal
elections. Therefore, the Commission has not included the existing FEC
Office of Election Administration (OEA). It is expected that the new
Commission will be established in late FY 2003 and the OEA will be
transferred with all existing assets to the EAC for the entire FY 2004.

**Building on Past Successes**

In FY 2002 and 2003, the FEC achieved several major successes: meeting
statutory and court deadlines for the BCRA implementation and legal
challenges to the BCRA; expansion of the compliance program;
implementation of mandatory electronic filing; and issuance of the
revision of the Voting Systems Standards (VSS). These successes are the
result of FEC efforts and support from our Congressional oversight
committees. Swift Congressional action on mandatory electronic filing
for large filers and the establishment of an administrative fine
program, as recommended in the PricewaterhouseCoopers *Technology and
Performance Audit and Management Review of the Federal Election
Commission,* resulted in programs allowing the FEC to carry out its
disclosure and compliance missions more effectively. In addition, two
programs have received accolades from the regulated community--- the
Administrative Fine Program and Alternative Dispute Resolution (ADR).

[BCRA Implementation]{.underline}

Operating under strict statutory deadlines for promulgation of new
regulations to implement the BCRA amendments, the Commission met the
required deadlines and issued new regulations to implement the changes
to the FECA enacted in the BCRA, including such topics as soft money and
elections and issues communications. In addition, the FEC staff has been
required to review all programs and processes for disclosure and
compliance programs to ensure that all forms and procedures comply with
the BCRA changes. As delayed funding and the lack of space for
additional staff made it impossible to hire the requested staff for the
BCRA implementation, the Commission has relied on overtime, contract
temporary staff assistance, and pulling staff from other programs.
Commission staff also was required to comply with strict court imposed
deadlines in the legal cases challenging the BCRA and the
constitutionality of several aspects of the new law. As in the case of
the review of Commission processes and the regulations, lack of
additional staff required the use of overtime, contract assistance, and
"borrowed" staff from other programs.

While the Commission was successful in meeting its responsibilities
under the BCRA implementation, the additional staff for FY 2004 is
necessary to allow recovery in those programs where resources were
pulled to meet the BCRA changes. This includes enforcement, litigation,
policy, compliance and disclosure and informational outreach programs.
The demands of the compressed time frame for the BCRA implementation had
a major impact on Commission programs across the board.

[FEC Compliance Program]{.underline}

The Administrative Fine Program, initiated in July 2000, and the
Alternative Dispute Resolution (ADR) program, initiated in October 2000,
were established to allow the Office of General Counsel enforcement
resources to focus on more substantive and significant cases, permit the
FEC to resolve cases that would otherwise not have been activated, and
increase the number of compliance actions handled in the FEC enforcement
program.

For example, from FY 1995 through FY 2000, the FEC closed an average of
205 cases each fiscal year. In FY 2001, with the addition of the
administrative fine and ADR programs, the FEC closed 517 cases, a 152%
increase over the FY 1995-2000 annual average of 205 cases. In FY 2002,
the FEC closed 292 cases, including enforcement, ADR and administrative
fine cases.

The ADR program affords both the FEC and the respondent parties the
opportunity to resolve cases more rapidly. This is another opportunity
for the Commission to resolve cases substantively as well as to process
them more rapidly. Since the inception of the program on October 1,
2000, the ADR office concluded 73 agreements with respondents and
formally closed 51 cases (as of March 7, 2003) in an average of 119 days
from the time matters were referred to the ADR office.

The FEC enforcement goals established in the Strategic Plan and annual
Performance Plan seek to activate more enforcement cases and reduce the
number of cases dismissed without substantive action. These goals build
on the FY 2000 record when the FEC closed over 70% of the cases
processed with some form of substantive action and over 50% of the
average monthly caseload was actively being processed.

At the same time, the FEC has improved the OGC enforcement tracking
process through the Case Management System. In addition, future
productivity benefits are expected from document imaging and management
systems.

![](media/image3.wmf)

![](media/image4.wmf)

[Electronic Filing Program]{.underline}

The mandatory electronic filing program began in January 2001. In July
2001, 2,460 committees electronically filed either their Mid-Year
Reports or their July monthly Reports, with 1,135 committees filing
electronically for the first time. Election-cycle-to-date financial
activity for those committees filing electronically represented 82% of
the total disbursements for all committees filing reports, excluding
Senate filers. The 2002 year-end filings included electronically filed
reports from 3,236 PAC, Party and Campaign committees. For all filers,
excluding Senate committees, the election-cycle-to-date figures
represent 84% of the total disbursements reported.

Electronic filing has increased the timeliness, scope, and amount of
data available to FEC staff and external users of campaign finance
disclosure information.

[Voting Systems Standards]{.underline}

The FEC issued the draft technical Voting Systems Standards (VSS)
designed as voluntary standards for election administration officials
charged with selecting and using voting systems in federal elections.
The final technical standards were released formally at a conference
hosted by the FEC's Office of Election Administration (OEA) in 2002.
They also were disseminated in educational outreach workshops and
through other OEA efforts. The new EAC will be able to build upon the
work accomplished by the Commission's OEA in developing operational
guidelines for election administrators to improve the operational
management of federal elections.

The Commission believes that, within the context of limited funding,
support for OEA initiatives to disseminate the new VSS and to begin work
on operational guidelines for election administration was critical to
continuing to ensure the integrity of federal elections. The Commission
believes that the past OEA efforts will provide the new agency with a
good foundation for the location that the political branches of
government have determined to place additional resources for election
reform issues.

**Funding Required to Continue FEC Programs**

The success of these initiatives has resulted, and will continue to
result in, improved disclosure through electronic filing, improved
compliance through varied enforcement programs, and improved federal
election administration through updating and enhancing the VSS.

When considered within the context of the continuing record levels of
total federal campaign finance activity each election cycle, resulting
in more than a 1000% increase since 1976, these initiatives have enabled
the Commission to handle an expanding workload without proportionate
requests for additional staff. The FEC has relied on information
technology (IT) to automate and streamline disclosure and compliance
programs to respond to the expansion in campaign finance activity with
stable levels of staff resources.

In order to continue reaping the benefits of automation in our
disclosure and compliance programs without adding additional staff, it
is imperative that the Commission receive the requested resources in FY
2004 to continue to implement the automated review of financial
disclosure reports, to initiate the portal development project to
enhance the analysis and accessibility of information, and to continue
the alternative compliance programs. The FEC FY 2004 budget request
complies with the Administration goal to use IT improvements to enhance
program productivity, as well as Human Resources (HR) and financial
management support.

###  {#section .unnumbered}

### Impact of OMB Level for FY 2004 {#impact-of-omb-level-for-fy-2004 .unnumbered}

The FEC request contained in the President's FY 2004 Budget continues
funding for the staff necessary to fully implement the changes required
by the BCRA amendments to the FECA. Administering the campaign finance
laws in the 2004 election cycle required a concerted effort from the
Commission prior to the enactment of the BCRA amendments. Now even
greater efforts will be required to successfully implement the BCRA
changes during what is certain to be another record setting election
cycle for total campaign disbursements in federal elections.

As noted, the FY 2004 budget represents minimal increases from the final
enacted funding for the Commission in FY 2003. This funding is required
to provide the Commission with the space and resources to house and
support a full complement of staff in the peak period of the 2004
election cycle, as represented by FY 2004 and the first part of FY 2005.

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

-   Continue to meet all deadlines and requirements for the BCRA
    implementation

-   Complete all Presidential audits within two years of the election

-   Conduct 40-45 Title 2 "for cause" audits per election cycle as
    opposed to 20-25 in the previous election cycles

-   Maintain a timely and enhanced campaign finance disclosure program

-   Ensure that significant efforts are made to enforce the FECA

-   Maintain 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

-   Continue the automation of the reports review process

-   Develop and maintain IT capabilities:

```{=html}
<!-- -->
```
-   Support the mandatory electronic filing program

-   Complete the conversion to a client server environment

-   Complete the conversion to a Commission-wide document management
    system

-   Complete the changes necessary to implement the BCRA amendments to
    the FECA

-   Initiate development of portal, web-based access to FEC data:
    Portals Development Project (PDP)

    \* Maintain the FEC website

-   Support the case management system

#### DIFFERENCE FY 2003 TO FY 2004

#### President's FY 2004 Budget Request for FEC

**FY 2003 Appropriation** **\$49,866,000**

[**-** FY 2003 Rescission \$ 324,129]{.underline}

= **Adjusted FY 2003 Appropriation \$49, 541,871**

\+ Increase in pay, benefits \$ 2,337,200

\+ Increase in overtime/transit subsidy/other \$ 11,000

\+ Increase in rent \$ 490,000

\+ Increase in IT program costs \$ 427,500

\+ Cost of financial audit preparation \$ 100,000

\- Change in BCRA related and other non-personnel costs (\$ 1,289,000)

[- Decrease in space acquisition costs (\$ 1,178,571)]{.underline}

Subtotal for changes to FY 2003 for FY 2004 Request: \$ 898,129

= **Budget for FY 2004 (President's Budget FY 2004) \$50,440,000**

**FEDERAL ELECTION COMMISSION**

**FY 2004 BUDGET REQUEST**

The Federal Election Commission (FEC) submits a budget request of
\$50,440,000 and 391 FTE for FY 2004, an increase of \$898,129 (1.8%)
over our FY 2003 appropriation. This request represents a continuation
of the FY 2003 funding level, as adjusted for inflation and salary and
benefits increases, full staffing of the 391 FTE requested, and with no
programmatic increases other than two temporary staff for matching fund
certifications and preparation for a full financial audit in 2004. This
request was arrived at during negotiations with the OMB during the
preparation of the FY 2004 President's Budget Request. As a result of
the negotiations, the FEC agreed to support the President's request for
the FEC for FY 2004.

As a result, the funding level contained in this budget request will
enable the Commission to:

Continue to meet all deadlines and requirements for the BCRA
implementation

-   Complete all Presidential audits within two years of the election

-   Conduct 40-45 Title 2 "for cause" audits per election cycle as
    opposed to 20-25 in the previous election cycles

-   Maintain a timely and enhanced campaign finance disclosure program

-   Ensure that significant efforts are made to enforce the disclosure
    provisions of the FECA

-   Maintain 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 enhancement of the Voting Systems Standards and provide
    for limited development of operational guidelines for the
    administration of federal elections; Continue other Office of
    Election Administration efforts to disseminate information and
    assist elections officials to improve the conduct of federal
    elections

-   Continue the Administrative Fine and Alternative Dispute Resolution
    programs

-   Continue the automation of the reports review process

-   Develop and maintain IT capabilities:

```{=html}
<!-- -->
```
-   Support the mandatory electronic filing program

-   Complete the conversion to a client server environment

-   Complete the conversion to a Commission-wide document management
    system

-   Complete the changes necessary to implement the BCRA amendments to
    the FEC

-   Initiate development of portal, web-based access to FEC data:
    Portals Development Project (PDP)

> \* Maintain the FEC website

\* Support the case management system

**Information Technology (IT) Enhancements**

The budget request funds IT initiatives as outlined in the IT Strategic
Plan attached, including the following areas:

-   Client/server environment development and conversion

-   Document management system development and implementation

-   Enhanced automated review of disclosure reports

-   Capability to process paper filings with OCR system

-   Computer security

-   Case Management and related tracking systems

-   Financial management and human resources IT systems

-   Website enhancement

-   Portal Development Project (PDP)---web based access to FEC data

    **Electronic Filing**

    By 1998, the FEC implemented the voluntary electronic filing system
    for use by any political committee, other than Senate committees and
    the national parties' Senate campaign committees that are required
    by law to file their reports with the Secretary of the Senate, and
    therefore, cannot participate in the FEC electronic filing program.
    The voluntary program was successful, with over 1,000 committees
    filing reports electronically in the 2000 election cycle.

    On September 29, 1999, the President signed the FY 2000 Treasury,
    General Government Appropriations Act that mandated electronic
    filing in the 2002 election cycle for political committees reaching
    a certain threshold, excluding Senate committees and the national
    parties' Senate campaign committees. The provision was effective for
    reporting periods beginning after December 31, 2000. Mandatory
    electronic filing began in 2001 with the filing of the monthly
    reports due on February 20, 2001.

    The IT enhancements included in the FY 2004 budget will enable the
    FEC to make necessary changes to the electronic filing process to
    ensure that all BCRA changes are complied with for the 2004 election
    cycle. Educational and outreach efforts by the Commission have been
    successful, as the first results indicate a high compliance with the
    mandatory electronic filing requirements.

    Full realization of the potential of mandatory electronic filing
    will require the funding of several of our programmatic requests for
    FY 2003 and 2004. These initiatives include enhanced automated
    review, the data mining project, and the upgrades of the disclosure
    systems particularly those required by the BCRA changes. Due to
    funding levels in FY 2002 and 2003, as well as the BCRA impacts,
    some of these projects may be delayed until FY 2004.

    By the 2004 election cycle, based upon our experiences with the 2002
    cycle and the results of the RAD business process review, as well as
    the data mining project, the FEC expected to realize the full
    benefits of both electronic filing and the IT enhancements in the
    document processing and reports review programs. This full
    realization will be delayed until at least FY 2005.

    **Point of Entry**

    The IT Enhancements supports implementation and operation of an
    enhanced document imaging system. The updated imaging system and the
    new client server infrastructure enhance both the external user
    interface with the disclosure process and FEC internal processing
    and use of in-house documents.

    **Summary of Request and Differences from FY 2003**

    The following set of tables summarizes the FY 2004 request and the
    differences from FY 2003. As noted in the Executive Summary, the net
    increase in FY 2004 is only a 1.8% increase over FY 2003: a total of
    \$898,129. The increase in personnel costs is due mainly to the full
    funding of the 391 FTE requested; although authorized 389 FTE in FY
    2003 the FEC will only be able to reach about 373.2 FTE due to
    delayed enactment of the FY 2003 appropriation and the lack of
    additional space to house the 27 FTE requested for BCRA
    implementation in FY 2003.

    The FY 2004 request assumes that, although delayed by the late
    enactment of the FY 2003 appropriation and the unwillingness of GSA
    to therefore implement a forced move, the FEC will initiate a forced
    move and construction project to acquire the 5^th^ floor by the
    close of FY 2003. We therefore assume that we will either occupy
    swing space or the completed 5^th^ floor for the entire FY 2004
    period, and will be able to staff up accordingly.

    TABLE 1: FEC FY 2003 TO FY 2004: SUMMARY DIFFERENCES

    ![](media/image5.wmf)

    TABLE 2: PERCENTAGE INCREASES FROM FY 2003

    ![](media/image6.wmf)

##  {#section-1 .unnumbered}

##  {#section-2 .unnumbered}

## TABLE 3: FEC STAFFING {#table-3-fec-staffing .unnumbered}

![](media/image7.wmf)

## TABLE 4: BCRA INCREASES BY OBJECTIVE {#table-4-bcra-increases-by-objective .unnumbered}

![](media/image8.wmf)

**FEC Staffing and Workloads**

FY 2004 will encompass the 2004 primary and pre-general election peak
period and most of the post-election disclosure and enforcement work for
that election cycle. The 2000 elections broke all records for total
financial activity in federal elections, and this record level of
financial activity should continue for the 2004 elections. The 2004
election is expected to be as competitive as the 2000 and 2002 cycles.

Despite large increases in Commission workloads because of increasing
federal election-related campaign finance activity, the FEC has been
relying on management initiatives and information technology
advancements to improve productivity rather than adding staff. Total
disbursements in federal elections have increased by over 1000% since
1976: from \$300 million to over \$3.7 billion in the 2000 cycle. This
has translated into workload increases such as a 27% increase in
documents filed since 1984 and an increase of 400% in the number of
transactions entered into the database since the 1984 election cycle.
The FEC has processed these record level workloads with minimal
increases in the staff processing and reviewing the reports.

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, approximately
50% 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 Current
Services base will jeopardize our basic mission and objectives.

Total campaign finance activity for the congressional election in the
2002 election cycle could ultimately reach \$3 billion in total
disbursements for federal campaigns, from 8,000 committees filing over
90,000 reports and generating 2.5 million itemized transactions in the
FEC Disclosure Database. For the 2004 cycle, campaign finance activity
could exceed \$4 billion in total disbursements from 8,500 committees
filing over 90,000 reports and generating 3 million itemized
transactions.

Realizing additional future efficiencies from the mandatory electronic
filing program will help keep staffing needs at current levels in the
disclosure program. The Commission has managed new records for total
campaign finance activity in presidential and congressional elections
each election cycle since 1992, with limited staff increases. Our
original request for FY 2003 only provided for additional staff and
resources for the OEA, with no additional staff for any other programs.
The final FY 2003 request included the 27 additional FTE allocated to
the BCRA amendments enacted in FY 2002. Our FY 2004 request includes on
the BCRA staff and two FTE for matching fund certifications in the 2004
elections.

Despite the prospect of continuing increases in record amounts of
campaign finance activity in federal elections, the FEC has requested no
additional resources for the disclosure, compliance and enforcement
programs other than to cover the BCRA impacts. Given the expected total
volume of money involved in the 2002 and 2004 election cycles, we
believe that the FEC request for FY 2004 is fully supported and is a
modest one.

**FEC Mission**

The FEC budget is based on the agency's fundamental 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 Commission has established six major
    core and management programs.

    The core programs are:

-   Promoting Disclosure

-   Obtaining Compliance with the Federal Election Campaign Act (FECA)

-   Administering the Public Financing of Presidential Elections

    The management programs are:

-   Special IT/Electronic Filing Projects, and

-   Commission Policy and Administration

    Within each of the core programs, the Commission has defined
    specific objectives. To achieve these objectives, the Commission
    must accomplish certain goals. To the extent that the agency
    succeeds in reaching these goals and objectives, it will fulfill its
    fundamental mission. The core and management programs are described
    below in terms of their objectives and related goals, and a series
    of tables supplement the explanation.

    **Overview of FEC Programs**

    Tables 5A, 5B, and 5C provide an overview of the FEC budget, by
    program. Table 5A shows the total dollars budgeted for each program;
    Table 5B distinguishes between personnel and non-personnel costs;
    and Table 5C shows the personnel (FTE) for each program. tables 5A
    and 5C indicate what percentage of the total budget request each
    program represents.

    ![](media/image9.wmf)

    ![](media/image10.wmf)

    ![](media/image11.wmf)

    **Program I: Disclosure (Core Program)**

    **Objectives**

    With regard to the Disclosure Program, the Federal Election
    Commission seeks to:

-   Review and process the financial reports filed by political
    committees accurately and timely.

-   Make the reports and data readily accessible to the public, the
    media and the regulated community.

-   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 Commission 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.

-   Review 60 percent of reports within 90 days of receipt at the FEC.

-   Encourage filers to voluntarily correct the public record by
    requesting additional information.

-   Code and enter into the FEC database the information contained in 95
    percent of reports within 45 days of receipt at the FEC. This is a
    pre-electronic filing goal that will be adjusted after our
    experience with the 2002 cycle reports under mandatory electronic
    filing.

*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.

-   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.

-   Provide policy guidance through the timely release of Advisory
    Opinions.

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

    **Summary**

    The resources needed to meet the objectives and goals of the
    Disclosure Program in FY 2004 are summarized in Tables 6A and 6B.

    ![](media/image12.wmf)

    ![](media/image13.wmf)

    **Program II: Compliance (Core Program)**

    **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 voluntarily comply with the law's reporting
    requirements, fundraising restrictions and public funding statutes.
    The FEC encourages voluntary compliance through education (described
    under the Disclosure Program, p. 23). To buttress its educational
    efforts, the Commission carries out a Compliance Program with the
    following objectives:

-   Conduct desk audits (reviews) of every report;

-   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:

    *Desk Audits*

    The Commission will:

-   Conduct a desk audit of every report and encourage the regulated
    community to clarify the public record when information is
    inaccurate or incomplete.

-   Refer filers who fail to comply with the FECA disclosure
    requirements or contribution limitations or restrictions, and who
    fail to voluntarily correct their reports, for an audit and/or
    enforcement action, if necessary.

    *Audits*

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

    The Commission's budget contains the resources added in FY 2001 to
    establish a "stand alone" Title 2 Audit "For Cause" Program (a PwC
    recommendation.) A total of two FTE's allows the Audit Division to
    hire eight part-time student interns, which will enable the FEC to
    conduct approximately 40-45 Title 2 audits per cycle as opposed to
    the previous 20-25 per cycle. These part-time staff also will assist
    the auditors in performing Title 26 audits of Presidential
    committees that receive public funds. This proposal, along with
    other procedural changes, allows the Commission to maintain the
    Title 2 audit program even during presidential election cycles. In
    contrast, over the previous four cycles (1991-92 through 1997-98) an
    average of 9 authorized and 12 non-authorized committees had been
    slated for audit.

    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. One FTE is dedicated to four temporary positions to begin
    to process matching fund requests in the last quarter of FY 2003 in
    anticipation of the 2004 presidential primaries (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.
    (A substantive finding is a finding based on the merits of the
    matter \[other than dismissal\], including findings of "no reason to
    believe the FECA has been violated.")[^2]

    In past budget requests, the Commission has asked for additional
    resources for its compliance program. The Commission is only seeking
    additional staff resources for its compliance programs in this
    budget request to cope with the changes to the FECA contained in the
    BCRA amendments. OGC expects to maintain performance levels from
    pre-BCRA implementation, when staff was pulled from enforcement to
    work on regulations and court cases. It is important to note,
    however, that maintaining previous staffing levels in OGC will limit
    the Commission's capability to handle new major cases that may arise
    from the 2002 cycle.

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

-   Maintain a monthly average active caseload of at least 50 percent of
    the total caseload.

-   Close an estimated 150 cases. The Commission will close 50 percent
    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 Fines program pursuant to 2
    U.S.C.437g(a)(4)(C)(iii). (It is not possible 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.)..

-   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.

-   Conclude some or all of the major cases involving complex legal
    issues[^4]---including those remaining from earlier election cycles
    (1996 and 1998) and those stemming from the 2000 cycle.

    *Administrative Fine Program and ADR*

    The Commission undertook two compliance initiatives in FY 2000 and
    2001 to maximize the use of enforcement resources. 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, on a pilot basis, 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, which was made a permanent part
    of the Commission on October 1, 2002, 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.

    **Summary**

    Since 1995, with the institution of the Enforcement Priority System
    (EPS), the Commission's enforcement workload has averaged about 215
    total cases per month, with about 100 of those cases actively being
    worked on. In each election cycle, the FEC has averaged about 200
    complaints and about 125-150 internal referrals. Historically, the
    FEC has closed about 40% of its cases with some form of substantive
    action, dismissing the others without formal action either due to
    staleness or lack of substantive issues. From FY 1998-2000, the
    Commission was able to increase the number of cases activated to
    over 50% of the incoming cases, and the average active to inactive
    caseload percentages improved to over 50% in FY 1999-2000. In
    addition, the number of cases dismissed, or closed without
    substantive Commission action, dropped significantly from an average
    of about 60% (FY 1995-1999) to 25% in FY 2000. This was accomplished
    without a major increase in authorized staff.

The FEC anticipates that the ADR and administrative fine programs will
continue to enable the Commission to assign OGC enforcement resources to
more complex, substantive matters. These programs expanded the number of
compliance actions that the Commission enforcement program could process
and resolve. From FY 1995 (when the EPS was installed) through FY 2000,
the Commission averaged closing 205 cases each fiscal year. In FY 2001,
the Commission closed a total of 517 enforcement matters or compliance
actions, including cases in the administrative fine and ADR programs.
This represents a 152% increase. In FY 2002, the FEC closed 184
administrative fine cases.

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). The two new programs help to
ensure that limited enforcement resources are focused on more
substantive and significant cases, yet allow the Commission to pursue
the successful resolution of a major increase in the total number of
cases processed. This is in response to both recommendations from the
PwC review of the FECA and the FEC, and a desire by the Commission to
improve the timeliness of FEC compliance actions. The administrative
fine program was also congressionally mandated in language in the
Commission's appropriations legislation.

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.

With the conclusion of the BCRA implementation and the addition of the
requested staff for OGC, the Commission expects to return to a more
"normal" enforcement program; enforcement activities were disrupted in
FY 2002 and 2003 due to the BCRA amendments and the shifting of staff
from enforcement to regulations and litigation (BCRA cases.)

the resources needed to meet the objectives and goals of the Compliance
Program in FY 2004 are summarized in Tables 7A and 7B.

![](media/image14.wmf)

![](media/image15.wmf)

\*Office of General Counsel's old Public Financing, Ethics, and Special
Projects staff

\*\* Contract for legal document imaging and indexing

**Program III: Public Financing (Core Program)**

**Objectives**

Under the Public Financing Program, the Commission seeks to:

-   Certify timely the eligibility of Presidential candidates and
    committees for payments.

-   Ensure timely U.S. Treasury payments to certified committees.

-   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 2000 and
    2004 Presidential general elections.

-   Successfully resolve all enforcement cases within the statutory time
    limits.

-   Process the certifications quickly and accurately. (The bulk of
    these will be completed during FY 2004.)

### Summary {#summary .unnumbered}

For FY 2004, the resources needed to complete the 2000 cycle and prepare
to implement the public financing program in the 2004 election cycle are
summarized in Tables 8A and 8B.

![](media/image16.wmf)

![](media/image17.wmf)

**Program IV: Election Administration (Core Program)**

Contained in the President's FY 2004 Budget as part of the Election
Assistance Commission (EAC); expected to be transferred to the EAC in
late FY 2003.

**Objectives**

Through the FEC Office of Election Administration, the agency did:

-   Carry out its statutory responsibilities under the National Voter
    Registration Act (NVRA) to help improve the national level of voter
    registration.

-   Carry out its responsibility with respect to the Voting
    Accessibility Act.

-   Help ensure that state and local election officials receive
    informational and educational assistance in administering federal
    elections in an efficient and effective manner.

-   Foster public confidence in the fairness and reliability of the
    polling process in federal elections.

    **Goals**

    To realize the objectives described above the Commission, through
    the Office of Election Administration, did:

-   Grant and oversee research contracts on issues of concern to
    election administrators.

-   Assist state election officials in implementing the NVRA, collect
    data on the impact of that law on election administration, and
    report to Congress thereon by June 30, 2004.

-   Serve as an on-call resource to election officials with immediate
    needs for technical and legal information.

-   Help state and local election officials adapt to changing technology
    and legal requirements.

-   Disseminate revisions to the Voting Systems Standards (VSS),
    originally issued in 1990; revisions initiated in FY 1999 for a
    total multiyear cost of over \$500,000 for this project.

-   Develop operational guidelines to complement the technical VSS; to
    assist state and local elections administrators in improving the
    management and conduct of federal elections in 2004 and future
    elections.

    **Summary**

    Resources needed to reach these goals in FY 2002 and 2003 are
    summarized in Table 9A and 9B.

    ![](media/image18.wmf)

    ![](media/image19.wmf)

    **Program V: IT and Electronic Filing Projects (Management
    Program)**

    The Commission will allocate \$6,389,900 of its FY 2004 budget
    request to fund IT initiatives and the electronic filing program.
    This amount, which is provided for in the FEC's IT Strategic
    Plan,[^5] represents an increase of \$427,500 (7.7%) from the FY
    2002 IT budget of \$5,932,313. This funding will enable the FEC to
    continue the installation of the new client/server infrastructure,
    meet its statutory responsibilities under mandatory electronic
    filing, and undertake additional initiatives to further enhance the
    IT systems at the FEC.

    **IT Enhancements**

    Under the FY 2004 Budget Request, the agency will continue to
    implement and expand upon the IT enhancements initiated in previous
    years, including Client/Server development and conversion.

### Electronic Filing

*Progress to Date*

By 1998, the FEC electronic filing system was implemented, and was
optional for any political committee, other than Senate committees and
the national parties' Senate campaign committees.[^6] During FYs 2000
and 2001, the FEC continued to develop incentives to encourage
committees to file voluntarily their reports electronically, and in the
2000 election cycle more than 1,000 committees filed their reports
electronically.

The mandatory electronic filing provision in the FY 2000 Treasury and
General Government Appropriations bill required the FEC to establish
thresholds for mandatory electronic filing for committees effective for
the 2002 election cycle. The rulemaking was implemented by December
2000. The FEC has the capacity to handle all electronically filed
reports. To initiate the program, the FEC:

-   Established the structure of the program.

-   Established the mechanisms by which committees electronically file
    their reports: by diskette, by modem and through the Internet.

-   Established the infrastructure both to receive and validate the
    reports filed.

-   Implemented a system for automatically placing the electronic data:

```{=html}
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```
-   In the FEC database and

-   In an image format resembling an FEC form so that individuals, using
    a computer, can read simulated pages of reports.

    *Future Efforts*

    The FEC will continue to review the electronic filing procedures to
    improve the process, including:

```{=html}
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```
-   Analyzing the strengths and weaknesses of the FEC experience to date
    with the electronic filing program;

-   Evaluating and modifying the software developed and implemented for
    the program;

-   Evaluating and expanding the Commission's program for training
    committees in the use of the software;

-   Evaluating and modifying methods for educating the filing community
    about electronic filing; and

-   Continue to work with private software companies to integrate
    electronic filing features into their commercial products.

Development of new processes to improve internal document flow in the
mandatory electronic filing environment will continue into FY 2003 and
FY 2004. The automated review of reports will be expanded and enhanced.
Spending on this initiative during FY 2004 also includes funds for
on-going operation and maintenance of the electronic filing system
during the 2002 and 2004 election cycles.

*Data Input*

The FEC will continue to input manually the data taken from reports
filed by Senate committees and committees that do not meet the
established threshold and choose not to file electronically.

*Data Mining*

In FY 2003, \$250,000 was originally requested to develop data mining to
review disclosure data for patterns of behavior that may extend to more
than one filer. As a result of the BCRA implementation, this project may
now be delayed until FY 2004.

*Response to Growing Demand for Information*

Enhanced information technology has enabled the FEC to respond to a
growing demand for information---and to deliver the information
faster---without additional staff. Through the FEC automated fax system
and the Internet, the public can instantaneously access FEC forms,
publications and campaign finance data.

*Larger Audience Using Data*

Additionally, the new technology has broadened the audience for existing
services. In the past, for example, a limited community of campaign
finance specialists accessed the FEC data-base through the Direct Access
Program (DAP), a fee-for-service program.[^7] The agency has now made it
possible for these same experts---and the public as a whole---to access
the data cost-free on the Internet. During FY 2001, the agency continued
its conversion from the DAP to the FEC website.

*Point of Entry Completed*

The Commission successfully completed its Point-of-Entry initiative in
2000. Under this program, all political committees (except Senate
committees and the national parties' Senate campaign committees[^8])
file their reports with the Commission (either on paper or
electroni-cally). The Commission scans the paper documents to make
images that are available for review on FEC computers and on the
Website. Images of Senate documents are electronically transmitted to
the FEC and automatically added to the FEC imaging database.
Electronically filed documents are imaged and retrievable from the
Website, in the same format as if filed on paper. Imaged filings are
available for calendar years 1993 through the present cycle.

### Summary: Electronic Filing and IT Enhancements {#summary-electronic-filing-and-it-enhancements .unnumbered}

the total request for IT enhancements and electronic filing in FY 2004
is \$6,389,900. Tables 10A and 10B summarize the costs contained in the
FY 2004 budget. The IT Strategic Plan discusses the initiatives planned
for FY 2004 and beyond. The major new initiative scheduled to begin in
FY 2003 with completion in FY 2007, is the portal development project
that will integrate the IT systems into a web-based access environment
for both external and internal users.

![](media/image20.wmf)

![](media/image21.wmf)

**Program VI: Commission Policy and Administration (Management
Program)**

Tables 11A and 11B depict the costs and corresponding FTE for central
policy guidance, management and staff support for all Commission
operations that do not otherwise fit under the previously identified
programs. Besides the offices of the six Commissioners and the
Secretariat, this budget category includes all basic administrative
overhead, such as rent, phones, postage, etc., and support functions,
such as management, budget, accounting and personnel. Direct support
costs for program-related items, such as travel, training, and printing,
are allocated to specific Commission objectives and programs.

![](media/image22.wmf)

![](media/image23.wmf)

[^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]: There is a significant difference between mere "dismissal" and a
    finding of "no reason to believe" the law has been violated. A
    finding of "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 limited 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.

[^4]: Examples of complex legal issues include possible "soft money"
    abuse, claims of improper coordination or express advocacy, and
    alleged laundered and/or foreign contributions.

[^5]: The FEC's IT Strategic Plan is a running five-year plan, reviewed
    and updated annually. (See Appendix B.)

[^6]: Senate committees and the national parties' Senate campaign
    committees are required by law to file their reports with the
    Secretary of the Senate. Consequently, these committees are unable
    to participate at this time in the FEC's electronic filing program.

[^7]: While used primarily by the campaign finance community, the Direct
    Access Program has always been available to the public.

[^8]: Senate committees and the national parties' Senate campaign
    committees are required by law to file their reports with the
    Secretary of the Senate. Consequently, these committees are unable
    to participate at this time in the FEC's electronic filing program.