)('(5$/(/(&7,21&200,66,21

:$6+,1*721'&

May 2, 2022 

MEMORANDUM 

To: The Commission 

Through: Alec Palmer 

Staff Director 

From: Patricia C. Orrock 

Chief Compliance Officer e Offi

irecto

Offic

Dayna C. Brown 

Assistant Staff Director 

Audit Division 

Nicole Burgess 

Audit Manager 

By: Terry O’Brien 

Lead Auditor 

Subject: Resubmission - Audit Division Recommendation Memorandum on the 

Kentucky State Democratic Central Executive Committee (A19-13) 

Pursuant to Commission Directive No. 70 (FEC Directive on Processing Audit Reports), 

the Audit staff presented the Draft Final Audit Report (DFAR) to the Kentucky State 

Democratic Central Executive Committee (KSDCEC) on January 19, 2022 (attached). 

KSDCEC did not request an audit hearing. 

This office is resubmitting the subject Audit Division Recommendation Memorandum 

(ADRM). The original ADRM, along with the Office of General Counsel’s (OGC) 

comments on the DFAR and KSDCEC’s response to the DFAR, were circulated to the 

Commission on February 28, 2022, and withdrawn on March 21, 2022. Subsequently, on 

March 30, 2022, OGC issued supplemental comments (LRA 1107, dated March 30, 2022, 

attached) revisiting its analysis of Finding 4, Excessive Coordinated Party Expenditures, 

pertaining to door hangers. On April 19, 2022, KSDCEC responded to OGC’s analysis of 

Finding 4. KSDCEC’s February 3, 2022, response to the DFAR and April 19, 2022, 

response to the Finding 4 analysis are noted below. 
2 

This memorandum provides the Audit staff’s recommendation for each finding outlined in 

the DFAR. 

Finding 1. Misstatement of Financial Activity 

The Audit staff recommends that the Commission find that, in 2017, KSDCEC 

understated its receipts by $15,838, disbursements by $38,846, beginning cash by 

$35,925, and ending cash by $12,917; and in 2018, KSDCEC understated its 

receipts by $116,641, disbursements by $61,315, and ending cash by $68,280. 

Finding 2. Receipt of Contributions in Excess of the Limit 

In response to the DFAR, KSDCEC maintained that the excessive contributions in 

the finding came from a small number of “institutional contributors” who make 

yearly contributions to KSDCEC. KSDCEC contends that these donors each gave 

with the understanding that their contribution would be split between KSDCEC’s 

federal and non-federal accounts. KSDCEC also noted that the non-federal portions 

of these contributions were transferred to its non-federal account in a timely manner. 

KSDCEC further stated that no responses were received from the letters it sent to its 

donors, in response to the Interim Audit Report (IAR), “confirm[ing] that their 

contribution was split between their federal account and non-federal account and 

offer[ing] a refund....” It was the understanding of KSDCEC that sending these 

letters satisfied the Audit Division’s recommendation in the IAR. 

Pursuant to OGC’s DFAR comments (LRA 1107, dated December 14, 2021, 

attached) and Advisory Opinion 2001-17 (DNC Services), the Audit staff’s DFAR 

recommended that KSDCEC submit evidence that its contributors intended or 

directed their contributions be split between federal and non-federal accounts. In its 

DFAR response, KSDCEC requests that this language either be deleted from the 

Final Audit Report or that more clarity be provided regarding what is considered 

sufficient documentation for purposes of compliance as it relates to Finding 2. 

In its comments on KSDCEC’s DFAR response (LRA 1107, dated February 15, 

2022, attached) OGC elaborated that if KSDCEC was relying on Advisory Opinion 

2001-17 (DNC Services) for its transfers of contributions intended to be split into 

federal and non-federal components, KSDCEC would need to provide evidence of 

contributor intent as discussed in the Advisory Opinion, i.e., evidence that would 

conform to the time frames of 11 C.F.R. § 103.3. OGC also raises the question of 

whether Advisory Opinion 2001-17 (DNC Services) may be relied upon by a state 

party committee transferring funds from a federal to D non-federal account after 

the promulgation of 11 C.F.R. § 300.30(b)(3)(i) following the enactment of 

the Bipartisan Campaign Reform Act of 2002. As such, we raise this matter 

for the Commission’s consideration. 

Notwithstanding the applicability of Advisory Opinion 2001-17 (DNC Services), 

the Audit staff notes that KSDCEC was not able to provide evidence that its 

contributors intended their contributions to be split between federal and non-federal 

funds, as noted in its DFAR response. The Audit staff further notes that, in response 

to the IAR, KSDCEC instead provided letters to its contributors informing them that 
3 

their contributions were split between its federal and non-federal accounts, and 

offering the opportunity for a refund, which resolved their excessive contributions, 

albeit untimely. As such, the Audit staff recommends that the Commission find that 

KSDCEC received excessive contributions totaling $78,043. 

Finding 3. Recordkeeping for Employees 

The Audit staff recommends that the Commission find that KSDCEC did not 

maintain monthly payroll logs or equivalent records, totaling $443,976, to document 

the percentage of time each employee spent in connection with a federal election for 

calendar years 2017 and 2018. 

Finding 4. Excessive Coordinated Party Expenditures 

In response to the DFAR, KSDCEC noted that it previously provided sign-in sheets 

and photographs of volunteers, along with sworn declarations1

 from a volunteer, a 

KSDCEC staffer and a mail house employee. The Audit staff acknowledged that 

KSDCEC partially complied with the IAR recommendation with the provision of 

the sign-in sheets, photographs and affidavits associated with ten of its mailers and, 

as such, no longer attributed the cost of the ten mailers to KSDCEC’s coordinated 

party expenditure limit. However, three mailers remained where the Audit staff 

concluded that KSDCEC did not provide additional information. 

KSDCEC stated that the Audit staff accepted documentation for ten mailings 

undertaken by KSDCEC but rejected documentation for the remaining three 

mailings, although the declarations provided in response to the IAR were intended 

to be applied to all thirteen mailings found in the finding. 

Given that KSDCEC also intended the affidavits from the volunteer, KSDCEC 

employee and mail house employee to document the volunteer materials exemption 

for the three mailers totaling $210,120, and that there were no sign-in sheets or 

photographs to support these three mailers, the Audit staff recommends that the 

Commission determine whether these affidavits sufficiently document volunteer 

involvement and satisfy the exemption given the lack of clarity regarding how the 

exemption should be applied. 

In LRA 1107, dated March 30, 2022, OGC revised its conclusion regarding the door 

hanger (see Finding 5) and whether a door hanger is a public communication. OGC 

stated that a door hanger that qualifies as exempt under the volunteer materials 

exemption should be excluded from being classified as a party coordinated 

expenditure, but a door hanger that does not qualify for the volunteer materials 

exemption likely is a public communication and, therefore in this case, also a party 

coordinated expenditure. OGC recommends that the cost of the door hanger be 

included in Finding 4 as a party coordinated expenditure because if it is not within 

the volunteer materials exemption, the door hanger is likely a public communication 

that otherwise meets the definition of “party coordinated communication” in 11 

C.F.R. § 109.37. 

1

 The Audit staff notes that KSDCEC’s DFAR response refers to the three submissions as “sworn 

declarations”; however, three affidavits were submitted. 
4 

In its response to OGC’s LRA 1107, dated March 30, 2022, KSDCEC maintained 

that the door hanger at issue qualifies for the volunteer materials exemption, noting 

that “documentation beyond a sworn affidavit has never been required” to qualify 

for the exemption. KSDCEC stated that the process of distributing a door hanger is 

“a very decentralized process” making it difficult to document such activity, in 

contrast to documenting the volunteer activity relative to exempt mail pieces which 

are generally handled in a closed environment. 

KSDCEC further stated that the door hanger in question should not be included in 

the coordinated expenditure finding because the door hanger is not a public 

communication and therefore cannot qualify as a coordinated party expenditure. 

This, KSDCEC asserted, is due to the content standard which states that a 

communication must be a “public communication” to meet the definition of a 

coordinated party expenditure. 

As a result of OGC’s revised conclusion regarding the door hanger, the Audit staff 

has added the $14,105 cost of the door hanger to the $210,120 cost of the remaining 

three mailers, for a revised coordinated party expenditure total of $224,225. Should 

the Commission determine that the affidavits do not sufficiently document the 

volunteers’ involvement for the door hanger and the mailers, and that the volunteer 

materials exemption does not apply to these expenditures, the Audit staff 

recommends that the Commission find that KSDCEC exceeded the coordinated 

party expenditure limit by $169,525. 

Finding 5. Failure to File a 24-Hour Report 

In response to the DFAR, KSDCEC stated that this finding should either be removed 

from the report or additional clarifying information should be provided due to the 

origin of the finding, which KSDCEC believes was the Audit staff’s attempt “to 

address a purported lack of documentation” provided for the use of volunteers, as 

documented by a sworn declaration provided by its then-Executive Director. 

KSDCEC further stated that the Audit staff “chose to analyze this issue as a 

reporting matter and not one related to the issue at hand, which is whether the 

distribution of these materials resulted in an excessive coordinated expenditure on 

behalf of the candidate.” Additionally, KSDCEC maintained that the activity in 

question was not a public communication and thus could not be considered a 

coordinated communication, which OGC agreed with in its DFAR legal analysis 

(LRA 1107, dated December 14, 2021, attached). 

However, in its subsequent LRA 1107, dated March 30, 2022, OGC revised its 

conclusion that a door hanger cannot be a public communication, stating that if 

KSDCEC’s documentation is insufficient to establish the volunteer materials 

exemption, then the door hanger likely is a public communication and would be 

considered a party coordinated expenditure. In its response, KSDCEC noted that 

“documentation beyond a sworn affidavit has never been required...” to show 

volunteer involvement and that “door hangers are not public communications, and 

therefore, cannot qualify as coordinated party expenditures.” 

Irrespective of whether the door hanger is a public communication, given 

KSDCEC’s assertion that the expenditure was coordinated with a nominee, the door 
5 

hanger does not meet the definition of an independent expenditure and, therefore, 

did not require the filing of a 24-hour report, as determined in the DFAR. The Audit 

staff notes that KSDCEC first asserted that the expenditure in question 

was coordinated with a nominee in its response to the IAR and therefore WKH

$XGLWVWDII did not analyze this issue until it was raised by KSDCEC. As such, the 

Audit staff therefore recommends that the Commission find that KSDCEC did not 

fail to file a 24-hour report. 

The Office of General Counsel has reviewed this memorandum and concurs with the 

recommendations. 

If this memorandum is approved, the Proposed Final Audit Report will be prepared and 

circulated within 30 days of the Commission’s approval. 

If this Audit Division Recommendation Memorandum is not approved on a tally vote, 

Directive No. 70 states that the matter will be placed on the next regularly scheduled 

open session agenda. 

Documents related to this audit report can be viewed in the Voting Ballot Matters folder. 

Should you have any questions, please contact Terry O’Brien or Nicole Burgess at 694-

1200. 

Attachments: 

- Draft Final Audit Report of the Audit Division on the Kentucky State Democratic 

Central Executive Committee 

- Comments on Draft Final Audit Report on the Kentucky State Democratic Central 

Executive Committee, dated December 14, 2021 (LRA 1107) 

- Comments on Kentucky State Democratic Central Executive Committee Response 

to the Draft Final Audit Report, dated February 15, 2022 (LRA 1107) 

- Comments on Audit Division Recommendation Memorandum on the Kentucky 

State Democratic Central Executive Committee, dated March 30, 2022 (LRA 1107) 

cc: Office of General Counsel 
Draft Final Audit Report of the 

Audit Division on the Kentucky 

State Democratic Central 

Executive Committee 

(January 1, 2017 - December 31, 2018) 

Why the Audit 

Was Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political committee that i

required to file reports 

under the Federal 

Election Campaign Act 

(the Act). The 

Commission generally 

conducts such audits 

when a committee 

appears not to have met 

the threshold 

requirements for 

substantial compliance 

with the Act.1 The audit 

determines whether the 

committee complied with

the limitations, 

prohibitions and 

disclosure requirements 

of the Act. 

s 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, 

with respect to any of the 

matters discussed in this 

report. 

About the Committee (p. 2) 

The Kentucky State Democratic Central Executive Committee is 

a state party committee headquartered in Frankfort, Kentucky. 

For more information, see the chart on the Committee 

Organization, p. 2. 

Financial Activity (p. 3) 

• Receipts 

o Contributions from Individuals $ 918,471 

o Contributions from Political 

Committees 802,802 

o Transfers from Affiliated/Other 

Party Committees 709,719 

o Offsets, Refunds, and Other 

Federal Receipts 286,747 

o Transfers from Non-federal 

Account 88,064 

Total Receipts $ 2,805,803 

• Disbursements 

o Operating Expenditures $ 188,678 

o Allocated Federal/Non-federal 

Expenditures 813,027 

o Transfers to Affiliated/Other 

Party Committees 63,757 

o Refunds/Other Disbursements 385,724 

o Federal Election Activity 1,259,053 

Total Disbursements $ 2,710,239 

Findings and Recommendations (p. 4) 

• Misstatement of Financial Activity (Finding 1) 

• Receipt of Contributions in Excess of the Limit (Finding 2) 

• Recordkeeping for Employees (Finding 3) 

• Excessive Coordinated Party Expenditures (Finding 4) 

• Failure to File a 24-Hour Report (Finding 5) 

1

 52 U.S.C. §30111(b). 
Draft Final Audit Report of the 

Audit Division on the 

Kentucky State Democratic 

Central Executive Committee 

(January 1, 2017 - December 31, 2018) 
Table of Contents 

Page

Part I. Background

Authority for Audit 1 

Scope of Audit 1 

Commission Guidance 1 

Part II. Overview of Committee 

Committee Organization 2 

Overview of Financial Activity 2 

Part III. Summaries

Findings and Recommendations 3 

Part IV. Findings and Recommendations

Finding 1. Misstatement of Financial Activity 5

Finding 2. Receipt of Contributions in Excess of the Limit 7

Finding 3. Recordkeeping for Employees 12

Finding 4. Excessive Coordinated Party Expenditures 13

Finding 5. Failure to File a 24-Hour Report 19
1

Part I

Background 

Authority for Audit

This report is based on an audit of the Kentucky State Democratic Central Executive 

Committee (KSDCEC), undertaken by the Audit Division of the Federal Election 

Commission (the Commission) in accordance with the Federal Election Campaign Act of 

1971, as amended (the Act). The Audit Division conducted the audit pursuant to 52 

U.S.C. §30111(b), which permits the Commission to conduct audits and field 

investigations of any political committee that is required to file a report under 52 U.S.C. 

§30104. Prior to conducting any audit under this subsection, the Commission must

perform an internal review of reports filed by selected committees to determine if the

reports filed by a particular committee meet the threshold requirements for substantial

compliance with the Act. 52 U.S.C. §30111(b).

Scope of Audit

Following Commission-approved procedures, the Audit staff evaluated various risk 

factors and as a result, this audit examined: 

1. the receipt of excessive contributions;

2. the disclosure of contributions received;

3. the disclosure of individual contributors’ occupation and name of employer;

4. the disclosure of disbursements, debts and obligations;

5. the disclosure of expenses allocated between federal and non-federal accounts;

6. the consistency between reported figures and bank records;

7. the completeness of records;

8. the disclosure of independent expenditures; and

9. other committee operations necessary to the review.

Commission Guidance

Request for Legal Consideration by the Commission

Pursuant to the Commission’s “Policy Statement Establishing a Program for Requesting 

Consideration of Legal Questions by the Commission,” several state party committees 

unaffiliated with KSDCEC requested early consideration of a legal question raised during 

audits covering the 2010 election cycle. Specifically, the Commission addressed whether 

monthly time logs under 11 CFR §106.7(d) (1) were required for employees paid with 

100 percent federal funds. 

The Commission concluded, by a vote of 5-1, that 11 CFR §106.7(d) (1) does require 

committees to keep a monthly log for employees paid exclusively with federal funds. 

Exercising its prosecutorial discretion, however, the Commission decided it will not 

pursue recordkeeping violations for the failure to keep time logs or to provide affidavits 

to account for employee salaries paid with 100 percent federal funds and reported as 

such. This audit report does not include any findings or recommendations with respect to 

KSDCEC employees paid with 100 percent federal funds and reported as such. 
2 

Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration July 12, 1975 

• Audit Coverage January 1, 2017 - December 31, 2018 

Headquarters Frankfort, Kentucky 

Bank Information 

• Bank Depositories Three 

• Bank Accounts Four Federal; Three Non-Federal 

Treasurer 

• Treasurer When Audit Was Conducted M. Melinda Karns (4/12/2013 – Present) 

• Treasurer During Period Covered by Audit M. Melinda Karns (4/12/2013 – Present) 

Management Information 

• Attended FEC Campaign Finance Seminar Yes 

• Who Handled Accounting and 

Recordkeeping Tasks 

Paid Staff 

Overview of Financial Activity 

(Audited Amounts) 

Cash on hand @ January 1, 2017 $ 47,671 

Receipts 

o Contributions from Individuals 918,471 

o Contributions from Political Committees 802,802 

o Transfers from Affiliated/Other Party 

Committees 

709,719 

o Offsets, Refunds, and Other Federal Receipts 286,747 

o Transfers from Non-federal Account 88,064 

Total Receipts $2,805,803 

Disbursements 

o Operating Expenditures 188,678 

o Allocated Federal/Non-federal Expenditures 813,027 

o Transfers to Affiliated/Other Party 

Committees 

63,757 

o Refunds/Other Disbursements 385,724 

o Federal Election Activity 1,259,053 

Total Disbursements $ 2,710,239 

Cash on hand @ December 31, 2018 $ 143,235 
3

Part III

Summaries 

Findings and Recommendations 

Finding 1. Misstatement of Financial Activity

During audit fieldwork, a comparison of KSDCEC’s reported financial activity with its 

bank records revealed a misstatement of receipts, disbursements, and beginning and 

ending cash for calendar year 2017, as well as receipts, disbursements, and ending cash 

for calendar year 2018. Specifically, for 2017 KSDCEC understated receipts, 

disbursements, beginning cash and ending cash by $15,838, $38,846, $35,925 and 

$12,917, respectively. For 2018, KSDCEC understated receipts, disbursements and 

ending cash by $116,641, $61,315 and $68,280, respectively. In response to the Interim 

Audit Report recommendation, KSDCEC filed a Form 99 (Miscellaneous Electronic 

Submission) correcting the receipt and disbursement misstatements. Additionally, 

subsequent to its response to the Interim Audit Report, on September 20, 2021, KSDCEC

adjusted its beginning and ending cash balances on its most recently filed disclosure

report. (For more detail, see p. 5.) 

Finding 2. Receipt of Contributions in Excess of the Limit

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review indicated that KSDCEC

received apparent excessive contributions totaling $78,043. The errors occurred as a 

result of KSDCEC not notifying contributors that the excessive portions of the 

contributions were transferred to the non-federal account. In response to the Interim 

Audit Report recommendation, KSDCEC stated that it “disagrees with the Commission’s 

legal basis for this finding,” noting that each donor who made a contribution did so “with 

the full understanding that the contribution was to be split between [KSDCEC’s] federal 

account and non-federal account.” KSDCEC stated that its solicitation materials provide 

clear notice that contributions are subject to the prohibitions and limitation of the Act and 

any portion in excess of the federal limit was timely transferred to its non-federal 

account. 

KSDCEC provided copies of letters to contributors, notifying them that the excessive 

portion of their contribution had been allocated to the non-federal account and offering a 

refund of the amount in excess of the $10,000 limit, thus resolving the excessive portion, 

albeit untimely. After consultation with the Office of General Counsel, the Audit staff 

recommends that KSDCEC provide further evidence that its contributors intended or 

directed their contributions to be split between KSDCEC’s federal and non-federal 

accounts. (For more detail, see p. 7.) 
4

Finding 3. Recordkeeping for Employees

During audit fieldwork, the Audit staff determined that KSDCEC did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2017 and 2018, the Audit staff identified 

payments to KSDCEC employees totaling $443,976 for which KSDCEC did not maintain 

monthly payroll logs. This consisted of payroll which was allocated with federal and 

non-federal funds. There was no payroll paid exclusively with non-federal funds. In 

response to the Interim Audit Report recommendation, KSDCEC stated it “has instituted 

procedures to ensure that time records are maintained for all employees who are paid in 

part with non-federal funds[.]” (For more detail, see p. 12.) 

Finding 4. Excessive Coordinated Party Expenditures 

During audit fieldwork, the Audit staff identified apparent coordinated expenditures for 

one House candidate that exceeded the 2018 coordinated party expenditure limit by a 

total of $558,320. In response to the Interim Audit Report recommendation, KSDCEC 

provided sign-in sheets and photographs of volunteers working at a mail house assisting 

with ten party mailings. KSDCEC also provided affidavits from a volunteer present at 

one of the mailings, a KSDCEC employee who coordinated volunteer recruitment and a 

mail house employee who coordinated volunteer activity with KSDCEC. There remain 

three mailings totaling $210,120 for which KSDCEC did not provide additional 

documentation. As a result, KSDCEC exceeded its coordinated party expenditures 

limitation by $155,420. (For more detail, see p. 13.) 

Finding 5. Failure to File a 24-Hour Report 

During audit fieldwork, the Audit staff reviewed expenditures that KSDCEC disclosed on 

Schedule B (Itemized Disbursements), Line 30(b) (Federal Election Activity Paid 

Entirely with Federal Funds), one of which appeared to be an independent expenditure 

which should have been disclosed on Schedule E, Line 24 (Independent Expenditures). 

KSDCEC may have been required to file a 24-hour report for $14,105, the amount 

KSDCEC paid for a door hanger supporting a candidate for federal office, depending 

upon the dissemination date.

In response to the Interim Audit Report recommendation, KSDCEC disagreed with the 

characterization of this expenditure as an independent expenditure. KSDCEC also 

asserted the door hanger is not a public communication, and therefore cannot be 

considered a coordinated communication. KSDCEC stated that this was an exempt 

activity coordinated with the candidate and distributed by volunteers. A declaration from 

KSDCEC’s Executive Director was also provided. Additionally, KSDCEC stated that 

while it mischaracterized the door hanger expense on its reports as a mailing activity, 

they were actually “printed material that were disseminated by volunteers by manually 

placing them on individual doors of voters.” 

After consultation with the Office of General Counsel, the Audit staff concluded that the 

door hanger is not an independent expenditure, in agreement with KSDCEC. 

(For more detail, see p. 19.) 
5

Part IV

Findings and Recommendations

Finding 1. Misstatement of Financial Activity 

Summary 

During audit fieldwork, a comparison of KSDCEC’s reported financial activity with its 

bank records revealed a misstatement of receipts, disbursements, and beginning and 

ending cash for calendar year 2017, as well as receipts, disbursements, and ending cash 

for calendar year 2018. Specifically, for 2017 KSDCEC understated receipts, 

disbursements, beginning cash and ending cash by $15,838, $38,846, $35,925 and 

$12,917, respectively. For 2018, KSDCEC understated receipts, disbursements and 

ending cash by $116,641, $61,315 and $68,280, respectively. In response to the Interim 

Audit Report recommendation, KSDCEC filed a Form 99 (Miscellaneous Electronic 

Submission) correcting the receipt and disbursement misstatements. Additionally, 

subsequent to its response to the Interim Audit Report, on September 20, 2021, KSDCEC

adjusted its beginning and ending cash balances on its most recently filed disclosure 

report. 

Legal Standard 

Contents of Reports. Each report must disclose:

• The amount of cash on hand at the beginning and end of the reporting period; 

• The total amount of receipts for the reporting period and for the calendar year; 

• The total amount of disbursements for the reporting period and for the calendar year; 

and 

• Certain transactions that require itemization on Schedule A (Itemized Receipts) or 

Schedule B (Itemized Disbursements). 52 U.S.C. §30104(b)(1), (2), (3), (4), and (5). 

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff reconciled KSDCEC’s reported financial activity 

with its bank records for calendar years 2017 and 2018. The reconciliation determined 

that KSDCEC misstated receipts, disbursements, and beginning and ending cash for 

2017, as well as receipts, disbursements and ending cash for 2018. The following charts 

detail the discrepancies between KSDCEC’s disclosure reports and its bank activity. The 

succeeding paragraphs explain why the discrepancies occurred. 
6

2017 Committee Activity 

Reported Bank Records Discrepancy 

Beginning Cash on hand @ 

January 1, 2017 

$11,746 $47,671 ($35,925)

Understated

Receipts $605,653 $621,491 ($15,838)

Understated

Disbursements $484,147 $522,993 ($38,846)

Understated

Ending Cash on hand @ 

December 31, 2017

$133,253 $146,170 ($12,917)

Understated

The beginning cash on hand was understated by $35,925 and the discrepancy resulted 

from prior period discrepancies. 

The net understatement of receipts resulted from the following: 

• Contributions from individuals not reported $15,000 

• Transfer from affiliated committee not reported 11,290 

• Transfer from Non-federal account not supported by bank records (10,586) 

• Unexplained differences 134 

Net Understatement of Receipts $15,838 

The understatement of disbursements resulted from the following:

• Disbursements not reported or reported incorrectly $11,551 

• Transfers to Non-federal not reported 15,000 

• Transfer to affiliated committee not reported 11,290 

• Unexplained differences 1,005 

Understatement of Disbursements $38,846

The $12,917 understatement of the ending cash on hand was a result of the reporting

discrepancies described above.

2018 Committee Activity 

Reported Bank Records Discrepancy

Beginning Cash on hand @ 

January 1, 2018

$132,996 $146,170 ($13,174)

Understated

Receipts $2,067,670 $2,184,311 ($116,641)

Understated

Disbursements $2,125,931 $2,187,246 ($61,315)

Understated

Ending Cash on hand @ 

December 31, 2018 

$ 74,9562 $ 143,236 ($68,280)

Understated

2

 The reported 2018 ending cash on hand does not equal beginning cash on hand plus reported receipts 

minus reported disbursements. This was due to a mathematical discrepancy in which the reported 

beginning cash on hand for 2018 did not equal the ending cash on hand reported for 2017. 
7

The understatement of receipts resulted from the following: 

• Contributions from individuals not reported or reported incorrectly $28,980 

• Contributions from political committees not reported 28,187 

• Transfers from Non-federal account not reported 53,190 

• Unexplained differences 6,284 

Understatement of Receipts $116,641 

The net understatement of disbursements resulted from the following:

• Disbursements not reported or reported incorrectly $20,428 

• Disbursements reported but did not clear the bank (7,454) 

• Disbursements reported twice (35,171) 

• Transfers to Non-federal account not reported 64,636 

• Payments for salaries and wages not reported 20,204 

• Unexplained differences (1,328) 

Net Understatement of Disbursements $ 61,315 

The $68,280 understatement of the ending cash on hand was a result of the reporting 

discrepancies described above. 

B. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with the KSDCEC representatives during the exit 

conference and provided schedules detailing the misstatements of financial activity. The 

Audit staff explained each reporting error to the KSDCEC representatives and answered 

several questions regarding the details of the misstatement. The KSDCEC

representatives acknowledged their understanding of the differences. In its response to 

the exit conference, KSDCEC did not provide any comments on this finding. 

The Interim Audit Report recommended that KSDCEC amend its disclosure reports or 

file a Form 99 (Miscellaneous Electronic Submission)3 to correct the misstatements. In 

addition, the Interim Audit Report recommended that KSDCEC reconcile the cash 

balance on its most recently filed report and correct any subsequent discrepancies. 

C. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, KSDCEC filed a Form 99 

correcting the receipt and disbursement misstatements for the 2017 and 2018 calendar 

years. Additionally, KSDCEC adjusted its beginning and ending cash balances on its 

most recent report, filed September 20, 2021. 

Finding 2. Receipt of Contributions in Excess of the Limit

Summary 

During audit fieldwork, the Audit staff reviewed contributions from individuals to 

determine if any exceeded the contribution limit. This review indicated that KSDCEC

3

 KSDCEC was advised by the Audit staff that if it chose to file a Form 99 instead of amending its 

disclosure reports, the form must contain all pertinent information that is required on each schedule.
8

received apparent excessive contributions totaling $78,043. The errors occurred as a 

result of KSDCEC not notifying contributors that the excessive portions of the 

contributions were transferred to the non-federal account. In response to the Interim 

Audit Report recommendation, KSDCEC stated that it “disagrees with the Commission’s 

legal basis for this finding,” noting that each donor who made a contribution did so with a 

full understanding that the contribution was to be split between KSDCEC’s federal and 

non-federal account. KSDCEC stated that its solicitation materials provide clear notice 

that contributions are subject to the prohibitions and limitation of the Act and any portion 

in excess of the federal limit was timely transferred to its non-federal account. 

KSDCEC provided copies of letters to contributors, notifying them that the excessive 

portion of their contribution had been allocated to the non-federal account and offering a 

refund of the amount in excess of the $10,000 limit, thus resolving the excessive portion, 

albeit untimely. After consultation with the Office of General Counsel, the Audit staff 

recommends that KSDCEC provide further evidence that its contributors intended or 

directed their contributions to be split between KSDCEC’s federal and non-federal 

accounts.

Legal Standard 

A. Party Committee Limits. A party committee may not receive more than a total of 

$10,000 per year from any one individual. This limit is shared by the state, district, & 

local party committees. 52 U.S.C. §30116 (a)(1)(D) and 11 CFR §§110.1(c)(5) and 

110.9. 

B. Handling Contributions That Appear Excessive. If a committee receives a 

contribution that appears to be excessive, the committee must either:

• Return the questionable check to the donor; or 

• Deposit the check into its federal account and: 

 Keep enough money in the account to cover all potential refunds; 

 Keep a written record explaining why the contribution may be illegal; 

 Include this explanation on Schedule A if the contribution has to be 

itemized before its legality is established;

 Seek a reattribution or a redesignation of the excessive portion, following 

the instructions provided in the Commission regulations (see below for 

explanations of reattribution and redesignation); and 

 If the committee does not receive a proper reattribution or redesignation 

within 60 days after receiving the excessive contribution, refund the excessive 

portion to the donor. 11 CFR §§103.3(b)(3), (4) and (5) and 110.1(k)(3)(ii)(B). 

C. Joint Contributions. Any contribution made by more than one person (except for a 

contribution made by a partnership) must include the signature of each contributor on 

the check, money order, or other negotiable instrument or in a separate writing. A 

joint contribution is attributed equally to each donor unless a statement indicates that 

the funds should be divided differently. 11 CFR §110.1(k)(1) and (2). 
9

D. Reattribution of Excessive Contributions. The Commission regulations permit 

committees to ask donors of excessive contributions (or contributions that exceed the 

committee’s net debts outstanding) whether they had intended their contribution to be 

a joint contribution from more than one person and whether they would like to 

reattribute the excess amount to the other contributor. The committee must inform 

the contributor that: 

• The reattribution must be signed by both contributors; 

• The reattribution must be received by the committee within 60 days after the 

committee received the original contribution; and

• The contributor may instead request a refund of the excessive amount. 11 

CFR §110.1(k)(3). 

Within 60 days after receiving the excessive contribution, the committee must either 

receive the proper reattribution or refund the excessive portion to the donor. 11 CFR 

§§103.3(b)(3) and 110.1(k)(3)(ii)(B). Further, a political committee must retain 

written records concerning the reattribution in order for it to be effective. 11 CFR 

§110.1(l)(5). 

Notwithstanding the above, any excessive contribution that was made on a written 

instrument that is imprinted with the names of more than one individual may be 

attributed among the individuals listed unless instructed otherwise by the 

contributor(s). The committee must inform each contributor: 

• How the contribution was attributed; and

• The contributor may instead request a refund of the excessive amount. 11 

CFR §110.1(k)(3)(B). 

Facts and Analysis 

A. Facts

The Audit staff utilized sample testing and a review of high dollar contributions not 

included in the sample population to identify apparent excessive contributions from 

individuals, as noted below. 
10

Excessive Contributions – Testing Method

Sample Projection Amount4 $28,798 

High Dollar Review Contribution Error 

Amount $49,245 

Total Amount of Excessive Contributions $78,043 

Reasons for Excessive Contributions

Contributions transferred to the Non-federal 

account without prior notification $78,043 

Total Amount of Excessive Contributions $78,043 

B. Additional Information 

KSDCEC did not maintain a separate account for questionable contributions. However, 

based on its cash on hand at the end of the audit period ($143,236), it appears that 

KSDCEC did maintain sufficient funds to refund the apparent excessive contributions. 

The Audit staff notes that the excessive portions of the contributions reviewed were 

timely transferred to KSDCEC’s non-federal account.

C. Interim Audit Report & Audit Division Recommendation 

The Audit staff discussed this matter with the KSDCEC representatives during the exit 

conference and provided a schedule of the apparent excessive contributions. The Audit 

staff noted that the contributors may not have been made aware that the excessive 

portions of their contributions were transferred to the non-federal account because 

KSDCEC has not provided supporting documentation such as letters or solicitations 

cards. In its response to the exit conference, KSDCEC stated that it would provide the 

Audit staff “acknowledgments from donors who donated in excess of the federal limits 

that the funds were to be used for state expenditures.” To date, the Audit staff has not 

received the “acknowledgements” from KSDCEC.

The Interim Audit Report recommended that KSDCEC: 

• Provide evidence demonstrating that the contributions in question were not 

excessive, or if excessive, were resolved in a timely manner. This evidence 

should have included documentation that was not made available to the Audit 

staff during the audit, including copies of solicitation cards completed by the 

contributors at the time of their contribution that clearly informed the 

contributors of the limitations; timely letters sent to contributors eligible for 

presumptive reattribution; or timely refunds (copies of the front and back of 

negotiated refund checks) or reattributions for excessive contributions. 

4

 The sample error amount ($28,798) was projected using a Monetary Unit Sample with a 95 percent 

confidence level. The sample estimate could be as low as $13,913 or as high as $55,427.
11

• Absent such demonstration, KSDCEC should have reviewed its contributions to 

determine which were excessive and how each can be resolved. For any 

excessive contributions that KSDCEC could have resolved by sending a 

presumptive reattribution letter, it may now send letters to inform the 

contributors how the committee reattributed the contribution and/or offer a 

refund for any remaining excessive amounts that have not been previously 

transferred to the non-federal account. KSDCEC must provide evidence of such 

refunds (copies of the front and back of negotiated checks). For a reattribution, 

both the contributor and the individual to whom a contribution was reattributed 

must be notified. 

• If funds are not available to make the necessary refunds, KSDCEC should have 

disclosed the contributions requiring refunds on Schedule D (Debts and 

Obligations) until funds become available to make such refunds.

D. Committee Response to Interim Audit Report

In its response to the Interim Audit Report recommendation, KSDCEC stated that it 

“disagrees with the Commission’s legal basis for this finding.” KSDCEC asserted that 

each contribution to KSDCEC was made by a donor who had a full understanding that 

their contribution would be split between its federal and non-federal accounts. KSDCEC 

further stated that the Commission’s regulations do not “directly address the process 

whereby a political party committee must notify a donor that their contribution is 

excessive and offer a refund in lieu of the splitting of their contribution.” KSDCEC 

noted it provides clear notice in its solicitation materials that contributions are subject to 

the limitations and prohibitions of the Act and that any excessive contributions above the 

federal limit were timely transferred to its non-federal account. 

KSDCEC provided the following in response to the Interim Audit Report: 

Corrective Action Taken in Response to the Interim Audit Report

Letters sent notifying contributors of transfer to the 

non-federal account – Untimely $69,245 

After reviewing KSDCEC’s response to the Interim Audit Report and consultation with 

the Office of General Counsel, the Audit staff recommends KSDCEC submit evidence 

that its contributors intended or directed their contributions be split between federal and 

non-federal accounts. 
12

Finding 3. Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff determined that KSDCEC did not maintain any 

monthly payroll logs, as required, to document the percentage of time each employee 

spent in connection with a federal election. For 2017 and 2018, the Audit staff identified 

payments to KSDCEC employees totaling $443,976 for which KSDCEC did not maintain 

monthly payroll logs. This consisted of payroll which was allocated with federal and 

non-federal funds. There was no payroll paid exclusively with non-federal funds. In 

response to the Interim Audit Report recommendation, KSDCEC stated it “has instituted 

procedures to ensure that time records are maintained for all employees who are paid in 

part with non-federal funds[.]” 

Legal Standard 

A. Maintenance of Monthly Logs. Committees must keep a monthly log of the 

percentage of time each employee spends in connection with a federal election. 

Allocations of salaries, wages, and fringe benefits are to be undertaken as follows:

• Employees who spend 25 percent or less of their compensated time in a given 

month on federal election activities must be paid either from the federal account 

or have their pay allocated between federal and non-federal accounts as 

administrative costs;

• Employees who spend more than 25 percent of their compensated time in a given 

month on federal election activities must be paid only from a federal account; and

• Employees who spend none of their compensated time in a given month on 

federal election activities may be paid entirely with funds that comply with state 

law. 11 CFR §106.7(d)(1). 

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff reviewed disbursements for payroll. KSDCEC

did not maintain any monthly payroll logs or equivalent records to document the 

percentage of time each employee spent in connection with a federal election. These logs 

are required to document the proper allocation of federal and non-federal funds used to 

pay employee salaries and wages. For 2017 and 2018, KSDCEC did not maintain 

monthly logs for $443,9765

 in payroll. This amount consists solely of payroll for 

employees reported on Schedule H4 (Disbursements for Allocated Federal and NonFederal Activity) and paid with an allocation of federal and non-federal funds during the 

same month. There was no payroll paid exclusively with non-federal funds. 

5

 This total does not include payroll for employees paid with 100 percent federal funds and reported as 

such (see Part I, Background, Commission Guidance, Request for Early Consideration of a Legal 

Question – Recordkeeping for Employees, Page 1). Payroll amounts are stated net of taxes and benefits. 
13

B. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with the KSDCEC representatives during the exit 

conference and provided a schedule of the payroll transactions. In its response to the exit 

conference, KSDCEC did not provide any comment on this finding. 

The Interim Audit Report recommended that KSDCEC: 

• Provide evidence that monthly time logs were maintained to document the 

percentage of time an employee spent in connection with a federal election; or

• Provide and implement a plan to maintain monthly payroll logs in the future. 

C. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, KSDCEC stated it has 

“instituted procedures to ensure time records are maintained for all employees who are 

paid in part with non-federal funds[.]” 

The Audit staff maintains that KSDCEC was required to maintain payroll logs for its 

employees paid with a combination of federal and non-federal funds. The Audit staff 

concludes that KSDCEC did not maintain monthly logs for payroll totaling $443,976, 

however, KSDCEC complied with the Interim Audit Report recommendation by 

instituting procedures to maintain future time records for employees who are paid in part

with non-federal funds. 

Finding 4. Excessive Coordinated Party Expenditures 

Summary 

During audit fieldwork, the Audit staff identified apparent coordinated expenditures for 

one House candidate that exceeded the 2018 coordinated party expenditure limit by a 

total of $558,320. In response to the Interim Audit Report recommendation, KSDCEC 

provided sign-in sheets and photographs of volunteers working at a mail house assisting 

with ten party mailings. KSDCEC also provided affidavits from a volunteer present at 

one of the mailings, a KSDCEC employee who coordinated volunteer recruitment and a 

mail house employee who coordinated volunteer activity with KSDCEC. There remain 

three mailings totaling $210,120 for which KSDCEC did not provide additional 

documentation. As a result, KSDCEC exceeded its coordinated party expenditures 

limitation by $155,420. 

Legal Standard 

A. Coordinated Party Expenditures. National party committees and state party 

committees are permitted to purchase goods and services on behalf of candidates in 

the general election—over and above the contributions that are subject to contribution 

limits. Such purchases are referred to as “coordinated party expenditures.” They are 

subject to the following rules:

• The amount spent on “coordinated party expenditures” is limited by statutory 

formulas that are based on the Cost of Living Adjustment (COLA) and the voting 

age population; 
14

• Party committees are permitted to coordinate the spending with the candidate 

committees;

• The parties may make these expenditures only in connection with the general 

election;

• The party committees—not the candidates—are responsible for reporting these

expenditures; and 

• If the party committee exceeds the limits on coordinated party expenditures, the 

excess amount is considered an in-kind contribution, subject to the contribution 

limits described above. 52 U.S.C. §30116(d) and 11 CFR §§109.30 and 109.32. 

B. Assignment of Coordinated Party Expenditure Limit. A political party may 

assign its authority to make coordinated party expenditures to another political party 

committee. Such an assignment must be made in writing, state the amount of the 

authority assigned, and be received by the assignee before any coordinated party 

expenditure is made pursuant to the assignment. The political party committee that is 

assigned authority to make coordinated party expenditures must maintain the written 

assignment for at least three years. 11 CFR §§104.14 and 109.33(a) and (c). 

C. Volunteer Activity. The payment by a state committee of a political party of the 

costs of campaign materials (such as pins, bumper stickers, handbills, brochures, 

posters, party tabloids or newsletters, and yard signs) used by such committee in 

connection with volunteer activities on behalf of any nominee(s) of such party is not a 

contribution, provided that the following conditions are met: 

• Such payment is not for cost incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any 

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists;

• The portion of the cost of such materials allocable to Federal candidates must be 

paid from contributions subject to the limitations and prohibitions of the Act;

• Such payment is not made from contributions designated by the donor to be spent 

on behalf of a particular candidate for federal office;

• Such materials are distributed by volunteers and not by commercial or for-profit 

operations; 

• If made by a political committee such payments shall be reported by the political 

committee as a disbursement in accordance with 11 CFR §104.3 but need not be 

allocated to specific candidates in committee reports; and

• The exemption is not applicable to campaign materials purchased by the national 

party committees. 11 CFR §100.87 (a), (b), (c), (d), (e) and (g) and 11 CFR 

§100.147 (a), (b), (c), (d), (e) and (g). 

D. Coordinated Party Communication. A political party communication is 

coordinated with a candidate, a candidate’s authorized committee, or agent of any of 

the foregoing, when the communication satisfies the following conditions: 

(1) The communication is paid for by a political party committee or its agent.
15

(2) The communication is a public communication that satisfies at least one of the

following content standards. 

• Expressly advocates a candidate’s election or defeat 11 CFR §100.22(a) and 

(b).

• Involves the dissemination, distribution or republication of a candidate’s 

campaign materials.

• Refers to a federal candidate, is directed to the candidate’s constituents and is 

distributed within certain time frame before an election.

(3) The communication satisfies at least one of the conduct standards in 11 CFR 

§109.21(d)(1) through (d)(6), subject to the provisions of 11 CFR §109.21(e), (g), 

and (h). 

• Must have been created, produced or distributed at the request of the 

candidate or its agent.

• Developed with a “material involvement” of the candidate.

• Created, produced or distributed after “substantial discussion” with the 

candidate or his agents.

• The use of a common vendor in the creation, production or distribution of a 

communication. 11 CFR §109.37. 

E. Reporting Coordinated Party Expenditures. Each political committee shall report 

the full name of each person who receives any expenditure from the reporting 

committee during the reporting period in connection with an expenditure under 11 

CFR Part 109, Subpart D (52 U.S.C. §30116(d)), together with the date, amount and 

purpose of any such expenditure as well as the name of, and office sought by the 

candidate on whose behalf the expenditure is made. 11 CFR §104.3 (b)(1)(viii). 

F. Public Communication (52 U.S.C. § 30101(22)). Public communication means a 

communication by means of any broadcast, cable, or satellite communication, 

newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to 

the general public, or any other form of general public political advertising. The term 

general public political advertising shall not include communications over the 

Internet, except for communications placed for a fee on another person’s Web site.

G. Limits on Contributions Made by State and Local Party Committees.

State and local party committees must comply with the contribution limits below:

• $5,000 per election to a Federal campaign if the contributing committee has 

qualified as a multicandidate committee. 

• $2,700 per election to a Federal campaign if the contributing committee has not 

qualified as a multicandidate committee.

• $5,000 per year to a separate segregated fund (corporate or labor PAC) or a 

nonconnected committee. 

• Unlimited transfers to other party committees. 52 U.S.C. §30116(a). 
16

Facts and Analysis 

A. Facts

The coordinated expenditure limit during the 2018 election cycle for a House candidate 

in the state of Kentucky was $49,700 each, for the state and national party committees. A 

review of the Democratic Congressional Campaign Committee’s (DCCC) disclosure 

reports indicated that the DCCC made coordinated expenditures of $99,400 on behalf of 

Amy McGrath for Congress (Kentucky, District 6). KSDCEC did not transfer any of its 

coordinated spending authority to the DCCC. 

During audit fieldwork, the Audit staff’s review of disbursements identified apparent 

coordinated expenditures made on behalf of Amy McGrath for Congress consisting of 13 

mail pieces totaling $613,020 that were reported on Schedule B, Line 30(b).6 Of this 

amount, $558,320 in expenditures were in excess of the authorized coordinated spending 

limit for the candidate and resulted in an apparent excessive in-kind contribution to the 

candidate. 

The Audit staff’s analysis was based on a three-pronged test to determine whether a 

communication is a party coordinated communication. A communication must satisfy all 

three prongs of the test to be considered a party coordinated expenditure. The threeprong test consists of payment prong, content prong and conduct prong. 

• Payment Prong means the communication is paid for, in whole or in part, by a 

person other than the candidate. All communications in this finding were paid by 

KSDCEC and traced to its federal account. 

• Content Prong means the communication must be a public communication that 

also meets any one of these three standards to meet the content prong: 

• Expressly advocates the election or defeat of a clearly identified candidate for 

federal office per 11 CFR §100.22(a)or (b); or 

6

 As discussed in Finding 5 below, KSDCEC also reported the cost of a door hanger, $14,105, on Schedule 

B, Line 30(b). The Audit staff previously included the cost of this door hanger in Finding 5 in the 

Interim Audit Report, based on it being considered an independent expenditure. However, KSDCEC 

indicated in its response to the Interim Audit Report that the door hanger was fully coordinated with the 

candidate and, in consultation with the Office of General Counsel, the Audit staff therefore determined 

that the door hanger could not be classified as an independent expenditure. Further, although KSDCEC 

had reported the door hanger as having been mailed, KSDCEC asserts that this was a reporting error and 

that copies of the door hanger were distributed by hand by volunteers. The invoice associated with the 

door hanger, submitted to Audit staff, appears to corroborate KSDCEC’s assertion that the door hangers 

were distributed by hand, though they do not show that the door hangers were distributed by volunteers. 

The Office of General Counsel has concluded that, based on this method of distribution, the door hanger 

is not a public communication and therefore does not meet the threshold criteria for satisfying the content 

prong of the coordinated expenditure standard (See LRA 1107). Because the Commission has been 

inconsistent on this issue, however, the Office of General Counsel recommended referral of this question 

to the Commission. The Audit staff therefore mentions the door hanger here, although the cost of the 

door hanger is not included in the total dollar amount of the coordinated expenditure finding.

 
17

• Involves the dissemination, distribution or republication of a candidate’s 

campaign materials; or

• Refers to a clearly identified federal candidate and is publicly distributed in 

the identified candidate’s jurisdiction within 90 days of the candidate’s 

general election. 

All communications in this finding contained express advocacy for a clearly 

identified federal candidate per 11 CFR §100.22(a) or (b). 

• Conduct Prong means the communication must have been one of the following: 

• Created, produced or distributed at the request of the candidate or its agents; or 

• Developed with a material involvement of the candidate; or 

• Created, produced or distributed after substantial discussion with the 

candidate or its agents; or 

• Involved the use of a common vendor by the candidate committee and the 

party committee in the creation, production or distribution of a 

communication; or 

• A former employee/independent contractor used or conveyed information 

about the plans, projects, activities or needs of the candidate to create the 

communication. 

All the communications, including the door hanger, in this finding contained the 

following disclaimers: “Paid for by the Kentucky Democratic Party and 

Authorized by the Amy McGrath for Congress Committee,” or “Paid for by the 

Kentucky Democratic Party.” In addition, the Amy McGrath for Congress 

committee and KSDCEC employed a common vendor in the creation, production 

or distribution of communications, as evidenced by reports filed with the 

Commission by the Amy McGrath for Congress Committee and KSDCEC, in 

addition to invoices provided to Audit staff by KSDCEC. 

The following chart details the total amount of apparent coordinated expenditures and the 

resulting apparent excessive in-kind contributions. 

KSDCEC Coordinated Expenditures Amy McGrath for Congress

Reported Expenditures $613,020

Less: KSDCEC Spending Limit ($49,700)

Over Limit (In-Kind Contribution) $563,320

Less: Allowable Contribution to Candidate ($5,000)

Excessive Coordinated Party Expenditures $558,320

B. Interim Audit Report & Audit Division Recommendation

The Audit staff discussed this matter with the KSDCEC representatives during the exit 

conference and provided a schedule of the apparent excessive in-kind contributions. In 

response to the exit conference, a KSDCEC representative stated “the wrong disclaimer 

for the McGrath piece was used, but the mail was run volunteer exempt.” Further the 
18

KSDCEC representative stated that KSDCEC was in the process of obtaining affidavits 

from its volunteers and would submit them when complete. To date KSDCEC has not 

provided any affidavits to the Audit staff. 

The Commission has addressed the applicability of the volunteer materials exemption in 

the Final Audit Reports of the Arizona Republican Party, the Democratic Executive 

Committee of Florida, and the Tennessee Republican Party. In these reports, the 

Commission recognized a lack of clarity regarding the application of the volunteer 

materials exemption. The Commission had attempted to formulate a consensus policy 

regarding what constitutes substantial volunteer involvement for the purpose of applying 

the exemption,7 but this was never achieved. Since a lack of clarity exists concerning the 

application of the volunteer materials exemption, it follows that the type and amount of 

documentation needed to support volunteer involvement is also unclear. 

The Interim Audit Report recommended that KSDCEC demonstrate that it did not exceed 

its coordinated spending limit on behalf of Amy McGrath for Congress. Evidence could

include sign-in sheets and pictures of volunteers sorting and bundling the identified mail 

pieces. Absent such evidence, the Interim Audit Report recommended that KSDCEC

seek reimbursement from the Amy McGrath for Congress committee in the amount of 

$558,320. 

C. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, KSDCEC provided volunteer 

sign-in sheets (dated 10/18/2018 – 11/1/2018), and photographs of volunteers at a mail 

house handling mail pieces for ten separate mailings totaling $402,900. KSDCEC also 

provided an affidavit from a volunteer present at one of the mailings stating that the 

volunteer went to a mail house in Lexington, KY to assist with mailers, signed a 

volunteer sheet to document attendance, and, while at the mail house, helped remove mail 

pieces from a printing press and helped sort mail pieces to prepare them for mailing. The 

volunteer’s affidavit also stated she appears in pictures submitted along with the affidavit.

KSDCEC also provided an affidavit from a KSDCEC employee who coordinated 

volunteer recruitment. The affidavit stated that the employee “organized volunteers to 

assist with volunteer exempt mail pieces,” “instructed employees to send volunteers to 

the mail house,” and “ensured that there was at least one volunteer assisting with each 

mail piece.” The affidavit further stated that “volunteer duties ranged from sorting the 

mail, packaging the mail, and placing paper or other materials in the printer.” 

A third affidavit provided was from a mail house employee who coordinated volunteer 

participation with KSDCEC. KSDCEC stated that this person was “personally familiar 

with volunteer activity undertaken in connection with these mailings.” The affidavit 

stated that as part of their duties, the mail house employee routinely ensured “compliance 

with volunteer exempt mail pieces for state and local parties.” The affidavit further 

7

 Proposed Interim Enforcement Policy, Agenda document No. 10-16.

 https://www.fec.gov/resources/updates/agendas/2010/mtgdoc1016.pdf
19

stated the mail house employee worked with the party and the mail house to coordinate 

volunteer participation, discussed with the mail house how many volunteers were need 

for a given project, and communicated this to the party. The affidavit goes on to state the 

employee “routinely asked the mail house to keep a log of volunteers and take pictures of 

volunteer activity.” 8

 

The Audit staff acknowledges that KSDCEC partially complied with the Interim Audit 

Report recommendation by providing evidence of volunteer involvement with its mail 

pieces, including volunteer sign-in sheets, pictures of volunteers handling the mailers, 

and affidavits from individuals familiar with the mailings and related volunteer 

involvement. While underscoring the absence of a clear standard related to volunteer 

materials exemption, given the various types and specificity of the documentation 

provided by KSDCEC, the Audit staff no longer attributes the cost of 10 mailers totaling 

$402,900 to KSDCEC’s coordinated party expenditure limit. There are three remaining 

mailers, totaling $210,120, included in the finding for which KSDCEC did not provide 

any additional documentation. Absent further documentation, the Audit staff maintains 

that KSDCEC exceeded the coordinated party expenditure limit by $155,420.9

Finding 5. Failure to File a 24-Hour Report

Summary 

During audit fieldwork, the Audit staff reviewed expenditures that KSDCEC disclosed on 

Schedule B (Itemized Disbursements), Line 30(b) (Federal Election Activity Paid 

Entirely with Federal Funds), one of which appeared to be an independent expenditure 

which should have been disclosed on Schedule E, Line 24 (Independent Expenditures). 

KSDCEC may have been required to file a 24-hour report for $14,105, the amount 

KSDCEC paid for a door hanger supporting a candidate for federal office, depending 

upon the dissemination date. 

In response to the Interim Audit Report recommendation, KSDCEC disagreed with the 

characterization of this expenditure as an independent expenditure. KSDCEC also 

asserted the door hanger is not a public communication, and therefore cannot be 

considered a coordinated communication. KSDCEC stated that this was an exempt 

8

 In regard to the door hanger, discussed in footnote 6 above, KSDCEC provided a declaration from its 

Executive Director stating that the door hanger was distributed by hand and left on doorknobs of 

individual homes and that, although the reports filed with the Commission indicated the door hanger was 

mailed, this notation was a reporting error by KSDCEC. The Executive Director’s declaration further 

stated that the door hanger was distributed exclusively by volunteers and “the distribution of the door 

hanger, in all respects, complied with the requirements set forth at 11 CFR §§ 100.87.” As noted above, 

the cost of the door hanger is not presently included in the total dollar amount for the finding. However,

the Office of General Counsel has recommended that the question of the exemption’s application be 

referred to the Commission for its consideration, along with the question of whether the door hanger is a 

public communication. The Audit staff mentions this here because if the Commission concludes that the 

door hanger is a public communication, and therefore a coordinated expenditure, the question of the 

sufficiency of the Executive Director’s declaration may be relevant. 9

 $155,420 = $558,320 - $402,900
20

activity coordinated with the candidate and distributed by volunteers. A declaration from 

KSDCEC’s Executive Director was also provided.

After consultation with our Office of General Counsel, the Audit staff concluded that the 

door hanger is not an independent expenditure, in agreement with KSDCEC.10

Legal Standard 

A. Definition of Independent Expenditures. An independent expenditure is an 

expenditure made for a communication expressly advocating the election or defeat of 

a clearly identified candidate that is not made in cooperation, consultation, or concert 

with, or at the request or suggestion of, a candidate, a candidate’s authorized 

committee, or their agents, or a political party or its agents.

A clearly identified candidate is one whose name, nickname, photograph or drawing 

appears, or whose identity is apparent through unambiguous reference, such as “your 

Congressman,” or through an unambiguous reference to his or her status as a 

candidate, such as “the Democratic presidential nominee” or “Republican candidate 

for Senate in this state.”

Expressly advocating means any communication that: 

• Uses phrases such as “vote for the President” or “re-elect your Congressman” or 

communications of campaign slogan(s) or individual word(s), which in context can 

have no other reasonable meaning than to urge election or defeat of one or more 

clearly identified candidates; or

• When taken as a whole and with limited references to external events, such as 

proximity to the election, could be interpreted by a reasonable person only as 

advocating the election or defeat of one or more clearly identified candidates. 11 

CFR §§100.16(a), 100.17 and 100.22. 

B. Disclosure Requirements – General Guidelines. An independent expenditure shall 

be reported on Schedule E if, when added to other independent expenditures made to 

the same payee during the same calendar year, it exceeds $200. Independent 

expenditures made (i.e., publicly disseminated) prior to payment should be disclosed 

as memo entries on Schedule E and as a debt on Schedule D. Independent 

expenditures of $200 or less need not be itemized, though the committee must report 

the total of those expenditures on line (b) on Schedule E. 11 CFR §§104.3(b)(3)(vii), 

104.4(a) and 104.11. 

C. Last-Minute Independent Expenditure Reports (24-Hour Reports). Any 

independent expenditures aggregating $1,000 or more, with respect to any given 

election, and made after the 20th day but more than 24 hours before the day of an 

election must be reported and the report must be received by the Commission within 

24 hours after the expenditure is made. A 24-hour report is required for each 

10 See footnotes 6 and 8, above, in Finding 4, for further discussion of the current treatment of the door 

hanger.
21

additional $1,000 that aggregates. The 24-hour report must be filed on a Schedule E. 

The date that a communication is publicly disseminated serves as the date that the 

Committee must use to determine whether the total amount of independent 

expenditures has, in the aggregate, reached or exceeded the threshold reporting 

amount of $1,000. 11 CFR §§104.4(f) and 104.5(g)(2). 

D. Formal Requirements Regarding Reports and Statements. Each political 

committee shall maintain records with respect to the matters required to be reported 

which shall provide in sufficient detail the necessary information and data from which 

the filed reports may be verified, explained, clarified, and checked for accuracy and 

completeness. 11 CFR §104.14(b)(1). 

E. The Get-Out-the-Vote Activity. Informing potential voters, whether by mail 

(including direct mail), e-mail, in person, by telephone (including pre-recorded 

telephone calls, phone banks and messaging such as SMS and MMS), or by other 

means; the location of particular polling places. 11 CFR§100.24(a)(3)(i)(B)(2).

F. Volunteer Activity. The payment by a state committee of a political party of the 

costs of campaign materials (such as pins, bumper stickers, handbills, brochures, 

posters, party tabloids or newsletters, and yard signs) used by such committee in 

connection with volunteer activities on behalf of any nominee(s) of such party is not a 

contribution, provided that the following conditions are met: 

• Such payment is not for costs incurred in connection with any broadcasting, 

newspaper, magazine, bill board, direct mail, or similar type of general public 

communication or political advertising. The term direct mail means any 

mailing(s) by a commercial vendor or any mailing(s) made from commercial lists. 

• The portion of the cost of such materials allocable to Federal candidates must be 

paid from contributions subject to the limitations and prohibitions of the Act.

• Such payment is not made from contributions designated by the donor to be spent 

on behalf of a particular candidate for federal office.

• Such materials are distributed by volunteers and not by commercial or for-profit 

operations. 

• If made by a political committee, such payments shall be reported by the political 

committee as a disbursement in accordance with 11 CFR §104.3 but need not be 

allocated to specific candidates in committee reports.

• The exemption is not applicable to campaign materials purchased by the national 

party committees. 11 CFR §100.87 (a), (b), (c), (d), (e) and (g) and 11 CFR 

§100.147 (a), (b), (c), (d), (e) and (g). 

Facts and Analysis 

A. Facts

During audit fieldwork, the Audit staff identified one disbursement for a door hanger 

totaling $14,105 that required a 24-hour report to be filed. KSDCEC disclosed this 

expenditure on Schedule B, Line 30(b) (Federal Election Activity Paid Entirely with 

Federal Funds). However, it appears that this is an independent expenditure containing 
22

express advocacy and should have been disclosed on Schedule E, Line 24 (Itemized 

Independent Expenditures). One side of the door hanger contained the phrase “Vote for 

Amy McGrath” expressly advocating for the election of Amy McGrath. The disclaimer

noted on the printed materials was “Paid for by the Kentucky Democratic Party.” 

As a result, the Audit staff concluded that this printed door hanger was an independent 

expenditure which should have been reported as such and that a 24-hour report may have 

been required. 

B. Interim Audit Report & Audit Division Recommendation

The Audit staff presented this matter at the exit conference and provided KSDCEC 

representatives a supporting schedule. Further, the Audit staff requested information 

regarding the door hanger, including its method and date of distribution. In response, a 

KSDCEC representative stated that the door hanger was not a public communication and 

should not be presumed to be an independent expenditure. The KSDCEC representative

also stated that the door hanger was “placed on the doors of voters by volunteers in 

accordance with the FEC’s volunteer exempt activity rules,” was “not sent by mail,” and 

was “designed to be distributed close to the election, or shortly before the day of the 

election.” 

The Commission has addressed the applicability of the volunteer materials exemption in 

the Final Audit Reports of the Arizona Republican Party, the Democratic Executive 

Committee of Florida, and the Tennessee Republican Party. In these reports, the 

Commission recognized a lack of clarity regarding the application of the volunteer

materials exemption. The Commission had attempted to formulate a consensus policy 

regarding what constitutes substantial volunteer involvement for the purpose of applying 

the exemption,6 but this was never achieved. Since a lack of clarity exists concerning the 

application of the volunteer materials exemption, it follows that the type and amount of 

documentation needed to support volunteer involvement is also unclear. 

The Interim Audit Report recommended that KSDCEC provide documentation and 

evidence that the apparent independent expenditure in the amount of $14,105 did not 

require reporting as an independent expenditure. Evidence should have included 

documentation such as volunteer sign-in sheets, photographs of volunteers participating 

in various duties, etc., to support the involvement of volunteer processing or distribution. 

Alternatively, the Interim Audit Report recommended that KSDCEC provide 

documentation to support the date of public dissemination for the door hanger to 

determine whether a 24-hour report was required to be filed. 

C. Committee Response to Interim Audit Report

In response to the Interim Audit Report recommendation, KSDCEC stated that while it 

mischaracterized the door hanger expense on its reports as a mailing activity, they were 

actually “printed material that were disseminated by volunteers by manually placing them 

on individual doors of voters.” KSDCEC further stated that it objected to the 

characterization of this expenditure as an independent expenditure during audit 

fieldwork, and that the expenditure was properly made as an exempt expenditure “fully 
23

coordinated with its nominee.” KSDCEC explained that it believes the door hanger 

cannot be considered a coordinated communication since the door hanger itself is not a 

public communication and the door hanger was distributed by volunteers. KSDCEC also

noted that, “it is quite uncommon for state party committees to create and maintain 

documentation relating to the volunteer component of such daily canvassing activities. 

They are much to[o] voluminous and difficult for a state party to document.” 

KSDCEC provided a declaration from its Executive Director stating that the door hanger 

was distributed by hand and left on doorknobs of individual homes and that, although the 

reports filed with the Commission indicated the door hanger was mailed, this notation 

was a reporting error by KSDCEC. The Executive Director’s declaration further stated 

that the door hanger was distributed exclusively by volunteers and “the distribution of the 

door hanger, in all respects, complied with the requirements set forth at 11 CFR §§ 

100.87.” 

After consideration of KSDCEC’s response and in consultation with the Office of 

General Counsel, the Audit staff determined that the disbursement for the door hanger did 

not meet the definition of an independent expenditure and, therefore, did not require the 

filing of a 24-hour report.11 

11 See footnotes 6 and 8 above, in Finding 4, for further discussion of the current treatment of the door 

hanger.
 

 

el 

el

FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

December 14, 2021 

MEMORANDUM 

TO: Patricia C. Orrock 

Chief Compliance Officer

 Dayna C. Brown 

Assistant Staff Director

 Audit Division 

me 

FROM: Neven Stipanovic 

Associate General Couns 

Policy Division

nsel 

Counsel 

 Lorenzo Holloway 

Assistant General Couns

 Compliance Advice 

Joshua Blume 

Attorney 

SUBJECT: Draft Final Audit Report on the Kentucky State Democratic Central Executive 

Committee (LRA 1107) 

I. INTRODUCTION 

The Office of the General Counsel has reviewed the Draft Final Audit Report (“DFAR”) 

on the Kentucky State Democratic Central Executive Committee (“Committee”). The DFAR 

contains five findings: (1) Misstatement of Financial Activity; (2) Receipt of Contributions in 

Excess of the Limit; (3) Recordkeeping for Employees; (4) Excessive Coordinated Party 

Expenditures; and (5) Failure to File 24-Hour Report. We comment on Findings 2, 4 and 5, and 

otherwise concur with the findings. If you have any questions, please contact Joshua Blume, the 

attorney assigned to this audit. 
 

 

Comments on the Draft Final Audit Report 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 2 

II. RECEIPT OF CONTRIBUTIONS IN EXCESS OF THE LIMIT (Finding 2). 

The DFAR concludes that the Committee received apparent excessive contributions 

totaling $78,043. The Committee transferred these excessive contributions to its non-federal 

account; however, the DFAR finds that the Committee did not provide timely notice to the 

contributors of its plan to do so. We commented on the legal basis for this finding in our 

comments on the Interim Audit Report (“IAR”), see Memorandum from Neven F. Stipanovic to 

Patricia C. Orrock, Interim Audit Report on the Kentucky State Democratic Central Executive 

Committee (LRA 1107), at 1-2 (May 27, 2021). Our view has not changed since that time and 

we therefore do not reiterate it here.

 In its response to the IAR, the Committee states that each contributor fully understood at 

the time of providing the contribution that the amount provided was to be split between the 

Committee’s federal and non-federal accounts. It observes that nothing in the Commission’s 

regulations requires a political committee to notify a contributor that a contribution is excessive 

and to offer a refund in lieu of splitting the contribution. Finally, it notes that it nevertheless 

notified the contributors and that none of them objected to the splitting of the contributions. 

In asserting that the contributors fully understood that their contributions were to be split 

between the Committee’s federal and non-federal accounts, the Committee appears to be arguing 

that the contributors intended the total sums contributed to include both a federal and a nonfederal component. In a 2001 advisory opinion, the Commission endorsed a national party 

committee’s stated intention to deposit the total amount of a contribution intended to be split into 

a federal and a non-federal component (hereafter “composite contribution”) in its federal account 

and to transfer the non-federal component of the contribution to its non-federal account. 

Advisory Opinion 2001-17 (DNC Services).1

 That endorsement was accompanied by the 

endorsement of a specific reporting regime for composite contributions proposed by the national 

party committee, with some modifications. Id. 

Thus, to the extent that contributions deposited in the federal account and partly 

transferred to the non-federal account were composite contributions, the Committee’s treatment 

of these would appear to be permissible under the reasoning set forth in Advisory Opinion 2001-

17 (DNC Services). This would entail the conclusion that such contributions were not excessive 

federal contributions. 

However, there does not currently appear to be evidence to support the Committee’s 

The requestor in that advisory opinion was a national party committee. Although national party 

committees were able at that time to maintain separate federal and non-federal accounts, this is no longer the case. 

See 52 U.S.C. § 30125(a). State party committees are, however, permitted to maintain separate federal and nonfederal accounts, and we therefore believe that the reasoning of the advisory opinion would permit state party 

committees to receive composite contributions. See Memorandum from Lisa J. Stevenson to Patricia C. Orrock, 

Draft Final Audit Report on the New York Republican Federal Campaign Committee (LRA 1038), at 2 (July 7, 

2017) (accepting committee’s argument that treatment of composite contributions acceptable under reasoning of 

Advisory Opinion 2001-17 (DNC Services)). 

1 
 

 

 

 

Comments on the Draft Final Audit Report 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 3 

factual premise that the contributions at issue in this finding were composite.2 In the advisory 

opinion, the national party committee proposed to use a donor card that solicited contributions to 

either the committee’s federal or non-federal account, that advised the donor of the relevant 

limitations on federal contributions, and that informed the donor of the Committee’s intent to 

allocate amounts exceeding the federal contribution limit to the non-federal account. Advisory 

Opinion 2001-17 (DNC Services), at 2. The donor card asked the donor to designate either the 

entire contribution, or such amount as would not exceed the federal limit, to the federal account, 

or to designate the entire contribution to the non-federal account. Id. Thus, the donor’s 

signature on the donor card would constitute the donor’s express permission to split the 

contribution between the federal and the non-federal account. Id. 

We recommend therefore that the DFAR be revised to solicit evidence from the 

Committee that would show that the contributors intended or directed that their contributions be 

split between the Committee’s federal and non-federal accounts. 

III. EXCESSIVE COORDINATED PARTY EXPENDITURES (Finding 4) 

The DFAR finds that the Committee spent $155,420 more on communications supporting 

then-House of Representatives candidate, Amy McGrath, than it was entitled to spend when 

considering both its coordinated party expenditure limit for the 2017-18 election cycle 

($49,700)3

 and its contribution limit for that cycle ($5,000). This represents a deduction of 

$402,900 from the amount of $558,320 deemed excessive in the IAR. 

The Audit Division reduced the amount of excessive expenditures in the finding as a 

result of its evaluation of evidence submitted in tandem with the Committee’s response to the 

IAR. The Committee asserted in the response that none of the 13 mailings at issue in the finding 

should be deemed coordinated party expenditures because volunteers prepared them for 

dissemination, thus invoking the “volunteer material exemption” (“VME”), which would exempt 

the communications from being considered expenditures. See 52 U.S.C. § 30101(9)(B)(viii); 11 

C.F.R. § 100.147. 

The Committee submitted evidence to support its assertion that the VME applies with 

respect to 10 of the 13 mailings.4

 This evidence consists of photographs, sign-in sheets and 

affidavits submitted by persons who coordinated the volunteering exercises, or who were 

2 According to the Audit Division, the Committee has provided bank statements, a contributor check, and a 

merchant account statement for contributions given via “Stripe”, but no documents showing that the donors intended 

or directed that their donations be split between federal and non-federal accounts. 

3 

 The DFAR notes that the Democratic Congressional Campaign Committee apparently spent twice the 

applicable party coordinated expenditure limit, or $99,400, to support Amy McGrath’s House campaign. The 

auditors have no evidence that the Committee transferred its authority to make coordinated expenditures to the 

DCCC, however, and therefore credit the Committee with an independent $49,700 limit. 

4 

 We agree with the Audit Division’s decision to maintain the finding with respect to the cost of the three 

mailings for which the Committee submitted no VME documentation. See Memorandum from Adav Noti to 

Patricia C. Orrock, Draft Final Audit Report on the Colorado Republican Committee (LRA 961), at 6 (Aug. 15, 

2016) (Commission has never approved application of VME based solely on general, conclusory assertion that VME 

applies). 
 

 

 

 

 

Comments on the Draft Final Audit Report 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 4 

otherwise personally familiar with the activities involved. We agree with the Audit Division’s 

discussion and analysis of this evidence, as well as its ultimate disposition of the finding. We 

comment only to recommend that the language in which the conclusion is stated be rephrased so 

that it is consistent with the absence of a clear standard for determining the degree and type(s) of 

volunteer involvement necessary to qualify a mailing for the VME. Specifically, the DFAR 

states that the Audit staff “determined that the affidavits, pictures and sign-in sheets sufficiently 

demonstrated volunteer involvement for the ten mailers totaling $402,900”. Given the absence 

of a clear standard, however, we do not believe it would be possible to make a firm positive or 

negative determination regarding the VME. Rather, we recommend that the DFAR state that the 

Audit staff decided not to attribute the cost of the 10 mailers to the Committee’s coordinated 

party expenditure limit. See, e.g., Final Audit Report on the Arizona Republican Party, at 13 

(Nov. 25, 2013). See also Memorandum from Lisa J. Stevenson to Patricia C. Orrock, Draft 

Final Audit Report on the New York Republican Federal Campaign Committee (LRA 1038), at 

3-4 (July 7, 2017). 

IV. FAILURE TO FILE A 24 HOUR REPORT (Finding 5) 

The DFAR concludes that the costs of a door hanger, reported by the Committee as 

Federal Election Activity5

 paid entirely with federal funds, should have been reported instead as 

an independent expenditure because the door hanger expressly urged the election of then-House 

of Representatives candidate, Amy McGrath. 11 C.F.R. §§ 100.16, 100.22(a). In response to the 

IAR, which contained the same conclusion, the Committee disagrees with the classification of 

the door hangers as independent expenditures, asserting that it fully coordinated its activities 

with respect to the door hangers with the candidate. Despite this conceded coordinated activity, 

the Committee argues that the door hangers nevertheless do not qualify as coordinated party 

expenditures because door hangers are not “public communications” as that term is defined in 11 

C.F.R. § 100.26.6

 Finally, the Committee states that in any event the door hangers were 

distributed by volunteers and therefore qualify for the VME. The Committee submitted a 

declaration from its executive director, in which she recalls that the door hanger was distributed 

by volunteers in accordance with the pertinent regulatory requirements. The declaration is 

submitted “under penalty of perjury”. 

Commission regulations define an “independent expenditure”, in pertinent part, as an 

expenditure for a communication that expressly advocates the election or defeat of one or more 

candidates for federal office that is not made in cooperation, consultation, or concert with, or at 

the request or suggestion of, a candidate. 11 C.F.R. § 100.16(a). A communication is “made in 

5 “Federal Election Activity” includes specific types of activities engaged in by a state party committee 

during specific time frames, public communications containing specific content, or activities consuming more than a 

specific percentage of an employee’s time in a given month. 52 U.S.C. § 30101(20); 11 C.F.R. § 100.24. A state 

party committee must pay for the costs of such activities exclusively with federal funds, subject to certain 

exceptions. 52 U.S.C. § 30125(b); 11 C.F.R. § 300.32(a)(2). 

6 A “public communication”, in pertinent part, means “a communication by means of any broadcast, cable, 

or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or telephone bank to 

the general public, or any form of general public political advertising.” 11 C.F.R. § 100.26. See also 52 U.S.C. § 

30101(22). 
Comments on the Draft Final Audit Report 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 5 

cooperation, consultation, or concert with, or at the request or suggestion of, a candidate" ifit is 

a coordinated communication under 11 C.F.R. § 109 .21 or a party coordinated communication 

under 11 C.F.R. § 109.37. Id. In no event, however, may a communication be an independent 

expenditure "ifthe person making the expenditure allows a candidate, a candidate's authorized 

committee, or their agents ... to become materially involved in decisions regarding the 

communication . . . or [to share] financial responsibility for the costs ofproduction or 

dissemination with any such person." Id. § 100.16(c). 

Given the Committee's assertion that it fully coordinated the distribution ofthe door 

hangers with the candidate, we do not believe that the door hanger may continue to be classified 

as an independent expenditure. Although the Committee does not elaborate upon the nature of 

the coordination involved, its statement that the door hanger was "fully coordinated" with the 

candidate implies that the candidate was materially involved in the decision-making process 

regarding the door hanger. 11 C.F .R. § 100 .16( c ). We therefore recommend that the Audit 

Division revise Finding 5 to state that the disbursement for the door han er should not be 

classified as an inde endent ex enditure. See 

We also agree with the Committee that the door hanger at issue in the finding cannot be 

classified as a coordinated communication under 11 C.F.R. § 109.21 or as a party coordinated 

communication under 11 C.F.R. § 109.37. To qualify as a coordinated communication or a party 

coordinated communication, a communication must, among other things, be either an 

electioneering communication or a public communication as that te1m is defined in 11 C.F.R. § 

100.26. 11 C.F.R. §§ 109.2l (c)(l), 109.37(a)(2). The door hanger is not an electioneering 

communication because it is not a broadcast, cable, or satellite communication. 52 U.S.C. § 

30104(f)(3)(A); 11 C.F.R. § 100.29(a). 

With respect to the question ofwhether a door hanger may be a public communication, 

we previously concluded in the ne ative and we reiterate the rationale and conclusion from that 

revious audit here. See 

(palm 

cards and door hangers). In those comments, we noted that the subject palm cards and door 

hangers were not distributed by any ofthe means set forth in 11 C.F.R. § 100.26. Id. Fluther, 

the Commission has explained that the various means ofmass communication encompassed by 

the public communication definition all lend themselves to the distribution of content tluough an 

entity ordinarily owned or controlled by another person. See Internet Communications, 71 Fed. 

Reg. 18,589, 18,594 (Apr. 12, 2006) ("Thus, for an individual to communicate with the public 

using any of the fo1ms of media listed by Congress, he or she must ordinarily pay an 

inte1mediaiy (generally a facility owner) for access to the public tlu·ough that fonn ofmedia each 

time he or she wishes to make a communication."). Distribution of a door hanger by hand does 

not require payment to an inte1mediate facility owner each time communication with an audience 

is sought (though payment to a printer for the creation ofthe door hanger may be required), but 

rather may be accomplished independently by the communicator. A door hanger is therefore 

more akin to a printed slate card, handbill, brochure, or bumper sticker than it is to any ofthe 
 

 

 

 

 

Comments on the Draft Final Audit Report 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 6 

communication modalities enumerated in the definition of public communication.7 

At the same time, we note that the Commission has been inconsistent in its treatment of 

door hangers in previous enforcement matters. In several matters, the Commission concluded 

that door hangers should be treated as public communications. See MUR 6778 (David Hale for 

Congress), Factual and Legal Analysis, at 3 (undated, circa Nov. 5, 2015); MUR 6924 (Andrew 

Winer), Factual and Legal Analysis, at 5 n.26 (Aug. 21, 2017). See also MUR 4643 (Democratic 

Party of New Mexico), Letter to Allen Weh from Jonathan Bernstein (June 23, 2005) (advising 

of Commission’s entry into Consent Judgment with respondent and enclosing Order and 

Judgment, United States District Court of New Mexico, Civil No. 02-0372 MCA/RHS (Apr. 29, 

2005), Paragraph A of which notes disbursements from non-federal account for “public 

communications”; communications at issue in enforcement matter included some door hangers). 

In another enforcement matter, however, the Commission concluded that a door hanger was not a 

public communication because it qualified as a handbill subject to the “coattails exemption” (11 

C.F.R. § 100.148). See MUR 6673 (Lee), Factual and Legal Analysis, at 5 (Sept. 13, 2013).8 

In light of the above history, we recommend that the Audit Division raise the question of 

whether the door hanger is a public communication in the cover memorandum that will 

accompany the transmission of the DFAR to the Commission. 

Regarding the VME and the sufficiency of the declaration, we note that the Commission 

has divided over the question of whether unsworn written assertions suffice in the absence of 

documentation of the nature and extent of volunteer involvement. See Final Audit Report on 

Nebraska Democratic Party, at 19-20 (approved Oct. 23, 2014). Here, as noted above, the 

declaration of the executive director was submitted under penalty of perjury. It is therefore 

somewhat stronger insofar as it may carry the same weight as a sworn statement. 28 U.S.C. § 

1746 (unsworn declaration subscribed as true under penalty of perjury supports matter “with like 

force and effect” as sworn declaration or affidavit). However, in that the declaration is not 

accompanied by documentation of the nature and extent of volunteer involvement, it is arguably 

akin to the unsworn statement at issue in the Nebraska Democratic Party audit. Further, the basis 

upon which the executive director’s recollection is premised, whether upon personal knowledge 

7 See, e.g., 11 C.F.R. §§ 100.140 (slate card exemption), 100.147 (VME for party committees), which 

expressly distinguish communications covered by the exemption from modes of public communication that are not. 

11 C.F.R. §§ 100.140 (exception shall not apply to costs incurred respecting listings made on broadcasting stations, 

newspapers, magazines and similar types of general public political advertising), 100.147(a) (exemption not 

applicable to broadcasting, newspaper, magazine, billboard, direct mail, or similar type of general public 

communication or political advertising). 

8 The Commission has also divided over the question of whether the broader category of “door to door 

canvassing” constitutes a public communication. See, e.g., MUR 5564 (Alaska Democratic Party), Statement of 

Reasons of Chairman Robert D. Lenhard, at 3-4 (Dec. 31, 2007) and Statement of Reasons of Vice Chairman David 

M. Mason and Commissioner Hans A. von Spakovsky, at 8-10 (Dec. 21, 2007); Advisory Opinion 2016-21 (Great 

America PAC), at 4 n.3 (Commission could not agree on whether door to door canvassing is public communication); 

Advisory Opinion 2016-21 (Great America PAC), Concurring Statement of Vice Chair Caroline C. Hunter and 

Commissioners Lee E. Goodman and Matthew S. Petersen (concluding door to door canvassing not public 

communication). See also MUR 7521 (Swing Left), Factual and Legal Analysis, at 7 n.34 (Oct. 6, 2021) 

(unnecessary to decide whether door to door canvassing is public communication in light of minimal cost of 

communication at issue). 
 

Comments on the Draft Final Audit Report 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 7 

or not, is not clear. We have recommended in the past that even affidavits bearing such 

uncertainties be raised for Commission consideration. See Memorandum from Lisa J. Stevenson 

to Patricia C. Orrock, Draft Final Audit Report on the New York Republican Federal Campaign 

Committee (LRA 1038), at 4 (July 7, 2017); Memorandum from Adav Noti to Patricia C. 

Orrock, Draft Final Audit Report on the Illinois Republican Party (LRA 1006), at 4-5 (Jan. 31, 

2017). We therefore do so again here, recommending that the question be raised in the cover 

memorandum that will accompany the transmission of the DFAR to the Commission. 
 

 

 

 

el

FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

 February 15, 2022 

MEMORANDUM 

TO: Patricia C. Orrock 

Chief Compliance Officer

 Dayna Brown 

Assistant Staff Director 

Audit Division 

FROM: Neven F. Stipanovic 

Associate General Couns 

Policy Division 

Jessica Selinkoff 

Acting Assistant General Counsel

 Compliance Advice 

unsel

Joshua Blume 

Attorney 

SUBJECT: Comments on Kentucky State Democratic Central Executive Committee 

Response to the Draft Final Audit Report (LRA 1107) 

I. INTRODUCTION 

The Office of General Counsel has reviewed the response from the Kentucky State 

Democratic Central Executive Committee (“the Committee”) to the Draft Final Audit Report. 

We comment here on certain legal issues raised by the Committees’ response to Finding 2, 

Receipt of Excessive Contributions. 

II. RECEIPT OF EXCESSIVE CONTRIBUTIONS (Finding 2) 

The DFAR concludes that the Committee received into its federal account apparent 

excessive contributions totaling $78,043. The Committee transferred these excessive 

contributions to its non-federal account; however, the DFAR finds that the Committee did not 

provide timely notice to the contributors of its plan to do so. In our comments on the Interim 

Audit Report (“IAR”), we observed that while Commission regulations require political party 

committees to resolve excessive contributions either by refunding or, with the contributor’s 
 

 

 

Comments on the Committee Response to the Draft Final Audit Report 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 2 

permission, reattributing them,1 11 C.F.R. §§ 103.3(b)(3), (4); 110.1(k)(3), those regulations do 

not cover the transfer of excessive contributions from the federal to the non-federal account. See 

Memorandum from Neven F. Stipanovic to Patricia C. Orrock, Interim Audit Report on 

Kentucky State Democratic Central Executive Committee (LRA 1107), at 2 (May 27, 2021) 

(citing Memorandum from Neven F. Stipanovic to Patricia C. Orrock, Proposed Interim Audit 

Report on Tennessee Democratic Party (LRA 1073), at 2 (Nov. 29, 2018)). We recommended 

that the question be presented to the Commission for its consideration. Id. 

The Committee responded to the IAR by asserting that in fact the contributions at issue in 

the finding were intended by the contributors to be split between the Committee’s federal and 

non-federal accounts. In our comments on the DFAR, we addressed this contention, noting that 

the Commission has addressed a committee’s receipt of contributions intended to be split into a 

federal and non-federal component in Advisory Opinion 2001-17 (DNC Services). While that 

advisory opinion primarily concerned how such split contributions should be reported, the 

Commission also approved the requestor’s proposal to obtain the contributors’ consent to 

splitting, either through designations or subsequent confirmation.2 

In our comments on the DFAR, we indicated that if the Committee’s contention were 

true, then its treatment of the contributions could be in accord with Advisory Opinion 2001-17 

provided that the Committee present evidence of contributor intent. See Memorandum from 

Neven F. Stipanovic to Patricia C. Orrock, Draft Final Audit Report on Kentucky State 

Democratic Central Executive Committee (LRA 1107), at 2-3 (Dec. 14, 2021). We elaborate 

here that evidence of contributor’s intent for the transferred deposits would need to conform to 

the time frames of section 103.3. See Advisory Opinion 2001-17 (DNC Services), at 3 (citing 

11 C.F.R. §§ 102.5 and 103.3, which allow temporary deposit of apparently excessive 

contributions in federal account pending resolution of their legality by treasurer). Having timely 

evidence of intent would ensure the ability of the Commission to verify that such contributions 

were both handled correctly and reported accurately.3

 11 C.F.R. § 104.14(b)(1). See also 

Advisory Opinion 2001-17 (DNC Services), at 4 (“Because the DNC will initially receive a 

check in excess of the [52 U.S.C. § 30116](a)(1) limit, it is essential that the contribution and the 

division of the funds be disclosed in a manner that is clear on the public record.”), 6. 

We comment additionally upon a question we did not adequately address in our 

comments on the DFAR: Whether Advisory Opinion 2001-17 (DNC Services) may be relied on 

by a state party committee transferring funds from a federal to non-federal account after the 

1 Contributions to state party committees, such as the Committee, may not be redesignated, as this is an 

option available only to candidates and their authorized committees. See 11 C.F.R. § 110.1(b)(5). 

2 The Commission also noted that approaches other than the one specifically proposed by DNC Services 

might also be acceptable. Advisory Opinion 2001-17 (DNC Services,), at 3. 

3 The Audit Division has informed us that in seven out of ten receipts to the federal account that were 

transferred, the Committee did not report the transfer of the excessive portion to the non-federal account. This 

failure to report the transfers would undermine the Committee’s ability to rely on Advisory Opinion 2001-17 (DNC 

Services) regardless of whether the evidence of contributor intent was timely. See Final Audit Report on Missouri 

Democratic State Committee, at 8-12 (approved Oct. 31, 2003). 
 

 

 

 

 

 

Comments on the Committee Response to the Draft Final Audit Report 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 3 

promulgation of 11 C.F.R. § 300.30(b)(3)(i) following the enactment of the Bipartisan Campaign 

Reform Act of 2002 (“BCRA”), Pub. L. No. 107-155, 116 Stat. 81 (Mar. 27, 2002).4 This 

regulation prohibits state party committees from depositing funds exceeding the contribution 

limits or received from prohibited sources into their federal accounts “regardless of whether such 

contributions are for use in connection with Federal or non-Federal elections.” 11 C.F.R. § 

300.30(b)(3)(i).5

 The Commission’s final rule promulgating this and other regulations in 11 

C.F.R. Part 300 does not expressly supersede Advisory Opinion 2001-17 (DNC Services).6 

 

However, the Commission explained generally that “[o]ther advisory opinions may no longer be 

relied upon to the extent that they conflict with BCRA.” Prohibited and Excessive 

Contributions: Non-Federal Funds or Soft Money, 67 Fed. Reg. 49064, 49065 (July 29, 2002). 

In our view, 11 C.F.R. § 300.30(b)(3)(i) effectively did supersede Advisory Opinion 

2001-17 (DNC Services). As such, we believe that the Committee may not rely upon this 

advisory opinion, even if the facts in this audit – e.g., regarding timely evidence of contributor 

intent for non-federal funds received into its federal account and reporting of the transfers to the 

non-federal account – were not materially distinguishable from those in the advisory 

opinion. We recommend that this question be referred to the Commission in the cover 

memorandum accompanying the DFAR. 

4 In the comments on the DFAR, this Office observed that the BCRA provision codified at 52 U.S.C. 

§ 30125(a) rendered national party committees unable to engage in the activity addressed in Advisory Opinion 

2001-17 because they could no longer have non-federal accounts. See Memorandum from Neven F. Stipanovic to 

Patricia C. Orrock, Draft Final Audit Report on Kentucky State Democratic Central Executive Committee (LRA 

1107), at n. 1. The same footnote observed a post-BCRA application of Advisory Opinion 2001-17 in a state party 

committee audit but did not analyze such application in light of section 300.30. Id.; see also infra note 6. 

5 This provision contains a cross reference to § 103.3, thereby implying that a treasurer’s temporary deposit 

of apparently impermissible funds in accordance with § 103.3 is still permitted. Id (“See 11 CFR [§] 103.3 

regarding impermissible funds”). 

6 This Office has cited Advisory Opinion 2001-17 in post-BCRA matters. See, e.g., Memorandum from Lisa 

J. Stevenson to Thomas Hintermister, Draft Final Audit Report – Arizona Republican Party (LRA 889), at 2 n.2 

(Apr. 8, 2013); Memorandum from Lisa J. Stevenson to Thomas Hintermister, Draft Final Audit Report on the New 

York Republican Federal Campaign Committee (LRA 1038), at 2 (July 7, 2017); MUR 7877 (Tennessee 

Democratic Party), First General Counsel’s Report, at 7 n.24 (July 27, 2020) (citing concurring opinion of 

Commissioner Thomas). As noted above, in note 3, the Commission also discussed the advisory opinion in its Final 

Audit Report on the Missouri Democratic State Committee, at 8-12 (approved Oct. 31, 2003). Whereas the 

Commission’s approval of the final report occurred following BCRA, the audit was of the party committee’s 

activities during the 1999-2000 election cycle, and the Commission explained that it was applying the laws in effect 

at that time. Id, at 1. 
 

 

 

 

el

FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

 March 30, 2022 

MEMORANDUM 

TO: Patricia C. Orrock 

Chief Compliance Officer 

Dayna C. Brown 

Assistant Staff Director 

Audit Division 

FROM: Neven F. Stipanovic 

Associate General Couns 

Policy Division 

Jessica Selinkoff 

Acting Assistant General Counsel

 Compliance Advice 

unsel

Joshua Blume 

Attorney 

SUBJECT: Audit Division Recommendation Memorandum on the Kentucky State 

Democratic Central Executive Committee (LRA 1107) 

I. INTRODUCTION 

The Office of General Counsel (“OGC”) did not initially comment on the Audit Division 

Recommendation Memorandum (“ADRM”), but we now comment to revisit the analysis in 

OGC’s comments on the Draft Final Audit Report (“DFAR”) regarding whether door hangers 

that the Kentucky State Democratic Central Executive Committee (“the Committee”) distributed 

should be classified as coordinated party expenditures in Finding 4, Excessive Coordinated Party 

Expenditures.1

 In OGC’s DFAR comments, we concluded that the door hangers cannot be 

See Memorandum from Neven F. Stipanovic to Patricia C. Orrock, Draft Final Audit Report on the 

Kentucky State Democratic Central Executive Committee (LRA 1107), at 4-7 (Dec. 14, 2021) (“DFAR 

Comments”). On February 15, 2022, OGC commented on the Committee’s Response to the DFAR; those 

comments were limited to a discussion of another issue. See Memorandum from Neven F. Stipanovic to Patricia C. 

1 
 

 

 

 

 

Comments on the Audit Division Recommendation Memorandum 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 2 

classified as party coordinated communications under 11 C.F.R. § 109.37 because they are not 

“public communications” under 11 C.F.R. § 100.26.2 

For the reasons discussed below, we are revising this conclusion. We now conclude that 

door hangers that qualify as exempt under the volunteer materials exemption (“VME”)3

 should 

be excluded from classification as party coordinated expenditures, but that door hangers that are 

not exempt VME likely are public communications and, therefore, party coordinated 

expenditures. We therefore recommend that the Audit Division include the cost of the door 

hangers in Finding 4, Excessive Coordinated Party Expenditures, pending the Commission’s 

resolution of the question of whether the Committee’s documentation suffices to meet the VME. 

Because we are revising our conclusion, we further recommend that the Audit Division 

notify the Committee of this changed analysis and provide an opportunity for the Committee to 

submit written comments if it wishes to do so. 

II. EXCESSIVE COORDINATED PARTY EXPENDITURES (Finding 4) 

A payment by a political party committee for a communication that is coordinated with a 

candidate, i.e., a party coordinated communication, must be treated as an in-kind contribution to 

that candidate or as a party coordinated expenditure, unless that payment is “otherwise exempted 

under 11 C.F.R. part 100, subpart C or E.” 11 C.F.R. § 109.37(b). Payments for campaign 

materials within the VME are such “otherwise exempted” payments in 11 C.F.R. part 100, 

subparts C and E. Thus, if the door hangers, which the Committee asserts were “fully 

coordinated” with a candidate, qualify for the VME, they cannot be party coordinated 

expenditures. 

The VME exempts from the definitions of “contribution” and “expenditure” payments for 

“campaign materials (such as pins, bumper stickers, handbills, brochures, posters, party tabloids 

or newspapers, and yard signs)” distributed by a state or local party committee in connection 

with volunteer activities on behalf of a federal candidate of that party, provided other 

requirements are met.4

 Although the Commission does not appear to have specifically analyzed 

whether door hangers are “campaign materials” within the meaning of the VME,5 it has 

Orrock, Comments on Kentucky State Democratic Central Executive Committee Response to the Draft Final Audit 

Report (LRA 1107) (Feb. 15, 2022) (discussing DFAR Finding 2, Receipt of Excessive Contributions). 

2 DFAR Comments at 5-6. 

3 See 52 U.S.C. § 30101(8)(B)(ix), (9)(B)(viii); 11 C.F.R. §§ 100.87, 100.147. 

4 11 C.F.R. §§ 100.87, 100.147. The VME does not apply for the “cost incurred in connection with any 

broadcasting, newspaper, magazine, billboard, direct mail, or similar type of general public political advertising.” 

11 C.F.R. §§ 100.87, 100.147. 

5 But cf. Advisory Opinion 2008-06 (Democratic Party of Virginia) at 4, 5 (concluding, without further 

analysis, that “[t]he types of campaign materials covered by this [VME] exemption include all manner of 
 

 

 

 

 

 

Comments on the Audit Division Recommendation Memorandum 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 3 

determined that door hangers may be included within another exemption in 11 C.F.R. part 100, 

subparts C and E, for payments for campaign materials. In MUR 6673 (David Lee for 

Supervisor 2012), the Commission concluded that a door hanger paid for by a local candidate 

and distributed by volunteers qualified for an exemption similar to the VME, the “coattails 

exemption.”6

 The coattails exemption and the VME use identical language to describe the 

“campaign materials” within the scope of the respective exemptions.7

 For this reason and 

because the exemptions operate similarly, we conclude that it is appropriate to extend the 

Commission’s determination, in MUR 6673, that door hangers can be campaign materials within 

the coattails exemption to include door hangers within the meaning of “campaign materials” in 

the VME. 

Thus, if the Committee otherwise satisfies the requirements of the VME (e.g., by 

sufficient documentation of volunteer dissemination of the door hangers), we further conclude 

that, under 11 C.F.R. § 109.37, the VME-qualified door hangers cannot be classified as a party 

coordinated expenditure and the amount of that payment should not be included in Finding 4. 

Assuming, arguendo, that the Committee’s documentation is insufficient to establish that the 

door hangers are exempt under the VME, the determination of whether the door hangers should 

be included in Finding 4, Excessive Coordinated Party Expenditures, will depend upon whether 

the door hangers are public communications.8

 We conclude that, if the door hangers are not 

exempt under the VME, they likely are public communications and party coordinated 

expenditures. 

The Commission’s conclusion in MUR 6673 that a door hanger within the coattails 

exemption is not a “public communication” was limited to the facts at issue in that MUR; the 

Commission did not determine that no door hanger is a public communication as a matter of 

law.9

 In fact, as OGC explained in its DFAR comments, the Commission, after deciding MUR 

publications, including the publications proposed by the Committee,” which, as noted in an analysis of a different 

exemption, for slate cards, might possibly include a door hanger version of a slate card). 

6 Factual and Legal Analysis at 5-6, MUR 6673 (David Lee for Supervisor 2012) (Sept. 13, 2013) (“Lee 

F&LA”) (concluding that, because the door hanger was a type of “handbill” meeting the requirements of the coattail 

exemption, it was not a public communication subject to soft money restrictions in the statutory provision now 

codified at 52 U.S.C. § 30125(f)); see also 11 C.F.R. §§ 100.88, 100.148 (coattails exemptions, exempting from 

definitions of “contribution” and “expenditure” certain payments by candidates for campaign materials used in 

connection with volunteer activity). 

7 Compare 11 C.F.R. §§ 100.87, 100.147 (VME use of “campaign materials”) with 11 C.F.R. §§ 100.88, 

100.148 (coattails exemption use of “campaign materials”). 

8 See DFAR Comments at 6-7 (discussing VME evidence); see also id. at 5-6 (describing payment, express 

advocacy content, and representation of coordination conduct that appear to adequately address other requirements 

of 11 C.F.R. § 109.37). 

9 See Lee F&LA at 5 (explaining that a handbill is not a public communication if “at the least” it qualifies for 

the coattails exemption); id. at 5 n. 5 (acknowledging an earlier enforcement matter, MUR 5604 (Friends of William 

D. Mason), in which three Commissioners concluded that handbills that qualify for coattails exemption are not 

public communications and three Commissioners concluded that no handbills are public communications). 
 

 

 

 

 

 

 

Comments on the Audit Division Recommendation Memorandum 

Kentucky State Democratic Central Executive Committee (LRA 1107) 

Page 4 

6673, concluded in two enforcement matters not implicating exempt activity under 11 C.F.R. 

part 100, subpart C or E, that door hangers are public communications.10 Although the 

Commission did not analyze the regulatory definition of “public communication” and that 

definition’s use of the phrase “general public political advertising”11 in reaching those 

conclusions, the Commission has analyzed the treatment of door hangers as “general public 

political advertising” in an enforcement matter, MUR 4741 (Bono), that pre-dates the “public 

communication” definition. In MUR 4741, which concerned door hangers not claimed to be 

exempt activity under 11 C.F.R. part 100, subpart C or E, the Commission concluded that a door 

hanger is a form of general public political advertising, as that phrase was then used (and is still 

used) in the statutory disclaimer provision now codified at 52 U.S.C. § 30120(a), in part because 

“the doorhanger was distributed to the general public at their place of residence, . . . just as if 

they had received it in the mail.”12 

Thus, we recommend that the Audit Division include the cost of the door hangers in 

Finding 4, Excessive Coordinated Party Expenditures, because the door hangers, if not within the 

VME, are likely public communications that otherwise meet the definition of “party coordinated 

communication” in 11 C.F.R. § 109.37.13 

10 DFAR Comments at 6 (citing Factual and Legal Analysis at 3, MUR 6778 (David Hale for Congress) and 

Factual and Legal Analysis, at 5 n.26, MUR 6924 (Andrew Winer)). 

11 See 11 C.F.R. § 100.26 (defining “public communication”, in pertinent part, as “a communication by means 

of any broadcast, cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass 

mailing, or telephone bank to the general public, or any other form of general public political advertising”); see also 

52 U.S.C. § 30101(22) (defining “public communication” and including same “general public political advertising” 

phrase). 

12 Factual and Legal Analysis, at 4-5, MUR 4741 (Bono) (Jan. 19, 1999). OGC, at the time of its DFAR 

comments, was not aware of and did not cite MUR 4741. In the DFAR comments, without benefit of specific 

precedent analyzing non-VME door hangers as “general public political advertising,” OGC reached its conclusion 

that door hangers are not “public communications,” in part, on the basis of the Commission’s explanation of 

revisions to the “public communication” definition to include some internet communications. See DFAR Comments 

at 5 (citing Internet Communications, 71 Fed. Reg. 18,589, 18,594 (Apr. 12, 2006) (“Internet E&J”)). In the DFAR 

comments, OGC focused on the Internet E&J’s explanation of the relation between the “catch-all” category of 

“general public political advertising” and the enumerated communications included in the statutory “public 

communication” definition now codified at 52 U.S.C. 30101(22). See id.; see also Internet E&J, 71 Fed. Reg. at 

18,592, 18,594 (referring to the “catch-all”). In light of the more specific analysis regarding door hangers in MUR 

4741, OGC finds the couching language in the Internet E&J on which we previously relied — e.g., that each of the 

enumerated communication forms “lends itself to distribution . . . through an entity ordinarily owned or controlled 

by another person” and that a person “must ordinarily pay an intermediary (generally a facility owner) for access to 

the public” — less persuasive in this context. See Internet E&J, 71 Fed. Reg. at 18,594 (emphasis added). 

13 We recommend further that the determination that the door hangers likely are public communications if 

they do not qualify as exempt under the VME be referred to the Commission for its consideration.