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FEDERAL ELECTION COMf\.lISSION

,.\21) K SHUll N.W.

W/\StUNG r()N,ll.C. 204('-'

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REPORT OF THE COMPLIANCE REVIr~ SECTION

OFFICE OF DISCLOSURE AND COfwtPLIANCE

FEDERAL ELECTION COHMISSION

ON

... UNITED STEELtiORKERS OF AMERICA

.~ POLITICAL ACTION FUND

I. Background

This report covers an audit of the United Steelworkers of America

Political Action Fund undertaken by the Compliance Review Section staff of

the Pcdcral Election Commission to determine whether there has been compliance with the Federal Election Campaign Act ("the Act"). The audit was

conducted pursuant to Section 438(a) (8) of the Act which directs the Commission to conduct audits and field investigations with respect to reports

and stntements filed under the Act.

The United Steelworkers of American (USt'lA) is an affiliated nlember

of the 1\Fl..-CIO. The USt'lA Political Action Fund was established for the p\lrpose of receiving contributions from local union members and friends to be

used to further the interests of the organization in the fields of political

action and education.

The Political Action Fund Committee is financially administered by

a committee of the International Officers of the USWA. The Committee is

financed by voluntary contributions from its members by (1) a payroll checkoff plan, (2) special fundraising activities, and (3) ongoing subscriptions.

Campaign disbursements are made via written approval of the USWA Treasurer

in response to requesLs generally originating at the district and local union

levels.

During the period audited, January 1, 1975 through March 31, 1976,

the USWA reported total receipts of $348,117.61 and total expenditures of

$142,895.74. The officers of the Committee are Walter J. Burke, Treasurer,

and I.W. Abel, Chairman. Committee offices are located at 5 Gateway Center,

Pittsburgh, Pennsylvania, 15222.

II. Findings and Conclusions

A. The Committee Statement of Organizution indicates that it has

a single d~pository. Committee records indicate that several district and
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local unions maintain triln~~mitl.tl llccOl1lll:~ int" \oJlai",h I'tdit i,',ll contributions are dcposited and from which tr'dll:~fl"-' ,tit' m.adt' tt, Ih" depository

."cflectcd on the Statement. of orqanization.

Title 2, U.S.C. Section 417lJ(a) (2) t{'ql1il"~; lhdt .all contribl1tion~

l"cceive<.1 by a political committep bp depo:iitf'tl ill dl"~.iCJllelt('d depositories,

Clnd all expenditures, except for petty ci1~;h, bl' 1I1e1<1.' by ('hl'ck drawn on ~uch

account. Section 433(b) (9) requirps that .&11 h.lJlk~;, ~; .. tl'ty depo~iit bOXQ!;,

(,nd allier depositories used by lhe' comrn.ittet~ ill' ) l'corc!t'd Oil the Statement

of Organization.

All expenditures made by a pol iti cell comm i l t(~P 1ll11~; I be made from a

campaign depository unloss the <"xpclIditurC' is made frcw} t 1 t·.. ~;ury funds. If

the local union~ make expenditures (other t 11,111 ('xpl'nc1i lur~~; (rom tr-pilsury

funds), C'ither before or after thc' contribut jon~; dn~ depo~;i t t.~d in t.he "transmittal account," the account should l)(~ con!;idl'r(~d a cdmpaiqn depo!;itory. The

nat iona] union can either pay thc local cxpcn~.:;c~~ from i tf; d('signat(~d campaign

dcpo~ilory or denignate th(~ "transmittal account" d camp~ign depository ilnd

allow the local to pay for cxpenses from cOlltribut ion~; received.

B. Committee records indicate that. many local unions reccive political contributions which arc dCPOS1 led in f'c'rsonal checking accounts, local

union accounts, ilnd in accounts of cmployer or9an j ::d t ions, some of which are

incorporatcd, and subsequently transferred to tll0 Commi.ttee. Title 2, U.S.C•.

432(b) states in part that funds of a political committee shall be segregated

from ilnu may not be commin<:,11e'd \·Jith th0. persollal fund~; of any officcrs, rnembcr~; or associates of such cOlllJ!litt.ec. Meml..>ers of local unions should be instl."llctcd not to df\po!..;it political conlribution~; received in personal, union

or corporate account.s for subsequent transfear to the Committee depository.

'I'he Commi t t ('e has advised their collectors at the local level that

the US\-lA Pol i tica 1 Action Fund wi 11 not accept any ch(~cks drawn on their

personal account~; or union or corporate account~;.

c. COlTulli ttcC' r('cords indicate thal the Conuni ttec is not consistent

in reporting poli tical contributions r0<:eivC'd frOlll lh0. voluntary payroll

check-off program. Itemized contributions are reporl~d in the time period

during which the funds are withheld from the contril)utor's salary, but not

yet received by the Committe~. The unitemizcc1 contribution figure represents total receipts for the period lesG the ilmount of the itemized contributions. All contributions should be report(~d duriIlCJ the period receivcd

by the Committee (2 U.S.C. 434(b)(2».

The Commi ttec. has advised tha t they are nO'.-1 reporting all contributions received by the Fund on a cash reporting b.:lsis.

D~ Committee records indicate thal politieal contributions received by the local and dislri.ct uniolls ilrc not trdnsferrcd and reported

to the Conunittee promptly. Title 2 U.S.C. 43;~(h) rf'quirps that any person

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who receives a contribution in C.'X("l'~~~~ of $~\O.OO, including those deposited

in a transMittal account not COtl~; idt,t"l'd ..I c\lll1mi ltC'P depository, shall make

a detailed accounting to the conuni t- t l.'l' of ~;l1cla receipts no more than five

(5) days after receipt. The Commit ll't' :;h0\11\1 in~jtruct fundraisers to make

such an accounting.

Cornmi ttce officials have st ub'd that t hpir fundraiscrs will be advised of the requirements of 2 U.S.C. 43J(b).

E. Committee records indicilt c' t hdt f;Omf\ politieal contributions

arc received by local and district llllion~; through collect.ions and fund~

raising activities. Our revic\ol of C'o1l1mi t l('l"" l'('p()rt~, however, discloses

nei ther a separate reporting of t ht.' pI. occ'('(l~~ frum such events, nor the

expenditures made in connection with the eV('tlt~;. Title 2, U.S.C. Section

434 (b) (6), (9), (10) and (11) require t.hl'" li~;l inq of all rec(~ipts and expenditures from collections and fundraisinq .let ivitie::;. Total receipts

from such activities would be rcported by d~t0 and event on FEC Schedule 0

a~d the expenses involved with such activiti('~; \vould be rcportcd on FEC

Schedule B.

Assuming the fundraising costs are being paid out of voluntary

money, the Co~~ittec would be required to list the expenditures relating

to each event. This can be accompJishcd by requiring the local union to

inform the Committee of that part of the contribution total retained to

meet expenditures. That figure would then be reported by t.he Committee

as a fundraising expenditure. If the cxp0.nditures arc not reported by the

Commi ttl."'c, the local union will h~vc been deemed to hav(~ made the expenditure.

III. Recommendations

It is recommended that the Com:nission accept t.he Compliance Reviei.'1

Section staff's position outlined above. It is further recoMmended that

the Conunission advise the CommittcC' of th(~sc findings, particularly Finding A

in which the Corrunis~ion determi.ned that., if expenditures nre made from the

"transmittal accounts, II these accounts are in fact d('po~;itories of the Committee and Finding E, in \olhich the Commission detC'rniIlPd that collection and

fundraising expenditures, paid from voluntary money, have to be reported by

the Committee.

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