• FEDERAL ELECTION CO/\1MISSION

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REPORT OF THE AUDIT DIVISION

ON THE

ASSOCIATION FOR BETTER CITIZENSHIP

I. Backaround

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1\. Overv i e\v

This report is hascd on an audit of the Association

For Better Citizenship ("the Committee"), undertaken by the

Audit Division of the Federal Election Commission in accordance

\-li th the Commission's audi t po] icy to determine whether there

h~s been compliance with the provisions of the Federal Election

C~mpLlign Act of 1971, as amended (" the Act"). The audi t \vas

conducted pursuant to Section 438(a) (8) of Title 2 of the United

St~t0S Cod~ which, at the time of the audit, directed the

Co~mission to make from time to time au~its and field investigations with respect to reports and statements filed under the

provisions of the Act•

The Committee reaist0rcd with the v. ~. House of Represe~t~­

ti·.,·,,~~ on June 8, 1972, subsoquently reportinq tho Cali:ornia Te~chcrs

t'\s~~()\.~i~tion as its connected organizution. The Committee maintClins

i t:~ hl"'~l<1qtl~lrters in Burlingame', C.:11 i forni.J..

The audit co\·cred the' p~~rioc1 from ,-1anu:lry 1, 1976 throuqh

.Junt' 30, 1978, the date of the Committee's lat<.:'st report filed

.:\t t Itt, time of the audit. ~'hc Commi ttce reported a beginning Cc::lsh

b~ll lllC\~ on \January 1, 1976 of $-0-, total receipt:; for the peric'c

0:- ~~~lG,783.78, tot.:ll expenc1itul·CS of $3lG,443.fJ4, and a closinc

c~l~~h h ..l1.:1ncc at December 31, 1977 of $339.84. 1/

This audit report is based on documents and workpapers

\-:11: ',':1 support each of its factual statements. They form part of

th,' r,-"'cord upon \'1hich the Conunission based its decisions on th0

!11d +_ tt~l'S in th~ report .:tnl1 v:cr0 a\·.:ti lable to C0mml sBioners and

~l:,;,~,,)priate st.aff for rC'vic\·:.

1,' Tho Co:nmittcc filcJ an FEe for~l1 3a for the first qU.:lrtcr lc)-:-~

.:1nd ..J{1S \-:3.ivc(1 from filinq for the second quarter .
B. Key Personnel

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The Committee treasurer during the period covered by

t h~~ audit was Matthew C. Krier. The Committee did not identif~{

d Ch3irm3n for the period, although members of its Board of

[) i rectors were included on amendments to its statement of organizal i()I1.

c. Scope

The audit included such tests as verification of total

f' '} I()rt.cd receipts and expendi tures und individual transactions;

r· 'v i(~\..! of required supporting docum(~atation; analysis of Comrni t tee

dl'l)L~; and obligations; and, such ot.her audit procedures as deemed

n f 'Cf_~ss3ry under the circumstanccs.

II. Audit Findings and Recommendations

Use of Reverse Check-off Payroll Deduction

To Collect Contributions

Section 44lb(b) (3) (1\) of 'llitle 2, United States Code, in

part, prohibits a separate segrC(.J3 ted fund established by a labor

organization for political purposes from making a contribution or

expenditure by utilizing dues, fces, or other monies required as

a conf~li tion of wewbership in a labor orsanizc:l tion or as a conai tion •

of cr~I.)l,~ymcnt.

Section 114.5(a) of Title 11, Code of Federal Regulations, further St3tCS that fees or monies paid as a condition

of aC~~"'lirinCJ or rt.... Laining mer.'lbership or employment are monies

r f 'q~ir(;d as a con~!i tion of membership 01· cTI1!)loymcnt even thoug~

th·...!": arc rcfundQble upon request of thL..... pa'lor.

Our rcvi~w of ABC's records and system of receiving

con t:.ribu tions rcvc.:l1etl tha t virtually its so Ie source of fund~)

W;lS its $5 annual mcniliership fces (political contributions)

:~()licit(~d and collL'ctecl by way of reverse check-off payroll

df '/!uction at thc~ school district level, i. e., membership dues ..·cre

tltlt()::~:1tically dcd:..lcted from a member's p.:lyroll check unless

ot;1·,'~-·...·i?>~: stipulated. ABC's TrCi1SUrl.:'r st~ted that this method

\'~'d;': tl:"ili~~ed in llJ'/(j uut ui~conlinth~<.1 thereafter on the federal

lc~vr..}] F\.'ndinq the ouLcome of tht." ,,~ourt C.:lse invulvinq the Nation.:ll

Ldu~,-it.i:..;n Associ,.ttion (Nl:;\) and L;h~ CO:~l~:li~j~;.Lon req.:lrdilhJ the

l •."ralit.~· of the rc:v<-~r~;e cht~ck-of"~- m~tho(l.

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Oil fv1.:1rch 28, 1979, this ffiLltter Wd~) referred to tht~

ot~-i~~L~ of Ct'IH'rl.ll Counsel where subsequently Matter Under Review

#<)·l C) '.vd~ i tl i t i 1.1 ted. On rv'ay 17, 1979, the Commission found

rl.',l:-;l)11 t(, hI' I i t~VC th~ t the' Comrni t tee and the Cal i forni,,1 TC~lchcrs

i\~'>.;l)Cl,ll.i,\ll (C'l"\) m~y hu.'vc violated 2 U.S.C. 441b(b) (3) (i\) ~lnd

11 CFH II·l. I'«(1} by using the reverse check-off procedure to collec:.

contrihutions for the Committee. Fo11o\vinq additional invc'stig<ltion

ill lhi:; m.ltter, on Novc..':-:1Ler 27,1979, the Commission found l-C3son-

,lb1,,' caU~;t'" to believe that the Committee and CTA had violated this

SC'ction or the Act. Suh~()quently, rcspondC'nts W0r0 includoll in a

compl'('h(;n~~ive concili;ltir)n aqreemcnt, with other NEi\ 1.1ffiliates,

which prn'."ided for a ei '/j 1 pen~lt·/ of $75,000. Upon rf'coipt fro::1

r l: ~_~ r.)( )II d C' n t. 0 f the s i q n ·d conc iIi Cl t ion a <J l~ ( '( '111 en t i1 n d p ~1 Yrol' n t 0 f

th0 ci'Ji 1 ponu1ty, t.he' (J::ice of Gener:tl Counsel rcconuncndcJ to

the Cu:m:1i~~sion th~t tho filo on this mZ1tter be closed. On ~~.:1y 29,

1980, the.... Commission appr0vc~(1 this rccommcnct~tion and closed the

rill~.

Section 441b(cl) of Tit1!..' 2 of the United St..llcs Cede,

f)t,~t·,:~, in p~rt, th.:1t it is unl.:1\·:ful for any labol- orl~:lnizLl::isn

lo r.;, ~:C' .] contri btl t i C)~1 or e::pcnd i ttlrc in conncc tion '.': i t:1 an::

Fcder~l election .

Section 103.3(Cl) of 'Titlt.' 11, Code of }··C'dt.... r:11 Rcg~13tio=--.2,

rC(:u11"CS, in port, tb;1t ,:.1.1 contributi()n~~ rc\cl'lj'J(~d by politic~l

cc:~~;:~i tt".... 0 (s) shZlll b(~ (l(':~nsi ted in :1 rhr\c}:i.nc~ ,tC'count in the

ll:'~~r():Jl-i.. ttt~ cLlmp.11Qn dL':"'c:;itory by t-hp trl~~l;'Ut·(\l· of the c()~.::-~i+:t.ec

en· hi.:-~ /ht'r ~lqc~nt, \'Ill thi 10 day~~ of rt.·cPl pt. S\lbs0C!lH:nt to th0

.-llL:::. ;-i:..'l,-~·.vurk, Sl·cl.i0:~ ·i3:2(b) (2) o~~ 'I'itIt\ ~, llllitcc1 States (:od·.:

'.'.:,1:' :1I:1'.,::,:\.,d to rc'quit-c, i:1 p.lrt, thdt cOllt14.ibuti.ons br' fOl:\..·.:1rc:l·d

l(" :::1',' ("'~:'l;'-li tt(\(~ trC~:::~_l~·C)~· \'11 thi n 30 d,lys of rt'coipt, or i~ t:-: n

C":l~.;'-~ 0:- c.::-:tributions in ~,~C(;SS of t>50.00, \'v"ithin 10 d;l'/S of

l·L"'\.~~. i :'L.

/·.L·curdinCj to ;\F\' l1ffjci:lls, ~\Ei\ c("llc\ct.(~d its llnn'..~:1~

nh.··::'.~',·r:·::i:· ...lues by ...:,:"~: nf r(;':(lr~:;,,-'1 chpc~:-()fr 1':1,/ro11 1.1t_'(,:ucti,,""'::

t:1~··'~~1::: 1~"'::L:1 of :its ;·,l:lLt... s' 10(,",11 .lffiIi,ltt"'~ \·.'hich tr,ln~ft.'1t·l.·o'.l

t. :>. .:: ~. c' t.::' 5 t ,1 t C 1 f i 1 i,1 t· l ") \V h i l'h , i n t· \1 1- n, ll- d n SIn itt •'d l h '\~: 0

~:l:-·.. It V:dS d]~~() llut,·,i th.lt: ()n1~' l1It·!:t!··)l'~; of (,'1'i\/:;I'::\ c(Jl11 ...1 bt'

m· ..... ~.;~. :",,:' :\FC ,Ind ,L' .1 !·t';;ult :\Bl.· cf)::lrilJutit)I1;; \"".'1-" ,d:;,-'

(, " ': 1,·," L t': ': i ,1 t h i ~; I ), 1':' ~', I 1. 1 ... i t..~ d t h." t i 0: I •
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As a result of this process, the ABC contributions •

\oJt~'n2 for~..J"'I-ded from each local to thc CTA membership department

to(_retht\l· with NEA dues, C'fl\ dues, chapter dues, health benefits,

in!)Ur.lt1<.·'\ preiums, NEA-PAC contributions, etc. and deposited

into Ot1l' (I) bank account. The crrA membership department director

st:ll",l that. checks from locals were received throughout the month

llnci lil.lt the majority were received between the 1st and the 15th of

the' m()n t h. ABC maintained a ledger account for each of the local

di~;tricls by which the monies in the bank account were divided.

The 0mp1oyce stated that these amounts were then transferred to the

int('nd(~c.1 reci}Jients daily with the exception of AI3C. She, as had

ALC'~; treasurer in one (1) of its reports to the Commission, inc1il..:'.lt·l·d that the transfers from the CT/\ membership department to

ABC \'lcre mado on <1 monthly basis.

Until early 1976, ABC's portion of monthly contributions

\oJc ~-t' tr~1I1S ferrec1 fi rsl from the C'l'A r-1embership Department to the

AE:": st;lt (I llccounts and then fro::1 ABC state accounts to ABC-Federal.

In :·1.J~·~~il, 1976, ABC OlJ~n('ti a ft...... dera1 accoun+.~ and requested that

fl~nL1s ill the ilmount of ~tlticipdtc(1 federal sU:-)PU1~t for the period

1J~ tr~n~~fc.:rred dircctl~r fl-om the eT;\. !'-lcmbcrshii) Dl~p<1rtment to tr.c

i\F.C-r0d~rCtl account on an as-n<"'edt:d basis. Our review disclosed

tIL: L the rc wore eiqht (8) tran~-) I..~rs in to this account totaling

~13~-·,SOO.OO. Six (6) 0: thc~s(' tr:lnsfers totLllinq $110,000.00 wc~e

n~.:l,-~t~ '-.11. ter perlads c;,:ct~L'din(j 10 dLl~·S. .

The' offie(' of GL")ncr~ll Counsel inc1utled this matter in •

r·1\" ;.: ::~}.~ <) • On r-lay 1 7, 1979, thl.o· Co::,::-:i 5 sian f o~ln<.1 l'~ason to be 1 ic ~:t..~

t.::'.~ CCDmitte~e ~nd c'rl\ may h(1V(~ \·iol.J.tcd 2 U.S.C. ,1'11b(a) by

c\"~:.::·:~.~l\.;linq Committee and CT1\ func.1s in the same account. Subsc1:~.·o;~~Ly, llftc:r lldclitionZll invc::;j~~.i(~Lltion by the Cn\lIl~;c1Is Office,

t::,.: Cl.'lm::ission, on Nover.:ber 27, 1~)/9, fOUIld rt..:osondble C.:lUSC to

:JI·1 i':':l~ tb:lt thc' Committt..\(; Q.nd eT:".. h:l~i viol~lt,--'d this section of

t !:'': :\,."l 1)": nut routj nel': tr~1I1S :-·-~rrin.~ to i\BC I...... \·t~rv 10 da',:s of

rL'c·.:iDl b~' CTi\. The CO~:I~1i.~~sion h ..ld l~l~ld Lhd.t ~aH..:'il a transmitt.J.l

1)~4~ _··.:~urc:~ (pa'/roll deduction) \';d:; l~l\·:ful undl..'l:" tht~ Act only if

L~ . .: :-()1iticCtl monies W(~l:-e depo:3il.·\.l in .:1 desi\j!L..lt l\d dep0sitory

0:- ·~:~l..! cO:'-~1ittce \-vithin 10 d~l~'S (5(")0 .:\dvisOl·~· l)l'lnions 1978-42

;1 : :, l~) 7 <3 - Sf a) •

Sul)~)L'quentl'"/, rt.'::pon;.:,·n::s \';L:l-e inclul..lt·d in the prc-

'.' i· .:.: 1'.: mt..~n t i oned cone i 1.1 ;1 to. ion ~l\ :,",'~l '!::L'n t . tT!"'O;l l-l~ce ipt from

.•• ;:: (;:1,:l':1::'S of thl.· siqnl-·d COIle i lL..ttion agrcL~::1t..:~lL (lnJ payl:1cnt

« :. ::~. l i vi 1 }-'£.:n':11 t y, tl1l' 0 f [i eL' of Gl~nQr:1l C\.)Un~~l~1 recol:lnlCnd(.... d

tr '.:>' l·()::.:7Li~;:.;.i.on thllt t.IlI..: fill: i:1 tr-:i~; I:\.:ltt~~o· be' closed. On

:':d~' ~q, 11)80, the CO:llIni s~-; ion .:1:'I)l:O\·c~i Lhi~; recl)mmt..~nJ3tion and

C~.'-,.:l ~i the fill.:.

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.-1 ()lRt\L. ELECTION COl\:1,\\lSSION

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ADDITIONAL INFORMATION REGARDING nIlS ORGANIZATION

MAY BE IDC'ATED IN A OOMPLETED COMPLIANCE AcrION

FlLE RELEASED BY mE aM1ISSION AND MADE PUBLIC IN

'!HE PUBLIC RECDRDS OWICE. FOR nus PARI'ICULAR

ORGANIZATION'S COMPLETED CXJMPLIANCE ACnON FlLE

SIMPLY JtSK FUR 1lIE PRESS stMfARY OF MUR 11 9~Z

'!HE PRESS StM1ARY WlIL PROVIDE A BRIEF HIS'roRY OF

'!HE CASE AND A StHfARy OF '!HE ACTIONS TAKEN, IF MW•