FEDERAL ELECTION COMMISSION 

WASHINGTON, D.C. 20463 

March 27,2014 

MEMORANDUM 

To: Hie Commission 

Through: Alec Palmer 

Staff Director 

From: Patricia C. Orrock 

Chief Compliance Officer 

Thomas E. HintermisteT"'?^ 

Assistant Staff Director 

Audit Division 

Zuzana O. Pacious 

Audit Manager 

KendrickSmi^ 

Audit Manager 

By: Sheialine Thomas 

Lead Auditor 

Subject: Resubmission: Audit Division Recommendation Memorandum on die 

Nebraska Democratic Parly (NDP) (A11-18) 

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

the Audit staff presents its recommendations below and discusses the findings in the 

attached Draft Final Audit Rqiort (DFAR). The Office of General Counsel has reviewed 

diis memorandum and concurs with the recommendations. 

Finding 1. Recordkeeping for Employees 

For the period covered by the audit, NDP did not maintain any monthly payroll 

logs, as required, to document the percentage of the time each employee spent on 

federal election activity. For 2009 and 2010, tiie Audit staff identified payments to 

NDP employees totaling $300,708 for whom NDP was required to maintain 

monthly payroll logs. All of these individuals were paid witii an allocation of 

federal a^ non-federal funds and disclosed on Schedule H4 ($282,882) or with 

exclusively non-federal funds ($17,825). Of the employees paid exclusively with 

non-federd funds ($17,826) tiim were two employees (teceiTdng non-fede^ 

payments of $3,642) that were also paid vintfa federal fb^ in the same month. 
The remaining employees (receiving non-federal payments of $14,184) were paid 

exclusively with non-federal funds and were not paid with federal funds in the 

same month. During audit fieldwork, the Audit staff provided NDP with a 

schedule of employees paid with an allocation of federal and non-federal funds. 

An NDP representative completed this schedule by inserting the percentage of 

time each employee spent in connection with federal election activity and provided 

a signed affidavit in which he attested to the accuracy of information provided. 

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

established procedures to maintain contemporaneous documents to certify the 

payroll records for employees paid exclusively with non-federal funds or with an 

allocation of federal and non-federal funds. NDP made no further comments in 

response to the DEAR. 

It should be noted that this finding does not contain contract labor totaling $36. 

NDP made this one-time payment from its federal account and disclosed it on 

Schedule H4 with the notation "Building Maintenance." 

The Audit staff recommends that the Commission fmd that NDP failed to maintain 

monthly time logs to document the time employees spent on federal election 

activity totaling $300,708. This amount includes payroll paid as follows to NDP 

employees. 

A. Employees reported on Schedule H4 and paid with allocated federal 

and non-federal fimds during the same month (totaling $282,882); 

B. Employees reported on Schedule H4 or Schedule B and also paid with 

100 percent non-federal funds during the same month (totaling $3,642) 

and, 

C. Employees paid exclusively with non-federal funds in a given month 

(totaling $14,184). 

Finding 2. Reporting of Debts and Obligations 

During audit fieldwork, the Audit staff noted that NDP had failed to disclose debts 

and obligations totaling $120,447. In response to the Interim Audit Report 

recommendation, NDP filed amended reports to materially disclose these debts and 

obligations. NDP made no further comments in response to the DFAR. 

The Audit staff recommends that the Commission fmd that NDP failed to itemize 

debts and obligations totaling $120,447. 

Finding 3. Excessive Coordinated Party Expenditures 

The Audit staff initially determined that NDP exceeded the 2010 coordinated party 

expenditures limit on behalf of a House candidate by $34,789. In response to the 

Interim Audit Report recommendation, NDP provided support that an expenditure 

for a campaign sign ($578) was not intended as a public communication. The 

Audit staff did not apply the expmiditure of $578 towards the coordinated 

expenditure limit. 

NDP also made expenditures totaling $99,206 for a candidate mailer ($94,610) and 

a candidate postcard ($4,596) that may be attributable to the coordinated 
expenditure limit. For these expenditures, NDP provided some documentation to 

support its contention that the volunteer materials exemption applies to these 

expenditures and the amount should not be attributed towards the coordinated 

expenditure limit. In view of the uncertainty regarding the amount of volunteer 

involvement needed to qualify for the volunteer materials exemption, as well as 

the amount of documentation required to support such an exemption, the Audit 

staff did not attribute these expendimres totaling $99,206 towards the coordinated 

expenditure limit. 

The Audit staff recommends that due to the lack of clarity regarding the level of 

volunteer involvement needed to qualify for the volunteer materials exemption, the 

Conunission not attribute expenditures totaling $99,206 towards the coordinated 

expenditure limitation. 

The Audit staff reconunends that the Commission fmd that NDP exceeded the 

2010 coordinated party expenditure limit by $29,615 ($34,789 less the candidate 

postcard ($4,596) and the campaign sign ($578)). 

NDP did not request an audit hearing. 

If this memorandum is approved, a Proposed Final Audit Report will be prepared within 

30 days of the Conunission's vote. 

In case of an objection. Directive No. 70 states that the Audit Division Recommendation 

Memorandum 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 Sheraline Thomas or Zuzana Pacious at 

694-1200. 

Attachment: 

- Draft Final Audit Report of the Audit Division on the Nebraska Democratic Party 

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

Audit Division on the Nebraska 

Democratic Party 

(January 1, 2009 - December 31, 2010) 

Why the Audit Was 

Done 

Federal law permits the 

Commission to conduct 

audits and field 

investigations of any 

political conunittee that is 

required to Hie 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.' 

The audit determines 

whether the committee 

complied with the 

limitations, pro! 

disclosure reqii nents of 

the Act. 

About the Committee (p. 2); ; „ 

The Nebraska Democratic Party iyt^late party committee 

headquartered in Lincoln, Nebr^C^gbr more information, see the 

chart on the Committee Ore 

Financial Act! 

• Receipts 

o Contributi6ti.s from 

Contributions from 

fers from 

iV'-fcr- iom Non-: 

Other KeCv'ipi 

o 

o 

o 

o 

Total R( 

• 

immittees 

Accounts 

k'. .. 

Future Action 

The Commission may 

initiate an enforcement 

action, at a later time, with 

respect to any of the matters 

discussed in this report. 

lursem 

1 Operating^^xpenditui^s 

Other Fede% Expenditures 

ay:.|Weral Eleclii Activity 

" Coord&i^ Expenditures 

f. liK^endent Expenditures 

o Disbursements 

TotJrDisbursements 

ndings and Recommendations (p. 3) 

Recordkeeping for Employees (Finding 1) 

Reporting of Debts and Obligations (Finding 2) 

Excessive Coordinated Party Expenditures (Finding 3) 

$ 218,270 

24,202 

1,682,699 

344,901 

185,066 

$2«45S,138 

$ 540,126 

129,323 

1,490,477 

138,967 

114,788 

12,475 

35,174 

$2,461,330 

2 U.S.C. 1438(b). 
Draft Final Audit Report of 

the Audit Division on the 

Nebraska Democratic Party 

(January 1, 2009 - December 31, 2010) 
Table of Contents 

Page 

Part I. Background 

Authority for Audit 

Scope of Audit 

Commission Guidance 

Partn. Overview of Committee 

Committee Organization 

Overview of Financial Activity 

Part III. Summaries 

Findings and Recommendations 

Part IV. Findings and Reco: 

Finding 1. Recordkeeping for Employees 

Finding 2. Reporting of Debts ai^,pbligations 

Finding 3. Excessive Coordinated#^y^ExpenditureS'^5a,. 
Parti 

Background 

Authority for Audit 

This report is based on an audit of the Nebraska Democratic Party^ (NDP). 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 2 U.S.C. §438(b), which permits the 

Commission to conduct audits and field investigations of any po^M%@l committee that is 

required to file a report under 2 U.S.C. §434. Prior to ( 

subsection, the Commission must perform an internal; 

committees to determine whether Ae reports filed by a ] 

threshold requirements for substantial compliance wit 

Scope of Audit 

Following Commission-approved procedures^ 

factors and as a result, this audit examined: 

1. the disclosure of individual contributors' occupation 

t under this 

filed by selected 

ittee meet the 

i.e. §438(b). 

1 obligatii 

[federal 

2. the disclosure of disbursements, 

3. the disclosure of expenses allocai 

4. the consistency between reported fi: 

5. the disclosure of independent and 

6. the completeness of and 

7. other committee o^atioln^fiecessary to %e review.' 

ii 

Commission 

aluated risk 

name of employer; 

oil-federal accounts; 

Request 

Pursu^t^to the "Polic; 

of Legal^^estions by 

question r^^ during the 

under 11 CF»i06.7(d)(li 

•fe;. 

jPonsideration of a Legal Question 

ishing a Program for Requesting Consideration 

NDP requested early consideration of a legal 

>P questioned whether the monthly time logs required 

lied to employees paid with 100 percent federal fiin^. 

The Commission ^nclu^, by a vote of S-1, that 11 CFR § 106.7(d)(1) does requite 

coiiunittees to keep a monthly log for employees paid exclusively with federal fimds. 

Exercising its prose^torial discretion, however, the Conunission 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. The Audit staff informed I^P Counsel of the Commission's decision on NDP's 

request. This audit report does not include any finding or reconunendation with respect 

to NDP's employees paid with 100 percent federal funds and reported as such. 

' The committee's name during the audit period was the Nebraska Democratic State Central Committee 

and was changed subsequently on April 4,2012. 
Part II 

Overview of Committee 

Committee Organization 

Important Dates 

• Date of Registration December 3,197S 

• Audit Coverage January 1.2009 - December 31,2010 

Headquarters Lincoln. Nebrasfe^^. 

Bank Information 

• Bank Depositories One 

• Bank Accounts Five Non-federal 

Treasurer 

• Treasurer When Audit Was Conducted iii^OTy Finnfegan 

• Treasurer During Period Covered by Audit (S^yFinnelkn, p" 

Management Information 'mr 

• Attended Commission Campaign Finaq^, 

Seminar a. 

• Who Handled Accounting and Recordkee|p^| 

Tasks 

^ Staff -•'fy 

Oi^Bi^iew of 

(Audited 

cial Activity 

Its) 

v#a9ii*uii*iiiinu vy jHiiunry i, AUUEP J. 

Receipts 

o Contributi^*> from IndMjduals''^^ 218,270 

o ContribMons from Polil&tComiiii^iises 24,202 

o Tramli^^Nrm Affiliates 1,682,699 

o Transfers f^mNon-federal ^ii^unts^ 344,901 

o Other Receipl^-T... -- 185,066 

Total Receipts $ 2.455,138 

Disbursements 

o Operating ExpenditureS-V 540,126 

0 Other Federal Expenditures 129,323 

o Federal Election Activity 1,490,477 

o Transfers to Affiliates 138,967 

o Coordinated Expenditures 114,788 

o Independent Expenditures 12,475 

o Other Disbursements 35.174 

Total Disbursements $2,461,330 

Cash-on-hand @ December 31,2010 $ 57,003 
Part III 

Sununaries 

Findings and Recommendations 

Finding 1. Recordkeeping for Employees 

During audit fieldwork, the Audit staff noted that NDP did not maintain any monthly 

payroll logs, as required, to document the percentage of time ( 

federal election activity. For 2009 and 2010, the Audit staff i 

employees totaling $293,439^ for which payroll logs 

consisted of payroll whidi was allocated between: 

payroll paid exclusively with non-federal funds. 

In response to the Interim Audit Report 

established procedures to maintain 

records for employees paid exclusively with non-fcdcial i 

federal and non-f^eral funds. 

(For more detail, see p. 5.) 

iloyee spent on 

ed'payments to NDP 

. This amount 

funds and 

P stated I hill ii has 

its to certify the payroll 

with an al^cation of 

Finding 2. Reporting of Debts ai^Obligations 

During audit fieldwork, the Audit staff n(^ %lfi^l^^^iled to correctly disclose 

debts and obligations to|^^.|[^^.20,447. Tfi^l^dit staf^^mmended that, absent 

documentation demot^atin^^ these exp^ditures did not require reporting on 

Schedule D (Debts hn^Dbligatfl^), NDP am^d its disclosure reports to disclose these 

debts properly. In resp^a^, to ^^^m Audif^eport recoimnendation, NDP filed 

amended reporjsjamateri^i^'^isdMsi^bSe.debts and obligations. 

(Formorg^®e^,^.) 

Fi: 

During ai 

NDP for a 

expenditure liniita^n by 

3. Ex( 

leldwork. 

ive ^Srdinated Party Expenditures 

udit Itaff identified coordinated party expenditures made by 

it appeared to exceed the 2010 coordinated party 

4,789. 

In response to the In^m Audit Report recommendation, NDP provided statements and 

documents to suppoA its contention that two expenditures totaling $5,174 should not be 

considered excessive coordinated party expenditures. In addition, NDP acknowledged 

that it received $80,000 from the Democratic Congressional Campaign Committee 

(DCCC) prior to making expenditures on behalf of the House candidate. NDP provided a 

letter from DCCC in which DCCC further ceded, albeit untimely, $6,600 to NDP in 

^ 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 fw Early Commission Consideration of a 

Legal Question, page 1). 
2012. NDP argues that this amount remains unspent and therefore should reduce the 

amount of excessive expenditures. 

Lastly, NDP acknowledged that apparent Coordinated Expenditures totaling $29,615, 

identified by the Audit staff, were inadvertently and incorrectly classified GOTV ("Get 

Out the Vote") calls as generic GOTV calls due to a miscommunication with the 

candidate campaign. NDP materially amended its disclosure reports and included these 

expenditures on Schedule F (Coordinated Party Expenditures). 

After considering the Interim Audit Report response, the Audit 

excessive coordinated expenditures to be $29,615. The revisi 

$4,596 which NDP claims as exempt under the volunteer 

(For more detail, see p. 8.) 

A ,.C 

recalculated the 

[justs for the 

exemption. 

-4^ 
Part IV 

Findings and Recommendations 

Finding 1, Recordkeeping for Employees 

Summary 

During audit fieldwork, the Audit staff noted that NDP did not maintain any monthly 

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

federal election activity. For 2009 and 2010, the Audit staff idra^llb^ payments to NDP 

employees totaling $293,439^ for which payroll logs were nQ|iaaintained. This amount 

consisted of payroll which was allocated between federal jgu^^^^ederal funds and 

payroll paid exclusively with non-federal funds. 

ion, NDP stated^ai it has 

documents to certify ifemavroll 

[cdcral fiaMs or with an a]^:ation of 

In response to the Interim Audit Report recommi 

established procedures to maintain contempi 

records for employees paid exclusively with 

federal and non-f^eral funds. 

Legal Standard 

Maintenance of Monthly Logs. Part> cmnrhiiiccs must a -.nbnthly log of the 

percentage of time each employee spen#^ connc^jpn with A federal election. 

Allocations of salaries, wages, and fringe ipe^t^^rel^^jandertaken as follows: 

• employees who^p^^^% or less o^eir completed time in a given month on 

federal electi!^|activu^^ust be pai^either from the federal account or be 

allocated as'^%iinistrati^| costs. 

• employees whols^j^^ moic^^n 25% o^'&eir compensated time in a given month 

on f(||d^|^J^^tionl^itiefli^]^^lid only from a federal account; and, 

• e|^pT6yecV^o;$^ of their compensated time in a given month on federal 

.^Mection activide^^y be-^|ig^tirely with funds that comply with state law. 11 

Facts and 

A. Facts 

During fieldwork, the Audit staff reviewed disbursements NDP made to employees for 

payroll, totaling $306^708®, for which monthly logs were not provided to document the 

percentage of time the employee spent in connection with federal election activity. These 

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

pay these workers. The total of $300,708 consisted of $282,882 for which payroll was 

* 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 Commission Consideration of a 

Legal Question, page 1). 

Payroll is stated net of taxes. 
allocated between federal and non-federal funds and $17,826 that was paid exclusively 

with non-federal fiinds.^ Of the $17,826, NDP paid $14,184 to 32 employees that were 

not reported on either Schedule H4 or Schedule B during the audit period. The remaining 

two individuals were reported as receiving salary payments on either Schedules H4 or 

Schedule B during the report period. 

As part of fieldwork, the Audit staff provided NDP with a schedule of employees with an 

allocation of federal and non-federal funds for which a log was required. An NDP 

representative completed this schedule by inserting the percentage of time each employee 

spent in connection with federal election activity and provided a s^ed affidavit in which 

a NDP representative attested to the accuracy of the informati^prc^ed. 

B. Interim Audit Report & Audit Division Recomm^iilimi 

At the exit conference, the Audit staff discussed the n^^eepiii}', i^e with NDP 

representatives. They asked whether the schedule ^^)|Mfidavithad provided 

would resolve the recordkeeping finding. The staff explained thai^bccause NDP 

did not create and maintain Aese documents the ah(^t notification Icilpfbut 

instead prepared them during fieldwork, the issu6%^uld bi^qluded in the pterim Audit 

Report. 

For NDP employees that were paid exS^wely with non-i^feml funds or with an 

allocation of federal and non-federal funi^ii^;;)|[iterim Audil^^port recommended that 

NDP provide and implement a plan to mftintami^hM;|[ payrglf logs to track the 

percentage of time each employee spends ^ f^dirafl^^pa'activity. 

C. Committee Resgj^nse to i^j^m Audit %port 

In response to the ji^j^ Audi^eport recon^^^ation, NDP stated that, while it has 

already provided the dc^^^tdfioa reflecting much time employees spent on 

federal ele^tm <icii\ ity, records contemporaneously widi 

payroll unities in iliMutuiThe Au^t^m considers this matter resolved. 

Finding Repordjig cff Debts and Obligations 

Summary 

During audit fieldwi^^rtlie Audit staff noted that NDP had failed to correctly disclose 

debts and obligations/totaling $120,447. The Audit staff recommended that, absent 

documentation demonstrating that these expenditures did not require reporting on 

Schedule D (Debts and Obligations), NDP amend its disclosure reports to disclose these 

debts properly. In response to the Interim Audit Report recommendation, NDP filed 

amended reports to materially disclose these debts and obligations. 

The total amount of payroll and payroll paid from non-federal funds figures were adjusted from the 

Interim Audit Repon amounts of $293,439 and $10,SS7, respectively. 
Legal Standard 

A. Continuous Reporting Required. A political committee must disclose the amount 

and nature of outstanding debts and obligations until those debts are extinguished. 

2 U.S.C. §434(b)(8) and 11 CFR §§104.3(d) and 104.11(a). 

B. Separate Schedules. A political committee must file separate schedules for debts 

owed by and to the committee with a statement explaining the circumstances and 

conditions under which each debt and obligation was incurred or extinguished. 

11 CFR §104.11(a). 

C. Itemizing Debts and Obligations. 

• Once it has been outstanding 60 days from the da 

less must be reported on the next regularly sch 

• A debt exceeding $500 must be disclosed i 

which the debt was incurred, except reo 

rent) shall not be reported as a debt be 

11 CFR §104.11(b). 

Facts and Analysis 

A. Facts 

During audit fieldwork, the Audit staff 

the accounts^ of NDP's 1 Uareest vendors 

services such as office 

debt of $500 or 

the date on 

administrativeH^cnscs (such as 

ty^nt due date. ^ 

jlilc ili^hume^ent records to reconcile 

t vi-ricliirs^vided NDP mainly with 

le bank, p%iting and (^pliance services. 

The Audit staff reviev^^'e vepors' invoicedlpounts and identified unreported debts 

and obligations, totalin^^^ipi^^^i^j^l^^to lO.^f its vendors. Included in this balance 

were payrrtei^;td|^i)ig $4,'iS^Tor that NDP made more than 30 days late 

throughQuf the audit p^od. i^|^jarly reoccuiring administrative expenses such as rent 

are rep|||^ble as debts ify^^ymerifea^ot made by the due date. 

unreport^jdebts discussed above, NDP incorrectly reported debt 

amounts ow^i ^ne vend||l The under-reported debts total $ 15,000 for the audit 

period.' 

B. Interim Audit I^ort & Audit Division Recommendation 

The Audit staff presented this matter to NDP representatives at the exit conference and 

provided schedules detailing the unreported and under-reported debts for eadi reporting 

period for the audited cycle. NDP representatives object^ to the inclusion of rent, a 

^ The reconciliation consisted of calculating invoiced and paid amounts for individual reporting periods in 

the 2009-2010 campaign cycle. The Audit staff then determined whether any outstanding debts were 

correctly disclosed on Schedule D. Each debt amount was counted once, even if it required disclosure 

over multiple reporting periods. 

' The total amount of reportable debt to this vendor was $34,500. NDP reported only $19,500 on its 2009 

and 2010 disclosure reports. The underpayment was calculated as follows: $34,500 - $19,500 = $15,000. 
8 

regularly recurring obligation, appearing on the debt schedule. The Audit staff 

acknowledged that regularly occurring administrative expenses are not debt reportable as 

long as they are paid by the due date; however, NDP had consistently paid its rent more 

than 30 days after the payment was due. 

The Interim Audit Report recommended that NDP provide documentation demonstrating 

that these expenditures did not require reporting on Schedule D. Absent such 

documentation, the Interim Audit Report recommended that NDP amend its reports to 

disclose the outstanding debts. 

C. Committee Response to Interim Audit Report 

In response to the Interim Audit Report reconunendation, NI^|iled amended reports to 

materially disclose these debts and obligations. 

Finding 3, Excessive Coordinate4iilaai!y Expia|j|j.tures 

Summary 

During audit fieldwork, the Audit staff identified cc 

NDP for a House candidate that appear to exceed th^ 

limitation by $34,789. 

rparty expenditures made by 

coordinated party expenditure 

In response to the Interim Audit Report%coinmciidation, NDi'pravided statements and 

documents to support its contention that %> expcndi(iiix:<> iciiafing $5,174 should not be 

considered excessive 

that it received $80; 

(DCCC) prior to 

letter from DCCC 'in 

2012. NDP 

party ex; 

atii 

ires on hi 

further 

amount of. 

Las 

ideiitifii 

Out the Vi 

candidate 

111 iiililiiion, NDP acknowledged 

lid^ Campaign Committee 

of the House candidate. NDP provided a 

beit untimely, $6,600 to NDP in 

rpent and therefore should reduce the 

/..the Audit si 

Is as g( 

NDP 

Coordinated Expenditures totaling $29,615, 

were inadvertently and incorrectly classified GOTV ("Get 

ic GOTV calls due to a miscommunication with the 

aterially amended its disclosure reports and include these 

expenditures on j^i^ul^F (Coordinated Party Expenditures). 

' •."•"'I's'v''' 

After considering the^ Interim Audit Report response, the Audit staff recalculated the 

excessive coordinated expenditures to be $29,615. The revised figure adjusts for the 

$4,596 which NDP claims as exempt under the volunteer materials exemption. 

Legal Standard 

A. Coordinated Party Expenditures. National party < » 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; 

• 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 Pj^y expenditures, the 

excess amount is considered an in-kind contribution, s^j^t^the contribution 

limits. 2 U.S.C. §441a(d) and 11 CFR §§109.30 an^%32. 

B. Assignment of Coordinated Party Expenditur^ymit. A pl^Hiical party may 

assign its authority to make coordinated party exp^^mures^to another gtoical party 

committee. Such an assignment must be made i^f^ting, state the am^ra^ the 

authority assigned, and be received by the as§i]^^^efore\ny coordinated®^ 

expenditure is made pursuant to the assignment. %c political party commit that is 

assigned authority to make coordinated party expenditure.N must maintain the written 

assignment for at least three years. lIs^FR §§104.14 and 1^9.33(a) and (c). 

C. Volunteer Activity. The payment bj 

of campaign materials (such as pins, bum^r sti^ ^ 

tabloids or newsletters, aq^^^ signs) us^;byV'such i 

volunteer activities i 

provided that the; 

littee I 

1. 

swsletters, aq^^ signs) useq^y'such com 

ivities on nominees) of such=f 

t the foj^^ing conditions are met;;^ 

payment 4^»ot for est incurred ihlaohnectii 

iitical party of the costs 

I, brochures, posters, party 

: in connection with 

is not a contribution. 

Such payment 

newspaper, 

compu^fj^-iign or 

ing(sr'""'" 

Id e portion of 

contrib 

Su( inyment is 

)f a partii 

It incurred ih^iEmnection with any broadcasting, 

inail, or similar type of general public 

;. The term direct mail means any 

vendor or any mailing(s) made from commercial lists, 

iterials allocable to Federal candidates must be 

the limitations and prohibitions of the Act. 

from contributions designated by the donor to be spent 

ar candidate for Federal office. 

stributed by volunteers and not by conunercial or for-profit 

I sut ;toi 

5. 

6. 

on 

Such 

operations. 

If made by a political committee, such payments shall be rqiorted 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). 

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

State and local party comniittees must comply with the contribution limits below: 
10 

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

qualified as a multicandidate conunittee; 

$2,400 per election to a Federal campaign if the contributing conunittee has 

not qualified as a multicandidate committee; 

$5,000 per year to a separate segregated fund (corporate or labor political 

action committro) or a non-connected committee; and 

unlimited transfers to other party committees. 2 U.S.C. §441a(a). 

Pacts and Analysis 

A. Facts 

The coordinated expenditure limit for the 2010 election c; 

the state of Nebraska was $43,500 each for the state and 

During audit fieldwork, the Audit staff reviewed the 

the DCCC that addressed the coordinated expend! 

transferred its entire coordinated spending limit 

make coordinated expenditures of $87,000 

candidate for the United States House of Represi 

Congressional District (the candidate). Additional 

4-

a House candidate in 

ordi party committees, 

ndencc :^tween ND? and 

tfMay25T^q.NDP 

!. This permitiiii#CCC to 

of ToV White,: 

• ;es.,f^sNebraska's: 

itation indicated that DCCC 

authorized NDP to spend no more tha;|J80,000 of its ited party spending limit on 

behalf of the candidate.' ••• •'i-zr'- • 

•.;v 

The Audit staff's review of disbursemente^ndic^Sl^fitNDFlippeared to make 

coordinated expenditurescjy^^half of il:i- caiKlulaii- iliai uiiiiied $114,789, as outlined 

• NDP reportgl^M mB^rielated exp^itures totaling $85,174 as coordinated 

expenditures mi|pi^alf (^e candidate^pecifically, NDP spent $80,000 on a 

media ad in oppoWion il.j ^-dP.d:di.'.cOpponent, $4,596 on production of a 

^pci^iL-aid, iiiiil $578 for-oonapaign signage. 

' the ciKirdiriaictl <>|uaiilMig limit was established, NDP reported two 

additional disbursements, Uii^g $29,615, for "generic GOTV ("Get Out the 

I calls as fedei-^ eleq^ activity on its disclosure reports. The scripts 

.by the vert^r seem to indicate there was possible coordination with the 

candidid^^^commit^ since the scripts contained the message to vote for the 

candida^%^,incl:d^ed a disclaimer that the message was paid for by NDP and 

authorized 1 

In addition to the expenditures discussed above, NDP spent $94,610 to produce a single 

mailer on behalf of die candidate. This amount consisted of the following components: 

layout and production ($92,610) and postage ($2,000). NDP considered the cost of the 

entire mailer to be an exempt activity under the volunteer materials exemption. To 

support its assertion, NDP provided vendor statements and invoices along with 

photographs of the volunteers participating in various duties such as reviewing, sorting, 

and packing the direct mail pieces. 

' DCCC filings disclosed an additional candidate expenditure in the amount of $3S3, leaving DCCC with 

an unused coordinated limit of $6,647; ($87,000 - $80,000 - $353.) 
11 

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

the Final Audit Reports of the Democratic Executive Committee of Florida and the 

Tennessee Republican Party. In these reports, the Conunission recognized a lack of 

clarity regarding the application of the volunteer materials exemption. In recognizing the 

lack of clarity, the Commission has attempted to formulate a consensus policy regarding 

what constitutes substantial volunteer involvement for the purpose of applying the 

exemption.'" 

In view of the uncertainty regarding the amount of volunteer involvement needed to 

qualify for the volunteer materials exemption, as well as the amount of documentation 

required to support such an exemption, the expenditures for thq^iailcr,totaling $94,610 

have not been attributed to NDP's coordinated expenditure ] 

iitures and 

As a result, 

date. 

f 

The Audit staff concluded that NDP spent $114,789 on < 

exceeded its authorized coordinated party exf 

these expenditures are considered an excessive im-^md contribution to' 

B. Interim Audit Report & Audit Division Rc 

The Audit staff discussed this matter at the exit conF^|^ and provided schedules 

detailing the possible excessive in-kii^ contributions M}P ir.ade on behalf of the 

candidate. In response, NDP represeil^^es stated their belief that some of the amounts 

reported on Schedule F might not actus^^c been coordi^^d^xpenditures. 

The Interim Audit Report recommended 

demonstrating that it dy^^iieeed the 

candidate.'^ 

by the 

P nrcividfea^ditional documentation 

pai^^xpenditure limitation for the 

C. Committee Respoi^''tfi Int 

In response to^hi^terim Auc:: Repoii r<^plmendation, NDP argued that two 

expenditoM ibta^^^l74^^^s 1 and foelow) do not represent coordinated activity 

and thalihe unspent (^®mate^iii ix expenditure limitation of $6,600 (item 3), ceded 

Regarding 

coordinated 

reduce ilie amount of the excessive expenditure. 

itures and the Audit staffs calculation of amounts in excess of the 

imre ^ii, NDP explained as follows: 

1. The payment|il'$S78 to an NDP vendor was merely for a sign that was placed in 

the window of the party's field office during the 2010 general election period. 

The sign was not intended as a public communication; it was placed next to the 

sign of many other Nebraska candidates as is commonplace for party offices. 

Proposed Interim Enforcement Policy, Open Session Agenda document No. 10-16 dated March 10, 

2010, Drafts A through D. 

" The amount over the limit was calculated as follows: Total spent by NDP less amount authorized by 

DCCC: $114,789 - $80,000=334,789. NDP made and reported the maximum allowable contribution to 

the candidate during the 2010 election cycle. 

The authorized committee of Tom White was approved for administrative termination on May 10,2011. 

Therefore, a recommendation to seek refund from the candidate committee is not warranted. 
12 

2. 

3. 

NDP provided a declaration, signed and dated September 16,2013, from its 

Executive Director who oversaw all political and administrative operations of 

NDP during the 2009/2010 election cycle. In the document, the Executive 

Director attested that NDP paid for the printing of the postcards ($4,596) which 

advocated the election of the candidate. According to his recollection, the 

volunteers distributed, hand stamped, and placed the mailing labels on the 

postcards at the party headquarters. NDP incorrectly disclosed this payment on 

Schedule F and plans to amend its reports by disclosing the expenditures as 

Federal Election Activity (Line 30b). . 

NDP acknowledged that it received $80,000, the corad^ated party expenditure 

limit, from the DCCC prior to making expenditu^^^^^^dition, NDP presented 

an unsigned letter from the DCCC dated April 2^012, M^uch DCCC 

designated NDP as its agent".. .for the excl\|^^^vbpose o^^Mng expenditures 

pursuant to 2 U.S.C441a(d) on behalf of [ipe Candidate] up to^^^O." NDP 

acknowledged this authority was not ^ fashion. I^Vcnhdess, 

NDP urged the Coimnission to acknowlra^^at ^^^ount remains unspent 

and should therefore reduce the amount of ekl^^e expenditure. 

Lastly, NDP acknowledged i 

identified by the Audit staff we 

("Get Out the Vote") calls as; 

with the candidate's.campaign. 

on Schedi 

,615 in apparent Coordinated Expenditures 

itly and inco^tly classified GOTV 

is duejo a miscommimication 

and disclosed 

totalin^'15,687, however, a balance of 

/iewed the submitted documentation, 

ig the nature and the location of the 

; that the payment of $578 does not represent a 

i>not intended as a public communication. Since 

lule F, the Audit staff recommends that NDP 

ly report to disclose this disbursement on Schedule E 

lince the sign contains express advocacy. 

Coordinated Ex] 

$13,928 

/ 

The Audit staff consii 

Based on N]^^iadditioni 

campaig^^!^ 

coordj^^ied expendii 

NDP disposed this ex 

amend itslpi;0 August 

(Independenit^P^enditures; 

NDP's Executive attested to the volunteers' involvement with the printing of a 

candidate postcard (^p96). As with the other expenditures noted above, totaling 

$94,610, for which I^P claims the volunteer materials exemptions, the Audit staff 

acknowledges the lade of clarity regarding the level of volunteer involvement needed to 

qualify for the volunteer materials exemption. As with the treatment of those 

expenditures, the Audit staff does no longer attributes the $4,596 expenditure toward 

NDP's coordinated limit. NDP is encouraged, however, to provide any further 

documentation such as photographs of the volunteers participating in die dissemination of 

the candidate postcard for the Commission's consideration of the matter. 

" NDP used these funds to finance its broadcast television media buy and production and disclosed this 

expenditure on Scheduie F of its 2010 Post-General disclosure reports. 
13 

Finally, by presenting the assignment authority letter from the DCCC, NDP demonstrated 

that it was granted additional spending authority ($6,600) beyond $80,000. The Audit 

staff notes that the letter was issued on April 24,2012, well after the November 2,2010, 

general election. As noted in the legal standards above, 11CFR § 109.33(a) requires that 

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 m^e pursuant to 

the assignment. In similar cases, the Conunission has rejected assignments of spending 

authority after the fact. As a result, the Audit staff did not allow for the additional 

spending authority of $6,600. However, the Audit staff recognize|^at the $6,600 

represents unspent funds under the combined spending authorit^^i^th conunittees. 

As a result of NDP's response to the Interim Audit Repo^EhSf\iiclii staff recalculated 

the excessive coordinated expenditures to be $29,615.^^ '^e reviscil figure adjusts for 

$578 which does not represent a coordinated expei^^lq^^d $4,596 which NDP claims 

as exempt from the definition of a contribution UIK^ the volunteer materials exemption. 

Calculated as follows: $29,615 = [($114,789 - $578 - $4,596} - $80,000].