Perkins 

Coie 

700 Thirteenth Street, N.W., Suite 600 

Washington, ac. 20005-3960 

BrirmaSvobod. PHO«: 202.654.6200 

moNB; (202) 434-1654 . , 

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^ . I www.perkinscoiexom BMAiL: BSvobod8@pcrklnseoie.com 

June 12,2014 

VIA ELECTRONIC AND U.S. MAIL 

Mr. Thomas Hintermister 

Assistant Staff Director, Audit Division 

Federal Election Commission 

999 E Street NW 

Washington. DC 20463 

Dear Mr. Hintermister: 

On behalf of the Democratic Party of Wisconsin and its treasurer (collectively, "DPW"), we 

write to respond to the Interim Audit Report of the Audit Division regarding DPWs 2012 

election cycle activities. At all steps during the audit process, DPW has complied ivith the 

requests and recommendations of the Audit Division, and is taking additional steps to strengthen 

its compliance with the Federal Election Campaign Act of 1971, as amended ("the Act"), and 

with Federal Election Commission ("Commission") regulations, as described below. 

FACTUAL BACKGROUND 

The DPW takes its compliance obligations seriously, and makes best efforts to fiilly and 

accurately report its campaign finance activities. However, during the 2011-12 election cycle, 

the DPW was engaged in an unprecedented number of nonfederal elections. The nonfederal 

elections arose unexpectedly as a result of the filing of petitions that led to the recall of 13 state 

senators, the lieutenant governor, and the governor. These recall elections garnered nationwide 

attention at the time due to Wisconsin Governor Scott Walker's proposed budget bill and the 

large public demonstrations against it. 

The DPW was engaged in each of the following nonfederal elections in 2011 and 2012: 

• On April S, 2011, Wisconsin held a General Election for one state supreme court seat. 

The supreme court election also received nationwide publicity due to the candidates' 

positions on Governor Walker's proposed budget reforms. 

LEGAL122371379.1 

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Perkins Coie UP 
Mr. Thomas Hintermister 

June 12.2014 

Page 2 

• On May 3,2011, Wisconsin held a Special Election for one state assembly district. 

• On July 12,2011, Wisconsin held Primary Recall Elections for six state senate districts. 

• On July 19,2011, Wisconsin held a General Recall Election for one state senate district, 

and Primary Recall Elections for two state senate districts. 

• On August 9,2011, Wisconsin held General Recall Elections for six state senate districts. 

• On August 16,2011, Wisconsin held General Recall Elections for two state senate 

districts. 

• On November 8,2011, Wisconsin held a Special Election for one state assembly district; 

• On February 21,2012, Wisconsin held its Spring Primary Election for various local 

elections including county boards and city councils. 

• On April 3,2012, Wisconsin held its Spring General Election for various local elections 

including county boaids.and city councils. Wisconsin also held its federal Presidential 

Preference Vote on this date. 

• On May 8,2012, Wisconsin held Primary Recall Elections for four state senate districts, 

lieutenant governor, and governor. 

• On June S, 2012, Wisconsin held General Recall Elections for four state senate districts, 

lieutenant governor, and governor. 

• On August 14,2012, Wisconsin held its Fall Primary Elections for state assembly and 

state senate races across the state. Federal primary elections were also held on this date. 

• On November 6,2012, Wisconsin held General Elections for state assembly, state senate, 

federal Congressional, federal Senate, and Presidential elections. The Presidential, 

Senate and Congressional races were especially competitive, as were several of the 

nonfederal elections. Additionally, party control of the state senate was at stake. 

As it has previously reported to the Audit Division, the DPW had five paid staff members and 

several volunteer assistants during the 2011-12 election cycle whose primary responsibilities 

included ensiuing the committee's compliance with Commission regulations. DPW staff 

members also attended three separate FEC training seminars and webiiiars in 2011 and 2012. 

Since the 2012 election cycle, DPW staff have continued to attend training seminars or webinars 

and have worked to refine their internal compliance practices. Nevertheless, the level and 

LECAL12237I379.1 
Mr. Thomas Hintermister 

June 12,2014 

Page 3 

complexity of the DPWs activity, combined with the unanticipated level of nonfederal activity, 

plac^ extraordinary burdens on these personnel. 

DISCUSSION 

Finding 1. Misstatement of Financial Activity 

DPW has worked closely with the auditors since receiving the Interim Audit Report and is 

amending its reports to conform in all respects to the auditors' reconunendations. 

While the DPW does not contest the discrepancies identified by the auditors as part of the 

"misstatement" finding, the nature of these discrepancies in many cases involved the form of the 

disclosure provided, not its substance. For example, DPW reported vendor refimds as negative 

entries on Schedule B for Itemized Disbursements. These transactions - which totaled $57,545 

for 2011 and $15,312 for 2012 - were, in fact, disclosed on the public record before the audit 

was initiated. However, the auditors assert that these amounts would have been more properly 

reported as offsets to operating expenditures on Schedule A. The DPW respectfully submits that 

the corresponding amounts of activity are not properly included in the cumulative dollar amount 

of the asserted misstatement. 

Second, the Interim Audit Report states that, on a single monthly report, the DPW correctly 

reported transfers from two joint fundraising representatives, but incorrectly reported the 

underlying individual Joint fundraising contributions. This reporting error occurred simply 

because the wrong box was selected in the DPW's campaign finance reporting software used to 

prepare the DPWs reports. As a result of this clerical mistake, $457,814 in joint fundraising 

contributions were not reported as memo entries under the properly reported joint fundraising 

transfers, but were instead reported as direct contributions to the DPW. Again, these 

contributions - which account for over 58% of the alleged misstatement amount in 2012 - were 

reported to the Conunission on a timely, individualized basis, even if the DPW's cash position 

was incorrectly stated because of the error. 

Finding 2. Recordkeeping for Employees 

The Interim Audit Report correctly contains no finding that the DPW funded payroll for federal 

election activity with impermissible nonfederal funds. 

Employee recordkeeping appears to be one of the most common findings in recent Commission 

audits of state and local parties, and the scope of the Commission's jurisdiction over a party's 

payments to employees with nonfederal funds for exclusively nonfederal work has been a subject 

of recent Commission debate. The DPW presents a prime example of how these burdens afiect 

LEGALI2237I379.I 
Mr. Thomas Hintermister 

June 12,2014 

Page 4 

heavily nonfederally active elections. The Interim Audit Report states that the DPW had 

SI,434,708 in such purely nonfederal payroll. 

Nonetheless, the DPW acknowledges the need to improve its system for maintaining monthly 

employee timesheets. The DPW has developed a web-based system for employees to track and 

enter time; a copy of screen shots of the recordkeeping system the DPW intends to use are being 

send to the Audit Division under separate cover. The web-based form coihplies with the 

requirements of Commission regulations, and is straightforward and convenient for DPW staff to 

complete by simply logging on to the proper website. The web-based system also makes it 

easier for DPW compliance staff to track employee compliance and follow up with employees 

who may become delinquent in their timekeeping. Finally, keeping employee time sheets in an 

electronic format helps ensure the records will not be lost or misplaced. 

We appreciate the Commission's attention to our response. 

Very truly yours, 

_ 

Brian G. Svoboda 

Tyler J. Hagenbuch 

Counsel to the Democratic Party of Wisconsin 

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