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TO BE PUBLISHED IN THE OFFICIAL REPORTS
 

OFFICE OF THE ATTORNEY GENERAL
 

State of California
 

DANIEL E. LUNGREN
 

Attorney General
 

OPINION : 

: No. 95-320 

of : 

: August 9, 1995 

DANIEL E. LUNGREN :
 

Attorney General :
 

:
 

CLAYTON P. ROCHE :
 

Deputy Attorney General :
 

:
 

THE HONORABLE MICKEY CONROY, MEMBER OF THE CALIFORNIA 

ASSEMBLY, has requested an opinion on the following questions: 

1. May an Assembly member use campaign funds raised for his state legislative office 

to campaign for election to the office of county supervisor? 

2. May an Assembly member receive campaign funds from other candidates for use in 

campaigning for election to the office of county supervisor? 

3. May an Assembly member who is precluded from serving additional terms in the 

Assembly donate his campaign funds to a public interest or educational nonprofit organization that the 

member establishes or controls? 

CONCLUSIONS 

1. An Assembly member may use campaign funds, but not surplus campaign funds 

under current administrative enforcement practice, raised for his state legislative office to campaign for 

election to the office of county supervisor. 

2. An Assembly member may receive campaign funds from other candidates for use in 

campaigning for election to the office of county supervisor unless prohibited from doing so by county 

ordinance. 

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3. An Assembly member who is precluded from serving additional terms in the 

Assembly may donate his campaign funds to a public interest or educational nonprofit organization that 

the member establishes or controls if no substantial part of the proceeds will have a material effect on 

the member, his family, or his campaign treasurer, among other qualifications. 

ANALYSIS 

Contributions to and expenditures of political campaign funds are governed by the 

Political Reform Act of 1974 (Gov. Code, '' 81000-91015; "Act"),1 primarily in sections 85300-85307 

(contribution limitations) and sections 89510-89522 (campaign funds). 2 We are asked herein to 

analyze these provisions with respect to a member of the Assembly who, because of "term limits," may 

not run for reelection and accordingly will leave office in January of 1996. If the member chooses to 

run for the office of county supervisor, may he use his Assembly campaign funds for his county 

supervisorial campaign and may he receive campaign contributions from other candidates? If he 

decides not to run, may he donate his previously accumulated campaign funds to a public interest or 

educational nonprofit organization that he establishes or controls? 

Preliminarily, we note that "[a] county may by ordinance or resolution limit campaign 

contributions in county elections." (Elec. Code, ' 10003.) Here, the supervisorial office under 

consideration by the Assembly member is in Orange County. However, the interpretation of any 

applicable Orange County ordinance is one for local determination and is not a matter for this office. 

(Cf. 76 Ops.Cal.Atty.Gen. 157, 167 (1993); 66 Ops.Cal.Atty.Gen. Foreword I, IV (1983) ["the Attorney 

General declines opinion requests calling for the interpretation of local charters, ordinances, 

resolutions, regulations or rules"].) The scope of this opinion is thus limited to the requirements of 

the Act. 

1. Using Campaign Funds To Run For A Different Office 

In order to run for the office of county supervisor, the Assembly member in question 

will be required to file a statement of intention, establish a separate campaign bank account, and 

establish a separate campaign committee. ('' 85200, 85201; Cal. Code Regs., tit. 2, ' 18521.) 

The Act prohibits transfers from one campaign committee to another and the use of funds for one 

office that were raised for another. Section 85304 states: 

"No candidate for elective office or committee controlled by that candidate 

or candidates for elective office shall transfer any contribution to any other 

1

All section references are to the Government Code unless otherwise indicated. 

2

Elections Code section 18680, the so-called "Personal Use Law," regulates the use of funds raised to promote or defeat 

ballot measures. 

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candidate for elective office. Transfers of funds between candidates or their 

controlled committees are prohibited."3 

Subdivision (b) of section 89510 provides: 

"All contributions deposited into the campaign account shall be deemed to 

be held in trust for expenses associated with the election of the candidate to the 

specific office for which the candidate has stated, pursuant to Section 85200, that he 

or she intends to seek or expenses associated with holding that office." 

In Service Emp. Intern. v. Fair Political Prac. Com'n (9th Cir. 1992) 955 F.2d 1312, 

the court ruled that the Act's prohibition against transfers from one campaign to another 

("intra-candidate" transfers) was unconstitutional.4 The court stated: 

"We agree with the district court that the ban on intra-candidate transfers 

operates as an expenditure limitation because it limits the purposes for which money 

raised by a candidate may be spent. Expenditure limitations are subject to strict 

scrutiny and will be upheld only if they are `narrowly tailored to serve a compelling 

state interest.' [Citation.] 

"Appellant FPPC asserts that the ban is justified by the government's interest 

in preventing funds from being raised for one office and spent for another. Even if 

we were to recognize this to be a compelling state interest, we would invalidate the 

ban as violative of the First Amendment because it is not narrowly-tailored. We 

agree with the district court that this interest in ensuring that contributors are not 

misled could be served simply by requiring candidates to inform contributors that 

their contributions might be spent on other races. [Citation.] Concerns about the 

unintended use of contributors' money can be met `by means far more narrowly 

3

A "candidate" is defined in the Act to include officeholders: 

"`Candidate' means an individual who is listed on the ballot or who has qualified to have write-in 

votes on his or her behalf counted by election officials, for nomination for or election to any elective 

office, or who receives a contribution or makes an expenditure or gives his or her consent for any other 

person to receive a contribution or make an expenditure with a view to bringing about his or her 

nomination or election to any elective office, whether or not the specific elective office for which he or she 

will seek nomination or election is known at the time the contribution is received or the expenditure is 

made and whether or not he or she has announced his or her candidacy or filed a declaration of candidacy 

at such time. `Candidate' also includes any officeholder who is the subject of a recall election. An 

individual who becomes a candidate shall retain his or her status as a candidate until such time as that 

status is terminated pursuant to Section 84214. . . ." (' 82007.) 

4

In Buckley v. Valeo (1976) 424 U.S. 1, 39, the court observed that "a primary effect of . . . expenditure limitations is to 

restrict the quantity of campaign speech by individuals, groups, and candidates. The restrictions, while neutral as to the ideas 

expressed, limit political expression `at the core of our electoral process and of the First Amendment freedoms.' [Citations.]" 

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tailored and less burdensome than [a] restriction on direct expenditures: simply 

requiring that contributors be informed that their money may be used for such a 

purpose.' [Citation.] We hold, therefore, that the intra-candidate transfer ban fails 

the narrowly-tailored prong of the strict scrutiny test." (Id., at 1322; fns. omitted.) 

The district court had stated: 

"On May 19, 1989, this court issued a preliminary injunction, finding the 

ban on transfers among a candidate's own committees burdens First Amendment 

rights and serves no compelling state interest sufficient to justify those burdens. 

The court believes that the injunction should be made permanent. It is clear that the 

ban acts as an expenditure limitation; such limitations have never been upheld, save 

in connection with the expenditures of corporations. Moreover, the sole 

justification offered for the inter-committee transfer ban, is a notion that 

contributions given for one office ought not be diverted to another, because the 

donation was solicited and given with a particular office in mind. This `trust' 

theory, which suggests donations are premised upon the office rather than the 

candidate, may, of course, sometimes be true; on the other hand, as evidence in this 

trial demonstrated, it is sometimes false. More to the point, it is clear that to the 

extent the provision is intended to insure truth in soliciting, a narrower and more 

efficacious means is readily at hand. Such a purpose is easily served by requiring 

that the candidate inform potential donors of his intentions, or if he is unable to do 

so, to acknowledge that the sums raised could be expended on other races. For 

these reasons, and essentially for the reasons argued by plaintiffs in their points and 

authorities in support of preliminary injunctive relief, the court enjoins the 

enforcement of those provisions of Proposition 73 prohibiting transfers between the 

various committees of the same candidate." (Service Employees v. Fair Political 

Practices (E.D.Cal. 1990) 747 F.Supp. 580, 591; fn. omitted.) 

Although the Ninth Circuit and district court addressed only the use of campaign 

funds and not "surplus campaign funds,"5 the rationale of these decisions would apply equally to 

the latter. Section 89519 provides: 

"Upon leaving any elected office, or at the end of the postelection reporting 

period following the defeat of a candidate for elective office, whichever occurs last, 

campaign funds raised after January 1, 1989, under the control of the former 

candidate or elected officer shall be considered surplus campaign funds and shall be 

disclosed pursuant to Chapter 4 (commencing with Section 84100) and shall be used 

only for the following purposes: 

5

Campaign funds become "surplus campaign funds" when the officeholder leaves office or following the postelection 

reporting period after an election defeat. (' 89519.) 

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". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

"(d) Contributions to a political party or committee so long as the funds are 

not used to make contributions in support of or opposition to a candidate for elective 

office. 

"(e) Contributions to support or oppose any candidate for federal office, any 

candidate for elective office in a state other than California, or any ballot measure. 

". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ." 

In effect section 89519 bans the use of surplus campaign funds when an officeholder seeks to run 

for a different office. Such prohibition affects an officeholder's quantity of political expression 

during his second campaign. The purpose of the statute, to prevent campaign contributors from 

being misled, may be more narrowly addressed by, for example, a disclosure requirement. 

However, the Fair Political Practices Commission ("Commission") is the 

administrative agency responsible for enforcing section 89519 and rendering binding opinions 

thereon as well as the other provisions of the Act. ('' 83100-83123.) Since no court has ruled 

upon the constitutionality of section 89519, the Commission currently enforces the statute's ban 

upon intra-candidate transfers of surplus campaign funds. Section 3.5 of article III of the 

Constitution provides: 

"An administrative agency, including an administrative agency created by 

the Constitution or an initiative statute, has no power: 

"(a) To declare a statute unenforceable, or refuse to enforce a statute, on the 

basis of it being unconstitutional unless an appellate court has made a determination 

that such statute is constitutional; 

"(b) To declare a statute unconstitutional; 

"(c) To declare a statute unenforceable, or to refuse to enforce a statute on 

the basis that federal law or federal regulations prohibit the enforcement of such 

statute unless an appellate court has made a determination that the enforcement of 

such statute is prohibited by federal law or federal regulations." 

Accordingly, the ban on intra-candidate transfers of surplus campaign funds is subject to 

enforcement by the Commission until a court6 rules otherwise. (See 76 Ops.Cal.Atty.Gen. 98, 

101-102 (1993).) 

6

Although the Constitution speaks in terms of an "appellate court," the Commission would of course be required to obey 

a lower court order directly relating to the issue, should the lower court declare section 89519 to be unconstitutional. (See 

Fenske v. Board of Administration (1980) 103 Cal.App.3d 590, 595-596.) 

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We thus conclude in answer to the first question that an Assembly member may use 

campaign funds, but not surplus campaign funds under current administrative enforcement practice, 

raised for his state legislative office to campaign for election to the office of county supervisor. 

2. Contributing Campaign Funds to Other Candidates 

The second question is similar to the first except that the campaign funds are 

received from other candidates for office rather than from the initial contributors directly. The 

answer is similar as well--the Act prohibits such practice, and the Ninth Circuit has ruled the 

statutory prohibition to be unconstitutional. 

As previously quoted, section 85304 prevents any transfer of funds between 

candidates. In Service Emp. Intern. v. Fair Political Prac. Com'n, supra, 955 F.2d at 1322-1323, 

the court found this ban on "inter-candidate" transfers unconstitutional: 

"We turn now to the inter-candidate transfer ban, which, in contrast to the 

intra-candidate ban, operates as a contribution limitation because it limits the 

amount one candidate may contribute to another. The Supreme Court has applied a 

somewhat less stringent test than strict scrutiny to decide the constitutionality of 

contribution limitations. [Citations.] . . . However, the test is still a `rigorous' one. 

[Citation.] Proposition 73's ban on inter-candidate transfers may be sustained, 

therefore, only if the state `demonstrates a sufficiently important interest and 

employs means closely drawn to avoid unnecessary abridgment of associational 

freedoms.' [Citation.] 

"The FPPC asserts that the inter-candidate transfer ban is necessary to 

prevent contributors from circumventing the contribution limits by funneling 

contributions through one candidate to another. As the district court pointed out, 

[citation], the inter-candidate transfer ban cannot serve this purpose in the absence 

of valid contribution limits. 

“The Authors [of the Act] argue that the inter-candidate transfer ban may be 

justified by the state's interest in preventing corruption or the appearance of 

corruption by `political pawn brokers.' [Citation.] Even if we assume this to be an 

important state interest, the ban is not `closely drawn to avoid unnecessary 

abridgment of associational freedoms.' [Citation.] The potential for corruption 

stems not from campaign contributions per se but from large campaign 

contributions. [Citation.] The inter-candidate transfer ban prohibits small 

contributions from one candidate to another as well as large contributions. We 

hold, therefore, that the inter-candidate transfer ban is unconstitutional because it 

fails the `rigorous' test used in Buckley, 424 U.S. at 29, 96 S.Ct at 640." 

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The Ninth Circuit also struck down the Act's limitation upon campaign contributions of $1,000 per 

year per candidate (' 85301) on the basis that it favored incumbents over challengers. (Id., at pp. 

1318-1321.) Without a valid contribution limitation, such as the federal campaign limitation 

approved in Buckley v. Valeo, supra, 424 U.S. at 23-28, no governmental purpose would 

adequately support a general ban upon all transfers of contributions from one candidate to another 

as contained in section 85304. 

Of course, if the county in question has a valid campaign contribution limitation 

with respect to supervisorial offices, the prohibition of section 85304 would "prevent contributors 

from circumventing the contribution limits by funneling contributions through one candidate to 

another." (Service Emp. Intern. v. Fair Political Prac. Com'n, supra, 955 F.2d at 1322.) Under 

such circumstances, we believe that 85304's prohibition would meet the court's test for 

appropriately addressing "`a sufficiently important interest.'" (Ibid.) 

We thus conclude in answer to the second question that an Assembly member may 

receive campaign funds from other candidates for use in campaigning for election to the office of 

county supervisor unless prohibited from doing so by county ordinance. 

3. Donating Campaign Funds 

If the Assembly member chooses not to seek election to any other public office, the 

Act allows him under certain conditions to donate his campaign funds to a public interest or 

educational nonprofit organization that he establishes or controls. Section 89515 provides: 

"Campaign funds may be used to make donations or loans to bona fide 

charitable, educational, civic, religious, or similar tax-exempt, nonprofit 

organizations, where no substantial part of the proceeds will have a material 

financial effect on the candidate, elected officer, campaign treasurer, or any 

individual or individuals with authority to approve the expenditure of campaign 

funds held by a committee, or member of his or her immediate family, and where 

the donation or loan bears a reasonable relation to a political, legislative, or 

governmental purpose." 

With respect to surplus campaign funds, subdivision (c) of section 89519 allows them to be used to 

make: 

"Donations to any bona fide charitable, educational, civic, religious, or 

similar tax-exempt, nonprofit organization, where no substantial part of the proceeds 

will have a material financial effect on the former candidate or elected officer, any 

member of his or her immediate family, or his or her campaign treasurer." 

It is to be noted that both sections 89515 and 89519 contain the limitation that there 

be no "material financial effect" on enumerated individuals. "Material financial effect" has not 

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been defined by the Legislature for purposes of these two statutes. However, the Commission has 

applied in these situations the tests set forth in section 87103 governing the conflict of interests 

provisions of the Act. (See Cal. Code Regs., tit. 2, '' 18700-18706.) Generally a transaction has 

a material financial effect on an official if it increases his or her income or assets by $250 or more. 

(Cal. Code Regs., tit. 2, ' 18702.1, subd. (a)(1).)7 This would mean, for example, that the 

Assembly member could not be paid a salary or reimbursed for expenses by the nonprofit 

organization for more than $250 from the proceeds of the donation. 

We thus conclude in answer to the third question that an Assembly member who is 

precluded from serving additional terms in the Assembly may donate his campaign funds to a 

public interest or educational nonprofit organization that the member establishes or controls if no 

substantial part of the proceeds will have a material effect upon the member, his family, or 

campaign treasurer, among other qualifications. 

* * * * * 

7

Moreover, any nonprofit organization controlled by the Assembly member while he is a "candidate" (' 82007) could be 

found to be a "controlled committee" (' 82016) subject to additional regulations (Cal. Code Regs., tit. 2, ' 18217). 

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