Campaign Finance Reform: Experiences of Two States That Offered Full Public Funding for Political Candidates
Released: 2010-05-28T00:00:00

Letter

Background

Public Financing Programs in Maine and Arizona

In November 1996, Maine voters approved a citizen’s initiative—the Maine Clean Election Act (Maine’s Act)—establishing a full public financing program to fund with public moneys the campaigns of participating candidates for the state legislature and governor. Similarly, in November 1998, Arizona voters passed the Citizens Clean Elections Act (Arizona’s Act), establishing a full public financing program for participating candidates for the state legislature and various statewide offices, such as governor or secretary of state. Maine’s Commission on Governmental Ethics and Election Practices and Arizona’s Citizens Clean Elections Commission administer the respective state’s public financing program, including certifying that candidates have met qualifications for receiving public funds.

Legislative candidates who wish to participate in the respective public financing programs must be certified as a participating candidate. Certified candidates, among other things must (1) forgo self-financing and all private contributions, except for a limited amount of “seed money” prior to certification, and (2) demonstrate citizen support by collecting a minimum number of $5 contributions from registered voters. After being certified by the state as having met qualifying requirements, participating candidates receive initial distributions (predetermined amounts) of public funding and are also eligible for additional matching funds from public moneys based on spending by or for privately funded opponents. These matching funds, up to predetermined limits, are given to participating candidates when an opposing nonparticipating candidate exceeds the initial distribution of funds provided to the participating candidate during the primary or general election. Table 1 shows the public funding available to each participating candidate in the 2008 election cycle in Maine and Arizona. The calculation to assess whether matching funds for participating candidates are triggered is to include reported independent expenditures that, in general, are made on behalf of a nonparticipating or another participating candidate in the race by individuals, corporations, political action committees, or other groups.

Various revenue sources are used to support the public financing programs. In Maine, state appropriations were the largest funding source, contributing 82 percent of total revenue in 2008. In Arizona, a surcharge on civil and criminal fines and penalties was the largest funding source, accounting for 59 percent of total revenue in 2008. In addition, funding for public financing programs comes from state income tax checkoff donations in both states. During the 2008 primary and general elections, participating legislative candidates in Maine received a total of almost $3 million, and participating legislative candidates in Arizona received a total of about $6 million.

Before the passage of Maine’s Act in 1996 and Arizona’s Act in 1998, political campaigns in the two states were financed completely with private funds. There were no limitations placed on expenditures by candidates from their personal wealth. Under Maine’s and Arizona’s public financing laws, nonparticipating candidates are not limited in the amount they may spend from their personal financial resources on their own campaigns. While not faced with limits on the total amount of money that they can raise or spend, nonparticipating candidates are subject to certain limitations on the amount that an individual, corporation, or political committee can contribute to the campaigns of nonparticipating candidates, and nonparticipating candidates have additional reporting requirements. For example, in Maine, a nonparticipating candidate in the 2008 legislative elections could accept individual contributions of up to $250 per election, and in Arizona, a nonparticipating candidate could accept individual contributions of up to $488 per election. In both states, nonparticipating candidates must file certain reports with the state when their campaigns exceed certain statutory thresholds relating to, for example, expenditures or contributions. Appendix II provides information about the design and implementation of Maine’s and Arizona’s public financing programs.

Perspectives on the Five Goals of Public Financing Programs in Maine and Arizona

While there is widespread agreement among researchers and state officials in Maine and Arizona with the goals of the public financing programs, there is little consensus about how to assess progress toward these goals and the effects of these programs. For example, research on the effects of state public financing programs in general has been limited because the programs vary widely and were implemented at different times, hindering comparability. With regard to Maine’s and Arizona’s public financing programs, research tends to be limited to a single state or a limited number of years, or produced by groups that support or oppose public financing. Thus, in revisiting our 2003 report, we describe the five goals of the public financing programs and include a discussion of proponents’ and opponents’ views on the effects of these programs.

Increase Electoral Competition

One goal of the public financing programs in Maine and Arizona was to increase electoral competition, which refers to the level of competition for elected positions as demonstrated by whether races were contested (that is, involved more candidates than available positions) and by the percentage of the vote candidates received. For example, levels of electoral competition can vary from none at all in the case of an uncontested race, in which the sole candidate receives 100 percent of the vote (less any write-in votes), to an election in which several candidates vie competitively for a position, each winning a significant portion of the votes. Proponents of public financing for campaigns contended that public funding could increase electoral competition by allowing candidates, especially candidates challenging incumbents, to overcome the financial hurdles that would otherwise prevent them from entering a race. Further, proponents argued that public financing promotes competition by giving more candidates the opportunity to effectively communicate with the electorate once they have entered the race. Additionally, some proponents asserted that increasing the pool of challengers would also increase the diversity of the candidate pool and consequently make some races more competitive by offering candidates that appeal to a broader range of voters. On the other hand, opponents asserted that public financing does not necessarily attract candidates who have a broad base of constituency support and therefore, even though more new candidates may enter races and win, the quality of representation these candidates offer may be questionable.

Increase Voter Choice

Increasing voter choice, as measured by changes in the number of candidates per race and changes in the breadth of political party affiliations, such as third-party and independent candidates, represented in races, was a goal of public financing programs. Proponents of the public financing programs in Maine and Arizona contended that public funding of campaigns would encourage more individuals to run for office, thereby giving voters more choices on the ballot. Opponents asserted that an increase in the number of candidates on the ballot alone would not necessarily result in a more diverse selection of candidates, representation of a wider range of political views, or the guarantee that a broader array of issues would be debated in campaigns.

Curb Increases in the Cost of Campaigns

The public financing programs in Maine and Arizona each were designed to have a two-pronged approach for the third goal—curbing increases in the costs of campaign spending. Each program imposed spending limits and certain other requirements on candidates who chose to participate in the public financing program, and reduced the total amount of money that nonparticipating candidates were allowed to accept from each campaign contributor.

Proponents of the public financing programs in Maine and Arizona contended that escalating campaign costs helped deter candidates from running for office. The intended outcome of this approach was to lower the cost of running for office by reducing and capping the amount of money available for campaign spending. Opponents argued that worthy candidates will garner public support and therefore do not need public financing to run their campaigns. Opponents also cited concerns that rising campaign costs are overstated and that most campaign fundraising comes from individuals who give less than the legal limit.

Reduce the Influence of Interest Groups

A fourth goal of the public financing programs in Maine and Arizona was to enhance the confidence of citizens in government by reducing the influence of interest groups in the political process. The public financing programs in Maine and Arizona imposed campaign contribution limits on participating candidates and reduced the need for participating candidates to raise funds from private donors, such as interest groups, with the intent of eliminating any undue influence, or the perception of influence, large campaign contributors may have on participating candidates. For instance, the “findings and declarations” section of Arizona’s 1998 Act stated, among other things, that the then current election-financing system “effectively suppresses the voices and influence of the vast majority of Arizona citizens in favor of a small number of wealthy special interests” and “undermines public confidence in the integrity of public officials.” From an overall perspective, proponents asserted that public financing programs should enhance the confidence of citizens in government by increasing the integrity of the political process and the accountability of officials.

On the other hand, opponents asserted that, under the traditional campaign financing system, the voices of citizens are represented through competing interest groups. Opponents further asserted there is no evidence that government-financed campaigns attract more worthy candidates than do the traditional system or that, once elected, the publicly financed candidates vote any differently as legislators than do traditionally financed candidates. Moreover, some opponents argued that interest groups can still assert influence on the political process through means other than contributing directly to candidates’ political campaigns, such as contributions to political parties, independent expenditures on behalf of or for opposing candidates, as well as providing nonfinancial resources such as mobilizing members to volunteer for grassroots activities.

Increase Voter Participation

Increasing voter participation, as indicated by increases in voter turnout, was the fifth goal of public financing programs in Maine and Arizona. Proponents asserted that public financing increases voter participation by encouraging citizens to become involved in the political process and by increasing electoral competition. Proponents contended that the public financing programs increase communication between candidates and voters and encourage participating candidates or volunteers to go door-to- door to meet with voters and to collect $5 qualifying contributions. As a result, citizens would feel more involved in the political process and would be more likely to vote in legislative elections. Further, proponents argued that increased competition resulting from public financing would also increase voter turnout because more voters would be attracted by a more diverse set of candidates. Opponents stated that research on public financing programs and their effect on voter turnout is limited or anecdotal, and there is no evidence that citizens will become more engaged in the political process and be more likely to vote. Further, opponents cited the declining number of taxpayers who voluntarily provide contributions to the presidential and state public financing programs on their income tax forms as a reflection of the public’s waning participation and support.

Other States with Public Financing Programs

Since the 1970s, states and localities have offered a variety of programs providing public funds directly to candidates’ campaigns for statewide and legislative races. A July 2009 Congressional Research Service report identified 16 states offering direct public funding to candidates using two major types of public financing frameworks. According to this report, 10 of these states offered public financing programs that were primarily designed to match candidates’ private campaign contributions, thereby reducing the need for private fundraising. These programs varied widely, but generally the amount of public funds candidates received in this type of program depended on the amount the candidates raised and provided partial funding for candidates’ campaigns. Seven of these 16 states, including Maine and Arizona, offered full public financing programs for certain offices that provided fixed subsidies to candidates once they met basic qualifications. During the 2007 and 2008 election cycle, these 7 states offered full public financing programs for candidates running for those statewide and legislative offices shown in table 2.

Appendix III describes full public financing programs available in the 2007 and 2008 legislative elections in the two states other than Maine and Arizona that offer them—Connecticut and New Jersey.

Public Financing Proposals at the Federal Level

In nearly every session since 1956, Congress has considered legislation for public financing of congressional elections, although no law has been enacted. There are several bills pending in the current 111th session of Congress addressing public financing of congressional elections. Two of these are companion bills (H.R. 1826 and S.752) respectively addressing elections to the House of Representatives and the Senate by proposing voluntary public funding systems with a mix of predetermined funding amounts, matching funds, and vouchers for the purchase of airtime on broadcast stations for political advertisements. Two other bills propose variations for funding House elections—H.R. 2056 proposes a voluntary public funding system for House elections, and H.R. 158 proposes a grant system to exclusively fully fund House campaigns during general elections. In July 2009 the House Administration Committee held hearings on H.R. 1826. These bills were referred to committees in 2009 and as of April 2010 were pending.

Factors Influencing Effects of Public Financing Programs and Elections

Many factors, such as the popularity and experience of the candidates, can influence the competitiveness and outcomes of elections and the interpretation of the effects of public financing programs. For example, term limits—limits on the number of terms elected officials such as legislators can serve—and redistricting—the redrawing of state electoral boundaries such as those for legislative districts in response to the decennial census—are factors that complicate the interpretation of available data. Other factors not directly related to public or private financing can also affect electoral campaigns and outcomes, such as economic conditions or particularly controversial ballot initiatives.

Legislative Candidates’ Participation in Public Financing Programs in Maine and Arizona Increased from 2000 to 2008; Limited Data on Candidates Are Available

In Maine and Arizona, legislative candidates’ participation in the public financing programs (measured by the percentage of candidates participating and the proportion of races with a participating candidate) increased from 2000 to 2008; although limited data on candidates’ characteristics are available. Specifically, Maine candidates’ participation rates more than doubled in the primary and general elections from 2000 to 2004 and remained high through 2008 (over 70 percent); among incumbents, the majority participated from 2002 through 2008; and more Democrats (rather than Republicans) participated. In Maine, participating candidates were more likely to win their races. In Arizona, candidates’ participation rates more than doubled in the primary and general elections from 2000 to 2008, with higher percentages of challengers (rather than incumbents) and Democrats (rather than Republicans) participating. In Arizona, nonparticipating candidates were more likely to win their races than were participating candidates. Other than incumbency status and political party affiliation, states did not maintain data that would allow us to assess candidates’ characteristics, such as their experience or demographic characteristics.

Maine Legislative Candidates’ Participation Increased from 2000 to 2008

Maine Legislative Candidates’ Participation Rates More Than Doubled in the Primary and General Elections from 2000 to 2004 and Remained High through 2008

The participation rate of legislative candidates (i.e., percentage of legislative candidates participating in the public financing program) in Maine’s primary elections more than doubled in the first three election cycles after public financing became available. As shown in figure 1, the participation rate increased from 32 percent in 2000 to 72 percent in 2004 and remained over 70 percent from 2004 to 2008. Similarly, the participation rate of legislative candidates in Maine’s general elections more than doubled from 33 percent in 2000 to 79 percent in 2004 and then remained over 80 percent for the 2006 and 2008 elections.

When asked the main reasons for choosing to run their campaign with or without public funds in the 2008 election, the 11 candidates we interviewed in Maine offered a range of reasons why they chose to participate or not participate in the public financing program. Five of the 6 participating candidates cited difficulties associated with raising enough private funds to run a competitive campaign. Among the difficulties mentioned were the amount of time and energy required to fundraise, as well as the amount of funds needed to compete with a well-financed opponent. In addition, 4 of the 6 participating candidates said that participating in the public financing program allowed them to spend more time focusing on communicating with voters. For example, one candidate said that participating in the public financing program freed him up so he could focus on meeting with constituents and learning what issues were important to them, rather than having to spend his time asking for money. Further, 3 of the 6 participating candidates said that they wanted to be free of the influence of interest groups or other campaign contributors, and 2 of these candidates felt that it was strategically advantageous to participate in the public financing program. One of these candidates explained that he did not want to have to spend time raising funds while his opponent could use the time to campaign and still receive the same amount of money. We also asked candidates about specific factors they may have considered when choosing to run their campaign with public funds. Table 3 presents the number of participating candidates who said that they had considered each of the following factors when they decided to participate in the public financing program.

The 5 nonparticipating candidates we interviewed in Maine most frequently mentioned opposition to using public funds for election campaigns as one of the main reasons they chose not to participate in the public financing program in 2008. For example, 4 of the 5 nonparticipating candidates said they were opposed to public financing of elections for a range of reasons, including concern over the state’s fiscal situation. One nonparticipating candidate said he chose not to participate because he did not want restrictions on how he ran his campaign. He explained that he had more flexibility with private funds and could donate excess campaign funds to nonprofit organizations after the election. In addition, one candidate told us that he was not opposed to the public financing program, but did not participate because he did not intend to run a campaign and anticipated that another candidate would take his place before the general election. We also asked the 5 nonparticipating candidates if they considered any of the factors listed in table 4 when they chose not to participate in the public financing program; their responses appear alongside each factor in the table.

Incumbent candidates’ participation in the public financing program in general elections in Maine generally increased from 2000 to 2008, with the majority of incumbent candidates participating in the program from 2002 through 2008. As shown in figure 2, participating incumbent candidates, as a percentage of all candidates, increased from 10 percent in 2000 to 29 percent in 2008.

Further, the percentage of participating incumbents grew from 27 percent of incumbent candidates in 2000 to 80 percent of incumbent candidates in 2008.

Participating Candidates in Maine Were Generally More Likely to Win

Participating incumbents and challengers in Maine’s legislative races were generally slightly more likely to win than nonparticipating incumbents and challengers who ran in general elections held from 2000 through 2008, as shown in table 5.

Since 2000, more Democrats than Republicans participated in the public financing program in Maine primary and general elections, in terms of the proportion of candidates who participated. For example, while the rate at which Republican legislative candidates in the primary elections participated in the public financing program increased by about 41 percentage points from 2000 to 2008 (from 22 percent to 63 percent), the participation rate remains below that of Democrats, whose participation rate increased by about 48 percentage points in the primary election during the same period (from 39 percent to 87 percent), as shown in figure 3. For both Democrats and Republicans, most of the growth in participation rates occurred between the 2000 and 2004 legislative elections, whereas participation rates have been relatively stable over the past three election cycles (2004, 2006, and 2008) in both the primary and general elections. For example, participation rates increased in the primary elections by about 4 percentage points among Democrats (from 83 percent to 87 percent), and by 1 percentage point among Republicans (from 62 percent to 63 percent) between the 2004 and 2008 election cycles. In all election years, more Democrats participated in the public financing program than Republicans did, in terms of the proportion of candidates who participated.

Arizona Legislative Candidates’ Participation Increased from 2000 to 2008

Arizona Legislative Candidate Participation Rates More Than Doubled in the Primary and General Elections from 2000 to 2008

In Arizona, the participation rate of legislative candidates in primary elections doubled after the first election cycle when public financing became available, from 24 percent in 2000 to 50 percent in 2002. The participation rate then steadily increased over the next three elections to 59 percent in 2008, as shown in figure 4. Similarly, the participation rate of legislative candidates in Arizona’s general elections almost doubled after 2000, when it was 26 percent, to 49 percent in 2002, and then steadily increased over the next three elections to 64 percent in 2008.

The 11 candidates we interviewed in Arizona offered a range of reasons why they chose to participate or not participate in the public financing program when asked the main reasons for choosing to run their campaign with or without public funds in the 2008 election. Four of the 5 participating candidates we interviewed cited wanting more time to focus on interaction with voters when asked the main reasons for choosing to run their campaign with public funds in the 2008 elections. One of these candidates explained that collecting the $5 contributions strengthens candidates’ connections to voters at the grass roots level. Candidates cited other reasons for participation. The desire to be free of the influence of interest groups or other campaign contributors was among the reasons 3 of the 5 candidates gave for participating in the public financing program. One candidate explained that participating candidates are not reliant on interest groups and are only beholden to their constituents. Three candidates said difficulties associated with raising adequate private funds to run a competitive election campaign was one of the reasons they chose to participate. For example, one candidate said that as a first-time candidate, he did not know how to raise money, so without the public financing program he would not have been able to compete against the incumbent candidate. Two candidates said it was strategically advantageous to participate in the public financing program. One of these candidates told us that he decided to participate in the public financing program because he would feel like he was funding his opponents if he raised private funds and the participating candidates in his race received matching funds based upon his spending. We also asked candidates about specific factors they may have considered when choosing to run their campaigns with public funds. Table 6 presents the number of participating candidates who said that they had considered each of the following factors when they decided to participate in the public financing program.

The 6 nonparticipating candidates we interviewed most frequently cited opposition to using public funds for election campaigns as one of the main reasons they chose to use private rather than public funds for their campaigns. Five of the 6 nonparticipating candidates said that they were opposed to using public funds for election campaigns for various reasons, which included the belief that public financing program forces taxpayers to fund candidates that they may not support, and the belief that funds could be better spent on government services, such as healthcare for children, or to reduce the state’s deficit. In addition, 2 candidates said they did not participate because they did not want restrictions on how they ran their campaigns, such as the limit on the amount of money candidates may raise. Another candidate told us that he is opposed to the public financing program because he does not believe that the Citizens Clean Elections Commission should have the authority to remove legislators from office for violating the rules of the public financing program. Additionally, 1 nonparticipating candidate said that she did not participate because her primary race was uncontested, so the public financing program would provide meager resources and not enough for her to communicate with voters. We also asked the 6 nonparticipating candidates if they considered any of the factors listed in table 7 when they chose not to participate in the public financing program; their responses appear alongside each factor in the table.

Incumbent candidates’ participation in the public financing program in general elections in Arizona increased from 2000 to 2008; however, the majority of incumbent candidates did not participate in the program over these five election cycles. Figure 5 shows that participating incumbent candidates, as a percentage of all candidates, generally increased from 4 percent in 2000 to 18 percent in the 2008 general elections.

Nonparticipating legislative incumbents and challengers in Arizona were generally more likely to win than participating incumbents and challengers who ran in elections held from 2000 through 2008, as shown in table 8.

In Arizona primary and general legislative elections, more Democrats than Republicans participated in the public financing program, in terms of the proportion of candidates who participated, although, as shown in figure 6, the participation gap between Democrats and Republicans has narrowed since 2000. For example, the percentage of Democrats who participated in the public financing program during the primary election increased by about 30 percentage points (from 42 percent to 72 percent) from 2000 to 2008, while the rate of participation among Republican candidates increased by about 41 percentage points (from 9 percent to 50 percent) over the same period.

In Maine and Arizona, a Greater Proportion of General Election Races from 2002 through 2008 Had at Least One Publicly Financed Legislative Candidate Compared to 2000

The majority of general election races in both Maine and Arizona had at least one participating candidate in 2008, and the proportion of races with a participating candidate has generally increased from 2000 through 2008 in both states. In Maine, the proportion of races with at least one participating candidate doubled over the five election cycles, from 47 percent in 2000 to 96 percent in 2008, as shown in figure 7. In Arizona, the proportion of races with at least one participating candidate increased steadily over the five election cycles from 53 percent in 2000 to 82 percent in 2008.

Limited Data Are Available on Candidate or District Characteristics and Candidate Experience

Data limitations preclude providing additional information about legislative candidates or the districts in which they ran for office. For example, Maine and Arizona state officials did not maintain data to analyze candidates’ experience (e.g., whether they had previously held public office with the exception of whether a candidate was an incumbent in a given election and political party affiliation); qualifications (e.g., education or work experience); wealth; or demographics (e.g., sex, age, race, or ethnicity). Additionally, data were not available to address issues specific to individual legislative districts, such as partisan composition, local ballot initiatives and candidates, as well as economic or demographic factors that could affect a candidate’s participation in the public financing programs.

Changes in One Measure of Electoral Competition Could Not Be Directly Attributed to Maine’s and Arizona’s Public Financing Programs; No Overall Changes in Voter Choice, Campaign Spending, and Interest Group Influence, While Data Limitations Hinder Analysis of Changes in Voter Participation

We used a variety of statistical techniques to measure changes in five goals of public financing before and after the implementation of public financing and found some evidence of statistically significant changes in one measure of electoral competition. For the rest, we found either no overall changes or data limitations precluded any analysis of changes. Specifically, there were differences in one of the measures used for the goal of increased electoral competition—the winners’ margin of victory decreased—but we could not attribute these differences directly to the public financing programs because needed data were limited or unavailable and there are certain factors that we could not measure, such as candidate popularity, which affect electoral outcomes. There were no statistically significant differences observed for the other measures of electoral competition: contestedness (number of candidates per race) and incumbent reelection rates. For three of the remaining four goals— increasing voter choice, curbing increases in campaign spending, and reducing the influence of interest groups and enhancing citizens’ confidence in government—the measurable differences were not statistically significant overall. While there is no indication that the programs have decreased interest group influence, some candidates and interest group officials GAO interviewed said that campaign tactics have changed. We could not measure differences for the fifth goal—increasing voter participation—because of data limitations, including differences in how voter turnout has been measured over time for Maine and Arizona.

Changes in One Measure of Electoral Competition— Winner’s Victory Margin— Could Not Be Directly Attributed to Public Financing Programs in Maine and Arizona, While No Significant Changes Were Observed in Two Other Measures of Electoral Competition

Overall, the margin of victory in legislative races decreased significantly in both Maine and Arizona compared to their respective comparison states after the public financing programs were implemented; however, we could not attribute these decreases directly to the public financing programs due to factors such as candidate popularity and changing economic conditions, which affect electoral outcomes. On the other hand, contestedness and incumbent reelection rates did not significantly change over time in Maine and Arizona. The candidates and interest group representatives we interviewed from Maine and Arizona provided various perspectives on the effect of the public financing programs on the advantage of incumbent candidates and the number of close races.

For Legislative Races, the Margin of Victory Decreased in Maine and Arizona, While Contestedness and Incumbent Reelection Rates Did Not Change in both States

Overall, winner’s margin of victory in races decreased significantly in both Maine and Arizona as compared to their respective comparison states after public financing was available; however, we could not attribute these decreases to the public financing programs due to factors such as the qualifications or experience of the candidates and Presidential and othe top-ballot races, which could motivate certain citizens to vote, thereby influencing electoral outcomes. We used three different measures of margin of victory in our analyses: (1) the average margin of victory for contested races, (2) the percentage of close races (i.e., races decided by less than 10 percentage points), and (3) the percentage of races that were landslides (i.e., races decided by more than 20 percentage points).

As shown in tables 9 and 10, the average margin of victory for contested elections declined from 22 percent before public financing (1996 and 1998) to 19 percent after public financing (from 2000 through 2008) in Maine, and from 31 percent before public financing to 27 percent after public financing in Arizona. These changes, decreases of about 3 percent in Maine and 4 percent in Arizona, were statistically significantly different from the changes in the comparison states for both Maine and Arizona, where the average margin of victory increased about 1 percent in both the Maine and Arizona comparison states. The adjusted differences in the changes between Maine and Arizona and their respective comparison states are derived from statistical models that account for other factors that may have explained the changes, and in the case of average margin of victory the adjusted difference is statistically significant. Our fixed effects statistical models take into account whether elections were for the House of Representatives or Senate, and whether the races included incumbents. However, our results may be sensitive to our choice of comparison states. More information on these models and our choice of states is presented in appendix I and the e-supplement accompanying this report, GAO-10-391SP.

We obtained similar results when we measured the margin of victory by contrasting the percentages of close races (defined as competitive races with a margin of victory of less than 10 percentage points) and races that were landslides (defined as competitive races with a margin of victory exceeding 20 percentage points). Close races increased in Maine and Arizona after public financing was available, by about 9 and 6 percentage points respectively. The change observed in Arizona was significantly different from changes in the respective comparison states, where the percentage of close races increased only slightly or actually decreased. Landslide races also decreased in Maine (by 7 percentage points) and Arizona (by 12 percentage points). These changes were significantly different from the changes in the comparison states after controlling for the other factors in our model.

Figures 8 and 9 present the year-to-year outcomes (instead of the averages for before and after public financing) for the three margin of victory measures for Maine and its comparison states, and Arizona and its comparison states.

Changes in contestedness—the percentage of all races that had at least one more candidate running than the number of seats available—in Maine and Arizona before and after public financing was available were no different from changes observed in comparison states. As shown in tables 11 and 12, before public financing was available (1996 and 1998), 86 percent of the elections in Maine and 60 percent of the elections in Arizona were contested. The percentage of contested elections after public financing was available (from 2000 through 2008) increased in both states, to 91 percent in Maine and 75 percent in Arizona. However, even after controlling for other factors, these increases, of 5 percentage points and 15 percentage points respectively, were not statistically different from the changes in comparison states where percentages of contested elections increased by about 5 and 12 percentage points.

Further, year-to-year changes in the percentages of contested elections in Maine and Arizona over time are not much different from in their comparison states before or after controlling for other factors, as shown in figure 10.

Incumbent reelection rates (i.e., the percentage of incumbents who were reelected among those incumbents who ran in contested races) did not change significantly in Maine and Arizona before and after public financing was available. We first examined the proportion of contested races with incumbents who won relative to all contested races with an incumbent candidate. As shown in tables 13 and 14, in Maine the percentage of races in which incumbents who were challenged were reelected was 88 percent before public financing was available and about 90 percent after it was available. In Arizona, the percentage was 98 percent before public financing and 97 percent after. Incumbent reelection rates in comparison states did not change over time—staying around 93 percent and 91 percent, respectively, in the two groups of comparison states. Further, our statistical model that tested the difference in change across time periods between the states with and without campaign financing provided no evidence of any statistically significant difference.

Year-to-year changes in incumbent reelection rates for races in Maine and Arizona over time are basically unchanged and not much different from in their comparison states, as shown in figure 11.

We found similarly and consistently high reelection rates when we considered individual incumbent reelection rates, the proportion of individual incumbents who won out of all incumbents who ran. In Maine, 90 percent of all incumbents running in general elections races were reelected in the years before public financing was available, and 90.2 percent after. In Arizona, the individual incumbent reelection rate for general elections before public financing was available was 96.9 percent, compared to 96.1 percent after public financing was available. Research has shown that incumbent candidates may have an advantage over other candidates because of several factors, such as visibility in the media, name recognition, and the ability to perform services for constituents. Thus, the high incumbent reelection rates observed in these states despite the implementation of the public financing programs is not surprising.

Many other factors we could not control in our analyses may affect electoral competition, including the popularity of candidates, extreme one- issue candidates, polarizing candidates, local ballot initiatives and issues, economic conditions, and other aspects of political context. Further, the size and statistical significance of our comparative results also may be affected by our choice of comparison states. Thus, we cannot say definitively whether any of the changes we observe can be attributed to the campaign financing programs.

Candidates and Interest Groups Reported Various Perceptions on the Effect of Public Financing Programs on Electoral Competition

The candidates and interest group representatives we interviewed from Maine and Arizona provided various perspectives on the effect of the public financing programs on the advantage of incumbent candidates and the number of close races.

Most candidates we interviewed in Maine (8 of 11) believed that the advantage of incumbent candidates neither increased nor decreased as a result of the public financing program. Further, 2 of 11 candidates said that incumbents’ advantage had increased under the public financing program. Among the reasons candidates gave for incumbents’ advantage was their access to resources, such as campaign databases; political party support; and officeholder privileges, such as a budget to distribute communications (e.g., mailers and newsletters) to constituents. On the other hand, 1 of the 11 Maine candidates said that the advantage of incumbents had decreased as a result of the public financing program since some incumbents have been defeated by participating candidates who may not have run for legislative office without public financing.

Arizona candidates had mixed perceptions on the effect of the public financing program on incumbents’ advantage. Four of 11 candidates said that the advantage of incumbents neither increased nor decreased as a result of the public financing program, citing incumbents’ benefits such as name recognition, experience in running a successful election campaign, and access to funding. Three candidates said that incumbents’ advantage increased. One of these candidates explained that participating incumbent candidates did not have to do as much outreach to voters as they would have if they needed to raise private funds. However, 3 candidates we interviewed stated that the advantage of incumbent candidates has decreased. Among the reasons given for the decrease in incumbents’ advantage was that incumbents face more challengers under public financing. Another candidate agreed that incumbents had to work harder to defend their seats in the primary election; however, according to the candidate, incumbents’ advantage had not changed in general elections since many legislative districts are either heavily Democratic or Republican.

The majority of candidates we interviewed in Maine (9 of 11) thought that the number of close legislative races increased as a result of the public financing program and provided a range of explanations for why. For example, one candidate said that before the public financing program, some candidates would run unopposed because potential challengers lacked funds, but after public financing became available, more challengers have entered races and have run competitively. However, other candidates had different perspectives that were not consistent with the statistical data we observed—one candidate said that the number of close races decreased, and one candidate said that the number of close races neither increased nor decreased as a result of the public financing program. According to this candidate, the broader political climate influenced elections more than the public financing program.

In Arizona, over half of the candidates (6 of 11) believed that the public financing program had increased the number of close races. Candidates attributed the increase to greater equality in financial resources among candidates, more candidates running for office, and more extensive discussion of the issues, among other reasons. On the other hand, in contrast with the data we observed, 3 candidates we interviewed said that the number of close races neither increased nor decreased as a result of the public financing program. Additionally, 2 candidates said that the number of close races increased in the primary election, where, according to one candidate, there have been more challengers, but neither increased nor decreased in the general election, since many districts are heavily Republican or Democratic.

Half of the interest group representatives we interviewed in Maine and Arizona (5 of 10) thought the closeness of races had not changed, although our data analysis did reveal changes. For example, an Arizona representative commented that the public financing program by itself had not changed the closeness of races and that redistricting and the ability of independents to vote in the primary has made the races closer. On the other hand, 2 of the 10 representatives believed that the closeness of races had changed. One representative from Maine stated that he believed there may be a few more close races because of the public financing program while an Arizona representative believed the closeness of races had changed in the primaries because more candidates have an opportunity to run with public financing and therefore may be more competitive. Finally, 2 of the 10 interest group representatives were unsure whether public financing had changed the closeness of races and 1 of the 10 interest group representatives did not respond.

No Observed Changes in Increased Voter Choice in Terms of the Average Number of Legislative Candidates and the Percentage of Third-Party and Independent Candidates Represented in Races in Maine and Arizona

While increasing voter choice, as measured by changes in the number of candidates per race and changes in the breadth of political party affiliations represented in races, was a goal of public financing programs, there were no observed changes in these measures in Maine and Arizona after the public financing programs were available. However, as discussed later, candidates we interviewed provided a range of perspectives about the role of third-party and independent candidates.

No Observed Changes in the Average Number of State Legislative Candidates per District Race

The average number of legislative candidates per primary and general election race in Maine and Arizona did not vary greatly over the seven election cycles examined—before (1996 and 1998 elections) and after (2000 through 2008 elections) the public financing programs became available, as shown in table 15.

During the 1996 through 2008 legislative elections in Maine and Arizona, candidates from a variety of third parties and independents ran for office. In Maine, these candidates included Green Party members and independents. In Arizona, these candidates included members of the Green, Natural Law, Reform, and Libertarian Parties, as well as independents. As shown in tables 16 and 17, while there were some changes in the percent of races with third-party or independent candidates receiving 5 percent or more of votes cast—a proxy indicator for “viable” candidates—there were no discernable trends from 1996 through 2008 in Maine and Arizona.

The 22 candidates from Maine and Arizona we interviewed had mixed views on the role of third parties and independents in the 2008 election and the quality and types of candidates running for election. The majority of candidates in Maine (7 of 11) and Arizona (7 of 11) said that the role of third parties and independents neither increased nor decreased as a result of the public financing programs. However, the other candidates had differing perspectives. For example, one candidate in Maine told us that public financing had increased the role of third-party and independent candidates as it has been particularly helpful for third-party candidates running against incumbent candidates.

Additionally, several candidates provided comments about the effect of the public financing programs on the quality and type of candidates running for legislative office. For example, in Maine, 3 of the 11 candidates told us that the public financing program had a positive effect on voter choice, by allowing a greater diversity of candidates to run for office and by improving the quality of political debate. On the other hand, 3 other Maine candidates thought the public financing program allowed candidates to run for office who were not credible or who were unqualified. In Arizona, 2 of the 11 candidates said that the public financing program allowed candidates that were on the extremes of the political spectrum to run and win, which has resulted in a more partisan and divided legislature. However, another candidate said that many of the participating candidates are experienced incumbent candidates.

Average Legislative Candidate Spending Varied in Election Cycles under Public Funding Programs in Maine and Arizona; Independent Expenditures Increased in Maine, and Officials Reported Independent Expenditures Also Increased in Arizona

Average legislative candidate spending varied from year to year in Maine and Arizona in the five election cycles that occurred after public financing became available (2000 through 2008). In Maine, average candidate spending in House races decreased statistically significantly after public financing became available as compared to the two elections before public financing was available (1996 and 1998). However, we could not attribute this decrease to the public financing program because of other factors, such as reductions made to the amounts of funding publicly financed candidates received during the 2008 elections. Average candidate spending in Maine Senate races did not change significantly. In Arizona, data were not available to compare legislative candidate spending before 2000; however, in the five elections under the public financing program, average candidate spending has increased. Independent expenditures have increased fourfold in Maine, and state officials reported that independent expenditures have increased in Arizona since 2000.

Average Maine Legislative Candidate Spending Decreased in House Races, but Did Not Change Significantly in Senate Races after Public Financing Became Available

While average legislative candidate spending varied from year to year in Maine, as shown in figure 12, in the five elections after public financing became available average candidate spending in House races decreased, while average Senate candidate spending did not change significantly compared to the two elections before public financing was available. Specifically, average candidate spending in Maine House races decreased from an average of $6,700 before public financing was available to an average of $5,700 after public financing became available. A state official told us that a 5 percent reduction in the set amount of public funding distributed to participating candidates for the general election likely contributed to the decrease in spending in the 2008 election.

As shown in figure 13, spending by Maine legislative incumbent candidates, challengers, and open race challengers (i.e., candidates running in open races with no incumbent candidates) varied from year to year.

However, overall, the difference in average spending by incumbents and challengers narrowed in both House and Senate races after public financing became available. In addition, average spending by open race challengers was relatively higher than either incumbent or challenger spending averages in House races, but was not significantly different in Senate races in the elections after public financing became available. In Maine House races, incumbents spent $1,800 more on average than their challengers in the two elections before public financing became available. In comparison, the difference in average spending by incumbents and challengers was not statistically significant in the five elections under the public financing program. Open race challengers spent more on average ($6,100) than either incumbents, who spent an average of $5,600, or challengers running against incumbents, who spent an average of $5,400, in the five elections under the public financing program. Before public financing became available, incumbents spent an average of $7,700, more than the average amount spent by challengers ($5,900) or open race challengers ($6,300) during the same period.

The difference in average incumbent and challenger spending in Maine Senate races also decreased in the period after public financing became available. On average, incumbents spent nearly $10,500 more than their challengers in the two elections before public financing became available; however, after public financing became available, the difference between average incumbent and average challenger spending was not statistically significant. Similarly, spending by open race challengers in Senate races was not significantly different from spending by either incumbents or challengers in the elections after public financing became available.

As figure 14 shows, average spending by participating and nonparticipating candidates varied in the five elections under the public financing program. However, overall, spending by participating candidates was not significantly different than spending by nonparticipating candidates in both Maine House and Senate races in the five elections under the public financing program.

Independent expenditures in Maine legislative races have increased by about $500,000 in the five elections under the public financing program. As figure 15 shows, independent expenditures increased from about $150,000 in 2000 to a high of about $655,000 in 2006, with a large increase occurring in the 2004 election. The Director of Maine’s commission told us that he believes that the increase in 2004 was due principally to a change in the definition of independent expenditures. While independent expenditures decreased somewhat (by about $20,000) in the 2008 election compared to the 2006 election, the total amount remained high.

Average candidate spending in Arizona legislative races has generally increased in the five elections under the public financing program; however, we were not able to compare these spending levels to those in the period before public financing became available. As shown in figure 16, average candidate spending in Arizona House races has increased in each subsequent election since 2000, with the exception of 2006, when average spending declined about $1,000 from the previous election. In 2008, average spending increased to $48,700, a $13,000 increase from 2006. In Arizona Senate races, average candidate spending has been increasing following the 2002 election, after a decrease of about $10,000 in the 2002 election.

State officials told us that the way candidates have spent campaign funds has changed since the implementation of the public financing program. For example, they said that candidates have coordinated their campaigns with other candidates in their district to maximize their campaign resources. For example, two Republican candidates for the Arizona House of Representatives may pool their campaign funds to send out one mailing in support of both candidates, rather than each candidate sending out separate mailings.

Average spending by challengers and incumbents fluctuated from year to year, with challengers spending more in some elections, and incumbents spending more in other elections in both Arizona House and Senate races, as shown in figure 17.

Overall, there was no statistically significant difference between average incumbent and average challenger spending in either Arizona House or Senate races in the five elections under public financing. Further, spending by open race challengers in House races was not significantly different from spending by incumbents or challengers after public financing became available. However, in each of the five elections examined, average spending by open race challengers in Arizona Senate races was higher than average spending by incumbents or challengers, and overall, open race challengers spent between $14,600 and $16,200 more on average than either incumbents or challengers.

Participating candidates spent more on average than nonparticipating candidates in Arizona House, while in Senate races nonparticipating candidates spent more on average than participating candidates in some years and less in others, as shown in figure 18. Participating candidates in Arizona House races spent $44,500 on average, compared to nonparticipating candidates, who spent an average of $29,700 in the five elections under the public financing program. In Arizona Senate races, there was not a statistically significant difference between average spending by participating and nonparticipating candidates in the five elections examined. State officials said that the amount spent on independent expenditures has increased since 2000. Therefore, they stated that matching funds distributed to participating candidates for independent expenditures may account for some of the difference in average spending by participating and nonparticipating candidates.

According to state officials, independent expenditures have increased in Arizona legislative elections under the public financing program. In 2008, independent expenditures in Arizona House and Senate races totaled $2,170,000. While complete data on independent expenditures specifically in legislative elections were not available for elections prior to 2008, state officials told us that independent expenditures have increased.

Furthermore, in our 2003 report, the Arizona Citizens Clean Elections Commission identified independent expenditures in the 1998, 2000, and 2002 legislative and statewide elections. Independent expenditures in both legislative and statewide races totaled $102,400 in 1998, $46,700 in 2000, and $3,074,300 in 2002. We reported in 2003 that the increase in independent expenditures in the 2002 election was largely associated with the gubernatorial race, with more than 92 percent of the independent expenditures associated with two gubernatorial candidates.

Candidates and Interest Group Representatives Had Mixed Perceptions about the Effect of Public Financing Programs on Campaign Spending

The candidates and interest groups we interviewed in Maine and Arizona had a range of experiences with and views on campaign spending, independent expenditures, and issue advocacy advertisements.

Candidates’ and Interest Groups’ Views on Campaign Spending While candidates and interest groups had varying views about whether campaign spending had increased in the 2008 elections, in general they indicated that equality in financial resources among candidates had increased in the 2008 election as a result of the public financing programs. In Maine, about half of the candidates (5 of 11) we interviewed said that campaign spending increased in the 2008 election as a result of the public financing program. Candidates provided a number of reasons for the perceived increase in campaign spending. For example, one candidate said that campaign spending increased because some participating candidates spent more than they would have if they had raised private funds for their campaigns. Another candidate noted that the amount of money spent by participating candidates has increased in some races because they received additional matching funds for independent expenditures made by interest groups. Spending by nonparticipating candidates may have increased in some cases as well, according to one candidate, since the presence of a participating candidate in the race forces nonparticipating candidates to take the election more seriously and spend more on their campaigns than they would have otherwise. However, 3 other candidates we interviewed in Maine contended that campaign spending had decreased. For example, one candidate noted that spending had decreased because of the spending cap placed on participating candidates. Three candidates felt that spending in Maine legislative races had neither increased nor decreased as a result of the public financing program. In one candidate’s view, contribution limits have had a greater influence on spending than the public financing program.

In Arizona, the majority of candidates (7 of 11) we interviewed believed that candidate spending increased in the 2008 election as a result of the public financing program. One nonparticipating candidate told us that, because of the matching funds provision of the public financing program, in 2008 he spent almost double the amount than he spent in any previous campaign in order to get out his message and outspend his participating opponent. Another candidate commented that the increase in independent expenditures has driven up campaign spending by triggering additional matching funds for participating candidates. On the other hand, 3 candidates felt that the public financing program led to a decrease in campaign spending in the 2008 election. One participating candidate explained that she could have raised more money traditionally than she received from the public financing program. One candidate indicated that spending neither increased nor decreased.

Regarding interest groups in Maine, two of the five representatives stated that candidate spending increased. One of these representatives commented that there has been an increase in money spent by candidates because there is more access to money and the races are more competitive. Further, this representative stated that the public financing program gives challengers an opportunity to level the playing field when running against incumbents. Participating candidates who would otherwise not be able to raise enough private money can run a well- financed campaign using public funds and have an opportunity to present their issues for debate in the race. On the other hand, three of the five interest group representatives stated that candidate spending neither increased nor decreased in the 2008 election as a result of the public financing program. One of these representatives commented that the amount of money spent by candidates has not changed because limits are set by the legislature. However, this representative opined that the amount of money spent on behalf of the candidates in the form of independent expenditures had increased dramatically and consistently. He went on to say that the public financing program is reducing the disparity between the candidates who can raise the money and those candidates who cannot raise the money and that a candidate who is not serious can receive as much money as a serious candidate.

In Arizona, four of the five interest group representatives believed that candidate spending increased as a result of the public financing program. For example, one of these representatives said that the public financing program has moved money from the candidates to independent expenditures, and that political parties are playing a significant role in this shift. Another interest group representative believed that candidate spending increased but was unsure if this increase was due to the public financing program, noting that increased campaign spending could be attributed to more competitive races or the rise in the cost of campaign materials due to inflation. Further, he noted that a pattern has emerged in which candidates run as participating candidates during their first election, and after being elected run subsequently as nonparticipating candidates. These legislators have name recognition and can raise the money required to run their campaigns and can also help other candidates get elected. On the other hand, one of the five representatives believed that campaign spending had neither increased nor decreased and that money has been redirected from the candidate campaigns to independent expenditures. He did not believe that his organization was spending any less money on campaigns.

In general, candidates and interest group representatives in Maine and Arizona reported that equality in financial resources among candidates had increased in the 2008 election as a result of the public financing programs. In Maine, the majority of the candidates interviewed (7 of 11) said that equality in financial resources among candidates increased as a result of the public financing program. Two candidates commented that candidates from different political parties compete on a roughly equal playing field under the public financing program. Another Maine candidate said that both nonparticipating and participating candidates spend about the same amount on their campaigns. However, 2 candidates we interviewed said that equality in financial resources had decreased as a result of the public financing program. According to one candidate, more money may be spent by political action committees than by candidates in a race, which can reduce equality. One nonparticipating candidate responded that the public financing program increased equality in financial resources among participating candidates, but decreased equality in financial resources among nonparticipating candidates, and 1 candidate was not sure how the public financing program had influenced equality in financial resources among candidates.

In Arizona, about half of the candidates (6 of 11) thought equality in financial resources among candidates had increased. Two of these candidates commented that in their experience, candidates spent roughly the same, regardless of their political party affiliation or if they participated in the public financing program or used traditional means to finance their campaigns. On the other hand, 1 candidate said that equality in financial resources had decreased, and commented that he was outspent by his participating opponents by a ratio of 13 to 1. Three of the 11 candidates we interviewed said that the equality in financial resources neither increased nor decreased as a result of the public financing program. For example, one candidate told us that incumbents continue to outspend their opponents and that nonparticipating candidates have developed strategies to maximize their financial advantage, such as raising funds at the end of the campaign so participating candidates have little time to spend matching funds. The remaining candidate was not sure about the change in resource equality.

Seven of the 10 interest group representatives we interviewed in Maine (3 of 5) and Arizona (4 of 5) said that equality in financial resources among candidates as a result of the public financing programs had increased. For example, an Arizona interest group representative commented that the public financing law holds the candidates’ financial resources even. On the other hand, 1 of the 5 representatives from Maine stated that equality in financial resources among candidates decreased and commented that since monetary limits are set statutorily, it is the independent expenditures that skew the financial resources among candidates. Finally, 2 of the 10 representatives, 1 from Maine and 1 from Arizona, believed that equality in financial resources neither increased nor decreased, while 1 of these representatives further commented that even though financial resources stayed the same, some nonparticipating candidates had a financial advantage because they asked for larger donations from interest groups.

Candidates’ and Interest Group Representatives’ Views on Independent Expenditures Independent expenditures were of varying importance in the races of the candidates we spoke with. The majority of the Maine legislative candidates we interviewed (7 of the 11) reported that independent expenditures were of little or no importance to the outcome of their races in the 2008 election. One candidate explained that no independent expenditures were made on his behalf because he was perceived to be the likely winner. However, 2 candidates we interviewed said that independent expenditures were moderately important, and 2 candidates said that independent expenditures were extremely or very important to the outcome of their races in the 2008 election. The candidates who had independent expenditures made in their races shared their experiences with us. One candidate said an independent expenditure made on his behalf could have possibly hurt his campaign since the expenditure was for a mailer that was poorly conceived and included a photograph of him that was of low quality. Another candidate who participated in the public financing program in Maine said that she and her participating opponent received large amounts of matching funds in response to independent expenditures made by business, trucking, state police, and equal rights groups that went towards mailings, television ads, and newspapers ads. However, the candidate thought that other factors played a greater role in the outcome of her election.

In Arizona, independent expenditures reportedly played an important role in the outcome of 6 of the 11 candidates’ races, with 5 candidates saying that independent expenditures were moderately important and 1 candidate reporting that independent expenditures were extremely important. One of these candidates said that groups made independent expenditures on behalf of his opponent to produce a number of mailers as well as billboards and television commercials that hurt his election campaign by shifting the focus away from the issues that he had concentrated on. Another candidate said that groups made independent expenditures opposing her near the end of her 2008 campaign; however, since she participated in the public financing program, she received matching funds and was able to respond. On the other hand, 5 candidates reported that independent expenditures were of little or of no importance in the outcome of their races. One candidate said that while there was a lot of money spent on independent expenditures in his race, the independent expenditures did not play a big role in the outcome of the election since roughly the same amount was spent on behalf of both him and his opponent. Another candidate explained that since she was an incumbent and her reelection was secure, not much was spent on independent expenditures in her race.

Eight of the 10 interest group representatives in Maine (5 of 5) and Arizona (3 of 5) we interviewed said their groups made independent expenditures in support of candidates in the 2008 elections; although, the representatives had varying views about the influence the expenditures had on the outcome of the races. All 5 Maine interest group representatives made independent expenditures in the 2008 elections, and all expenditures included mailers in support of candidates. Three of these 5 Maine representatives were not sure how much influence the expenditures had on the outcome of the elections. On the other hand, the remaining 2 representatives had different views. One Maine representative believed that her group’s expenditures were effective in getting the candidate’s message out to the voters. Finally, another Maine representative, who made several independent expenditures, said his experience was mixed, and the candidates he made independent expenditures on behalf of lost in more cases than they won. In Arizona, 3 of the 5 interest groups made independent expenditures. Two of these representatives said the expenditures were for mailers in support of candidates and believed that they were beneficial because the candidates won. The third representative said that his group made expenditures for both positive and negative mailers, and he believed that the expenditures were ineffective and was not sure what role they played in the outcome of the 2008 elections.

Candidates’ Views on Issue Advocacy Spending While Maine and Arizona legislative candidates we interviewed offered varying views on issue advocacy spending, 14 of the 22 candidates stated that issue advocacy advertisements were of little of no importance to the outcome of their races in the 2008 elections. Issue advocacy spending is often viewed as those forms of media advertisements that do not expressly advocate for or against a clearly identified political candidate. For example, such issue advocacy ads do not use terms like “vote for,” “vote against,” or “reelect.” In general, courts have not upheld campaign finance law regulation of issue advocacy spending upon the reasoning that the rationales offered to support such regulations did not justify the infringement upon constitutional free speech protections. According to state officials in Maine and Arizona, neither Maine nor Arizona track issue advocacy spending.

In Maine, 7 of the 11 candidates we interviewed reported that issue advocacy advertisements were of little or of no importance to the outcome of their races. One of these candidates explained that his race was not targeted by issue advocacy ads because he was expected to win and his opponent was not perceived to be very competitive. Another candidate we interviewed had a negative issue advocacy ad made in his race, but he did not think it affected the outcome of the election. The candidate told us the issue advocacy ad listed the tax increases he voted for alongside a smiling picture of him; however, according to the candidate, the ad only told half of the story, since the bill that contained the tax increases was revenue neutral and raised some taxes while lowering others. In contrast, 4 of the 11 candidates we interviewed said that issue advocacy was moderately important in their 2008 races. For example, 1 of these candidates said that issue advocacy advertisements highlighting the candidates’ positions on education issues was a factor in the outcome of his race.

Similarly, in Arizona, the majority of candidates interviewed (7 of 11) said that issue advocacy ads were of little or no importance to the outcome of their races in the 2008 election. For example, 1 candidate told us that he did not think that issue advocacy ads made a difference in his race because the ads did not mention the candidates’ names. Another candidate said that there were some issue advocacy ads that played an information role in his race by presenting a comparison of the candidates’ beliefs; however, the candidate thought the ads were of little importance in the outcome of the election. On the other hand, 3 candidates said that issue advocacy ads were moderately important to the outcome of their races. According to one candidate, issue advocacy advertisements on crime, abortion, and education funding influenced the outcome of his race.

Voting-Age Citizens, Candidates, and Interest Group Representatives We Interviewed Perceived That the Public Financing Programs Did Not Decrease Interest Group Influence or Increase Public Confidence, Although Some Reported That Campaign Tactics Have Changed

Our surveys of voting-age citizens and interviews with candidates and interest group representatives in Maine and Arizona indicated that the public campaign financing programs did not decrease the perception of interest group influence and did not increase public confidence in government. However, candidate and interest group representatives reported that campaign tactics, such as the role of political parties and the timing of expenditures, had changed.

Perceived Interest Group Influence Did Not Decrease as a Result of the Public Financing Program

In 2009, the percentage of voting-age citizens in Maine and Arizona who said that the public financing law had greatly or somewhat increased the influence of special interest groups on legislators was not significantly different from those who said that the law had greatly or somewhat decreased special interest group influence. For example, among those polled in Maine in 2009, the percentage of voting-age citizens who said that the influence of interest groups greatly or somewhat increased was 17 percent, while 19 percent said that the interest group influence had greatly or somewhat decreased, as shown in table 18. An additional 19 percent felt that the law had no effect on the influence of interest groups on legislators. In Arizona in 2009, 24 percent believed the public financing law greatly or somewhat increased the influence of interest groups, while 25 percent felt it greatly or somewhat decreased interest group influence. Additionally, 32 percent of those polled indicated that the public financing law had no effect on the influence of interest groups.

Both Maine and Arizona candidates and interest group representatives had mixed views about changes in interest group influence as a result of the public financing programs in their states. In Maine, a little over half of the candidates (6 of 11) said that the likelihood that elected officials serve the interests of their constituents free of influence by specific individuals or interest groups neither increased nor decreased as a result of the public financing program. One of these candidates said the public financing program has not met the goal of decreasing the influence of interest groups, since interest groups will always find ways to influence legislators and the election process. However, 4 candidates we interviewed in Maine—all of whom participated in the public financing program—said that that likelihood that elected officials serve free of influence by individuals or groups greatly increased or increased. One of these candidates explained that participating candidates are more empowered to serve as they see fit and are less willing to listen to political party leadership. On the other hand, a different candidate said that the elected officials are less likely to serve free of influence by specific individuals or groups as a result of the public financing program. The candidate explained that under the public financing program, lobbyists and special interest groups have focused less on individual candidates, and more on winning favor with the Democratic and Republican party leadership. According to this candidate, interest groups are spending more, since the contribution limits do not apply to contributions to political parties. In turn, the candidate said that political parties are buying the loyalty of candidates by providing know-how, campaign staff, and polling data during the election.

For Arizona, about half of the candidates interviewed (5 of 11) said that the public financing program did not affect the likelihood that elected officials serve the interests of their constituents free of influence by specific individuals or groups. One of these candidates said that the influence of special interest groups still exists, even if it does not come in the form of direct contributions. She explained that interest groups approach candidates with questionnaires and ask them to take pledges on different policy issues and also send their members voter guides and scorecards that rate candidates. Two other Arizona candidates we interviewed commented that under the public financing program, interest groups have been contributing to campaigns in different ways, such as providing campaign volunteers, and collecting $5 qualifying contributions for participating candidates. In contrast, 4 of the 11 candidates said that the likelihood that elected officials serve the interests of their constituents had decreased as a result of the public financing program. One of these candidates explained that the role of interest groups has increased, as they have become very skilled at producing advertisements with independent expenditures. On the other hand, 2 candidates we interviewed said that the public financing program increased the likelihood that elected officials serve the interests of their constituents free of influence by specific individuals or groups. One of these candidates said that in her experience as a participating candidate and state senator, interest groups are not “in her ear all of the time,” and legislators are free to make decisions based on the interests of their constituents.

With regard to Maine interest groups we interviewed, the five representatives we interviewed had varying views about the likelihood that elected officials serve the interests of their constituents free of influence by specific individuals or interest groups and about changes in interest group influence as a result of the public financing program. Two representatives believed that the likelihood that elected officials serve the interests of their constituents free of influence had increased, and one representative stated that it had decreased. The two remaining representatives stated that it had neither increased nor decreased. One of these representatives commented that candidates are predisposed to certain issues based on their core beliefs and there is not any correlation between public financing and the likelihood that the elected officials will serve the interests of their constituents free of influence. With regard to changes in interest group influence, three Maine representatives stated that they have less of a relationship with candidates. One of these three representatives stated that interest groups are one step removed from the candidate because to make independent expenditures they cannot directly coordinate with the candidate. As a result, this representative further stated that interest groups have established stronger relationships with political parties. Another of these representative believed that the public financing program has slightly decreased the role of interest groups because money tends to be funneled through the political parties. Also, there has been more emphasis on interest groups giving their endorsements of candidates rather than giving them money.

With regard to Arizona interest groups we interviewed, four of the five representatives said that the likelihood that elected officials serve the interests of their constituents free of influence by specific individuals or interest groups neither increased nor decreased as a result of the public financing program. One of the five representatives stated that the likelihood that elected officials serve the interests of their constituents had decreased but did not elaborate. Regarding interest group influence, two of the five representatives expressed opinions about whether changes in interest group influence as a result of the public financing programs have occurred. For example, one of these representatives stated that prior to the public financing program, interest groups made direct contributions to the candidates, but now they have to make independent expenditures or give money to the political parties. This representative stated that public financing has led to fringe candidates entering races and has caused a polarization in the legislature that has decreased the role of interest groups. Another representative stated that the interest groups do not directly support the candidate’s campaigns and, instead, make independent expenditures. He also stated that there has also been an increased emphasis on volunteer campaign activities in which interest groups use their members to help certain candidates.

Public Confidence in Government Did Not Increase as a Result of the Public Financing Programs in Maine and Arizona

In 2002 and 2009, the percentage of voting-age citizens in Maine and Arizona who said that their confidence in state government had somewhat or greatly decreased was not significantly different from those who said that their confidence had somewhat or greatly increased as a result of the public financing law. Additionally, the predominant response in both states was that respondents did not believe that the public financing program had any effect on their confidence in state government, as shown in table 19. For example, in Maine in 2009, the percentage of voting-age citizens who stated that the public financing law had no effect was 42 percent while the percent who felt that their confidence had somewhat or greatly increased was 20 percent, and the percent who felt their confidence had somewhat or greatly decreased was 15 percent. In Arizona, the percentage of voting-age citizens who stated that the public financing law had no effect was 39 percent in 2009, while the percent who felt that their confidence had somewhat or greatly increased was 26 percent, and the percent who felt their confidence had somewhat or greatly decreased was 22 percent.

In Maine and Arizona, over half of the candidates we interviewed reported that the public’s confidence in government had not changed as a result of the public financing programs. Over half of the candidates in Maine (6 of 11) said the public’s confidence in government neither increased nor decreased as a result of the public financing program. One of these candidates explained that he did not think many people were aware of the public financing program. Three of the 11 candidates said that the public’s confidence in government decreased in 2008 because of the public financing program. According to one candidate, people have been disappointed with the quality of the candidates, and their confidence in government has decreased as a result. On the other hand, 2 of the 11 candidates said that the public financing program increased the public’s confidence in government.

In Arizona, 7 of the 11 candidates interviewed said that the public’s confidence in government neither increased nor decreased as a result of the public financing program. The remaining 4 candidates were divided. Two candidates said that the public’s confidence in government greatly increased or increased as a result of the public financing program. One of these candidates commented that the public financing program goes beyond providing public financing by providing a public forum and publications that play an important role in informing voters about the races and candidates. However, 2 candidates said that the public’s confidence in government has decreased as a result of the public financing program. One of these candidates said that the public financing program resulted in a more divisive government, which has slightly decreased the public’s confidence in government.

Candidates and Interest Groups Representatives Reported Campaign Tactics Changed as a Result of the Public Financing Programs

Candidates and interest group representatives in Maine and Arizona provided a range of perspectives on how campaign tactics have changed under the public financing programs. Their observations included changes in how money is spent and the role of political parties and the timing of campaign activities.

Candidates in both Maine and Arizona identified changes regarding how money is spent and the role of political parties since the implementation of the public financing programs. For example, in Maine, one candidate told us that private funding that would have gone directly to fund candidate campaigns has been redirected to political parties, who strategically focus their resources in certain races to help elect their candidates. Candidates reported that political parties have helped support candidates by providing advice, polling services, campaign volunteers, distributing campaign literature, and making automated telephone calls to constituents on behalf of candidates. According to another Maine candidate, political parties are advising candidates to participate in the public financing program so that the political parties and political action committees can raise more money for their organizations. However, other candidates had different perspectives on the role of political parties under the public financing program. For example, one candidate told us that since participating candidates receive public financing, they are less dependent on political parties for money, less willing to listen to the party leadership, and are more empowered to make their own decisions.

Candidates in Arizona reported similar changes in how money is spent and the role of political parties. For example, one candidate commented that now more money is being funneled through the political parties rather than being directly provided to the candidates. Another candidate said that political parties have used the public financing program as a vehicle, explaining that when candidates use public funds for their campaigns, the money that would have normally gone to the candidate is now diverted to other candidates or causes. According to one candidate, after public financing, political parties are more active and have more extensive field operations to support candidates in a greater number of districts. Further, four candidates said that political parties are gaming the public financing system to maximize support for their candidates. For example, one candidate explained that if two Republican candidates or two Democratic candidates were running in the same multimember district, then partisan groups could make independent expenditures on behalf of one candidate that would trigger matching funds for the other participating candidate. However, two candidates said their party did not get involved in their races in the 2008 election, and one candidate said she did not observe any change in the role of political parties since the implementation of the public financing program. Furthermore, one candidate said that under the public financing program, candidates have more independence from political parties, noting that she relies on support from a broad constituency in her district, not just from her political party.

Interest group representatives in both Maine and Arizona identified changes regarding how money is spent and the role of political parties since the implementation of the public financing programs. For example, in Maine, one interest group representative stated that the group coordinates its expenditures through the party caucus committees and other interest groups. He said that substantial contributions from the caucuses are now made to candidate campaigns without the candidates’ knowledge. These committees are also engaged in public polling on an ongoing basis to identify voting patterns and constituent concerns in order to identify candidates to support. Another representative stated that because she made contributions to the political party, she does not have a way to know how her political action committee money is being spent because the committee makes independent expenditures on behalf of the candidate. Further, she stated that for participating candidates, the only thing an interest group can do is give an endorsement. In turn, participating candidates use these endorsements in their campaign advertisements. On the other hand, one representative said that there has not been much difference in campaign tactics since public financing has been available, and another representative said that the same tactics, such as direct mailers and going door-to-door for monetary solicitations, have been used.

Interest group representatives in Arizona similarly reported that public financing has changed campaign strategies. For example, one representative said that there is an increased reliance on volunteer activities, especially for statewide races. This representative stated that the amount of public funds for statewide candidates is not adequate, so candidates must rely on volunteers to get their message out. Volunteer activities, such as handing out flyers door-to-door or working phone banks to call voters, have become increasingly important. Another representative stated that since more candidates are participating in the public financing program and cannot accept direct contributions, there is more money available to nonparticipating candidates. He has noticed that nonparticipating candidates are asking for more money from interest groups than before public financing. According to another representative, campaign strategies are evolving. For example, a recent strategy has been the teaming of public and private candidates to maximize their resources such as on mailers.

Candidates and interest group representatives in Maine and Arizona also commented on how the public financing program has changed the timing of some campaign activities. In Maine, three candidates said that candidates or interest groups are changing the timing of spending in order to minimize either the amount or the effectiveness of matching funds distributed to opponent participating candidates. For example, one participating candidate told us that supporters of his opponent distributed mailers right before the date when communications that support or oppose clearly identified candidates are presumed to be independent expenditures and trigger matching funds for participating opponents. Another strategy, according to one candidate, is for nonparticipating candidates or interest groups to spend money in the days immediately before the election, when participating candidates’ ability to use the money is effectively restricted due to time constraints. In response, one candidate told us that participating candidates have television, radio, or other advertisements ready in case they receive additional matching funds that need to be spent quickly.

In Arizona, five candidates said that the tactics surrounding the timing of campaign spending have changed since the implementation of the public financing program. For example, one candidate said that the start of the campaign season is determined by the date on which spending by or on behalf of candidates triggers matching funds. In addition, one candidate explained that nonparticipating candidates have changed the timing of fundraising efforts, so that more funds are raised at the end of campaign, when it is more difficult for participating candidates to spend matching funds effectively. As in Maine, one candidate in Arizona said that participating candidates have responded to this tactic by preparing advertisements ahead of time, just in case they receive additional matching funds.

Interest group representatives in Maine and Arizona also commented on how the public financing program has changed the timing of some campaign activities. In Maine, one interest group representative stated that candidates were strategically timing their advertisements to gain a competitive advantage. For example, candidates are thinking about from whom to get their seed money, and when to qualify for the money. In addition, usually, incumbents have an advantage because they can send out newsletters to constituents close to the election without triggering matching funds. This representative stated the biggest consideration regarding campaign strategies is how and when matching funds will be triggered by the independent expenditures. She said that independent expenditures are made in the last 5 days before an election on the assumption that the opposing participating candidate cannot make effective use of the matching funds. In Arizona, one interest group representative said that generally nonparticipating candidates control the timing of their fundraising and spending, and participating candidates make plans to spend matching funds to counter last-minute attack advertisements.

Data Limitations and Differences in Measurement Hinder Analysis of Changes in Voter Participation in Maine and Arizona

While increasing voter participation, as indicated by increases in voter turnout, was a goal of public financing programs in Maine and Arizona, limitations in voter turnout data, differences in how voter turnout is measured across states and data sources, and challenges isolating the effect of public financing programs on voter turnout hindered the analysis of changes over time.

Voter turnout is typically calculated as a percentage of the voting-age population (VAP) or voting-eligible population (VEP) who cast a ballot in an election. The calculation of changes in voter turnout over time depends less on the specific data used for the numerator and denominator than it does on the consistency of how these data were collected over time and the use of comparable time frames and types of elections (e.g., presidential and congressional races). However, data reporting issues, changes in measurement, and other factors affect the calculation of voter turnout estimates.

With respect to data limitations, data on voter turnout are not consistent across states or data sources. Depending on the source, the numerator of the turnout calculation (i.e., who cast a ballot in an election) may include the total number of approved ballots cast, the number of ballots counted whether or not they were approved, self-reports of voting information, or the number of ballots cast for the highest office on a ticket, such as for president. For example, official voter turnout data compiled by the Election Assistance Commission (EAC) are based on surveys of states; however, states vary in their policies, for example, related to voter registration, as well as in which turnout statistics they report. Some states report voter turnout as the highest number of ballots counted, whereas other states report voter turnout as the number of votes for the highest office. Further, which specific statistic is reported is not necessarily constant over time. For example, EAC data prior to 2004 provide voter turnout based on the number of votes for the highest office on the ticket. Beginning in 2004, EAC reported total ballots cast, counted, or total voters participating for Maine and Arizona, but has not consistently reported the vote for highest office in these states. The Federal Election Commission (FEC) also provides information on turnout for federal elections, but the specific highest office in a given state and year could be for a state office such as governor that would not be reported along with federal election results.

Other voter turnout statistics, including those based on surveys of U.S. residents as part of the Census Bureau’s Current Population Survey (CPS) or the American National Election Studies, rely on respondents’ self- reports of voting behavior. However, self-reports of voting behavior are subject to overreporting because many respondents perceive that voting is a socially desirable behavior. Additionally, estimates of voting based on self-reports can fluctuate depending on the wording of the question used in a survey. Further, survey results are generalizable only to the population covered by the survey, or sampling, frame. The CPS sampling frame excludes individuals living in group quarters such as nursing homes, meaning that estimates of turnout based on CPS data would not include turnout among these individuals. Data on other forms of voter participation, such as volunteering for a campaign, contacting media, donating money, fundraising, and contacting representatives on issues of concern, are limited because they are rarely collected with the express purpose of making state-level estimates, and surveys with this information are not usually designed in a manner to allow comparison across individual states over many years.

In addition, measurements of the denominator of voter turnout differ with respect to whether citizenship or other factors that affect eligibility are taken into account. Turnout estimates produced by the Census Bureau have historically used the VAP as a denominator, which includes those U.S. residents age 18 and older. In theory, a more accurate estimate of voter turnout can be made by adjusting VAP to account for the statutory ability of individuals to vote, in particular by removing noncitizens from the estimate. This is particularly important at the state level because the proportion of noncitizens varies across states and over time. However, the practical application of such adjustments may be complicated by the timing of available data relative to the date of the election or by other data limitations. For example, although the Census Bureau began to produce estimates of a citizen VAP for EAC in 2004, the estimate is calculated as of July 1 of the election year and does not adjust for population changes that may occur between July and the time of the election. Other alternatives for adjusting VAP for citizenship include calculating estimates between decennial Census surveys. The Census data currently provided to EAC include adjustments for citizenship based on another alternative, the American Community Survey (ACS). The ACS uses a different sampling frame than other surveys used to adjust for citizenship, such as the CPS, and has slightly different estimates of citizenship. In addition to adjustments for citizenship, researchers have also adjusted VAP to account for other factors that affect eligibility to vote, including state felony disenfranchisement laws, and overseas voting, among others. To make these adjustments, researchers use alternative data sources such as information on the population in prison from the Department of Justice’s Bureau of Justice Statistics; however, these adjustments cannot always be applied similarly because of differences across states over time (such as in the proportion of probationers that are felons).

Lastly, changes in voter turnout cannot be attributed directly to public funding as there are a number of factors that affect voter turnout. Voter turnout can be affected by demographic factors such as age, income, how recently a person registered to vote, and previous voting history. For example, studies have shown that much higher percentages of older Americans vote than do younger citizens. Voter turnout can also be influenced by a broad range of contextual factors, including the candidates and their messages, mobilization efforts, media interest, campaign spending, and negative advertising. These potential confounding factors, along with aforementioned difficulties in calculating precise and consistent turnout information at the state level, prevented us from quantifying the extent to which, if any, Maine’s and Arizona’s public financing programs affected these states’ voter turnout. Additional information about factors influencing the determination of changes in voter participation in Maine and Arizona can be found in the e-supplement accompanying this report—GAO-10-391SP.

Concluding Observations

Seven years ago our 2003 report concluded that with only two elections from which to observe legislative races—2000 and 2002—it was too early to precisely draw causal linkages to resulting changes. Today, following three additional election cycles—2004, 2006, and 2008—the extent to which there were changes in program goals is still inconclusive. There were no overall observable changes in three of the four goals, and we cannot attribute observed changes with regard to the winner’s victory margin in Maine and Arizona to the public financing programs because other factors, such as changing economic conditions and candidate popularity, can vary widely and affect election outcomes. Further, essential data needed, such as uniform voter registration and turnout data across states, do not currently exist to enhance analyses conducted and, in the case of the fifth goal, increasing voter participation, to allow for analysis of changes. While undertaking considerable efforts to obtain and assemble the underlying data used for this report and ruling out some factors by devising and conducting multiple analytic methods, direct causal linkages to resulting changes cannot be made, and many questions regarding the effect of public financing programs remain.

Public financing programs have become an established part of the political landscape in Maine and Arizona and candidates have chosen to participate or not participate based on their particular opponents and personal circumstances and values. The public financing program is prevalent across these states, and in each election cycle new strategies have emerged to leverage aspects of the public financing program by candidates and their supporters to gain advantage over their opponents. The trend of rising independent expenditures as an alternative to contributing directly to candidates is clear and its effect is as yet undetermined.

Third-Party Views and Our Evaluation

We requested comments on this draft from the Maine and Arizona Offices of the Secretary of State and the commissions overseeing the public financing programs in each state. We received technical comments from the Arizona Citizens Clean Elections Commission, which we incorporated as appropriate. We did not receive any comments from the other agencies.

We are sending copies of this report to interested congressional committees and subcommittees. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staffs have any questions concerning this report, please contact me at (202) 512-8777 or jenkinswo@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV. illiam O. Jenkins, Jr.

Appendix I: Objectives, Scope, and Methodology

Objectives

In accordance with the congressional direction specified in Senate Report 110-129 to revisit and update our 2003 report on the public financing programs in Maine and Arizona to account for data and experiences of the past two election cycles, this report provides data related to candidate program participation, including the number of legislative candidates who chose to use public funds to run for seats in the 2000 through 2008 elections in Maine and Arizona and the number of races in which at least one legislative candidate ran an election with public funds; and describes statistically measurable changes and perceptions of changes in the 2000 through 2008 state legislative elections in five goals of Maine’s and Arizona’s public financing programs—(1) increasing electoral competition by, among other means, reducing the number of uncontested races (i.e., races with only one candidate per seat in contention); (2) increasing voter choice by encouraging more candidates to run for office; (3) curbing increases in the cost of campaigns; (4) reducing the influence of interest groups and, thereby, enhance citizens’ confidence in government; and (5) increasing voter participation (e.g., voter turnout)—and the extent to which these changes could be attributed to the programs.

Overview of Our Scope and Methodology

To obtain background information and identify changes since our 2003 report, we conducted a literature search to identify relevant reports, studies, and articles regarding the public financing programs in Maine and Arizona, as well as campaign finance reform issues generally, which had been published since May 2003 when our report was issued. Based on our literature review, discussions with researchers who have published relevant work on public financing programs or state legislatures, and suggestions by state officials in Maine and Arizona, we interviewed 9 researchers and 17 representatives of advocacy groups and other organizations concerned with campaign finance reform or issues related to state legislative elections. See the bibliography for a listing of the reports and studies we reviewed.

We reviewed the state statutes governing the public financing program— Maine’s Clean Election Act and Arizona’s Citizens Clean Elections Act— from 2002 through 2009 and other documentation related to the public financing program, such as candidate handbooks and annual reports, to determine any changes in the programs since our 2003 report. In addition, we interviewed state election officials in the commissions responsible for administering the two programs—Maine’s Commission on Governmental Ethics and Election Practices and Arizona’s Citizens Clean Elections Commission. We also interviewed officials in Maine’s and Arizona’s Offices of the Secretary of State, the agencies responsible for supervising and administering state elections activities, such as tabulating official election results. Through our discussions with Maine and Arizona state officials and our review of changes to the public financing statutes in both states from 2002 through 2009, we determined that the five goals of the public financing programs, as set out in our 2003 report, have not changed.

We reviewed the Web sites of Maine’s Commission on Governmental Ethics and Election Practices (www.state.me.us/ethics) and Arizona’s Citizens Clean Elections Commission (www.azcleanelections.gov) to obtain information on the public financing programs, such as candidate handbooks and forms necessary in order to run for office. Additionally, we reviewed information on state elections on the Web sites of Maine’s Secretary of State (http://www.maine.gov/sos) and Arizona’s Secretary of State (http://www.azsos.gov). Officials from these state agencies told us that their respective Web sites were current and reliable for our review.

In addressing the objectives, we obtained and analyzed, to the extent possible, available statistical data from Maine’s and Arizona’s commissions and Secretaries of State offices on candidate program participation, election outcomes, and reported campaign spending from the 1996 through 2008 state legislative elections. We assessed the quality and reliability of electronic data provided to us by officials in Maine and Arizona by performing electronic testing for obvious errors in accuracy and completeness; validating the data using other sources; and reviewing the associated documentation, such as system flow charts. We also interviewed state officials about their data systems and any issues or inconsistencies we encountered with the processing of the data. When we found discrepancies, such as nonpopulated fields, we worked with state officials to correct the discrepancies before conducting our analyses. Based on these tests and discussions, we determined that the data included in the report were sufficiently reliable for our purposes. Although the public financing programs in Maine and Arizona cover both legislative and certain statewide offices, we limited the scope of our review to legislative candidates, since most of the elections for statewide offices occurred every 4 years and sufficient data would not have been available to conduct our analyses and draw conclusions.

To obtain candidates’ and interest groups’ perspectives about the public financing programs, we conducted telephone interviews with a nonprobability sample of 22 out of 653 candidates who ran in 2008 state legislative primary and general elections in Maine (11 out of 452 candidates) and Arizona (11 out of 201 candidates). We conducted interviews with candidates from each state from June through September 2009. We selected these candidates to reflect a range of those who did and did not use public financing, won or lost in primary and general elections, had different political party affiliations, ran for election in different legislative chambers, and were incumbents and challengers. In our interviews, we asked similar, but not identical, questions to those from our 2003 report. Specifically, we included questions about the candidates’ views on factors influencing their decision to participate or not participate in the public financing program, the effects of the public financing program on electoral competition and campaign spending, and changes in the influence of interest groups on elections. We coded the candidates’ responses to the interview questions and conducted a content analysis to categorize responses and identify common themes.

Further, we interviewed a nonprobability sample of 10 interest group representatives—5 in Maine and 5 in Arizona. In Maine, we selected these interest groups from a listing of approximately 80 registered interest groups provided by a Maine state official. In Arizona, we selected interest groups from a total of approximately 220 interest groups, which we identified through the Arizona Secretary of State campaign finance Web site as contributors to campaigns during the 2008 election cycle. We selected these interest groups based on several factors, including industry sectors, such as communications or construction, range of contributions made to political campaigns, and availability and willingness of the representatives to participate in our interviews. Results from these nonprobability samples cannot be used to make inferences about all candidates or interest groups in Maine and Arizona. However, these interviews provided us with an overview of the range of perspectives on the effects of the public financing programs. Results from the candidate interviews are included in report sections regarding candidate participation, voter choice, electoral competition, campaign spending, and interest group influence. Results from the interest group interviews are included in report sections regarding electoral competition, campaign spending, and interest group influence.

Further details about the scope and methodology of our work regarding each of the objectives are presented in separate sections below.

Candidate Participation

To provide data related to candidate program participation, including the number of legislative candidates who chose to use public funds to run for legislative seats (“participating candidates”) in the 2000 through 2008 elections in Maine and Arizona and the number of races in which at least one candidate ran an election with public funds, we obtained data from Maine’s and Arizona’s commissions and Offices of the Secretary of State. Specifically, for each state, we obtained or calculated data showing the number of legislative candidates who chose to use public funds to run for seats in the 2000 through 2008 elections, the seats (i.e., House or Senate) for which they were candidates, the political party affiliation of the candidates, whether the candidates were incumbents or challengers, whether the candidates were successful in their races, and the number of races in which at least one legislative candidate ran an election with public funds.

As used in our report, “challengers” consist of all nonincumbent candidates. Thus, a candidate who was not an incumbent is called a challenger, even if that candidate did not face an opponent. Also, in counting races to calculate the proportion of races with at least one participating candidate, we included all races in which there was a candidate on the ballot regardless of whether or not the candidate faced a challenger. Additionally, we eliminated from our analyses all candidates with zero votes and write-in candidates whose names did not appear on the ballot.

Electoral Competition

In designing our approach to assess electoral competition, we first reviewed literature published since our 2003 report and interviewed researchers and representatives of organizations and advocacy groups who are concerned with public financing and campaign finance reform issues in general. Specifically, we reviewed articles and interviewed researchers and representatives of organizations concerned with public financing issues who had conducted studies and research on electoral competition in states. Based on our review of the literature and these discussions, we concluded that there is no agreement on a standardized methodology to measure electoral competitiveness in state legislative elections. Thus, we used many of the same measures of electoral competition as those in our 2003 report, including the winners’ victory margins, which refers to the difference between the percentage of the vote going to the winning candidate and the first runner up; percentages of contested races; which refers to the percentage of all races with at least one more candidate running than the number of seats in contention; and, incumbent reelection rates, which refers to the percentage of incumbents who were reelected.

To assess changes in electoral competition in Maine and Arizona, we examined changes in these three measures of electoral competition in state legislative races by comparing the two elections before public financing became available to the five elections with public financing. However, unlike our 2003 report, we obtained and analyzed general election data from 1996 through 2008 from four comparison states that did not offer public financing programs for legislative candidates to determine if changes identified in Maine’s and Arizona’s general election outcomes for that same time period were similar to or different from changes observed in the four comparison states.

Four Comparison States

We selected the four comparison states—Colorado, Connecticut, Montana, and South Dakota—based on a number of factors, including geographic proximity to Maine or Arizona; the capacity of the state legislature; the presence of legislative term limits; structure of the state legislature, such as legislative districts with more than one representative; and district size. In selecting our comparison states, we also reviewed other factors such as demographic and economic characteristics, including age, race, and poverty levels, and urban/rural population distribution, and recommendations from researchers and experts with knowledge of state legislatures we interviewed. Although all states were potentially candidates for comparison to Maine and Arizona, we eliminated some states (such as those with odd-year election cycles or a unicameral legislature) from our review because of their dissimilarity to Maine and Arizona, and focused primarily on those states that were recommended to us by researchers and experts we interviewed with knowledge of state legislatures. We also considered whether a state had reliable electronic data that covered the 1996 through 2008 general elections and whether the state was able to provide the data to us within the time frame of our review. No state we considered perfectly matched Maine or Arizona across the full range of characteristics we reviewed. Table 20 summarizes some of the characteristics we used to select the four comparison states for comparison to Maine and Arizona.

We conducted analyses, to the extent possible, of the four comparison states’ election data for 1996 through 2008 for comparison with Maine and Arizona to determine whether any trends or patterns observed in states with public financing were also seen in the four comparison states that do not have public financing programs. For our analyses, we compared Maine with the election outcomes of Connecticut, Montana, and South Dakota. We compared Arizona with the election outcomes of Colorado, Montana, and South Dakota. Generally, when conducting these analyses, we separated House and Senate elections and grouped Maine’s and Arizona’s election outcomes before the public financing program became available (1996 and 1998 elections) and election outcomes after public financing (2000 through 2008) with election outcomes in the comparison states during the same time periods.

Victory Margins

We measured victory margins in three ways. First, we calculated the average margin of victory for contested elections, defined in single- member districts as the difference in the number of votes between the winner and first runner up, divided by the total vote count. This measure is generally equivalent to the calculation of margin of victory in our 2003 report. For multimember districts, we defined the margin of victory as the number of votes going to the second winner minus the number of votes going to the runner up, excluding the number of votes going to the first winner from the denominator. Second, we compared whether changes in the margin of victory had an effect on the competitive nature of elections as defined by the distribution of the vote outcome between the winner and first runner-up. We compared close elections—defined as a difference of less than 10 percentage points in votes between the winning and losing candidates—with elections that were not as close—10 percentage points or more difference in votes between the winning and losing candidates. Third, we compared “landslide elections” or races with decisive winners—defined as a difference of more than 20 percentage points in votes between the winning and losing candidates—with elections that were not landslides—defined as 20 percentage points or less difference in votes between the winning and losing candidates.

Number of Contested Races

We measured the number of contested races by contrasting elections in which the number of candidates exceeded the number of seats available in the race with elections in which the number of candidates was equal to the number of seats available.

Incumbent Reelection Rates

We measured incumbent reelection rates in two ways. First, for those general election races with incumbents that were contested, we calculated the percentage of races with incumbents who won compared to all races with incumbents. Second, we calculated the percentage of individual incumbents who won, relative to all incumbents who ran. To assess whether our calculations of incumbent reelection rates were sensitive to redistricting that forced incumbents from formerly separate districts to run against each other, we calculated the individual incumbency reelection rate excluding incumbents who participated in races with more incumbents than seats. Although we were not able to assess other potential effects of redistricting on incumbent reelection rates, such as those caused by demographic changes in a candidates’ constituency, we conducted a limited analysis of geographic changes in state legislative district boundaries.

Multivariate Analyses

We used two types of multivariate statistical methods, fixed effects regression and hierarchical loglinear models, to evaluate how the competitiveness of races in Maine and Arizona changed after the implementation of public financing programs. Although multivariate methods do not allow us to directly attribute changes in outcomes to states’ public financing programs, they do allow us to assess whether changes in Maine and Arizona were unique relative to a set of comparison states, controlling for other factors, and whether the observed changes were different from what would have occurred by chance. Our statistical models and estimates are sensitive to our choice of comparison states for Maine and Arizona, thus researchers testing different comparison states may find different results.

We estimated fixed effects regression models to rule out broad groups of variables that may explain the patterns in our data without directly measuring them. Fixed effects models account for unmeasured factors that do not change over time (such as the structure of the state legislature), or that change in the same way (such as which party controls the U.S. Congress), for all states or legislative districts. This feature is particularly useful for our analysis because comprehensive and reliable data are not available on many of the factors that affect the competitiveness of state elections, such as long-term district partisanship, local economic conditions, and candidate quality.

We estimated a variety of fixed effects models to gauge the sensitivity of the results to different assumptions and alternative explanations. These included the following: Models that included fixed effects for districts and each combination of state and chamber of the legislature. These models estimate the district effects separately than the state effects.

Models that excluded multimember districts. These models confirm that our results are not sensitive to our choice of measure of margin of victory for multimember districts.

Models that logged the margin of victory to normalize the data to account for outlying data. These models reduce the potential influence of highly uncompetitive races.

Models that excluded races with no incumbent running for reelection.

These models account for the possibility that term limits influenced whether a race was contested because they exclude those seats that were open because of term limits.

Models that excluded races from Connecticut in 2008 when public funding became available. Full public financing was available for the first time to state legislative candidates in the 2008 elections in Connecticut.

Models that excluded races in which the number of incumbents exceeded the number of available seats. These models confirm that our results are not sensitive to our definition of an incumbent “win” when more incumbents than available seats participated in a race.

We included fixed effects for each year and, where appropriate, controlled for whether an incumbent was running for reelection. We estimated the models of both continuous and binary outcomes using linear probability models and robust variance estimators, due to the fact that all of our covariates are binary (i.e., all of the variables stand for the presence or absence or something, such as incumbency).

We also estimated loglinear models to evaluate the changes in these outcomes in House and Senate elections in Maine, Arizona, and the four comparison states. In our analyses, we fit hierarchical models to the observed frequencies in the different four-way tables or five-way tables formed by cross-classifying each of the four outcomes by state (Arizona vs. other states and Maine vs. other states), chamber (Senate vs. House), time period (before public financing programs were available in elections prior to 2000 and after public financing programs were available in 2000 and later elections), and whether an incumbent was or was not involved in the race.

We followed procedures described by Goodman (1978) and fit hierarchical models that placed varying constraints on the odds and odds ratios that are used to describe the associations of state, chamber, and time period with each outcome. Ultimately, we chose from among these different models a “preferred” model that included factors that were significantly related to the variation in each outcome and excluded those factors that were not.

We are issuing an electronic supplement concurrently with this report— GAO-10-391SP. In addition to summary data on election outcomes in Maine and Arizona, the e-supplement contains additional discussion on the following issues: summary tables of the election data obtained from the four comparison states; fixed effects model assumptions, sensitivity analysis, and results; loglinear model methods and results; margin of victory measures in multimember districts; incumbency reelection rates and the potential effect of district boundary changes following the 2000 Census; and voter turnout calculations and data.

Voter Choice

To determine whether public financing encouraged more state legislative candidates to run for office, we calculated the average annual number of candidates per legislative primary and general election races for seven election cycles, including two elections preceding the public financing program—1996 and 1998—and five elections after public financing became available—2000 through 2008. Also, to determine whether there were different types of candidates running for office, we compared the percentage of races with third-party or independent legislative candidates who received at least 5 percent of votes cast for each of these seven election cycles. We chose our threshold based on research and interviews with state officials that suggested 5 percent of votes is commonly required for parties to gain access to and retain ballot placement. Ballot placement is critical in that it enables voters to use party information to make voting decisions, and allows them to see alternative party candidates at the same level as major party candidates without having to recall a specific candidate name. This definition of viability focuses on voter choice, and is distinct from whether a candidate is “electable” or competitive with other candidates.

Campaign Spending

To determine changes in candidate spending, we obtained available campaign spending and independent expenditure data from Maine and Arizona. Specifically, we obtained summarized campaign spending and independent expenditure data from Maine’s Commission on Governmental Ethics and Election Practices, the state agency responsible for campaign spending reports. We found that Maine’s campaign spending data for the 1996 through 2008 election cycles and independent expenditure data for the 2000 through 2008 election cycles were sufficiently reliable. In Arizona, we obtained campaign spending and independent expenditure data from the Secretary of State’s office. Due, in part, to several upgrades to Arizona’s campaign finance data systems over the time period reviewed, we found that Arizona’s campaign spending data for the 2000 through 2008 election cycles and independent expenditure data for the 2008 election cycle were sufficiently reliable, with limitations as noted. For example, up to the 2008 election, Arizona’s campaign spending database did not include precise data to identify and link each candidate to his or her campaign finance committee(s), the entities responsible for reporting candidates’ contributions and spending. Further, the candidates’ campaign finance committees can span several election cycles and include spending reports for candidates who ran in several races for the same or different offices, such as House or Senate. Thus, to the extent possible, we matched candidates and candidate campaign finance committees through electronic and manual means, identified and calculated relevant candidate spending transactions, and sorted the data by election cycle dates. Further, although Arizona’s Secretary of State office collected independent expenditure data from 2000 through 2008, it did not collect data on the intended beneficiaries of independent expenditures until the 2008 election cycle. Therefore, we limited our analysis of independent expenditures to the 2008 elections since we could not identify which candidates benefited from the expenditure. We worked with state officials responsible for the public financing programs and campaign finance data systems in Maine and Arizona to develop our methodology for analyzing these data. These officials reviewed summaries we wrote about their respective databases and agreed that they were generally accurate and reliable.

We calculated the average House and Senate legislative candidates’ spending in Maine for seven election cycles, from 1996 through 2008 and in Arizona for five election cycles, from 2000 through 2008. For comparisons across years and to observe any trends, we adjusted all candidate spending for inflation with 2008 as the base year using the Department of Commerce’s Bureau of Economic Analysis gross domestic product implicit price deflator.

Interest Group Influence and Citizens’ Confidence in Government

To assess changes in interest group influence and citizens’ confidence in government, we included questions in our interviews with candidates in Maine’s and Arizona’s 2008 elections and interviews with interest groups in both states. Also, we contracted with professional pollsters who conducted omnibus telephone surveys with representative samples of voting-age citizens in Maine and Arizona. Generally, this polling effort was designed to determine the extent to which voting-age citizens in each state were aware of their state’s public financing program and to obtain their views about whether the program has decreased the influence of interest groups, made legislators more accountable to voters, and increased confidence in government.

In order to compare responses, the survey consisted of largely similar questions to those asked for our 2003 report. The questions for Maine and Arizona were identical, except for some minor wording differences customized for the respective states, as shown in table 21. Follow-up questions (e.g., questions 2, 3, and 4 in each set) were not asked of any individual who, in response to question 1, acknowledged knowing “nothing at all” about the applicable state’s clean election law or was unsure or declined to answer. Since we pretested largely similar questions with members of the general public for our 2003 report, we did not pretest questions for this effort.

Contracted Polling Organizations

To conduct the Maine poll, we contracted with Market Decisions (Portland, Maine), the same polling organization that conducted the Maine poll for our 2003 report. During October 19, 2009, to November 2, 2009, the firm completed 404 telephone interviews with randomly selected adults throughout Maine. The sample of the telephone numbers called was based on a complete updated list of telephone prefixes used throughout the state. The sample was generated using software designed to ensure that every residential number has an equal probability of selection. When a working residential number was called, an adult age 18 or older in the household was randomly selected to complete the interview. The 404 completed interviews represent a survey response rate of 42.5 percent.

To conduct the Arizona poll, we contracted with Behavior Research Center, Inc. (Phoenix, Arizona), the same polling organization that conducted the Arizona poll for our 2003 report. During September 9 through 18, 2009, the firm completed telephone interviews with 800 heads of households in Arizona. To ensure a random selection of households proportionately allocated throughout the sample universe, the firm used a computer-generated, random digit dial telephone sample, which selected households based on residential telephone prefixes and included all unlisted and newly listed households. Telephone interviewing was conducted during approximately equal cross sections of daytime, evening, and weekend hours—a procedure designed to ensure that all households were equally represented regardless of work schedules. Up to five separate attempts were made with households to obtain completed interviews. The 800 completed interviews represent a survey response rate of 42.98 percent.

Survey Error

All surveys are subject to errors. Because random samples of each state’s population were interviewed in these omnibus surveys, the results are subject to sampling error, which is the difference between the results obtained from the samples and the results that would have been obtained by surveying the entire population under consideration. Measurements of sampling errors are stated at a certain level of statistical confidence. The maximum sampling error for the Maine survey at the 95 percent level of statistical confidence is plus or minus 6.7 percent. The maximum sampling error for the Arizona survey at the 95 percent level of statistical confidence is plus or minus 5 percent.

Voter Participation (Turnout)

To examine changes in voter participation, we reviewed information about voter turnout data from the Census Bureau, Federal Election Commission, United States Election Assistance Commission, the American National Election Studies, and other resources, including two repositories of elections data and information—George Mason University’s United States Election Project (the Elections Project) and the Center for the Study of the American Electorate. We identified these sources through our review of the literature and through discussions with researchers. To determine the extent to which changes in voter participation could be assessed over time, we reviewed documentation and research on these potential data sources, including information on collection and measurement of the voting-age population (VAP) or voting-eligible population (VEP) and the type of turnout recorded. Finally, we examined data and methodologies for measuring changes in voter turnout and other forms of participation to determine whether changes in participation could be precisely measured at the state level. We found that the different data sources required to calculate changes in turnout are not always comparable across sources and over time, because of differences in the way that data are collected or changes in how turnout is defined. As such, there was no need to conduct electronic testing to further assess the reliability of the data for our purposes. This does not indicate that the data are unreliable for other purposes. We also discussed voter turnout calculations with state officials and researchers. Additional detail about our work related to voter participation is included in the e-supplement to this report— GAO-10-391SP.

We conducted this performance audit from November 2008 through May 2010, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Overview of the Public Financing Programs for Legislative Election Campaigns in Maine and Arizona

Maine voters, by a margin of 56 percent to 44 percent, passed the Maine Clean Election Act (Maine’s Act) in November 1996. Arizona voters, by a margin of 51 percent to 49 percent, passed the Citizens Clean Elections Act (Arizona’s Act) in November 1998. These ballot initiatives established optional financing programs for candidates desiring to use public funds to finance their campaigns as an alternative to traditional fundraising means, such as collecting contributions from individuals or political action committees. The Maine and Arizona programs were the first instances of state programs that offered public funding intended to fully fund most campaign costs of participating candidates seeking state legislature seats and certain statewide offices. Both states’ public financing programs became available for candidates beginning with the elections in 2000.

Generally, participating candidates—those candidates who forgo private fund raising and who otherwise qualify to take part in the respective state’s public financing program—are to receive specified amounts of money for their primary and general election campaigns. Under Maine’s and Arizona’s laws, nonparticipating candidates—those candidates who choose to continue using traditional means for financing campaigns—are subject to certain limits on contributions and reporting requirements.

This appendix provides an overview of the public financing programs for legislative election campaigns in Maine and Arizona. Detailed information is available on the Web sites of the state agencies responsible for administering the respective program—Maine’s Commission on Governmental Ethics and Election Practices (www.state.me.us/ethics) and Arizona’s Citizens Clean Elections Commission (www.azcleanelections.gov).

Maine’s Public Financing Program

Purposes of Maine’s Public Financing Program

Other than noting that the public financing program is an alternative financing option available to certain candidates, Maine’s Act has no section that specifically details the purposes, goals, or objective of the law. To get the initiative on the ballot, a coalition of interest groups, the Maine Voters for Clean Elections, collected about 65,000 signatures. At that time, the coalition and other proponents advertised that the public financing program would “take big money out of politics” by limiting what politicians spend on campaigns, reducing contributions from special interests, and increasing enforcement of election laws. They said that the initiative, if passed, would decrease the influence of wealthy individuals, corporations, and political action committees in politics, and would level the playing field so that challengers would have a chance against incumbents. They asserted that politicians would then spend more time focusing on the issues that affect all of their constituents rather than spend time on pursuing money for their campaigns. Further, proponents also advertised that the public financing program would allow candidates who do not have access to wealth the opportunity to compete on a more equal financial footing with traditionally financed candidates, restore citizen’s faith and confidence in government, and give new candidates the opportunity to run competitively against incumbents. In 2003 we reported that according to Maine state officials and interest group representatives we interviewed there was not any organized opposition to the initiative when it was on the ballot.

A 2007 report by the Maine Commission on Governmental Ethics and Election Practices reaffirmed that the goals of the program are generally to increase the competitiveness of elections; allow participating candidates to spend more time communicating with voters; decrease the importance of fundraising in legislative and gubernatorial campaigns; reduce the actual and perceived influence of private money in elections; control the increase of campaign spending by candidates; and allow average citizens a greater opportunity to be involved in candidates’ campaigns.

Requirements to Receive Public Funding in Maine

In Maine, candidates who wish to participate in the state’s public financing option and receive funds for campaigning must first be certified as a Maine Clean Election Act candidate. Certified candidates, among other things, must (1) forgo self-financing and all private contributions, except for a limited amount of “seed money,” which are funds that may be raised and spent to help candidates with the qualifying process prior to certification, and (2) demonstrate citizen support by collecting a minimum number of $5 contributions from registered voters. For example, as table 22 shows, to qualify for public financing during the 2008 election cycle, a candidate in a Maine House race had to gather $5 qualifying contributions from at least 50 registered voters, and could raise no more than $500 of seed money.

Amounts of Allowable Public Funding for Participating Candidates in Maine

After being certified by the state as having met qualifying requirements, participating candidates receive initial distributions (predetermined amounts) of public funding and are also eligible for additional matching funds based on spending by privately funded opponents in conjunction with independent expenditures against the candidate or on behalf of an opponent.

For example, in Maine’s 2008 election each participating candidate in a contested race for the House of Representatives (i.e., a race with more than one candidate per seat in contention) received an initial distribution of public funds in the amount of $1,504 for the primary election and an amount of $4,144 for the general election. Also, under Maine’s Act, the maximum allowable matching funds available to a participating candidate in a legislative race were capped at double the initial distribution that the candidate received for his or her contested race, as shown in table 23.

Under Maine’s Act, prior to being amended in 2009, the commission was required to recalculate the initial distribution amounts at least every 4 years, based upon average expenditures in similar races in the two previous election cycles. Under this statute, the commission was not required to recalculate the initial distribution amounts in 2008 and intended to use the same payment amounts as in 2006. However, according to a state official, due to a shortfall in the state’s General Fund budget, the Maine State Legislature approved a 5 percent reduction in the general election distribution amounts, which took effect in the 2008 legislative elections. Beginning in the 2012 elections, in response to a 2009 amendment, the state will be required to recalculate the initial distribution amounts every 2 years taking into account several factors such as average candidate spending and increases in costs of campaigning.

Matching funds are triggered when required reports show that the sum of a privately funded opponent’s expenditures or obligations, contributions and loans, or fund revenues received exceeds a participating candidate’s sum of fund revenues. Further, the calculation used to assess whether matching funds are triggered is to include reported independent expenditures that benefit an opponent’s campaign. Generally, independent expenditures are any expenditures made by individuals or groups, other than by contribution to a candidate or a candidate’s authorized political committee, for any communication (such as political ads or mailings) that expressly advocates the election or defeat of a clearly identified candidate. During the final weeks before an election, the definition of independent expenditure expands beyond express advocacy to include a broader range of communications directed to the public.

In 2008, a total of about $3 million in public funds was authorized for the 332 participating candidates who ran in the Maine primary or general elections for state legislature.

Revenue Sources for Maine’s Public Financing Program

Various revenue sources are used to support Maine’s public financing program. As table 24 shows, appropriations were the largest funding source in Maine in 2008. Table 24 also indicates that in 2008, about 6 percent of Maine’s funding came from state income tax checkoff donations and other voluntary donations. This included $194,970 in funding from state income tax checkoff donations, which represented about 7 percent of the 665,503 total returns filed in tax year 2007 in the state.

Administration of Maine’s Public Financing Program

Maine’s Act utilizes a commission, the Maine Commission on Governmental Ethics and Election Practices, to implement the public financing program and enforce provisions of the act. The commission consists of five members appointed by the Governor. Nominees for appointment to the commission are subject to review by the joint standing committee of the state legislature having jurisdiction over legal affairs and to confirmation by the state legislature. The commission is to employ a director and a staff to carry out the day-to-day operations of the program. In addition to financing election campaigns of candidates participating in the public financing program, the Maine Clean Election Fund is also to pay for administrative and enforcement costs of the commission related to Maine’s Act. In 2008, the commission’s total expenditures from the fund were $3,357,472, including $552,426 in personnel, technology, and other administrative costs.

Reduced Contribution Limits and Additional Reporting Requirements for Nonparticipating Candidates in Maine

Before the passage of Maine’s Act, political campaigns were financed completely with private funds. There were no limitations placed on expenditures by candidates from their personal wealth. Under Maine’s Act, nonparticipating candidates are not limited in the amount they may spend from their personal financial resources on their own campaigns. While not faced with limits on the total amount of money that they can raise or spend, nonparticipating candidates are subject to certain limitations on the amount that an individual, corporation, or political committee can contribute to the campaigns of nonparticipating candidates. In the 2008 elections, for example, a nonparticipating candidate for the state legislature could accept up to $250 from a donor per election. Prior to the 2000 election, the candidates could have collected up to $1,000 from individuals and up to $5,000 from political committees and corporations.

Additional reporting requirements are placed on nonparticipating candidates who have one or more participating opponents. For example, a nonparticipating candidate with a participating opponent must notify the commission when receipts, spending, or obligations exceed the initial allocation of public funds paid to the participating opponent. Further, the nonparticipating candidate must file up to three additional summary reports so that the commission can calculate whether the participating opponent is entitled to receive any matching funds.

Maine Reporting Requirements for Independent Expenditures

Under Maine law, individuals or organizations making independent expenditures in excess of $100 during any one candidate’s election must file reports with the state. Reporting requirements for independent expenditures are important for helping to determine if matching funds are triggered. Independent expenditures are generally defined as any expenditure for a communication, such as campaign literature or an advertisement that expressly advocates the election or defeat of a clearly identified candidate that is made independently of the candidate, the candidate’s committee, and any agents of the candidate. However, under Maine’s campaign finance laws, expenditures by a group or individual to design, produce, or disseminate a communication to support or oppose a clearly identified candidate during the final weeks before an election with a participating candidate will be presumed to be independent expenditures, even if the communication does not expressly advocate a candidate’s election or defeat. This “presumption period” was first implemented in the 2004 Maine election. In 2008, the presumption period was 21 days before a primary election and 35 days before a general election. The law relating to the presumption period for a general election increased the period from 21 to 35 days in 2007. As table 25 shows, Maine has reporting requirements based upon the amount and timing of the independent expenditures to help ensure that participating candidates receive any additional matching funds they may be eligible for in a timely manner, particularly in the days before the election.

Arizona’s Public Financing Program

Purpose of Arizona’s Public Financing Program

Arizona’s Act contains a “findings and declarations” section that addresses the intent of the program. Specifically, the “findings” subsection of the Citizens Clean Elections Act, passed by voters in 1998, noted that the state’s then-current election financing-system allows elected officials to accept large campaign contributions from private interests over which they have governmental jurisdiction; gives incumbents an unhealthy advantage over challengers; hinders communication to voters by many qualified candidates; effectively suppresses the voices and influence of the vast majority of Arizona citizens in favor of a small number of wealthy special interests; undermines public confidence in the integrity of public officials; costs average taxpayers millions of dollars in the form of subsidies and special privileges for campaign contributors; drives up the cost of running for state office, discouraging otherwise qualified candidates who lack personal wealth or access to special interest funding; and requires that elected officials spend too much of their time raising funds rather than representing the public.

Further, the “declarations” subsection of Arizona’s 1998 Act stated that: “the people of Arizona declare our intent to create a clean elections system that will improve the integrity of Arizona state government by diminishing the influence of special interest money, will encourage citizen participation in the political process, and will promote freedom of speech under the U.S. and Arizona Constitutions. Campaigns will become more issue-oriented and less negative because there will be no need to challenge the sources of campaign money.”

Requirements to Receive Public Funding in Arizona

As in Maine, Arizona candidates who wish to participate in the state’s public financing option and receive funds for campaigning must first be certified as a Clean Election candidate. Certified candidates, among other things, must (1) forgo self-financing and all private contributions, except for a limited amount of “early contributions,” which are funds that may be raised and spent to help candidates with the qualifying process prior to certification, and (2) demonstrate citizen support by collecting a set number of $5 contributions from registered voters. To qualify for public financing during the 2008 election cycle, a candidate for Arizona’s House of Representatives had to gather at least 220 qualifying $5 contributions, and could collect no more than $3,230 in early contributions, as shown in table 26.

Amounts of Allowable Public Funding for Participating Candidates in Arizona

After being certified by the state as having met qualifying requirements, participating candidates receive initial distributions (predetermined amounts) of public funding and are also eligible for additional matching funds when an opposing nonparticipating candidate exceeds the participating candidate primary or general election spending limits.

In Arizona’s 2008 elections, each participating candidate for the House of Representatives or Senate who was in contested party primary elections (i.e., races with more than one candidate per seat in contention) received an initial distribution of public funds in the amount of $12,921. After the primary, successful major party candidates who were in a contested general election race then received an additional $19,382, as shown in table 27. Independent candidates received 70 percent of the sum of the original primary and general election spending limits. Unopposed candidates (i.e., those in an uncontested race) received only the total of their $5 qualifying contributions as the spending limit for that election.

Participating candidates also received additional matching funds up to predetermined limits when an opposing nonparticipating candidate exceeded the primary or general election spending limits. Matching funds were also provided to participating candidates when independent expenditures were made against them or in favor of opposing candidates in the race. The calculation to assess whether matching funds for participating candidates are triggered is to include reported independent expenditures that, in general, are made on behalf of nonparticipating or another participating candidate in the race by individuals, corporations, political action committees, or other groups. A January 2010 federal district court ruling held Arizona’s Citizens Clean Election Act to be unconstitutional. More specifically, the U.S. District Court for the District of Arizona held that Arizona’s matching funds provision burdens First Amendment speech protections, is not supported by a compelling state interest, is not narrowly tailored, is not the least restrictive alternative, and is not severable from the rest of the statute thereby rendering the whole statute unconstitutional. On May 21, 2010, the U.S. Court of Appeals for the Ninth Circuit reversed the district court ruling on the basis that the matching funds provision imposes only a minimal burden on First Amendment rights, and bears a substantial relationship to the state’s interest in reducing political corruption.

In total, about $6 million in public funds was distributed in 2008 to the 120 participating candidates for the Arizona legislature.

Revenue Sources for Arizona’s Public Financing Program

Arizona’s public financing program is supported through various revenue sources. As table 28 shows, a surcharge on civil and criminal fines and penalties was the largest funding source. Table 28 also indicates that in 2008, $6.6 million, or about 39 percent of the fund’s revenue, came from state income tax checkoff donations and other voluntary donations.

Administration of Arizona’s Public Financing Program

Arizona’s Act established the Citizens Clean Elections Commission to implement the public financing program and enforce provisions of the act. The commission consists of five members selected by the state’s highest- ranking officials of alternating political party affiliation. No more than two commissioners may be from the same political party or county, and commissioners may not have run for or held office, nor been appointed to or elected for any office for the 5 years prior to being chosen as a commissioner. One new commissioner is to be appointed each year. As established by Arizona’s Act, the commission is to employ an Executive Director to facilitate administration of the program. The Executive Director is responsible for, among other things, educating and assisting candidates in compliance with the act’s requirements, limits, and prohibitions, assisting candidates in participating and obtaining public funding, as well as determining additional staffing needs and hiring accordingly. Arizona’s Act caps commission spending for a calendar year at $5 times the number of Arizona resident personal income tax returns filed the previous calendar year. Of that amount, the commission may use up to 10 percent for administration and enforcement activities and must use 10 percent or more for voter education activities. The remainder of commission spending goes to participating candidates’ campaign funds. In calendar year 2008, the commission’s expenditures totaled $14,741,043— $850,447 for administration and enforcement, $6,179,857 for voter education, and $7,710,739 for campaign funds. With regard to the $7,710,739 spent for campaign funds in 2008, $1,715,395 was for statewide candidates and $5,995,344 was for legislative candidates.

The commission’s responsibility for administering and enforcing Arizona’s Act covers related contribution limits, spending limits, and reporting requirements that affect both participating and nonparticipating candidates. Cases of possible violations may be initiated with the commission in one of two ways: (1) either by an external complaint or (2) through information that comes to the commission’s attention internally. The commission may assess civil penalties after investigating compliance matters and finding probable cause of a violation unless the candidate comes into compliance within a set time frame or settlement agreement is reached. Under certain circumstances, the commission can remove a legislator from office for violating specified Arizona Clean Elections Act spending or contribution limits. For example, the commission, for the first time, acted to remove a state legislator from office for exceeding spending limits by over 10 percent—about $6,000—in his publicly funded election campaign during the 2004 primary election. The commission’s action was upheld by an Arizona administrative law judge and an appeal by the legislator was unsuccessful in the Arizona court system.

Reduced Contribution Limits and Additional Reporting Requirements for Arizona Nonparticipating Candidates

Before the passage of Arizona’s Act, political campaigns in Arizona were financed completely with private funds. There were no limitations placed on expenditures by candidates from their personal wealth. Under Arizona’s public financing laws, nonparticipating candidates are not limited in the amount they may spend from their personal financial resources on their own campaigns. While not faced with limits on the total amount they can spend on their own campaigns, nonparticipating candidates are subject to certain limitations on the amounts of contributions they can accept. For example, in Arizona, contributions from individuals were limited to $488 per donor for nonparticipating candidates for the state legislature for the 2008 election cycle. The Arizona act reduced the limits on individual contributions to nonparticipating candidates by 20 percent.

Nonparticipating candidates have additional reporting requirements. For example, a nonparticipating candidate opposed by a participating candidate, must, in general, file a report with the Secretary of State if the campaign’s expenditures before the primary election exceed 70 percent of the original primary election spending limit imposed on a participating opponent or if the contributions to a nonparticipating candidate has exceeded 70 percent of the original general election spending limit.

Arizona Reporting Requirements for Independent Expenditures

Under Arizona law, individuals or organizations making independent expenditures must file reports with the Secretary of State. According to commission officials, the commission coordinates with the Secretary of State to determine if participating candidates are eligible for matching funds based upon independent expenditures opposing participating candidates or supporting other candidates in their race. Under Arizona law, independent expenditures are generally defined as expenditures such as campaign literature or advertisements that expressly advocate the election or defeat of a clearly identified candidate that is made independently of the candidate, the candidate’s committee, and any agents of the candidate. As table 29 shows, the amount and timing of the independent expenditure in relation to the election dictates when and how the independent expenditure must be reported.

In addition, according to commission and state officials, Arizona has made changes intended to improve and clarify the process of reporting independent expenditures, given their importance in determining matching fund disbursements under the public financing program. For example, these officials told us that they made a number of updates to the office’s campaign finance system for the 2008 election to help improve the reporting and tracking of independent expenditures and the timely disbursement of matching funds to participating candidates. One update required individuals or committees making independent expenditures to report the unique identification number of the candidate that is the beneficiary of an independent expenditure. A Secretary of State official told us that prior to the 2008 election the beneficiary of the independent expenditure was inconsistently identified in a text field, and there was no systematic way to distinguish independent expenditures made on behalf of specific candidates or ballot initiatives.

Appendix III: Information on Public Financing Programs for State Legislative Election Campaigns in Connecticut and New Jersey

After Maine voters passed the Maine Clean Election Act in November 1996 and Arizona voters passed the Citizens Clean Elections Act in November 1998, a similar public financing law (Connecticut’s Act) was introduced in the Connecticut state legislature in October 2005 and enacted in December 2005, establishing the Citizens’ Election Program. Connecticut’s Act established an optional financing program for candidates for the state legislature beginning in 2008 and certain additional statewide offices beginning in 2010 to use public funds to finance their campaigns as an alternative to traditional fundraising means, such as collecting contributions from individuals or political action committees. In addition, the New Jersey Fair and Clean Elections Pilot Project was enacted into law in August 2004 and the 2007 New Jersey Fair and Clean Elections Pilot Project Act was enacted into law in March 2007. These acts respectively established pilot projects offering optional public financing of campaigns for candidates seeking election to the General Assembly from certain legislative districts for the 2005 election and for candidates seeking election to the General Assembly and the Senate from certain legislative districts in the 2007 election.

Detailed information is available on the Web sites of the state agencies responsible for administering the respective programs—Connecticut’s State Elections Enforcement Commission (SEEC) (www.ct.gov/seec/site/default.asp) and New Jersey’s Election Law Enforcement Commission (www.elec.state.nj.us).

Connecticut’s Public Financing Program

Purpose of Connecticut’s Public Financing Program

Connecticut’s Act established the Citizens’ Election Program, which offered full public financing for participating candidates for the House of Representatives and Senate of the state legislature, also known as the General Assembly, beginning in 2008, and will expand to certain statewide offices, such as governor and attorney general, beginning in 2010. Connecticut’s State Elections Enforcement Commission (SEEC) outlined the following goals of the public financing program: to allow candidates to compete without reliance on special interest money, to curtail excessive spending and create a more level playing field among candidates, to give candidates without access to sources of wealth a meaningful opportunity to seek elective office in Connecticut, and to provide the public with meaningful and timely disclosure of campaign finances.

Requirements of the Public Funding Program in Connecticut

In Connecticut, candidates for the state legislature who wish to receive public funds for campaigning must qualify by, among other things, (1) raising a certain total amount of money, in amounts between $5 and $100, in qualifying contributions from individuals, and (2) collecting a certain number of these qualifying contributions from individuals who reside in the district for which the candidate seeks legislative office, as shown in table 30. In addition, candidates can contribute a limited amount of personal funds to their candidate committees before applying for the initial distribution of public funds. The maximum amount of personal funds allowed per candidate varies depending on the office sought. Any allowable amount of personal funds a candidate contributes is not considered as part of the qualifying contributions, and reduces the initial distribution by a corresponding amount.

After meeting the requisite qualifications and meeting the ballot requirements administered by the Secretary of State, participating candidates from major political parties may receive initial distributions of public funding as shown in table 31. Minor party candidates can receive varying amounts of public funding depending on whether they meet certain requirements. For elections held in 2010 and thereafter, SEEC is to adjust the amount of public funding for legislative candidates every 2 years to account for inflation.

Participating candidates are also eligible for supplemental public funding up to certain specified amounts, based on spending by nonparticipating or participating opposing candidates whose aggregate contributions, loans, or other funds received or spent exceed the applicable spending limit—the amount of qualifying contributions plus applicable full initial distribution for a participating candidate in that race. In addition, on the basis of required independent expenditure reports or a SEEC determination, a participating candidate can also receive additional matching funds, in general, if such independent expenditures are made with the intent to promote the defeat of the participating candidate. Such additional funds are to be equal to the amount of the independent expenditure but may not exceed the amount of the applicable primary or general election grant for the participating candidate. If such independent expenditures are made by an opposing nonparticipating candidate’s campaign, additional matching funds are only to be provided if the nonparticipating candidate’s campaign expenditures plus the amount of independent expenditures, exceed the applicable initial public funding amount for the participating candidate.

Revenue Sources and Expenditures Made from Connecticut’s Public Financing Program Fund

The primary revenue source for Connecticut’s public financing program is derived from the sale of abandoned or unclaimed property in the state’s custody, such as funds left in saving or checking accounts; stocks, bonds, or mutual fund shares; and life insurance policies. As of March 3, 2010, the Citizens’ Clean Election Fund has about $43 million, a fund established by Connecticut’s Act for the public financing program. In addition, the Citizens’ Election fund receives funds from voluntary contributions and interest earned on the fund’s assets, and if the amount from the sale of abandoned or unclaimed property is less than the amounts specified under state law to be transferred to the Citizens’ Election Fund, then the difference is to be made up from corporation business tax revenues. During the 2008 election cycle, about $8.3 million was distributed to 250 participating candidates in the general election and about $3 million was expended for SEEC administrative costs.

Candidate Participation in Connecticut’s Public Financing Program in 2008

About three-fourths (250 of 343) of legislative candidates in Connecticut’s general election participated in the public financing program, and there was at least one participating candidate in over 80 percent of the races, as shown in table 32.

Of the participating legislative candidates in Connecticut’s general election, more than half, or 130 of 250 candidates, were incumbents. Of those participating candidates who were elected to office, about 95 percent of the incumbents were elected, or 123 of 130 participating incumbent candidates, and about 23 percent of the challengers were elected, or 28 of 120 participating challenger candidates, as shown in table 33.

New Jersey’s Public Financing Program

Purpose of New Jersey’s Public Financing Program

In 2004, the New Jersey Fair and Clean Elections Pilot Project was enacted into law and established an optional public financing program for General Assembly candidates in two legislative districts in the 2005 general election. Under New Jersey’s 2005 public financing program for legislative candidates, the state Democratic party chairperson and the state Republican chairperson each chose one district to participate in the program. In one of the selected districts, two out of the four candidates for the state Assembly qualified for public funds, and in the other district, no candidates qualified. In 2007, the state legislature expanded the number of districts covered by the program to Senate and General Assembly candidates in three legislative districts and made several changes in the program, such as decreasing the number of contributions each candidate was required to collect from registered voters in his or her district.

The goals of the 2007 New Jersey Clean Elections Pilot Project are to end the undue influence of special interest money, to improve the unfavorable opinion of the political process, and to “level the playing field” by allowing ordinary citizens to run for office.

Requirements of the Public Financing Program in the 2007 New Jersey Clean Elections Pilot Project

To participate in the 2007 Clean Elections Pilot Project, candidates needed to, among other things, (1) file a declaration of intent to seek certification with the New Jersey Election Law Enforcement Commission (ELEC), the agency responsible for the public financing program; (2) agree to participate in at least two debates; and (3) after certification, limit their expenditures to the amounts raised as “seed money” and qualifying contributions, and public funds received from the fund. During the qualifying period, candidates may accept seed money contributions of $500 or less from individuals registered to vote in New Jersey, but in aggregate seed money contributions may not exceed $10,000. A candidate seeking certification must obtain at least 400 contributions of $10 (i.e., $4,000) to receive the minimum amount of public funds available and at least 800 contributions of $10 (i.e., $8,000) to receive the maximum amount of public funds. The contributions must be from registered voters from the legislative district in which the candidate is seeking office. In addition, if two state Assembly candidates from the same party are running in the same legislative district, they both must agree to participate in the public financing program to become certified and eligible to receive public funds.

The amount of public funds received by a certified candidate depended upon several criteria: (1) whether or not the candidate is opposed, (2) whether or not the candidate is a major party candidate, and (3) whether the candidate ran in a “split” district, one that, in general, was selected jointly by members of the majority and minority parties in the legislature. After being certified, a candidate nominated by a political party who has also received at least 400 qualifying contributions would receive a grant amount of $50,000 if opposed and $25,000 if unopposed. If the candidate were running in a “competitive” district, then such a candidate could collect funding in equal proportion to the number of remaining qualifying contributions (after the initial 400) up to a maximum of 800 qualifying contributions for a total amount of public funds not to exceed the average amount of money spent by all candidates in the two preceding general elections for those offices. If a candidate is running in one of the two “nonsplit” districts, that is, one district selected by the members of the majority political party, and one district selected by the members of the minority political party, then the candidate could collect funding in equal proportion to the number or remaining qualifying contributions (after the initial 400) up to 800 qualifying contributions for a total not to exceed $100,000. Qualifying contribution amounts received would be deducted from grant amounts. For example, if a candidate raised 400 $10 qualifying contributions, the amount dispersed to the candidate would be $46,000 ($50,000 minus $4,000 collected in qualifying contributions).

Participating candidates may also receive additional funds under certain circumstances. When a campaign report of a nonparticipating candidate shows that the aggregate amount of contributions exceeds the amount of money provided to an opposing participating candidate, ELEC may authorize an additional amount of money equivalent to the excess amount, up to a maximum of $100,000 to each opposing participating candidate in the same district as the nonparticipating candidate. In addition, when a participating candidate files a written and certified complaint to ELEC, and ELEC determines that (1) a nonparticipating candidate is benefiting from money spent independently on behalf of the nonparticipating candidate or that (2) a participating candidate is the subject of unfavorable campaign publicity or advertisements by an entity not acting in concert with the opposing nonparticipating candidate, ELEC may authorize an additional amount of money up to a maximum of $100,000 to the opposing participating candidate in the same legislative district who is not benefiting from the expenditure.

Revenue Sources and Expenditures for the 2007 New Jersey Clean Elections Pilot Project

For the 2007 pilot project, the New Jersey state legislature funded the program with approximately $7.7 million from the state’s general funds. In addition, voluntary donations, earnings received from the investment of money in the fund, and fines and penalties collected for violations of the public financing program are also sources of revenue. All unspent money is to be returned to the fund. About $4 million was distributed to participating candidates for the 2007 pilot project. According to a state official, New Jersey’s public financing program, which contains matching funds provisions, was not reauthorized for the 2009 elections due to both concerns about a federal district court ruling holding that the matching funds provisions of Arizona’s Citizens Clean Elections Act to be unconstitutional, as well as state budget constraints.

Participation in the 2007 New Jersey Clean Elections Pilot Project

In the 2007 Pilot Program, 16 of the 20 legislative candidates running for office in the three legislative districts participated in the program, and every winning candidate participated. Two of the 16 participating candidates received funds in addition to their initial distribution of public funds due to independent expenditures made on behalf of opposing nonparticipating candidates.

Appendix IV: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

In addition to the contact named above, Mary Catherine Hult, Assistant Director; Nancy Kawahara; Geoff Hamilton; Tom Jessor; Grant Mallie; Heather May; Amanda Miller; Jean Orland; Anna Maria Ortiz; Doug Sloane; Michelle Su; Jeff Tessin; Adam Vogt; and Monique Williams made significant contributions to this report.

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