Campaign Finance and Disclosure Requirements in Illinois 

 

By M. Neal Smith

 

Because of their skill set, attorneys frequently become candidates for public office. Supreme, Appellate and Circuit Court judgeships are elective offices, of course, but beyond the judiciary it is common to see attorneys as mayors, municipal and township board members and on local school boards. Other attorneys may not be on the ballot but are asked to put their communications and organizational skills to work by taking a leading role in a candidate’s campaign or on a campaign supporting or opposing a ballot initiative. So just because you may never have been hired to represent a candidate or a campaign committee does not mean your knowledge about campaign finance law will not be sought. This article provides an introduction and overview of campaign finance disclosure requirements in Illinois. For additional in-depth information on campaign disclosure “A Guide to Campaign Disclosure” published by the Illinois State Board of Elections is an outstanding resource and should be consulted.1

 

The source of campaign finance disclosure requirements in Illinois is Article 9 of the Election Code.2 Since monetary contributions are central to a political campaign’s ability to continue operating, one of the first questions asked by a nascent campaign is usually whether it has financial disclosure filing obligations. Most will – if not right away then in fairly short order – but some low budget campaigns will never have disclosure obligations. The reason is because the obligation is determined by a dollar threshold: any candidate, individual, or group of persons who has accepted contributions or made expenditures in excess of $5,000 in a 12-month period in support of or in opposition to a candidate or referendum question has a disclosure obligation.3

 

Organizing the Committee – Filing a D-1 Statement of Organization

When the $5,000 threshold is reached, the person or campaign is deemed a “political committee” and must organize and begin filing reports with the Illinois State Board of Elections.4 The initial filing is done on a form known as the “D-1 Statement of Organization” which can be found at https://www.elections.il.gov/downloads/campaigndisclosure/pdf/d1.pdf. The D-1 must be filed within 10 business days after the threshold is reached, but if the threshold is reached 30 days or less from election day, the D-1 must be filed within two business days of reaching the threshold.5 The State Board of Elections takes the position that a candidate, individual, or group of persons may voluntarily file a Statement of Organization before reaching the $5,000 threshold, but upon making this election must thereafter comply with all requirements as though the $5,000 threshold had been reached.

 

Among other information, the D-1 asks the date that the committee was created, which is the date that the $5,000 threshold is exceeded. The D-1 also requires the political committee to designate itself as one of five different types of committees that are defined by statute: Candidate Political Committee, Political Action Committee, Political Party Committee, Ballot Initiative Committee and Independent Expenditure Committee.6 For most campaigns for elective office, the Candidate Political Committee designation is used.

 

The Election Code requires political committees to have a chair and a treasurer, and the D-1 has a section where the names and contact information of the chair and treasurer are listed. If the custodian of the committee’s accounts is different than the chair or treasurer, then that person should be listed on the D-1 as well. Smaller campaigns often wonder whether the chair and the treasurer can be the same person, and indeed one person can have both roles. Sometimes the candidate himself is that person, which is also generally permissible. The position of treasurer is critical for the committee and it needs to be filled by a trusted person adept at record keeping and meeting deadlines. A person appointed treasurer will also need to take time to become familiar with the obligations and responsibilities she will have in this important role – more on this below.

 

Though not required, a political committee is well-advised to open a separate bank account that will only handle campaign contributions and expenditures. This is the most prudent and efficient way to avoid the commingling of personal and campaign monies – such commingling being specifically prohibited – and a separate account helps with the committee’s record keeping and financial reporting obligations. A political committee must list the financial institutions where its money is maintained, and this information will also be listed on the D-1.

 

The last section of the D-1 requires the committee to make a selection for how residual funds of the committee will be disbursed in the event of dissolution or termination of the committee. A committee should be sure to revisit this selection from time to time in order to avoid the type of dispute that ensued involving the disposition of committee funds of the political committee for the late Judy Barr Topinka who was serving as Illinois State Comptroller at the time of her unexpected death.7 Committees frequently decide to transfer the funds to a charitable organization because it eliminates paperwork headaches and allows the committee to appear charitable.

 

After completion of the D-1, the form must be verified by either the treasurer or the candidate. Note that Ballot Initiative Committees and Independent Expenditure Committees have an additional verification requirement for the chair of these committees. The D-1 verification requirement should be treated with all the seriousness that accompanies the execution of an affidavit. Verifying a false or incomplete D-1 subjects a person to a fine of up to $5,000.8

 

Role and Responsibilities of the Treasurer

The political committee treasurer is required to keep a detailed and exact account of the total of all contributions made to the committee, the full name and address of every person making a contribution and the date and amount of the contribution, the total of all expenditures made by or on behalf of the committee and proof of those expenditures, as well as the full name and address of every person to whom any expenditure is made, and the date and amount of the expenditure.9 All such records are required to be preserved for at least 2 years.10

 

For most committees, it will be the case that the treasurer will complete the periodic reports and filings that get submitted to the State Board of Elections. But while it usually makes sense for the treasurer to fulfill the filing obligation, it can be done by another person.

 

Political campaigns need to educate their workers and volunteers about the proper manner and mechanics for collecting and accepting contributions, and it frequently makes sense for the treasurer to be the point person in this endeavor. Persons collecting money or contributions must report to the treasurer, within five days of the contribution, a detailed account of the contribution, including (i) the amount, (ii) the name and address of the person making such contribution, (iii) the date on which the contribution was received, and (iv) the name and address of the person collecting or accepting the contribution for the political committee.11 Similar detail is required for reporting of in-kind contributions of goods and services. In other words, all the information that the treasurer must ultimately report to the State Board of Elections must be gathered in the first instance by the campaign’s grass roots volunteers and workers.

 

In order to avoid having to forfeit contributions, it is advisable that the treasurer make sure it is abundantly clear to everyone at the campaign that anonymous contributions are prohibited.12 Contributions made in the name of another person are also prohibited.13 The Election Code prohibits anyone from knowingly accepting anonymous contribution or a contribution made by one person in the name of another person.14

 

Campaign Disclosure Reports

The filing of the D-1 Statement of Organization is only the beginning of a periodic reporting process that will continue as long as the political committee is in existence. Every political committee must report its financial activity on a form that is filed quarterly with the State Board of Elections. The form is known as “Form D-2” and it is filed every three months covering the periods of January 1 through March 31, April 1 through June 30, July 1 through September 30, and October 1 through December 31.

 

Form D-2 contains a Section A for reporting of receipts and a Section B for the reporting of expenditures. Any donations, including in-kind contributions, received by the committee in an aggregate amount in excess of $150 from one person or source must be itemized on Schedule A of the D-2, where the contributor is also identified. Schedule B of Form D-2 is to reflect disbursements made in excess of $150 and in addition to the date and amount of disbursement, the recipient must be identified. Section C of the D-2 (and corresponding Schedule C) is used to report any debts of the committee exceeding $150.

 

In addition to the D-2 filing obligation that all political committees have, some committees will be obligated to reports known as “A-1 Reports” and “B-1 Reports.” An A-1 Report must be filed whenever a committee receives a contribution of $1,000 or more from a single source. The B-1 Report is filed whenever a committee makes an independent expenditure totaling $1,000 or more. Both reports are due within five business days following the contribution or expenditure. The time period for filings is shortened to two business days within the 60-day period before an election.

 

When a political committee winds up its affairs, it will file a final Form D-2 with the “Final Report” box checked at the top. The Final Report can be filed at any time, but the information must still be complete for the applicable period, of course. Note that a final report must indicate an ending balance of zero, though debts may be carried.

 

Prohibited Expenditures

Every campaign should be cognizant of those purposes for which campaign funds may not be used. The complete list of statutorily prohibited expenditures is at 10 ILCS 5/9-8.10(a). Among other prohibitions, funds may not be used for purchases in violation of any law, for purchases clearly in excess of fair market value, or for payment to anyone unless for compensation for services actually rendered.15 Perhaps less intuitively, funds may not be used for clothing or personal laundry expenses (though clothing may be rented for the candidate’s own use for a specific campaign-related event), for tuition or educational expenses except when directly related to a candidate or public official’s governmental duties, or for the purchase of a motor vehicle unless the political committee can demonstrate that purchase of a motor vehicle is more cost-effective than leasing a motor vehicle. The list of prohibited expenditures contains plenty of nuanced exceptions, so prudent committees will study the list and seek legal advice for those uncertain situations.

 

The recent case of Cooke v. Illinois State Board of Elections16 illustrates that it pays to be mindful of nuances in the listed prohibitions. Over a 15-year period the political committee in Cooke made payments for gas and vehicle repairs to an automobile service station in an amount totaling over $200,000, even though the committee did not own or lease any vehicles. The service station had a list of people that were entitled to get gas and vehicle repairs on the committee’s account, and the committee maintained that the people so authorized were campaign workers. The plaintiff argued that such payments were prohibited by the Election Code, and the Appellate Court agreed after conducting a statutory analysis of Section 9-8.10(a)(9). The Court held that Section 9-8.10(a)(9) provides a specific manner whereby a committee may make expenditures to an individual who seeks compensation for the use of his or her personal vehicle for campaign or governmental purposes – i.e. reimbursement for actual mileage in an amount not exceeding the IRS rate.17 The Court found that Section 9-8.10(a)(9) is the exclusive provision regulating campaign expenditures on vehicles and does not permit, and therefore effectively prohibits, any expenditure for gas and repairs of vehicles not owned or leased by a committee.18

 

Limits on Contributions to a Committee

Most political committees are subject to contribution limits that vary based on the source of the contribution. The exceptions are Ballot Initiative Committees and Independent Expenditure Committees, which may receive unlimited contributions from any source, but which are prohibited from making contributions to candidates or other political committees (though an Independent Expenditure Committee can make contributions to other such committees or to Ballot Initiative Committees).

 

The current applicable contribution limits are $5,800 for individuals, $11,600 for corporations, labor organizations and associations, and $57,800 for Candidate Political Committees and Political Action Committees.19 A Political Party Committee may make contributions in an unlimited amount except during an election cycle in which the candidate seeks nomination at a primary election.20 Note that, to account for inflation, the contribution limits are adjusted on January 1 of odd-numbered years by the State Board of Elections based on the Consumer PriceIndex.21 A committee that receives a contribution that exceeds a limit must return the excess portion to the contributor or donate the amount to charity.

The contribution limit amounts are the amounts that can be contributed during an “election cycle,” and for Political Party Committees and Political Action Committees an election cycle equals a calendar year.22 But an election cycle is different for Candidate Political Committees and it depends on the office the candidate is seeking. For determining a Candidate Political Committee’s election cycle, the definition of “Election cycle” in Section 9-1.9 of the Election Code must be consulted.23

 

Other Issues for Political Committees Administrative Complaints

 Violations of campaign finance laws are heard in the first instance by the State Board of Elections which has jurisdiction over such matters. The Board of Elections has developed administrative rules and procedures for the hearing of complaints.24 Decisions of the Board of Elections are subject to judicial review under the Administrative Review Law.25

 

Penalties. The Election Code provides for various monetary penalties up to $5,000 for each violation. Critically, all candidates must be cognizant that the candidate can face ballot forfeiture if his or her political committee has not paid a civil penalty.26

 

Raffles. Political Committees may fundraise by conducting raffles if a raffle license has first been obtained from the State Board of Elections. A “Raffle Report” must be filed after the raffle is concluded.

 

Federal Laws. Federal campaign finance is strictly regulated, but not discussed in this article. For more information on federal campaign finance, see the website of the Federal Election Commission at www.fec.gov. If a committee qualifies as a political committee in Illinois and is also required to file reports with the Federal Election Commission, the political committee only needs to submit a D-1 with the State Board and indicate in Part 6 of the D-1 that the committee will be filing under federal law.27

 

Your knowledge of Illinois campaign finance law will help you and the campaign that you are a part of avoid costly and embarrassing missteps. Happy campaigning!


 

1. https://www.elections.il.gov/downloads/campaigndisclosure/pdf/campdiscguide.pdf

2. 10 ILCS 5/9-1 et seq.

3. 10 ILCS 5/9-1.8.

4. 10 ILCS 5/9-3.

5. 10 ILCS 5/9-3.

6. 10 ILCS 5/9-2 and 10 ILCS 5/9-1.8.

7. Topinka v. Kimme, 2017 Il App (1st) 161000.

8. 10 ILCS 5/9-3(c).

9. 10 ILCS 5/9-7(1)

10. Id.

11. 10 ILCS 5/9-6(a).

12. 10 ILCS 5/9-25.

13. Id.

14. Id.

15. 10 ILCS 5/9-8.10(a).

16. Cooke v. Illinois State Board of Elections, 2019 IL App (4th) 180502,

17. Id. at ¶66

18. Id. at ¶68.

19. 10 ILCS 5/9-8.5.

20. Id.

21. 10 ILCS 5/9-8.5(g).

22. 10 ILCS 5/9-1.9.

23. 10 ILCS 5/9-1.9(1)-(5).

24. See 26 Ill. Adm. Code § 125.5 et seq.

25. 10 ILCS 5/9-22.

26. 10 ILCS 5/9-30.

27. See 10 ILCS 5/9-15 and 26 Ill. Adm. Code § 100.60.

 

Neal Smith is a Partner at the law firm of Robbins Schwartz representing municipalities, school districts, community colleges and other local governmental entities as well as companies and individuals in a wide range of legal matters, including tort and commercial litigation, election law, and zoning disputes. He graduated cum laude from NIU College of Law and received his undergraduate degree from Hampden-Sydney College.