OPINION NUMBER - 123

ADOPTED - 1990/01/19

SUBJECT - Campaign Financing

REQUESTED BY: Chrisite Schroff, Attorney for Lincoln Independent Business Association PAC

QUESTION: May the funds of a Separate Segregated Political Fund or PAC be used to hire an intern to do political research?

CONCLUSION

Yes, under the circumstances described and subject to the conditions set forth.

FACTS

You state that the Lincoln Independent Business Association PAC (LIBA PAC) is proposing to hire an intern with PAC money to do political research. Specifically, it is the intent of LIBA PAC to have the intern provide on-going monitoring of meetings of public bodies as well as provide further political research. The public bodies monitored would include city councils, county boards and school boards. The purpose of the monitoring and research would be to compile voting records of officeholders. This information would be used by the PAC to help it determine which candidates it would support.

ANALYSIS

LIBA PAC is the separate segregated political fund (SSPF) of the Lincoln Independent Business Association which is an industry, trade or professional association. As such, the use of its funds is governed by section 49-1469(2)(c) which states in part:

Only expenditures to candidates and committees and independent expenditures may be made from a fund established by a corporation, labor organization, or industry, trade, or professional organization, except that such separate segregated political fund may receive and disburse funds for the purpose of supporting or opposing candidates and committees in elections in states other than Nebraska and candidates for federal office and making independent expenditures in such elections . . . . The expenses for establishment and administration of a separate segregated political fund of an industry, trade, or professional association may be paid from the separate segregated political fund of such industry, trade, or professional association.

As to an industry, trade or professional association then, there are three categories for the use of its SSPF funds. They are:

1) Expenditures to candidates, committees and independent expenditures;

2) Disbursements to support or oppose candidates for federal office or for offices in states other than Nebraska; and

3)Administrative expenses.

We do not address the question of whether or not the hiring of an intern for the purpose stated would be an expenditure as defined by section 49-1419, because it is unnecessary to do so. We do not believe that the proposed use of funds to hire an intern for the purpose described in your request would be a permissable expenditure from a SSPF of an industry, trade or professional association.

The proposed use of the funds is not a disbursement for the purpose of supporting or opposing a candidate for office in a state other than Nebraska or a candidate for federal office. Thus, the proposed use of the funds does not fall within the second of the three categories set forth above.

The final consideration is whether or not the proposed use of SSPF funds could be considered an administrative expense and thus fall within the third category of permissable uses set forth above. We believe that it could. An administrative expense is an expense incurred in assistance of the proper administration of the SSPF. Certainly a basic administrative consideration is to which candidates the SSPF should contribute. Such a decision cannot be made in a vacuum. Information is required. The stated purpose for hiring an intern is to gather information so that these decisions can be made. The legislative history of section 49-1469(2)(c) supports this position. In its original form, section 49-1469(2)(e) did not permit industry, trade, or professional association to use its funds for administrative expenses. This was amended by LB214 which was passed by the Legislature in 1983. LB214 was introduced by the Miscellaneous Subjects Committee. During the floor debate on LB214 Senator Elroy Hefner, the committee chairman stated:

Now LB214 allows Pacs established by industry, trade or professional association, but not corporation or labor organization, to pay their own administrative costs using funds from their independent committee's separate segregated political funds. As has been the case, the cost of an administrator or part-time administrator working with these PAC groups would have to receive their compensation from the organization themselves. This would allow them to charge a portion of their expenses to the PAC that has been established. Legislative floor debate on LB214 March 25, 1983 at page 2213.

Senator Hefner's comments make it clear that section 49-1469(2)(c) permits a separate segregated fund established by an industry, trade or professional association to pay administrative expenses out of its fund. The senator's comments also make it clear that personnel could be included within the term administrative expense.

Therefore, it is our position that the hiring of an intern by an SSPF of an industry, trade or professional association for the purpose of doing political research to aid in determining which candidates to support is an administrative expense which may be paid by the SSPF.

As with any disbursement from a fund established under the provisions of the Nebraska Political Accountability and Disclosure Act, records must be kept to substantiate the disbursement as well as the purpose of the disbursement. Things which would tend to substantiate the purpose of such a disbursement include a job description of the intern and criteria to be used by the SSPF in determining which candidates to support. SSPF funds may not be used for lobbying purposes and, consequently, neither the intern nor the intern's research may be used for lobbying purposes. It is important that separate segregated political funds or PACs be aware of the restrictions on the use of PAC funds since a violation of section 49-1469 may result in civil or criminal penalties.