New York State's $100M program to publicly finance campaigns prompts emergency fix

ALBANY — New York State has issued an emergency order to better verify contributors to campaigns before the state matches cash contributions under the new public campaign financing program.

The order was made two days after the June primary and in the midst of the program’s biggest rollout leading to the November legislative elections. It followed a media report that claimed the system was abused by an Assembly candidate who secured nearly $163,000 in taxpayer funds under the program, some of it with cash donations without a way to verify or contact the contributor.

The emergency amendment approved by the New York State Public Campaign Finance Board on June 27 requires that “contribution cards” that were already required for cash donations must include a phone number or email address so contributors can be verified.

The State Legislature created the program to limit the influence of wealthy donors. This election year, the first major use of the program, has drawn 316 candidates vying in 213 state legislative races. They have qualified to receive part of up to $100 million in state-funded matches to encourage small donations, $5 to $250, from individuals.

The response to the program by challengers and incumbents has exceeded the predictions of even the program’s most ardent supporters, but hasn’t come without problems.

The amendment came after The New York Times reported on fundraising by Assembly candidate Dao Yin in the June 25 primary. The Times said the Queens Democrat used “fake donations and forged signatures” in a campaign that received almost $163,000 in taxpayer money under the new public finance system.

Yin denied he faked contributions. “Everything we say is distorted” in the news media, Yin told Newsday.

In a written statement, he said his campaign workers “adhered to all the necessary procedures to meet the matching funds requirements. In the event of any inadvertent errors, they are actively collaborating with the New York State Public Campaign Finance Board to rectify them.”

The amendment resolution approved by the campaign finance board said, "Mandating that the contributor’s phone number or email address be provided on a contribution card would greatly assist in the audit and process of contributions in order to pay matchable funds, but are not currently required to be provided.” 

“The matching claim would be denied until that information is supplied,” said William J. McCann, co-program manager of the public campaign finance unit, at the June 27 meeting.

The amendment also ends the use of “good-faith letters” that campaigns can attach to donations with too little information to verify the identity of the contributor. Campaigns could provide the letter to say they tried but failed to get the information. Before the amendment, that could have allowed a campaign to receive a matching fund from the state.

“The implementation of the policy of accepting good-faith letters was not a regulation, but rather adopted during program development by bipartisan staff,” said Kathleen McGrath, spokeswoman for the state Board of Elections. “The good-faith letters were to capture a phone number or email address of a cash contributor if not included on the associated contribution card. These data points were not required to be submitted by a committee under the statute for public funds matching, but were an effort by the [state Public Campaign Finance Board] to go above and beyond in auditing submissions. “

With the amendment, “The policy of accepting good-faith letters has been rendered moot,” McGrath said.

The state Board of Elections didn’t immediately release data on the number of letters of good faith that have been accepted. Newsday has requested the data under the Freedom of Information Law.

Two other complaints were handled this year as part of the public campaign financing program, according to Public Campaign Finance Board records.

In April, the board received a complaint that Democrat Gabi Madden’s campaign violated state election law by using a prohibited “game of chance” as a fundraiser in her unsuccessful race to represent parts of Dutchess and Ulster counties in the Assembly. In June, the board dismissed the case without further enforcement action after the campaign refunded the contributions.

In May, the board investigated a complaint that Madden’s campaign failed to report expenditures or in-kind contributions for use of the campaign office. In June, the board dismissed the case without further enforcement action after the campaign amended its required financial disclosures.

At the same June 27 meeting in which the state Public Campaign Finance Board approved the emergency amendment, the board also authorized a referral to law enforcement in another case without saying who or which campaign was the subject of the referral.

McGrath wouldn’t comment.

Board vice chairman Brian Kolb, a Republican who opposed public financing of campaigns when he served in the Assembly, defended the rollout.

“We have a very solid process in place,” Kolb told Newsday. “With any new program, you might find some things that we probably should do a little bit differently … but if there are any issues, we fix them and that’s the whole approach.”

Blair Horner of the New York Public Interest Research Group, which supported public financing of campaigns, said “it’s not surprising there are hiccups the first time through.”

He said the legislature should review this first year’s performance to determine if any changes are needed to improve accountability and thwart “people who are looking to game the system.”

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.