Panelists ask FEC to let candidates use campaign funds for salaries & benefits

Federal Election Commission

Federal Election Commission

Running for political office can be a full-time job, and the cost of campaigning has been cited as a barrier to working Americans considering congressional bids. But momentum to address this obstacle is growing, as the Federal Election Commission held a hearing Wednesday on a proposed rule change to allow candidates to use campaign funds to cover salaries and health care. 

The FEC adopted expanded regulations in 2002 permitting candidates to use campaign funds to pay their salaries in limited circumstances.

Under current regulations, candidate salaries paid using campaign funds are capped at the lower of two options: the minimum salary for the office sought or the income the candidate earned the year before their candidacy.

Federal candidates can currently use campaign funds to insure staffers but they cannot draw from those funds to pay for their own health care. 

cohort of panelists including freshman Rep. Maxwell Frost (D-Fla.), Georgia state Sen. Nabilah Islam (D) and other former congressional candidates discussed updating regulations on candidate salaries.

Islam, who submitted the petition for rulemaking that initiated the hearing, left her job to run for Congress in Georgia’s 7th Congressional District during the 2020 election cycle — and subsequently could not afford health care. 

“If we want a representative democracy with lawmakers that share our lived experiences, we need to eliminate the financial barriers that prevent so many qualified Americans from running for office,” Islam told commissioners in her opening testimony.

While the 118th Congress is the most diverse in history, several panelists pointed out that white men and millionaires are disproportionately represented in Congress, in part because of the cost to run for elections. Commissioner Shana Broussard pointed out that only 2% of members of Congress have working class backgrounds.

There’s currently no limit on how much money a federal candidate can loan their campaign committee, and wealthy candidates are increasingly self-financing election bids. Congressional candidates poured about $300 million of their own money into self-funding campaigns in the 2022 midterm election cycle, OpenSecrets previously reported, although only a handful of those candidates went on to win their races.

“The unfortunate reality is that the current campaign landscape benefits rich Americans,” Shrina Kurani, a former Democratic U.S. House candidate in California’s 41st Congressional District during the 2022 election cycle, said.

Not all panelists supported expanding regulations on candidate salaries. Institute for Free Speech Chair Brad Smith, a former FEC commissioner from 2000 to 2005, called his support to expand candidate salary regulation in 2002 “a mistake.” Smith said the commission does not have the legal authority to rule campaign contributions can be converted into personal funds and cautioned against opening the door to corruption as a consequence of “feel-good rule-making.” 

Since federal candidates’ campaign finances are publicly disclosed, candidates paying themselves a salary will “have to answer to their opponents, the public and the press,” Commissioner Ellen Weintraub said in her opening remarks.

“Why is it an explicit violation of law to pay one’s rent with campaign funds but acceptable to do so if it was funded under a salary?” FEC Commissioner Allen Dickerson asked, pointing out candidates are expressly prohibited from using campaign funds to pay for mortgages, tuition, clothing and other personal expenses. He told OpenSecrets after the hearing he had not made a decision on the legal or procedural matter, and he encouraged the public to submit additional comments.

Odessa Kelly, an unsuccessful Democratic candidate who ran for the U.S. House in Tennessee’s 7th Congressional District during the 2022 midterms, implored Dickerson to understand the broader implications of the commission’s decision.

“I just want to make sure that that’s clear, when we talk about inequity, does it always impact people of color? Absolutely,” Kelly said. But the financial barrier impacts working Americans regardless of identity, Kelly added, explaining “what we are asking you to do is to take special consideration that we are in trouble across this country, and a big part of the reason why we’re in trouble is because we do not have accurate representation in our highest levels of office.”

Out of all federal candidates running in 2022 elections, Kelly drew the second-highest salary from her campaign, receiving about $40,000 over the course of the 2022 election cycle. During the 2022 election cycle, 30 federal candidates reported paying themselves an average of about $10,000 over the course of the cycle, an OpenSecrets analysis of federal campaign finance data found. 

Panelists press FEC to adopt uniform salary cap

A large portion of Wednesday’s FEC hearing revolved around whether to create a cap on how much candidates could pay themselves.

Most panelists favored a uniform salary cap for all candidates, with some former candidates pointing out that every dollar spent on their own salary was a dollar the candidate could not put toward their own election. 

“Candidates don’t run for office because they want to take a salary, they run for office because they want to serve their constituents,” former congressional candidate Liuba Grechen Shirley, the founder and CEO of the Vote Mama Foundation, said.

In 2018, Grechen Shirley successfully petitioned the FEC to approve the use of campaign funds on childcare expenses directly related to campaign activities. 

Federal candidates reported using campaign funds to cover over $280,000 in childcare expenses during the 2022 midterm election cycle, a 17% increase from the 2020 election cycle, OpenSecrets recently reported.

The commission discussed the “arbitrary” nature of deciding a new salary cap, and what the “fair market value” of a federal candidate is. Most panelists signaled their support for setting the salary cap to the minimum salary paid to the officeholder holding the office that the candidate seeks, although Dickerson challenged the notion that the market value of a candidate is the same as the value of a member of Congress.

“I really do feel that it leads to a degree of unfairness because an essential worker who worked all through the pandemic but made a lower salary, I don’t think should be treated differently than a lawyer or a stock broker,” said Laurence Gold of The American Federation of Labor and Congress of Industrial Organizations, the largest federation of unions in the U.S. 

Several panelists also requested an updated federal regulation to allow candidates to start receiving compensation on the first day of their campaigns. They also asked to allow election winners to continue receiving compensation until they are sworn into office and prohibit further compensation once a candidate loses or withdraws from a race. 

Currently, federal candidates can begin drawing a salary from their campaign when the filing deadline for primary election ballot passes, or by Jan. 1 of each election year in states without primaries. Individuals must stop receiving compensation when they cease being a candidate.  

“I was unable to pay myself a salary for well over a year until the primary ballot qualification deadline on March 6, 2020,”  Islam wrote in her petition. “This only gave me two months to receive a salary from campaign funds before the Primary election—it was too little, too late by then. I ran for Congress in the middle of a pandemic without a salary or health insurance.”

Frost, the first Generation Z member of Congress, also left his job as the national organizing director at the gun violence prevention group March for Our Lives to run for office. His savings ran out sooner than expected and he took on personal debt during his campaign since he was not eligible to draw a salary until June 2022 despite declaring his candidacy in August 2021. After the debt impacted his credit score, Frost was denied an apartment he applied to rent when he first moved to Washington, D.C. Frost said during the hearing he was on track to pay back his debts now that he is a member of Congress.

“I did overcome the odds, but there are often consequences when you participate in a system that’s not set up for you,” Frost said.

Five of the six former congressional candidates who appeared on the panel were Democrats. The sixth, Matthew Hoh, ran as a Green Party candidate in North Carolina’s 2022 U.S. Senate race. All six former candidates voiced support for raising the salary cap and expanding the time frame for when candidates can begin collecting salaries from their campaigns.

The FEC also appeared split among party lines, with the two Republican commissioners in attendance expressing hesitance to support expanding the salary cap. A third Republican commissioner, Vice Chair Sean Cooksey, is on paternity leave.

Nonetheless, the National Republican Congressional Committee came out in support of two proposals to allow candidates to earn a salary on par with the federal minimum wage in lieu of their previous income, arguing this approach “offers needed flexibility and ensures that compensation is available to candidates from an array of financial backgrounds.”

The NRCC also supports standardizing the time frame that candidates can receive a salary to “as early as the first day of their campaigns.”

Non-salary benefits and compensation under consideration

The commission also considered three alternative definitions of candidate compensation that would include non-salary benefits like health care. In her petition, Islam wrote that she had to cancel her health insurance during the campaign “because the premiums were too expensive.”

The FEC previously ruled on non-salary compensation on a case-by-case basis. To determine if an expense is allowed, the commission considers whether the expense would exist irrespective of the individual’s candidacy, known as the “irrespective” test

In 2016, the FEC ruled that reimbursing a candidate’s health insurance premiums with campaign funds was prohibited. But in a comment to the FEC, the American Federation of Labor and Congress of Industrial Organizations argued that most Americans receive health care through employment, and therefore would have coverage if they were not running for office.

One definition of compensation the commission is considering would greenlight using campaign funds to cover both direct payment to the candidate and any benefits that the campaign provides to its staff, including health insurance premiums and dependent care costs. Most of the panelists who weighed in supported this definition.

Other definitions would give candidates more freedom to take advantage of benefits that their campaigns don’t provide for staff. Currently, candidates can spend an unlimited amount on the candidate’s dependent care costs that are a direct result of campaign activity. 

Ahead of the hearing, the FEC wrote that it is considering whether these expenses should be included under the cap on candidate compensation, subject to a separate cap or not capped at all.

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