Rules Lax as Lawmakers Retire Flush With Funds

After a quarter century in the California Legislature, state Sen. William A. Craven will leave office late this year with more than memories and a political legacy. He’ll also depart with a heap of campaign cash--more than $290,000, all told.

Craven, an avuncular Republican from Oceanside, is hardly alone. Nearly a dozen state lawmakers have decided to forgo another run for political office in 1998, and many are poised to slide into retirement with hefty war chests left over from campaigns past.

State Sen. Ken Maddy, a Fresno Republican, has $425,000 in the kitty. Sen. Quentin L. Kopp, a San Francisco independent, is headed out with nearly $250,000 still in the bank.

Some, like Craven, vow they’ll give the money to charity. Others plan to hand it off to political allies. A few are holding on to the cash for possible future bids for public office.

Those plans are a far cry from the situation a few decades ago, when retiring California lawmakers put more gold into their golden years by rolling excess campaign money into their private bank accounts.

But political reformers still see problems. Though the flagrant abuses of the past are no more, some legislative watchdogs argue that the rules remain too lax and that oversight of political funds kept by outgoing lawmakers is virtually nonexistent. Meanwhile, more and more lawmakers head for the turnstiles because of term limits.

“There’s still room for abuse,” said Robert M. Stern, co-director of the Center for Governmental Studies, a Los Angeles nonprofit research group. “Nobody really watches how our lawmakers use their campaign money after they leave office.”

Under current law, state politicians have no deadline for disposing of their campaign leftovers after leaving office. They can give it to charity, spend it on ballot initiatives or give it to candidates for federal office or those running in other states.

They can even spend up to $5,000 on a security system for home or office if they’ve received threats from angry constituents. There are also virtually no checks on what becomes of the campaign infrastructure--fax machines, computers, copying machines--that a lawmaker acquires after years of election fights.

“Right now, they could easily take a computer or nice fax machine into their home for private use,” noted Steven Churchwell, general counsel at the state Fair Political Practices Commission. “That’s a shortcoming in the law and something we’re going to look at correcting with a regulation.”

Before leaving office, politicians are free to act as political warlords in their final days, dispensing big checks to allies girding for election battles. Maddy, for instance, says he’ll give a hefty chunk of his money to the gubernatorial campaign of Republican Dan Lungren, the state’s attorney general.

“I’ve got some charitable things I’m going to do, but I feel that most of the people gave me this money to use for a political purpose,” said Maddy, who raised much of the cash during his long tenure as GOP Senate leader. “This seems the most apropos way.”

The senator says he expects nothing in return, but that sort of giving can create perception problems in the cozy confines of the Capitol.

It is not unusual for a governor to name big campaign donors to high-salaried jobs in the administration, a judicial appointment or a paying position on a state commission. Big campaign gifts can also add to the appearance of conflict for retiring lawmakers who join the state’s huge corps of lobbyists, which sets the agenda for much of the business in the Capitol.

“There is always a concern that retiring legislators who donate to constitutional officers will be fondly remembered,” said Jim Knox, executive director of California Common Cause, a political watchdog group. “We have the potential for all types of abuses.”

Not all reformers agree. Daniel H. Lowenstein, a UCLA law professor who helped craft California’s post-Watergate political reforms in 1974, doesn’t see anything particularly odious about the practice, suggesting it’s part of politics as usual.

“Someone like Ken Maddy doesn’t need to give away funds to earn acceptance in Sacramento,” Lowenstein said. “Why should politicians trying to influence one another financially be regarded any differently than politicians offering support in other ways?”

Kopp, meanwhile, sees room for improvement in the current rules.

He thinks there should be more oversight of how former lawmakers spend the campaign cash they carry into private life. He suggests a year or two is plenty of time to disburse the cash. And he believes lawmakers should not be allowed to transfer campaign money to political friends.

But such declarations aren’t keeping Kopp from spending his own campaign money on politics. Or from raising more of it.

He plans to use most of his campaign nest egg in the next few years to sponsor a statewide initiative intended to reform the state’s balky budget process. He might also spend some on a trio of municipal ballot measures he’s got going in San Francisco.

And to keep the machinery lubricated, he’s planning a $500-a-head fund-raiser at Sacramento’s swank Sutter Club in March. “I fully intend to continue fund-raising,” he said.

That’s not unusual for California’s retiring lawmakers. Assemblywoman Valerie Brown, a Kenwood Democrat, plans to hold fund-raisers this year even though she’s retiring. Much of the money will go to finance other Democrats, including a campaign being waged for Brown’s own seat by her chief of staff.

Anything left, Brown said, will be given to a battered women’s shelter and an educational foundation in her district.

California’s rules on surplus campaign cash have evolved over the last two decades. In the old days, lawmakers could put the cash into a private bank account as long as they paid taxes on it.

“It was regarded as something that was fairly commonly done,” Lowenstein said. “It was just an accepted practice. Contributors who gave the money were aware it was a possibility.”

But in those days, the stakes were much smaller and few lawmakers left with much. That was hardly the case in Congress, where leaders routinely left with sums upward of $1 million before the practice was outlawed in 1993, a factor that contributed to a historic number of federal lawmakers retiring that year.

California’s current statutes were laid down in 1989 in the aftermath of an FBI sting operation that landed several legislators in jail on political corruption charges.

The law was toughened further with voter approval in 1996 of Proposition 208, a campaign reform initiative. Under 208, leftover campaign cash had to be dispensed within 90 days after leaving office, either by returning it to contributors, giving it to a political party or placing it in the state general fund. It also restricted lawmakers from giving any surplus to political allies.

But to the dismay of reformers, the new law was declared unconstitutional in January by a federal judge. While that decision is being appealed, California lawmakers are operating under the previous rules.

Assemblyman Bernie Richter (R-Chico) has about $93,000 in campaign cash, though he expects to end up with $40,000 once he’s paid back outstanding loans.

The remaining campaign money, Richter said, will likely go to legislative candidates of like mind--his son-in-law, for instance, is running for Richter’s Assembly seat. It also could bankroll a Senate run that Richter might consider in the future.

One place he won’t put the money is charity, saying that that just isn’t the purpose his donors envisioned. “I can’t imagine any colleague who has a sense of where we still have to go in this state turning around and giving it to charity instead of continuing to fight the battle,” Richter said.

But many do make charity the prime beneficiary.

Former state Sen. Robert Beverly, a Long Beach Republican who left office in 1996 after nearly 30 years in the Legislature, departed with more than $67,000 in his campaign coffers. In 1997, he began sprinkling the money to a variety of charities: $1,000 to Pepperdine University, $100 to a museum, $100 to Friends of the Cabrillo Aquarium, $200 to the Armenian National Committee.

Craven will likely follow a similar course, according to Scott Johnson, his chief of staff. Johnson said the senator, who has missed most of this year’s legislative session because of illness, “has always been close to higher education” and might donate money to the budding California State University in San Marcos. No final decision has been made, he said.

Also contributing to this report was Times staff writer Max Vanzi.

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Into the Sunset

The following lawmakers are retiring from the state Legislature later this year, and some have lots of leftover campaign cash:

Sen. Ruben S. Ayala (D-Chino): $40,893

Assemblyman Larry Bowler (R-Elk Grove): $2,175

Assemblywoman Valerie Brown (D-Kenwood): $50,544

Sen. William A. Craven (R-Oceanside): $291,585

Sen. Ralph C. Dills (D-El Segundo): $14,905

Sen. Leroy Greene (D-Carmichael): $11,988

Sen. Quentin L. Kopp (I-San Francisco): $249,163

Sen. Ken Maddy (R-Fresno): $424,677

Sen. Herschel Rosenthal (D-Los Angeles): $31,287

Assemblyman Bernie Richter (R-Chico): $93,963

Assemblyman Nao Takasugi (R-Oxnard): $50,878

Sen. Diane Watson (D-Los Angeles): $805

All figures are for reporting period ending Dec. 31, 1997

Shedding the Surplus

State lawmakers who have retired with leftover campaign cash currently have several ways to spend it:

* Repay original donors on a pro rata basis

* Donate money to a bona fide charitable, educational, civic, religious or similar tax-exempt nonprofit organization

* Contribute to a political party or organization as long as the money is spent on operations, not campaigns

* Contribute to ballot measures or to candidates for federal office or those running in a state other than California

* Spend up to $5,000 on a home or office security system if they have received threats of physical harm arising from their stay in office

Under Proposition 208, the 1996 campaign finance reform measure declared unconstitutional in January, lawmakers had to get rid of money within 90 days of leaving office and had fewer options:

* Repay donors on a pro rata basis

* Distribute leftover funds to a political party

* Turn the money over to the state general fund

Source: Secretary of state; Researched by ERIC BAILEY / Los Angeles Times