No limits: Political action committees pump millions into state elections

The Media School Report • Dec. 7, 2016

By Kendall Gilbert, Anne Halliwell and Katherine MacDonell

The influence of political action committees in Indiana politics in recent years readily can be spotted in the state’s campaign finance database. The largest single contribution, in fact, is from a PAC, the Republic Governors Association Ohio, or RGA Ohio PAC. The organization made a $1 million gift to Mike Pence during his campaign for governor in 2012.

RGA Ohio PAC is one of hundreds of PACs that have contributed more than $51 million to Indiana political campaigns between 2010 and 2015, according to the state’s database. Before 2010, the state did not track the type of contributors, and irregularities in the data make it impractical to assess the full extent of PAC activity in the nearly $1 billion worth of campaign contributions since 2000.

The difficulty in following the money is one reason why Indiana earned a grade of F in the Center for Public Integrity’s State Integrity analysis in 2015. Under the state’s loose regulatory environment for campaign finance, there are few restrictions for political actions committees.

Often organized around ideological, business or labor interests, political action committees collect money from donors or members of a group and then contribute those funds to political campaigns. RGA Ohio PAC, for instance, was formed with the goal of electing Republican candidates to governors’ offices throughout the U.S. On the other hand, the International Brotherhood of Teamsters’ DRIVE Committee is a frequent contributor to Democratic campaigns.

While corporations and labor unions must follow strict contribution limits in Indiana, PACs have no such restrictions. They must keep their contributions separate from those of any individuals or related corporations that are also contributing money to political committees, but beyond that, PACs are allowed to make unlimited political contributions.

One result of that is that corporations and unions can and frequently do create and use PACs to extend their influence on political campaigns. Corporate- and labor-based organizations make up some of the biggest PAC donors.

The amount of PAC money contributed to state races has increased steadily over the years. According to OpenSecrets’ state summaries, PACs contributed about $1 million to Indiana campaigns in 2000, but that figured had nearly doubled by the 2004 election cycle, and by 2010, PACs contributed nearly $4.6 million to state races.

According to OpenSecrets, RGA Ohio PAC gave more than $9 million to Republican and conservative politicians in 2012. In addition to the $1 million donation to Pence, it gave another $100,000 in cash that year. It also provided Pence with $19,000 worth of in-kind contributions – for “research services” – in 2011.

The Center for Public Integrity has pointed to RGA Ohio PAC as illustrating a regulatory loophole for corporate contributions. The PAC accepts donations from corporations, but according to the CPI, there is no record to indicate whether or not the Pence donations come from money given by those corporate donors. The Republican Governors Association did not respond to a request for comment on this story.

Corporate PACs

Passing money through a PAC like RGA Ohio PAC is just one way corporations can get around Indiana’s corporate giving limits. Companies can also create their own PACs. Industries such as health care are well-represented among PAC contributors to Indiana campaigns.

Indianapolis-based pharmaceutical firm Eli Lilly & Co., for example, has a political action committee, Eli Lilly & Co. PAC, that has contributed a total of $314,800 from 2010 through 2015. About two-thirds of that amount has gone to Republican candidates for state offices.

Efforts to contact Lilly officials were unsuccessful, but the company addresses its political activity in annual reports on its website. The 2011 report says the PAC is funded through “voluntary eligible employee participation.” The report also specifies the questions Lilly considers in choosing candidates to support:

  • Has the candidate historically voted or announced positions on issues of importance to Lilly, such as pharmaceutical innovation and health care?
  • Has the candidate demonstrated leadership on key committees of importance to our business?
  • Does the candidate demonstrate potential for legislative leadership?
  • Is the candidate dedicated to improving the relationship between business and government?
  • Does the candidate represent a state or district where Lilly operates a facility or has a large concentration of employees or retirees?
  • Would Lilly support have an impact on his or her campaign?

Sheila Krumholz, executive director of the Washington, D.C.-based Center for Responsive Politics, said corporations use PACs to secure public officials’ seats in power in return for policies that help advance their business interests. And in Indiana, the lack of restrictions on PACs provide a clear path for those efforts.

Union PACs

Corporations are not alone in using PACs in that way. Labor unions must follow the same rules as corporations in Indiana, with a direct contribution cap of $22,000, but they can also create PACs that can make unlimited contributions.

The Democrat, Republican, Independent Voter Education (DRIVE) Committee is the PAC for the International Brotherhood of Teamsters, a multi-occupation labor union. DRIVE contributed more than $1.2 million to the Democratic Legislative Campaign Committee from 2010 through 2015. Other major union PAC contributors during that time period include the International Union of Operating Engineers Engineers Political Education Committee, $250,000; the National United Auto Workers PAC, $650,000; the UAW V Cap, $450,000; and the UA Local 157 Political Action Fund contributed, about $240,000.

The Northern Indiana Operators Joint Labor Management PAC is another major PAC that regularly contributes to Indiana’s political campaigns, giving more than half a million dollars to state candidates since 2010, including $150,000 to Democratic gubernatorial candidate John Gregg last year.

Executive Director Marc Paulos declined to comment for this story, but on his LinkedIn profile he describes the organization as a “fund that provides education, outreach and contributions to state and local officials who support labor-management initiatives.” The PAC has contributed to various lawmakers who did not vote for Indiana’s right-to-work law that was passed in 2012.

The Indiana Professional Firefighters PAC is another union-related PAC involved in political financing, about $50,000 last year at the state level. It is affiliated with the Professional Firefighters Union of Indiana. Union President Tom Hanify, a 35-year veteran of the Indianapolis Fire Department, said there are two reasons firefighters involve themselves financially in politics.

“Number one is for our safety on the job,” he said. “Second, so we have the means to raise our families.”

PACs in the policy arena

Education policy has been a prominent battleground for political action committees. The Indiana State Teachers Association attempts to influence policy through its Indiana Political Action Committee for Education, or I-PACE. According to its website, I-PACE contributes to campaigns to assist “candidates, political parties, and committees who are favorable to education issues as determined by ISTA Representative Assembly resolutions and legislative priorities.”

According to ISTA, I-PACE’s political involvement has “strengthened educators’ voices” and together they have “defeated bills which would have allowed administrators to pay certain teachers more at the expense of the majority of others.”

I-PACE is a regular backer of Democratic politicians. In 2015 alone, it contributed more than $350,000 to Gregg and to Superintendent of Public Instruction Glenda Ritz.

On the other side of the field is the Hoosiers for Quality Education Political Action Committee, which has been contributing to political campaigns since 2008. President and CEO Betsy Wiley said in an email that the PAC supports candidates based on the policies they support, rather than party loyalty. In 2015, however, its contributions went largely to Republican candidates such as House Speaker Brian Bosma.

“HQE’s focus as an organization is to advocate for and support policies which provide every Indiana student the access to the educational environment (traditional public school, charter school, private school etc.) that best meets his or her individual learning needs regardless of where they live, what their family income is or any other fact,” Wiley said.

I-PACE and HQE did battle most recently in this year’s race for Superintendent of Public Instruction. I-PACE supported incumbent Democrat Glenda Ritz with $161,000 in donations in 2016 alone. HQE supported Republican Jennifer McCormick with $130,000. McCormick won the election.

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