Iowa Republican Sen. Joni Ernst is running for reelection in what will likely be one of the nation’s most closely watched Senate contests this year. But her campaign has shielded a key bit of financial information from voters and the public: who she’s paying to run her re-election effort, and how much.
Through a subtle accounting maneuver, Ernst’s campaign has for months avoided reporting the names of the campaign staffers on her payroll, how many of those staffers there are, and the extent of payments they’ve received. Instead, the campaign appears to have grouped all of its employees together in large lump-sum payments to a staffing and human resources company it uses to administer its payroll.
It’s an arrangement that campaign finance experts say may have violated the spirit, and possibly the letter, of Federal Election Commission rules on the disclosure of payments to campaign staffers. The Ernst campaign disagrees, saying it fully complied with disclosure requirements, even as other Senate campaigns that employ the same payroll management firm have disclosed far more about the sums steered to their individual staffers.
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The campaign nevertheless told PAY DIRT on Thursday that it would amend FEC reports for the last three quarters to clearly spell out which of its staffers had been paid, and how much they’d received.
“I advised the campaign that the way they currently report the employment costs is in accordance with FEC requirements,” wrote Ron Jacobs, a partner at the law firm Venable and the campaign’s attorney, in an emailed statement. “The campaign has decided, out of an abundance of transparency, to amend the reports.”
Ernst’s campaign initially had disclosed names of individuals on its payroll. But it shifted its reporting practices to a more opaque system last year. The shift happened to occur just as a new dark money group ramped up to support her reelection bid. Ernst has drawn scrutiny over her work with political consultants who are simultaneously aiding that group, with which the campaign is restricted from coordinating.
It’s arrangements like that, experts say, that show the need for detailed reporting of the staffers on a campaign’s payroll. Without it, they say, the public has no way of knowing if a campaign is employing someone whose identity might be of public interest—say a family member or a business associate—or who also happens to have worked with allied groups with which the campaign is legally restricted from coordinating.
“They can’t do that,” Brendan Fischer, the director of Federal and FEC reforms at the Campaign Legal Center, a nonpartisan ethics group, said of the payroll non-disclosure setup that the Ernst campaign is now ditching. “I don’t think I’ve ever seen a campaign stop reporting any payments to individual staffers, and instead just report lump-sum payments to a payroll company.”
When Ernst’s 2020 reelection campaign kicked off, it listed three senior staffers on its payroll in quarterly FEC reports. In the first half of 2019, the campaign reported paying a total of $97,000 to its campaign manager, its political director, and its digital director. But for the first and second quarters of the year, those expenditures were merely itemized as “payroll” in FEC reports.
In the third quarter, and in every periodic FEC report since then, “payroll” expenditures disappeared completely. At the same time, payments to Insperity, a payroll and benefits management service used by a handful of federal political campaigns, shot up. In the first half of 2019, the Ernst campaign paid Insperity a quarterly average of just over $8,000. In the subsequent three quarters, as its payroll expenditures disappeared, that average was more than $131,000.
The shift came as the campaign entered into a co-employment agreement with Insperity, according to a source familiar with the arrangement. Under such an agreement, according to Insperity, the company typically manages human resources details such as payroll, tax reporting, and benefits, while operational employment decisions remain with its client, in this case the Ernst campaign.
The campaign’s position was that the arrangement precluded the need for an itemized breakdown of its staffers and the campaign committee’s payments to them.
Fischer was skeptical, and said FEC rules still require itemized reporting under such an agreement.
“Ernst staffers work for the campaign, not Insperity; a national HR services company is not controlling or directing the activities of Ernst campaign staff,” Fischer said. “And presumably, not only is the Ernst campaign (rather than Insperity) setting the salaries for its staffers, all of the money used to pay the campaign staffers' salaries is coming from Ernst campaign funds, not Insperity funds.”
The FEC has a page on its website dedicated to reporting requirements for campaigns that use payroll companies like Insperity. According to that page, campaigns must both disclose the lump-sum payments to those companies and “itemize the ultimate recipients of the salary payments.”
Other Senate campaigns appear to have hewed more closely to that guidance. Sen. Martha McSally’s (R-AZ) reelection campaign, for instance, pays Insperity for payroll services that appear similar to the services it’s provided to the Ernst campaign. But unlike Ernst’s campaign, McSally’s has disclosed both those Insperity payments and itemized breakdowns of how much each campaign staffer received as part of those lump-sum payments.
To underscore the importance of that more detailed reporting structure, Fischer pointed to recent controversy over a dark money group called Iowa Values that is supporting Ernst’s reelection bid. Iowa Values was co-founded by one of Ernst’s fundraising consultants and a longtime adviser who works for the firm Jamestown Associates, which received nearly $100,000 in consulting fees from the Ernst campaign last year.
In July 2019, the fundraising consultant, Claire Holloway Avella, hit up a donor for a $50,000 contribution to Iowa Values, according to emails reported by the Associated Press in December. The emails indicated that Ernst herself had introduced Halloway Avella to the donor.
An Ernst campaign spokesperson told the AP at the time that it was “completely separate and independent from any outside organization,” and that it “has and always will act in full compliance with and in the spirit of the law.”
The fundraising email mentioned in that AP report, as well as a strategy memo detailing Iowa Values’ plans, came near the beginning of the third quarter of 2019, the first reporting period for which the campaign initially declined to itemize its payroll expenditures. Neither of the Ernst consultants who are known to be involved with Iowa Values would have appeared in the campaign’s list of payroll expenditures anyway, as both are contractors for the campaign. And indeed, the campaign reported paying consulting fees to both even as its agreement with Insperity shielded details about its payments to full-time staffers.
But Fischer said the controversy over Iowa Values nonetheless shows why more detailed reporting of payments to staffers is important. “The Ernst campaign is obscuring who it is paying and when,” he said, “which makes it harder to detect if staffers are simultaneously working for the campaign's dark money arm.”
