On behalf of the members of the Board of Ethics, I am proud to submit this report regarding the Board’s Fiscal Year 2023 accomplishments. As explained below, FY2023 was an extraordinary year for the Board and the energy, level of output and enthusiasm of the Board and its small staff and the quality of their work again enabled the Board to tackle its challenging mandate to administer and enforce the City’s Public Integrity Laws. These laws include the Ethics, Campaign Finance, Lobbying, and Financial Disclosure Laws, as well as the Charter restrictions on political activity by City officers and employees. This Annual Report will describe our accomplishments in detail, but I wish to note here several developments during the past year of which the Board is especially proud.

As expected, the 2023 Philadelphia Primary Election was the major focus of the Board’s activities during FY2023.  This was the first primary election since 2015 in which there was no incumbent candidate for Mayor.  At the same time, all City Council seats were on the ballot with many such seats being effectively “open” as several City Council members resigned from their position, some to run for Mayor.  The offices of the three City Commissioners and the Sheriff were also on the ballot.  

Many of these races were very competitive with multiple candidates running for a single spot.  The end result was a “perfect storm” for the Board, tasked with administering the City’s Campaign Finance Law, as FY2023 entailed multiple, high-profile, competitive races; dozens of different candidates; thousands of political donors (including political action committees); and millions of dollars in campaign-related contributions and expenditures.  Also, as with any major election and change in administration, the Board faced a fresh wave of issues regarding its political activity rules and how City officers could participate in these elections and post-employment rules for City employees leaving City office with the onset of a new administration. The Board notes that, while this increased political activity created challenges for the Board and its small staff, the Board believes it reflects positively on the civic engagement of Philadelphia’s citizens (although the voting percentage remained low).

Fortunately, the Board and its staff had anticipated this increased activity and had taken many appropriate steps in the previous years to prepare for it. For example, following amendments to the City’s Campaign Finance Law, in June 2022, the Board began the process of making major revisions to its Regulation No. 1 (Campaign Finance).  The amended regulation (which became effective in FY2023) provided new, significant clarifications regarding how the City’s Campaign Finance Law applied to both political campaigns and contributors.  Similarly, in FY2023 the Board provided a host of new educational resources and training opportunities to further assist members of the regulated community, many of whom never had any involvement in City-related elections before and were completely unfamiliar with the City’s Campaign Finance Law.  

As another example, in FY2023 the Board hired two new attorneys to help restore its office to fuller capacity.  These two new staff members were able to assist current members regarding their tasks and duties and help alleviate the tremendous resource demand that the 2023 Primary Election created.  

The full extent of the Board’s work and the challenges involved with the 2023 Primary Election are described throughout this Annual Report.  The ability of the Board to foresee the challenges involved, carefully plan for them, and effectively address them is a testament to the commitment and work of the Board and its staff.

While the Board’s handling of the 2023 Primary Election certainly represented its most prominent and noteworthy accomplishment in FY2023, I would be remiss if I didn’t mention other key ones.

First, in spite of the activity related to the 2023 Primary Election, Board Staff continued to carry out the multitude of tasks that they perform every year regarding the list of non-campaign finance subjects the Board has jurisdiction over, such as the City's Ethics, Conflicts of Interest, Financial Disclosure, and Lobbying Laws.  These tasks include providing guidance to hundreds of requestors regarding compliance with City law, training hundreds of City officers and employees, and enforcing dozens of potential violations.  In short, the attention paid to the 2023 Primary Election did not compromise the Board’s other core functions. Further information pertaining to the Board’s work and efforts in this regard is included in this Annual Report.

Second, while occurring during the final days of FY2023, an extremely important development of the fiscal year for the Board regards the new, FY2024 budget that was signed by the Mayor in June 2023.  As part of the approved budget, the Board has received additional funds to its Class 100 budget resulting in the Board being able to add new positions to its staff.  These new staff members, regarding which the hiring process has already begun, will assist current staff members with the myriad of tasks, duties and obligations described above. They will also better ensure that the Board is able to continue to provide the high levels (in both quality and quantity) of work that the City has come to expect.

While the Board is grateful for the additional funding, it does not make up for years of flat funding while additional responsibilities were added to the Board's mandate. More funding in future years will be necessary to adequately fund the Board, given its broad and expanding mandate. 

In summary, FY2023 was a remarkable and eventful year for the Board.  We strongly believe that our work this year had a significant and positive impact on municipal governance in the City regarding one its most important and fundamental aspects: its elections.  We look forward, with enthusiasm, to continuing to provide such quality service to the citizens of Philadelphia in the new fiscal year. 

Michael H. Reed, Esq., Chair

City of Philadelphia Board of Ethics

Calendar year 2023 has been an eventful year for the Enforcement Team, which was strengthened by the addition of two new Senior Staff attorneys in 2022 thanks to the restoration of the Board’s budget by the Mayor and City Council as detailed in my message last year.

In his Annual Message, Chair Reed explains why 2023 was a major election year for the City. We anticipated the possibility that third party spending groups might support mayoral candidates. While there are no limits on expenditures by these groups when they operate independently of candidates and their campaigns, if these groups coordinate with a candidate or campaign, expenditures by them to influence the election are in-kind contributions to the campaign that are subject to the City’s contribution limits. In anticipation of potential coordination, we tightened the coordination rules in Board Regulation No. 1 (Campaign Finance) as explained in Chair Reed’s Annual Message.

In addition, Chair Reed and I co-wrote an op-ed that was published in the Philadelphia Inquirer on December 28, 2022 to remind everyone what coordination is and how it makes third party expenditures subject to the contribution limits. We made it clear that the coordination rules would be enforced to prevent circumvention of the City’s contribution limits. The op-ed is consistent with the Board’s broader efforts to advise and train the regulated community, especially during a major election cycle.

During FY2023, Board staff answered 300 substantive requests for advice on campaign finance issues in addition to requests for advice on ethics, lobbying and resign-to-run issues. This compares to 100 substantive requests for advice on campaign finance issues in FY2022.

In addition, Board staff conducted 96 training sessions in FY2023 and provided training on the City’s Public Integrity Laws to over 2,800 people. Training and providing advice are two of the Board’s core functions. We believe that everyone who is subject to the City’s Public Integrity Laws deserves to have access to training and advice to ensure better compliance and to avoid investigations into potential violations.

One investigation into suspected coordination between one mayoral candidate and a 501(c)(4) and a related PAC in FY2023 caused the Board to file a lawsuit in the Philadelphia Court of Common Pleas against those two groups. The suit sought to have the Court enjoin them from spending money to influence the outcome of the mayor’s race because they had already made expenditures far more than the contribution limits. The parties entered into a Stipulation and Order by Agreement, which was approved by the Court on April 24, 2023.

Earlier in FY2023, the Board successfully defended a challenge to the Philadelphia Home Rule Charter’s resign-to-run provision. The Board was represented by the Law Department in a suit that was filed in the Philadelphia Court of Common Pleas. Defending this legal challenge involved a combined effort by General Counsel Staff and Enforcement Staff, working with attorneys in the City Law Department.

Without the restored funding of the Board’s budget and the addition of two new Senior Staff attorneys in 2022 made possible with that restoration, the Board may not have had the capacity to take the steps that it did during this election cycle.

The additional resources that were added to the Board’s budget in the current Fiscal Year will allow the Board to continue to build the Enforcement Team, to give it even more capacity. We will make every effort to ensure that those additional resources are spent as wisely and as efficiently as possible by continuing to build the small, but excellent Enforcement Team. As Chair Reed notes in his Message, the Board appreciates the additional funding in FY2023, but we will need more funds in future years to have sufficient capacity to meet the Board's broadening mandate.

I remain extremely proud of the work that we do in building public confidence in the integrity of City government, through training, advice and enforcement of the City’s Public Integrity Laws.

J. Shane Creamer, Jr., Executive Director

City of Philadelphia Board of Ethics