FINAL ADVISORY OPINION 97-04

Nonforfeitable, vested employee and fringe benefits are reportable as "compensation" and as "expenditures" under the lobby disclosure statute.

"X" corporation hires "L" lobbyist as an employee and pays L a salary of $30,000. X also pays L an employee benefit in the form of a retirement fund contribution made by X on behalf of L which equals 10% of L's income. X and L must report the retirement fund contribution as a lobbying expenditure / compensation, to the extent it is vested, at the time of vesting. Any changes in value after disclosure which are attributable to the amounts already disclosed are not amounts related to lobbying expenditure s / compensation, because the receipt by L of those changes in value in no way depends upon L's providing a lobbying service to X, since those benefits are already vested. Only changes in value which occur prior to disclosure / vesting are considered to be compensation / expenditures made for lobbying.

"X" corporation hires "L" lobbyist as an employee and provides L with the fringe benefit of a company car. The annual value of the car is $5,000. X and L must report the value of the car as a lobbying expenditure / compensation.

"L" lobbyist participates in "X" corporation's employee stock ownership program (ESOP). L, an employee of X, gets a certain amount of stock options, based on years of service, and subject to a certain vesting schedule. L and X must report the value of L 's stock options, to the extent they become vested, as lobbying expenses.

"L" lobbyist, an employee of "X" corporation, participates in X's 401(k) program. L has obained a loan in the amount of $50,000 against the vested balance of his 401(k). This vested balance represents the amount contributed by L and also the matching am ount contributed by X on behalf of L. X and L need not report the amount of the loan which is taken against the contributions made by X as a lobbying expenditure / compensation, because the vested portion was presumably already reported at the time of ve sting.

I.C. 2-7-1-10 defines a "lobbyist" as any person who "receives or expends an aggregate of five hundred ($500) in compensation or expenditures" for lobbying. "Compensation" is defined as "anything of value." I.C. 2-7-1-2. "Expenditure" is defined also as "anything of value." To the extent an employee benefit or fringe benefit has an aggregate value in excess of $500, and is not forfeitable upon termination of the employee, it is reportable under the statute.

Certain exemptions exist under the statute. The exclusion of an "insurance policy" from the statute (I.C. 2-7-2-6(g)(1)) was promulgated when questions arose as to whether a lobbyist who does business with a member of the general assembly must report the purchase of an insurance policy when the policy was acquired in the ordinary course of business. However, an insurance policy which serves as part of a lobbyist's compensation package is not what was contemplated by the legislature when it drafted this exemption.

However, employer-provided group life, health, disability and other insurance policies which are contingient upon employment and are forfeitable upon termination are not reportable as lobbying expenditures / compensation because they do not belong to the employee/lobbyist, are not generally considered to be employment income in other areas of law, and are difficult to value because of the nature of the group benefit.

Nonvested retirement funds are not reportable as a lobbying expenditure / compensation because "payment" defined as "a rendering of money . . . or anything else of value . . whether tangible or intangible . . . ." I.C. 2-7-1-11. An unvested, forfeitable amount has no value to the employee / lobbyist until it vests. Upon vesting, the value of the fund at the time of vesting is the amount to be reported as the lobbying expenditure / compensation. Any changes in valuation which occur after such time are not expenditures / compensation made in anticipation of lobbying, but are a result of the employee / lobbyist's decision to remain with the employer and, thus, to leave the value of the assets in the plan fund.

The employee and fringe benefits discussed are not "overhead" costs or other costs enumerated in Ind.Code 2-7-3-3(c)(1) - (5). This portion of the statute, which lists certain expenditures as exemptions under the disclosure statute, was promulgated into law by P.L.3-1992, Section 12. As a result, a certain portion of Attorney General Opinion 90-23 was rendered void. That AG Opinion stated that the items enumerated by P.L.3-1992, Section 12 were reportable as lobbying expenditures / compensation. AG Op inion 90-23 did not contemplate vested, nonforfeitable employee and fringe benefits. The statutory changes do not reflect an express exclusion of such.

The object of statutory construction is to determine, give effect to, and implement the intent of the legislature. Indiana Family and Social Services Administration v. Petricia Day, 1997 WL 346387 (Ind. 1997). Unless the legislature expressly excludes n onforfeitable, vested employee and fringe benefits as a lobbying expenditure / compensation, it is considered a reportable expense.

The Commission recognizes some of the practical difficulties associated with valuing such benefits, and advises that lobbyists make a good faith effort to accurately value the total compensation being paid in the form of employee benefits.