Editor's note: This story has been updated throughout.
Former Texas Gov. Rick Perry's presidential campaign is no longer paying its staff because fundraising has dried up, while his cash-flush allied super PAC is preparing to expand its political operation to compensate for the campaign's shortcomings, campaign and super PAC officials and other Republicans familiar with the operation said late Monday.
Perry, who has struggled to gain traction in his second presidential run, has stopped paying his staff at the national headquarters in Austin as well as in the early caucus and primary states of Iowa, New Hampshire and South Carolina, according to a Republican familiar with the Perry campaign who demanded anonymity because of the sensitivity of the situation.
Perry campaign manager Jeff Miller told staff last Friday, the day after the first Republican presidential debate, that they would no longer be paid and are free to look for other jobs — and, so far at least, most aides have stuck with Perry — according to this Republican.
"As the campaign moves along, tough decisions have to be made in respect to both monetary and time related resources," Miller said in a statement. "Governor Perry remains committed to competing in the early states and will continue to have a strong presence in Iowa, New Hampshire and South Carolina."
Katon Dawson, Perry's South Carolina campaign chairman and head of a six-person staff there, said, "Money is extremely tight. We all moved to volunteer status." But, he added, "Our team is working as hard as it was last week."
News that Perry campaign had stopped paying its staff in South Carolina was first reported late Monday afternoon by the National Journal. News that the campaign was not paying any staff was first reported Monday night by CBS News.
The Perry campaign reported raising $1.14 million in the second quarter of this year and on July 15 reported having $883,913 on hand. The campaign is scaling down its expenditures to bare essentials — commercial plane tickets and hotel rooms for the candidate and an aide or two — and hoping for a breakthrough moment, perhaps in the Sept. 16 debate, that could boost fundraising.
Meanwhile, a group of Opportunity and Freedom super PACs promoting Perry's candidacy — which are in far healthier state financially, having raised nearly $17 million by mid-July — are planning to compensate for the shrinking campaign.
Austin Barbour, senior adviser to the super PAC, said the group would step up "to aggressively support the governor in a number of different ways."
“We’ve got plenty of money," Barbour said. "That’s what I know. And we’re going to put that money to use in Iowa to make sure the governor is in the top three there. The super PAC is not going to let Rick Perry down."
Barbour added, "He’s going to get one breakout performance at a debate and he’ll really jump up in the polls. Voters need to see him perform very well at a debate. ... This is a very fluid field, things will change a lot, and we will continue to be very patient."
The super PACs are legally barred from coordinating with Perry's official campaign. Barbour said he anticipated after the campaign's financial filing last month that the super PACs would need to step up and do some of the responsibilities traditionally handled by campaigns, such as building a ground organization. He said they have begun building an extensive field program in Iowa, where the first-in-the-nation caucuses are critical to Perry's strategy.
“We saw this was coming," Barbour said. "We started working on our own plan. We knew we would have to go build a ground game.”
Perry’s second campaign for president has been hobbled from the start by his weak performance as a candidate four years ago, demonstrating just how difficult it is to make a positive impression after a poor introduction.
Perry joined that race in August 2011 as someone seen as a potentially serious contender for the GOP nomination. He was the long-serving governor of a major state that had led the nation in job creation and his rivals feared his potential. His southern roots and Tea Party appeal made him a candidate feared by his GOP rivals, particularly those in the campaign of Mitt Romney.
Within weeks of announcing, he had risen to the top of the polls. Almost immediately, he began to fall back, his campaign damaged by attacks from Romney and his team as well as a series of poor debate performances.
His campaign took a substantial hit at a Florida debate when he came under attack for a Texas policy allowing children of illegal immigrants to pay in-state tuition at state colleges. Perry accused his critics of not having a heart, but the damage was done.
His worst moment came at a later debate in Michigan when he could not remember all of the federal agencies he had been vowing to eliminate as president. His final word as he admitted he couldn’t recall the names was, “Oops.”
That became the caricature of Perry as a poorly prepared candidate. It was an image he was determined to erase as he looked toward the 2016 campaign. Perry was candid about the mistakes he made in that first campaign and in the intervening time immersed himself in the details of domestic and international policies.
Perry said he believed voters were willing to give him a second chance. During the past two years, as he has traveled the country, he has earned positive reviews from one-time critics, who said they saw in him a more substantial and attractive candidate than in 2012.
But he has lagged in the polls throughout this year, despite those better reviews and improved performance on the campaign trail. Failing to qualify for last week’s debate in Cleveland was a clear setback in his hopes of moving up in the field. He appeared in the undercard debate, but there it was technology executive Carly Fiorina who had what many considered a breakout performance.
Perry now trains his attention on enough support in national polls to assure a spot on the main stage at the debate at the Ronald Reagan Presidential Library next month.
Perry aides said he hopes to continue raising money and is committed to a strong performance in the early contests next year. Perry is planning to campaign in South Carolina on Thursday and to visit Iowa next week.
News of Perry's money woes has surprised people in his political circle. In the 2012 campaign, Perry was a fundraising leader, bringing in $17 million to his campaign in a single quarter.
"Nobody talked about money being a problem,” said one former Perry appointee and longtime ally.
Perry's troubles are reminiscent of Sen. John McCain's collapse in the summer of 2007, though he rebounded and won the GOP's 2008 nomination.
"I experienced this firsthand starting at the McCain campaign, a few weeks prior to what became a mass exodus and downsizing because of fundraising," said Brian Haley, deputy national finance director on McCain's 2008 campaign. "It wasn’t the end of the campaign. It was traumatic when it happened, but we all recommitted when it occurred and took it to win the nomination."
Haley added, "In today’s world, with varying political committees supporting the candidate, there does seem to be an opportunity for campaigns to shift costs. So I’m curious how the Perry organization decides to do that.”