This Slate article has a decent summary:

Candidates like John McCain who participate in public financing must not accept private donations, spend more than $50,000 of their personal wealth, or exceed a government-specified spending cap—$84.1 million this season. ... It's OK to solicit private donations to help defray the cost of following the rules—like reporting where the campaign spends its money. Back in 2004, George W. Bush raised $12.2 million for his compliance fund while John Kerry hauled in $8.9 million. (There is no cap on total compliance spending during the general election.) ... Historically, compliance funds were used primarily for legal and accounting services. But after the 2004 season, the Kerry-Edwards campaign requested an advisory opinion from the FEC on whether they could use excess compliance donations to pay off debts incurred from TV advertising. In 2007, the FEC held that since campaigns must tag disclaimers onto the end of any ad ("I'm John McCain, and I approve this message"), they could use compliance funds to pay for up to 5 percent of broadcast advertising. ... If a campaign diverts compliance funds improperly (by using such funds to pay for more than 5 percent of a TV ad, say), then the FEC can impose a monetary penalty or get the Justice Department on the case. For much of the past year, however, the FEC lacked a quorum, which means they have a long case backlog and won't be very sprightly when it comes to enforcement.