Trust fund grants drop 44 percent in two years
The Legal Services Trust Fund Program annually distributes grants to a variety
of programs that assist impoverished Californians who often have nowhere else
to turn for legal help. But due to low interest rates in a sluggish economy,
the program has seen its distributions plummet 44 percent from $13.5
million to $7.5 million in just two years.
Program director Judy Garlow sees no signs of a turnaround.
"It's a little early to predict what grants will be next year," said Garlow.
"But given the continuing decline in interest rates, I think it's likely they'll
be down a little more."
California's IOLTA (Interest on Lawyers' Trust Accounts) program pools funds
held briefly in trust by attorneys for their clients and then distributes the
earned interest in grants to legal services programs. Other states have similar
programs.
Just this spring, legal services providers nationwide got some good news when
the U.S. Supreme Court in Brown v. Legal Foundation of Washington
narrowly rejected a constitutional challenge to the way in which the state IOLTA
programs collect and distribute funding. Last year alone, legal services providers
across the country received some $160 million in IOLTA funding.
In California this year, 99 legal services providers and statewide support
centers received IOLTA grants in amounts ranging from roughly $3,000 to $669,000
each. The support centers, 23 in all, receive 15 percent of the pot and the
remaining funds are split up among counties based on a formula. The formula
takes into account the number of poor residents in each county and the size
of the particular legal services organization.
Since its creation two decades ago, California's IOLTA program has distributed
some $250 million. The grants, which fluctuate with interest rates, hit a high
of $22.7 million in 1992. In recent years, some legal services programs have
lost hundreds of thousands of dollars in IOLTA grant money due to the shrinking
fund. At the same time, such grants continue to be seen as a particularly important
source of steady funding that, unlike restricted grants earmarked for special
programs, can help fill gaps in operating expenses as well as basic legal services.
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