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Two audits give bar clean bill of health

Two audits concluded this spring that the State Bar spends its resources properly and operates on solid ground, but warned that the bar will sink rapidly into deficit spending unless membership fees are increased.

“We have received a clean bill of health from both our financial auditors, Deloitte & Touche, and from the State Auditor General,” who is required to conduct an operations audit every two years, said State Bar President John Van de Kamp.

Both audits, however, noted that the bar, which has not increased its member fees for five years, faces looming deficits.

The current fee of $390 per year for active members is $88 lower than the $478 fee for actives in the mid- to late-1990s. California, which has the most advanced discipline system with the only professional State Bar Court in the U.S., once had the highest fees nationwide. Now, Van de Kamp said, California ranks 12th among state bars in fees charged and employs 200 fewer staff members than in the ’90s, even though its total membership has passed 200,000.

Without a fee increase, concluded Deloitte & Touche, the bar’s general fund will “incur an operating deficit of approximately $2.7 million by the end of 2006.” The State Auditor General affirmed the State Bar’s own forecast that, with normal cost-of-living increases, the bar will “sink into a deficit of $13.8 million by the end of 2008 unless revenues from membership fees increase.”

Both Van de Kamp and President-elect James O. Heiting have pledged their efforts to keep the bar from falling into major deficit spending.

The State Auditor found little to note in the biannual operations audit, focusing mostly on the collection of fees from disciplined attorneys, including new legislation that will enable the bar to improve its recovery rate, and staff development of a checklist for discipline case files.

Board member Rod McLeod, a frequent critic of bar operations, told his colleagues at the May board meeting: “If all the auditor can find was a checklist, then we have performed our mission reasonably well.”

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