Bar wars: The budget process

by John McGuckin

The process the Board of Governors uses to approve the State Bar's budget balances carefully the needs of programs to assist California's attorneys with the demands of the mandated functions designed to protect the public. It is important for bar members to understand that the annual budget process is far more businesslike than critics suggest.

Most activities, except for self-supporting programs like IOLTA and the bar exam, are financed through the general fund, which is sustained by membership dues. The board's final approval is only the last step in a year-long process, which begins with the filing of a baseline budget with the legislative analyst 12 months earlier.

The range of dues is set by the legislature, and the bar's budget is subject to scrutiny during the entire legislative process. This year's SB 60 review by the state auditor focuses in part on how the bar spends its money.

The budget process also is subject to intense internal inquiry. As in most businesses, the staff prepares most of the numbers and is responsible for operating within or below the budget. In 1991, the bar's management saved more than $2 million. In 1992-94, further cost-cutting techniques, such as deferred hiring and reduced travel, saved $1.5 million annually.

In 1994, the board undertook a major line-item fiscal review of the operating budget. In eight public hearings, a special budget committee cut $2.5 million and eliminated 23 positions. No part of the organization was exempt from scrutiny, although the board assumed that the many programs and services provided by the bar to our members and the public should be sustained, albeit more efficiently and cost-effectively.

In 1995, the board implemented the recommendations of an independent Discipline Evaluation Committee (DEC), eliminating another 21 positions. The entire Board of Governors also voted to support President Jim Towery's public commitment to a $20 dues reduction in 1997.

Against this background, the board's Administration & Finance Committee turned to the 1996 operating budget. We called in bar managers to respond to questions about particular programs, focusing on each budget increase over $10,000 and each change in full-time employee positions.

The 1996 budget was to be a carry-forward budget which reflected the cost-savings of the discipline re-engineering, the cost of the purchase of a new building in San Francisco and the implementation of the 1995 technology plan designed to facilitate and improve communications and services to members and the public.

The budget also had to reflect the costs of the plebiscite and audit required by SB 60 (Kopp). Although we have sought to implement the legislative mandate as cost-effectively as possible, the fact remains that these costs were imposed on the bar by outside sources.

The only major new program to be funded was the bar's advance onto the Internet, another far-reaching program which will be evaluated in the context of the cost savings to be realized in the future.

The board's determination to realize further savings is perhaps the most important process to carry over into the 1997 budget. Wherever possible, new or expanded programs must be funded at no additional cost to bar members. This scrutiny inevitably will be controversial because many important and successful bar programs are not and cannot be revenue neutral.

Nor are all bar expenditures foreseen. Recently, the bar has been asked by the Supreme Court, the Judicial Council and individual legislators to participate in task forces, hearings, study groups and committees addressing the standard of judicial review for arbitration decisions, the level of state oversight and certification for mediators, cameras in the courtroom and other post-O.J. reforms to the criminal system, a proposed business court and ways to encourage more qualified lawyers of color to seek judicial appointments.

We cannot refuse to participate in the debate on these important issues impacting California lawyers and the legal practice simply because they are unanticipated and unbudgeted.

The State Bar is not here to make a profit but to serve our members and protect the public. We cannot abandon a program or service simply because it fails to break even. We cannot refuse to address a problem or issue because it's unbudgeted. We can, however, approach the budget in a fiscally responsible and prudent manner.

John McGuckin is vice president of the Board of Governors and chair of the Committee on Administration & Finance.