A budget for a leaner State Bar
By KAREN NOBUMOTO
President, State Bar of California
Over the past year, the State Bar board has taken a long, hard look at the many
important things we do. In the course of this critical assessment, we have adopted
a more workable governance structure and created a long-range strategic plan.
Integral to these functions are changes to our budgeting process and a concerted
effort on behalf of the board to be involved in budget preparation and budget
monitoring on an ongoing basis, not just for one or two months of the year.
The State Bar faces some special challenges in its budgeting process. Currently,
the State Bar is operating under a two-year fee bill in which the legislature
set the maximum amount of dues that the bar can assess its members. However, this
is the first multi-year dues bill since the mid-1990s.
In almost every year in recent history, the fee bill was approved by the legislature
in late summer and signed by the governor in early fall (or, as in 1997, not signed
by the governor).
While the bar could devise a budget based on projected revenue, we are hoping
that with a long-range strategic plan in place, and by earning a solid record
on fiscal responsibility through biannual state audits, we will be able to attain
multi-year dues bills that will enable the bar to operate on more solid ground.
With that in mind, it is important to take a few moments periodically to review
the bar's budget and understand its various components. One look at the adjacent
pie chart reveals that 79 percent of our unrestricted General Fund budget is used
to fund the attorney discipline and adjudication system, enabling us to carry
out our all-important public protection function.
This leaves only a fifth of the General Fund budget to support all of our other
important unrestricted activities: administration of justice, legal services outreach,
professional administration and communications.
As we have worked in these past few years to become more accountable to our members,
we have developed more specific categories so that state auditors, legislators,
members and other interested parties can track every dollar we spend. In addition
to the unrestricted General Fund, we now have 18 restricted funds, which means
these funds can be used only for specifically restricted purposes.
(Please see below for the list of restricted funds.)
As we set up some of these new funds and redefined others that already existed,
we also eliminated any General Fund subsidies to these restricted funds. This
means that any previous General Fund dollars used to support these programs are
off limits and that no mandatory dues dollars are directed into these funds.
For instance, in 1996, the bar's General Fund subsidized the Conference of Delegates
for its total annual cost of $29,000. In 2001, no member dues money was used to
subsidize the conference, which is now paid for totally by voluntary contributions.
The same is true of the bar sections: In 1996, member dues subsidized the sections
by $430,000. In 2001, that figure was zero.
We also have taken steps, which the state auditor has lauded, to ensure that all
indirect administrative costs to the bar are accounted for and allocated to the
appropriate funds. For instance, administrative costs for the operation of the
bar's sections are allocated to the Sections Fund, while administrative costs
for programs operated by the General Fund are allocated to that particular program
which incurred the cost.
By taking these steps, we are able to account for the money spent by the bar for
specific programs and assess better ourselves, as board members, whether that
money is being spent effectively.
This year we also are re-examining the Client Security Fund, which reimburses
members of the public up to $50,000 for losses they sustained because of their
lawyers' dishonesty. (See Client Security Fund story) This fund is vital to our public protection
efforts and it is imperative that it remains on stable footing so that we can
alleviate some of the losses caused by the handful of unethical and dishonest
lawyers in our ranks.
Perhaps one of the most significant changes we have made is the timing of our
review of the budget. In past years, the proposed budget has been finalized over
the summer and presented to the board for adoption at its first meeting of a new
board year in the fall.
This year, budget preparations have been ongoing for months and a budgeting process
overview was presented to the board at its last meeting. We will be voting on
the budget at our meeting this month in Los Angeles, the last meeting of our board
year, when all of the members of the board have served for at least one full year
and have a better understanding of the bar and its programs.
All of these steps have been taken not only for budget clarity among our constituencies,
but also so that our staff and our programs can operate as effectively and efficiently
as possible, and that we may be in a better position to evaluate their performance.
This is a major ingredient to our leaner, more efficient bar. The new governance
structure will allow continual monitoring by future boards so they may evaluate
and update the bar's service to its members and the public.
EDITOR'S NOTE: The board planning committee received the proposed budget at
its July 26 meeting and will make its recommendations to the full board at the
August meeting. The bar is authorized by the legislature to collect up to $390
in dues for 2003. The board will set the dues as part of the budget approval process.
STATE BAR RESTRICTED FUNDS
- Admissions Fund - Fees and expenses related to administering the bar exam
and other requirements for the admission to practice law in California.
- Annual Meeting Fund - Established in 2000 for a strict accounting of Annual
Meeting registration fees and expenses. This fund allocates its revenue and
expenses among itself, the Conference of Delegates Fund and the Sections Fund.
- Lawyer Assistance Program Fund - Provides education, remedial and rehabilitative
programs to bar members in need of assistance as a result of disability related
to substance abuse or mental illness.
- Building Fund - Used to account for the State Bar's physical facilities.
- Certification Fund - Regulates programs related to the practice of law:
MCLE, Lawyer Referral Services, Law Corporations, Practical Training of Law
Students, Limited Liability Partnerships, Counsel Pro Hac Vice.
- Client Security Fund - Maintains funds from which members' clients may be
reimbursed for pecuniary losses resulting from dishonest conduct on the part
of their attorneys.
- Conference of Delegates Fund - Accounts for voluntary fees and other funds
raised through the activities of the Conference of Delegates and other voluntary
sources.
- Education Foundation Fund - Accounts for activities of the State Bar Education
Foundation, which includes organizing and administering certain educational
programs and activities conducted by the bar.
- Equal Access Fund - Administers funds received in connection with the Equal
Access Fund established initially in the 1999 Budget Act and distributed by
the California Judicial Council through the State Bar's Legal Services Trust
Fund Commission.
- Grants Fund - Accounts for various grants received and special projects
undertaken by the State Bar.
- Legal Services Trust Fund - Distributes funds (based on 1981 California
legislation) to expand the availability and improve the quality of existing
free legal services in civil matters to indigent persons, as well as to initiate
new programs.
- Legal Specialization Fund - Accounts for the certification of legal specialists
in eight areas of law: family; criminal; taxation; immigration and nationality;
workers' compensation; personal and small business bankruptcy; estate planning,
trust and probate; and appellate.
- Legislative Activities Fund - Established in 2000 to account for the consideration
of measures that are outside the parameters established in Keller v. State
Bar, the purview determination and any litigation in support or defense of
that lobbying.
- Sections Fund - Accounts for the activities of 16 sections consisting of
specific practice areas or areas of professional interest and provides members
with a vehicle for communicating with each other, educating themselves and
commenting on relevant legislation.
- Special Master Fund - Established in 1999 with specific discipline assessment
approved by the Supreme Court, used primarily to equip the bar with the latest
technology.
- Public Protection Reserve Fund - Established to assure continuity of the
State Bar's disciplinary system and its other essential public protection
programs.
- Technology Improvement and Reserve Fund - Established to fund technology
projects that the State Bar previously funded through the unrestricted General
Fund.
- Fixed Assets Fund - Accounts for all completed fixed assets. Fixed assets
financed by debt or capital leases remain in the fund carrying the related
obligations.
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