CBJ - February 2009 #02. Budgeters project bar red ink.

Author:By Nancy McCarthy

California Bar Journal


CBJ - February 2009 #02.

Budgeters project bar red ink

California Bar Journal February 2009 Budgeters project bar red ink By Nancy McCarthyStaff WriterThe State Bar is spending down its reserves and faces a $6.6 million deficit by 2011, according to figures released by bar officials last month. Nonetheless, chief financial officer Peggy Van Horn believes that with some cutbacks and readjustments, "there is no need for slash and burn" to the organization.

"The whole point is, we can take a measured approach to this," Van Horn said. "We want expenditures and revenue to match."

At a board meeting in La Quinta, Van Horn projected a deficit of $3.7 million this year. However, because of accumulated savings of almost $10 million, the bar would stay in the black with an ending balance of $6 million. Although the deficit is expected to grow in the following years, Van Horn said savings will not be spent until 2011, when the year would start with only $100,000 in the bank. By the end of that year, the bar would be $6.5 million in the hole, Van Horn projects.

The board asked her to provide options to avoid that outcome at a special budget meeting next month.

Van Horn's projections assume no increase in bar dues, which currently stand at $410 for California's 165,000 active attorneys. A $10 increase - 2.5 percent - in both 2010 and 2011 would ease the pain but would still leave the bar in the red, she said.

Among options discussed by the board were the imposition of new filing fees in State Bar Court, allocating a portion of the fees paid by law corporations and LLPs to the general fund, cutting the Lawyer Assistance Program to the level of its legislative mandate, and eliminating programs that address the elimination of bias and legal services.

A possible across-the-board 3 percent cutback would hit large bar operations, particularly discipline, disproportionately hard while the reductions to smaller programs would likely not be significant.

Although Van Horn favors a deliberate, slower approach to balancing the budget, board members appear to be leaning toward swifter action. Three members said they will not vote for a deficit budget. And President Holly Fujie said the board is questioning spending down savings. "We want to do what we can to reduce the deficit, and we understand the necessity of...

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