Friday, April 27, 2007
State Bar Faces Big Deficit, Must Improve Efficiency, State Auditor Says
By a MetNews Staff Writer
The State Bar of California faces a nearly $12 million general fund deficit by the end of 2010 and needs to improve the way it manages its programs, the state auditor has concluded.
In a cover letter addressed to Gov. Arnold Schwarzenegger and other state officials, State Auditor Elaine M. Howle said yesterday that “although the State Bar initiated a strategic-planning process in 2003, many of its departments have not fully completed their plans and selected performance measures, or updated their annual action plans intended to outline steps and timelines for completing their strategic objectives.”
Howle further noted that the State Bar’s dues authority is limited by law, and that its current general fund balance of over $6 million will erode into a deficit if it continues to fund its current programs and does not obtain new revenues. State Bar officials, Howle reported, intend to seek a $25 increase in active-member dues, currently $400 per year.
“However, the fact that [the State Bar] has not fully implemented its strategic plan may hamper its efforts to justify its request to the Legislature for a membership fee increase...,” the auditor suggested.
Howle also reiterated her comments of two years ago, when her bureau conducted its previous audit of the State Bar, that the bar’s recovery of discipline costs is relatively low. The State Bar has more than $72 million in outstanding invoices to disciplined lawyers, but has been unable to collect, despite changes in state law in 2004 which gave it increased power to recoup such costs, she said, because certain administrative procedures have yet to be approved by the California Supreme Court, Howle explained.
She added that officials do not believe that implementation of the law will immediately result in significant collections, because most of the debt is owed by disbarred or resigned lawyers who are “too financially distressed to pay.”
The auditor also called on the bar to improve the way it administers the Legal Services Trust Fund Program, which made more than $26 million in grants to 98 providers last year. She cited a shortfall in expected funding from interest on lawyers’ trust accounts, noting that only 45 percent of lawyers reported having such accounts, while 25 percent did not report and the rest reported that they do not maintain short-term funds in trust accounts.
While the State Bar does not believe that a significant portion of the 25 percent are evading the IOLTA requirements, Howle said, it does not have the data to back up that position. She said the group also needs to do a better job of monitoring grantees.
The auditor did note an improvement in clearing up the backlog of discipline cases, although the goal of whittling it down to 200 cases has not quite been met. That backlog, which dropped from 1,340 at the end of 2000 to 401 at the end of 2002, but rose to 402 by the end of 2004, was now down to 256 at the end of last year.
Copyright 2007, Metropolitan News Company