BY DANIEL D. CLARK
First, I hope that everyone is staying safe and healthy during this terrible pandemic. It’s a busy time of year, at least in terms of WSBA budgeting. We have just wrapped up our reforecast for the current fiscal year while launching into planning for the next. I have good news to report on both efforts, as well as highlighting some of the Board of Governors’ considerations as it looks at long-term planning
CURRENT AND FUTURE BUDGETS
The “reforecast” is what we do mid-fiscal year to compare budgeted revenues and expenditures in each cost center with actual revenues and expenditures. I reported in this column last month that we expected the reforecast for fiscal year 2021 to result in no significant negative deviations. That was, indeed, the case as the Board of Governors approved the reforecast budget at its April meeting; in fact, the reforecast yielded a positive $88,670 variance to the General Fund from the original budget. The most noticeable change in the reforecast was to the Continuing Legal Education Fund, which has been hit particularly hard by COVID-19 repercussions. However, because the CLE Fund is typically revenue-generating, it has built a healthy reserve for situations such as this.
The positive variance in the General Fund is the result of purposeful and vigilant shifts in expenditures as we have navigated many unknowns during the pandemic. For me, the best news is that we were actually able to capitalize on some of those savings during the reforecast process to add a full-time member wellness clinician to the WSBA’s staff. This reflects the Board’s commitment to implementing national best standards to keep our members healthy and at full capacity to serve clients. An investment in member wellness is a proactive complement to the WSBA’s regulatory initiatives: We should support members with tools and resources to improve their professional and personal lives. Stay tuned for more information as the WSBA introduces the new clinician and expanded resources in the coming months.
Of course, budgeting never stops! Just as we completed the reforecast, we launched into the heavy work of building the WSBA’s FY 2022 budget. The Board has already set steady license fees (no increases) for all license types, and we are in good financial stead to maintain and carefully grow operations while keeping reserve funds in a prudent range. Looking ahead, however, one of the Budget and Audit Committee’s challenges will be to prioritize and fund long-range goals and robust member services/benefits, all while trying to keep attorney member license fees from increasing.
At its May meeting, the Board of Governors moved $500,000 from the unrestricted General Fund balance into the existing Facilities Reserve as we strategically plan for the next steps upon the expiration of our current lease (in 2026) in Seattle.
NUTS & BOLTS: MARCH FINANCIAL STATEMENT
We have closed the books through March (halfway through the fiscal year) with a net increase to the unrestricted General Fund of $1,599,612. Our original FY 2021 budget called for $202,782 in reserve spending by year’s end, which means we are actually at a $1,802,354 positive variance from that projection.
How do these numbers all make sense, given what I told you about our reforecast? First, our reforecast budget is better than the original for the General Fund, but it still anticipates using reserve funds in a planned and prudent way. Whereas the original budget called for $202,782 in reserve spending, the reforecast calls for $114,092 in reserve spending. As for the fact that revenues are currently well ahead of expenditures for the fiscal year, we are accounting for the WSBA’s typical budget cycle: We are always revenue-heavy the first half (license season) and expense-heavy the second half (when many service contracts and expenses come due) of each fiscal year. That is an expected pattern; we expect to see expenses outpace revenue in the final months of the fiscal year. I’m hopeful, though, that as we have historically done, we will actually be able to beat our reforecast estimates in the second half of FY 2021.
Overall, I am proud of what we have accomplished—and what we are projected to accomplish—this fiscal year. At this point, we are looking at an almost revenue/expense neutral year, all while navigating a pandemic, and still finding ways to expand member services—without any increase in lawyer license fees. It’s my hope that as the year progresses, we will do better than expected and beat our reforecast in terms of reserve spending. My goal is for us to have another year of net increases to the WSBA unrestricted General Fund. I would like to thank the Budget and Audit Committee members, WSBA staff, and various stakeholders for their hard work and input. Thank you and please let me know if you have any questions.