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BY FRANCIS A. ADEWALE
The Washington State Bar Association recently passed the torch to new leadership, and I am happy to introduce the new Budget and Audit Committee members: Governors Matthew Dresden (District 7), Erik Kaeding (District 8), Nam Nguyen (District 10), Mary M. Rathbone (District 4), Kari Petrasek (District 2), Brett Purtzer (District 6), Alec Stephens (At Large), and yours truly as chair. I would also like to give special thanks to our past treasurer, Bryn A. Peterson, and other outgoing members for their diligence in management of our common purse.
Prudent Management of Our Bar Finances is an Imperative
As we begin the new fiscal year, it is prudent to review our historical financial results, reflect on the factors that impacted our performance, and identify trends that can help inform this year’s work. The chart below shows WSBA financial results from FY 18 through FY 2211 FY 22 figures are estimates; final figures are not confirmed until the WSBA annual audit is completed in December. (five years) and it reflects a consistent trend that we have seen over time, which is that while the annual budget is conservative and typically reflects an anticipated deficit, actual performance results in net income. Any variance between budgeted and actual performance of the general fund is accumulated in a reserve fund referred to as the “unrestricted general fund reserve.” These funds can be designated into other reserve funds by the Board of Governors for a variety of purposes. Currently, the Board has two designated reserve funds with balances: (1) an operating reserve of $2 million (a rainy day/emergency fund) and (2) a facilities reserve of $1 million (to support future space or capital needs). The balance of reserve funds is reflected in the chart below as “unrestricted general fund reserves” and is available to be used to make up any future shortfalls.
From 2018 to 2021 we’ve accumulated annual net increases ranging from $432,000 to $1.5 million and variances between budget and actual of $1 million to $1.7 million. Overall, we’ve increased the WSBA unrestricted general fund from $1.8 million to $4.5 million and expect to add another $300,000 for FY 22. Additionally, we have continued to add funds to the facilities reserve and the operating reserve and have recently established a license fee stability fund and a special projects and innovation fund, for which balances have yet to be determined. My mandate is to continue this amazing and beneficial streak with your help.
With that at the back of your mind, I would like to inform you that the Board of Governors passed the final version of the FY 23 budget at its September meeting. The budget is set out visually at the end of this article. The WSBA Budget and Audit Committee will closely monitor revenue and expenditures over the year and work hard to cap or reduce any deficit.
2024 License Fees
At the September meeting, the Board of Governors also voted to keep member license fees flat for 2024. License fees support the bulk of the WSBA’s annual operating activity, which is referred to as the general fund. The chart below shows that the WSBA has historically performed favorably against its projected budget. The reasons for this vary, but typically it is a combination of higher-than-expected license fee revenue (due in part to pro hac vice fees and a larger-than-expected number of licensed members), lower staffing (due to unfilled positions), and lower direct costs (due in part to remote work and remote meetings).
Based on our unrestricted general fund reserves balance, we believe it is reasonable to maintain license fees at current levels and draw down those reserves to balance the FY 23 budget. Thanks to Executive Director Terra Nevitt, one of the innovative ideas we are introducing this year is the license fee stability reserve fund. This will help to stabilize license fees year to year as the costs of funding the Bar’s regulatory functions and member programs and services increase.
2024 Client Protection Fund Assessment
The Board of Governors also voted in September to recommend to the Washington Supreme Court a reduction of the 2024 Client Protection Fund (CPF)22 www.wsba.org/docs/default-source/legal-community/committees/lawyers-fund-for-client-protection/client-protection-fund-application-procedures977b5ff2f6d9654cb471ff1f00003f4f.pdf?sfvrsn=7da33af1_4. assessment by $5 (from $20 to $15). From 2010 through 2020, the assessment remained at $30. In 2021, the assessment was reduced to $10, and in 2022 the assessment rose to $20. Overall, actual results have tracked in line with the budget. The estimated growth of the CPF reserve between 2018 and 202233 FY 22 figures are estimates; final figures are not confirmed until the WSBA annual audit is completed in December. is $975,000. This will result in an estimated reserve of over $4 million at the end of 2022, which remains available to support the fund’s largest expense for payments to injured clients. This expense can vary, as it depends on the number of applications filed and amounts awarded. For example, in 2011, the fund paid out 72 gifts totaling $1,002,683.
Based on the CPF reserve balance, the Board felt it was reasonable to implement a one-time $5 reduction of the assessment.
In closing, as we look forward, we intend to take a proactive approach to our budgetary process next year. The Board of Governors and WSBA senior staff will have a budget retreat where we will set the 2024 budget priorities for our organization. As members, you will have opportunities to weigh in to recommend programs and activities you love and those you would like to see done differently; your comments and suggestions, sent to Bar News or to me will be greatly appreciated. I look forward to being your treasurer this year and facing the challenges that FY 23 will present. Thank you.
FISCAL YEAR 2023 budget
General Fund Expenses by WSBA Programs & Services
A. Licensing and Admissions Services.
14% > Costs to administer admissions and annual licensing processes for nearly 40,000 WSBA members including lawyers, LPOs, and LLLTs; to maintain and respond to questions about members and their public information; and to support the Supreme Court-mandated MCLE Board, which adjudicates issues involving continuing legal education requirements. $3,040,780
B. Outreach and Engagement.
4% > Supports WSBA outreach to the public, legal professionals, bar associations, policymakers, and other stakeholders in order to enhance volunteer recruitment, raise awareness and understanding of WSBA programs and priorities, and create a sustainable stakeholder network. $790,829
C. Management and Operations.
30% > Includes costs associated with the WSBA Board of Governors, leadership, management, and internal support (finance, administration, and human resources). $6,638,714
D. General Counsel.
5% > Legal representation and support to the WSBA, the Board of Governors, and other boards, task forces, and committees; records requests and litigation management; and oversight, interpretation, and analysis of WSBA Bylaws and other legal issues. $1,057,534
E. Legislative and Law Improvement Efforts.
1% > Supports work with WSBA leadership and sections to formulate positions on legislation, track relevant legislation during session, and provide technical advice on bills and existing statutes to the Legislature. $269,464
F. Discipline and Disability Systems.
29% > Costs to handle consumer inquiries; to investigate, prosecute, and adjudicate written grievances about lawyers, LPOs, and LLLTs (e.g., costs associated with disciplinary counsel, hearing officers, and the Supreme Court-mandated Disciplinary Board); to administer the WSBA audit program; and to educate members and law students about legal ethics, trust account compliance, and the discipline system. $6,543,867
G. Publications.
4% > This category includes costs to develop, design, produce, and distribute WSBA print media and publications, including Washington State Bar News, the WSBA’s official publication. $819,754
H. Supreme Court-Mandated Boards and Programs.
3% > Costs to support four of six boards and programs mandated by the Supreme Court: (1) Access to Justice Board; (2) Limited License Legal Technician Board; (3) Limited Practice Officer Board; and (4) Practice of Law Board. Costs associated with the Disciplinary Board and MCLE Board, which adjudicate regulatory issues, are included in the Licensing and Admissions Services and Discipline and Disability Systems categories. $655,352
I. Member Benefits.
3% > Includes costs of programs benefiting the WSBA’s membership as a part of their annual license fee: (1) legal research tool (Fastcase); (2) monthly CLE programs (Legal Lunchbox™ Series); (3) the Professional Responsibility Program; (4) the Member Wellness Program; and (5) a confidential 24/7 member assistance program (WSBA Connects). $650,140
J. Public Service, Diversity, and Washington State Bar Foundation Support.
5% > Costs to support (1) WSBA public service programs (including Moderate Means Program, the Powerful Communities Project, and the Pro Bono WA portal); (2) work to advance diversity and inclusion in the legal profession; and (3) administrative costs of the Washington State Bar Foundation, which provides grant funding for these activities. $1,134,281
K. Sections Administration.
1% > Includes staffing and administrative costs to support 29 sections, and to help sections develop “mini-CLEs” that are not offset by per-member charge revenues. $298,596
L. Member Services and Engagement.
2% > Includes costs of outreach, education, training, and support to newly admitted WSBA members. Also includes funding for the WSBA’s mentor programming. $553,759
NOTES
1. FY 22 figures are estimates; final figures are not confirmed until the WSBA annual audit is completed in December.
3. FY 22 figures are estimates; final figures are not confirmed until the WSBA annual audit is completed in December.