BY FRANCIS A. ADEWALE
In this edition of the Treasurer’s Report, I sat down with Finance Director Tiffany Lynch for a Q&A to review the lessons learned from this year’s budget process and discuss how to prepare for future challenges.
A. Thank you, Treasurer Adewale. One of our operational priorities this year was to improve the annual budgeting timeline and process to address feedback from members of the Board of Governors and internal budget managers. With that in mind, we set out to design an approach that focused on providing heavier emphasis on Board involvement, more opportunities for feedback between drafts, increased transparency in the budget development process, and a more streamlined approach for internal managers to provide budget information.
For the Board, we launched the 2024 budget by holding a retreat to focus on funding priorities, future license fees, reserves, and initial projections. This helped create a baseline for staff to develop the first draft. We also increased the number of times that the Board reviewed the budget to allow for more frequent updates and the ability to provide input before acting on the final budget. This year the Board reviewed the first draft of the budget in June, second draft in August, and final draft in September, with the Budget and Audit Committee reviewing each of those drafts prior to the scheduled Board meetings. For internal managers, we launched a new budget software that provided a more user-friendly format for submitting information, tracking changes between budget drafts, and keeping records in an easily accessible universal location.
A. It is extremely helpful to have input from the Board throughout the entire process so that when we get to September everyone is well informed, has been given the opportunity to ask questions and voice any concerns and/or support on any issues impacting the budget, and feels confident approving the budget.
A. The budget has many moving parts and lots of contributors. Every part of the organization’s work reflected in the budget involves interactions among collaborators to arrive at a final product. Whether it is staff, volunteers, partner organizations, or others involved in the process, it takes solid communication and planning to ensure that the budget accurately reflects the needs of the organization each year. Timing is also a challenge as each group meets at different cadences that do not always coincide with the budget timeline.
A. Yes, I would say more so this year than in the past. We worked hard to open up our internal process to the Budget and Audit Committee and the Board in an effort to demonstrate how the budget is developed and the variety of requests that come forward each year, even before a first draft is presented for review. By increasing the number of times that the budget was reviewed, we were able to keep everyone informed of changes between drafts.
A. The work that is supported by the 2024 budget is relatively similar to the 2023 budget. There are no significant new programs that we’ve allocated funding to, and changes are reflective of our work plan for the coming year. The majority of the WSBA’s expenses are related to staffing, which typically increases each year as we adjust to the increased cost of labor. The budget also includes the addition of staffing needed in some key areas across the organization. On the revenue side, our main source of revenue is license fees, which continue to remain at the same rate of $458 since 2020. One part of our budget that has changed in 2024 is interest income. The WSBA invests its available funds in fixed-income investments and has been able to lock in favorable interest rates into 2024, which translates to increased interest income.
A. The most significant assumption we make in our projections is related to license fees and growth in membership over time. The license fee has been set to remain at the current rate of $458 through 2025 and our projections continue with that assumption through 2026. In terms of growth in membership, historically the WSBA has seen a net growth in membership each year; however, over the past two years we have seen a decline in that net growth by about 50 percent. We have long anticipated a decrease in active memberships based on our demographics, so we continue to monitor and factor this decline into projections. We also expect that the cost of doing business will continue to rise and therefore expenses will increase each year. As noted previously, the majority of our costs are for staffing, so we build in specific increases for salaries, benefits, and payroll taxes which are based on historical and market data. The budget also assumes no changes to our existing lease at Puget Sound Plaza, which expires at the end of December 2026.1
A. That’s a great question. Each year we plan out the budget process based on the dates of the scheduled Board meetings. Next fiscal year we have a total of six meetings being held in November, January, March, May, July, and September. Additionally, we consider whether a budget reforecast process should be implemented for the current fiscal year, which results in an amended budget. If there are items of significant financial impact to the 2024 budget, it is likely that there will be a need for the approval of an amended budget. An example of an item that could warrant the development of an amended budget is any fiscal impact resulting from action regarding the future of the WSBA office space. All of these things factor in to how we proceed with the budget and we will continue to provide as much transparency and involvement as possible in the budget process.
Q. What is next on your “to-do” list? An audit?
A. The to-do list includes closing out the 2023 fiscal year, which involves preparing for the annual audit, and implementing the 2024 budget internally so our staff have all the information they need to be successful. Our team is excited and looking forward to another great year!
FISCAL YEAR 2024 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. $3,319,504
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. $825,468
C. Management and Operations.
30% > Includes costs associated with the WSBA Board of Governors, leadership, management, and internal support (finance, administration, and human resources). $7,092,648
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. $1,078,051
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. $281,300
F. Discipline and Disability Systems.
28% > 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. $6,629,830
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. $831,549
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. $649,246
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. $738,491
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. $1,165,979
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. $300,489
L. Member Services and Engagement.
3% > Includes costs of outreach, education, training, and support to newly admitted WSBA members. Also includes funding for the WSBA’s mentor programming. $600,258
1. Although the budget assumes no changes to the lease, the Board has been authorized to explore potentially shrinking the WSBA’s footprint in the future.