COLUMN
BY FRANCIS A. ADEWALE
To provide transparency to our members on our budgetary planning process, this edition of the Treasurer’s Report will seek to address the three Rs of the WSBA budget: retreat, reforecast, and reallocation. I will report on the March WSBA budget retreat, explain what the WSBA budget reforecast entails, and then delve into the interesting landscape of budget reallocation.
BUDGET RETREAT
I always look forward to our annual budget retreat with “dreadful excitement.” Excitement arises from knowing that our members get to take a look at our planning process, and dread from what might go wrong if we don’t get budget planning right. Generally, the budget retreat helps guide decision-making and provides direct oversight of WSBA fiscal activities. The WSBA annual budget is a statement of the values of our organization as well as a financial document. It is also a tangible expression of the WSBA’s real priorities. WSBA managers are guided by the organization’s strategic priorities, but various departments, programs, or initiatives are in competition for the organization’s limited resources. The outcome of that competition is in the end determined by the Board of Governors’ willingness to allocate resources based on the organization’s strategic and operational priorities. Budgets invariably create incentives and disincentives that affect the behavior of managers, staff, and volunteers.11 Find the WSBA Fiscal Policies and Procedures at www.wsba.org/about-wsba/finances.
The 2024 WSBA budget retreat is done and dusted. The event took place on the campus of Gonzaga University School of Law and, as it did last year, the retreat provided guidance to staff as they work to build the FY 25 budget and plan for the future of your association. The fundamental question that pervades budget discussion remains: “What are we required to do and how much does it cost?” This question goes to the heart of the mandatory and nonmandatory functions of the WSBA.
At the retreat, the Board of Governors committed itself to building on this year’s strategic priorities, which they see as a multiyear commitment. Those priorities include emphasis on members’ well-being, examining the impact of technology on the profession, improving members’ sense of belonging, and support for rural practice. The Board also examined the staff’s “operational priorities,” which conveniently dovetail with the Board’s strategic priorities. The fiscal impact of both sets of priorities was the subject of spirited debate. Priorities require resources and investment. An organization’s commitment to its priorities is usually reflected in how it spends its time, funds, and resources. New priorities or changes in existing priorities may result in budget asks or require reallocation (we will talk about budget reallocation later). WSBA resources are finite and allocated according to many factors, such as:
- Is it required (mandatory versus non-mandatory)?
- What is the timeline (time-limited pilot, multiyear commitment, etc.)?
- Are there any available funding sources outside of license fees?
These are questions that require serious consideration by the WSBA Board of Governors, members, and the communities we serve. For instance, many communities in Washington request that the Bar address the dearth of legal practitioners in small town and rural areas in our state. While this is an access-to-justice issue, the Bar cannot do it alone. It requires the Bar to work with the state Legislature, the executive branch, and the judiciary to attend to this important issue that impacts the rule of law and equal justice in our state. Justice by geography is not equal justice.
The budget retreat brought up other concerns about “unknowns” such as the fiscal impact of the Washington Supreme Court decision on recommendations from the Bar Licensure Task Force, which was made public after the retreat.22 More information about the task force’s recommendations can be found here: www.wsba.org/for-legal-professionals/join-the-legal-profession-in-wa/lawyers/alternatives. Meanwhile, the lawyer license fee has remained steady at $458 since 2020 and is set at that number again through the 2025 membership year.
The goal of the retreat—as I stated in my last column—is to provide guidance to staff tasked with preparing the budget in key areas as they build the FY 25 budget and plan for future organizational needs. Below is the timeline for the rest of the budget preparation process:
- June 21: Budget and Audit Committee—first draft budget review.
- July 18-20: Board of Governors—first draft budget review.
- Aug. 9: Budget and Audit Committee—final draft budget review.
- Sept. 6-7: Board of Governors—review and approval of final budget.
BUDGET REFORECAST
In order to be a useful tool, a budget cannot be a rigid document that can never be amended. It can and should be amended, if necessary, through the reforecast process, with adequate oversight and direction.
The WSBA’s fiscal policies outline the steps and authority needed to execute a budget reforecast. When a reforecast is warranted, the process is used to recreate and adjust the current fiscal year budget (e.g., FY 24) due to some unforeseen circumstance. It is not an indication that the Board is veering off the original track; reforecast is often necessitated because of significant changes to operations. An example would be downward adjustments to expenses due to consolidation of office space.
The director of finance is mandated by the fiscal policies to prepare long-range forecasts prior to the annual budgeting process. This is meant to provide the Board of Governors and the executive director with parameters around the upcoming annual budget. Long-range forecasts are also prepared whenever requested by the Board of Governors, as part of planning any license fee increases or as part of the long-range planning process generally. Such forecasts will be part of the reforecast process, which is usually executed in the second quarter of the fiscal year. We are currently in the middle of such reforecast and have included recommendations for adjustments in the FY 24 reforecast budget that were presented to the Board of Governors at its May 2-3 meeting.
BUDGET REALLOCATION
In the past, I have addressed the issue of budget reallocation, the process of adjusting the allocation of funds within a budget to better meet the needs of an organization. It involves the reallocation of general, proprietary, fiduciary, and special revenue-internal funds between business units.
The WSBA’s fiscal policies state that the executive director is tasked with approving and reporting to the Board of Governors certain unbudgeted expenses, including reallocation of budgeted expenditures where the intent is similar or varies slightly; unbudgeted expenditures that are fully offset by unbudgeted revenue, or a reallocation of budgeted expenditures up to 5 percent of the approved operating budget to address operational, regulatory, or programmatic needs; and necessary and prudent expenditures to implement the WSBA’s Disaster Recovery Plan or to maintain the WSBA’s operations.
I hope this installment of your Treasurer’s Report enables you to know more about WSBA finances and the three Rs.
MORE ONLINE >
If you would like more information about the meeting times and materials for the WSBA Budget and Audit Committee, visit www.wsba.org/Legal-Community/Committees-Boards-and-Other-Groups/budget-audit.
About the authoR
Francis Adewale is the WSBA treasurer and can be reached at:
NOTES
1. Find the WSBA Fiscal Policies and Procedures at www.wsba.org/about-wsba/finances.
2. More information about the task force’s recommendations can be found here: www.wsba.org/for-legal-professionals/join-the-legal-profession-in-wa/lawyers/alternatives.