2010-11 Executive Budget Puts Access to Justice at Risk

Good morning, my name is Alan Harris and I am Executive Director of the Legal Aid Society of Rochester.  I am here today to testify on behalf of the Legal Services Funding Alliance, a coalition of the 20 civil legal services providers outside New York City.  I appreciate the opportunity to testify today about the impact the Governor’s proposed Executive Budget for Fiscal year 2010-2011 will have on the civil legal services community, particularly Funding Alliance partners and our ability to provide desperately needed legal assistance to struggling New Yorkers.
 
First, I must begin by thanking both the Senate and the Assembly for your support of civil legal services.  First, the Assembly.  Your undying belief in access to justice and your ongoing support of civil legal services for almost twenty years has sustained us and we are forever appreciative of that.  We are also thankful that for the first time ever, you have colleagues in the upper house who are also extremely dedicated to ensuring that low income New Yorkers have access to the civil legal assistance they need. To the Senate – we want to thank you for joining with the Assembly in making civil legal services a top conference priority and for fighting to include a new Senate appropriation in the first budget you negotiated as the Majority.  Given the bleakness of the state’s financial picture, we believe that it will take both houses working together – with OCA and the Governor – to restore our base funding to the budget, craft a temporary solution to the IOLA crisis and put in place a foundation for the creation of a stable, permanent funding stream that will move New York toward the long term goal of meeting the majority of the civil legal needs of New Yorkers.

Budget Analysis:

The Governor’s 2010-11 Executive Budget proposal eliminates all of the $13.2 million in state appropriations that were included in the budget last year for the provision of civil legal services, including the Governor’s own $1 million appropriation that has been included in the budget at at least that level for the last three years..  This action comes at a time when jobless rates continue to rise and the number of available jobs continues to decline; when foreclosures and evictions continue to rise; when, domestic violence has increased in the face of economic stress; and when the general need for legal assistance in rising dramatically.

In addition to those already in need, there are  increasing numbers of New Yorkers who have never needed legal services before but are now confronting extremely complex legal systems that govern access to government benefits and other needed support systems. From Unemployment Insurance, or staving off an eviction or foreclosure, to securing desperately needed Food Stamps, public assistance, or Medicaid, legal services providers are trying to meet the increase in demand on top of the already pressing need that the service delivery system has never been able to meet.  Before the recession, it’s estimated that providers were only able to help with one in five civil legal needs.

Over $13 Million - All of Last Year’s Funding for Civil Legal Services Eliminated:

Department of State:

    1)  General Civil Legal Services (Assembly): $4.2 million
    2)  General Civil Legal Services (Senate): approximately $4.4 million

Division of Criminal Justice Services:

    3)  General Civil Legal Services (Legal Services Assistance Account)– (Assembly): $2.4 million
    4)  Domestic Violence (Assembly): $609,000
    5)  Domestic Violence (Senate): $609,000
    6)  Legal Services Assistance Fund - General Civil Legal Services (Governor): $1 million

$15 Million Proposed to Avoid Devastating Cuts in IOLA Grants

While the Executive Budget eliminates all state funding for civil legal services, the Judiciary budget includes a $15 million appropriation that seeks to avoid deepening the crisis in civil legal services, by addressing the decimation of the Interest on Lawyers Account (IOLA) Fund.

IOLA is the single largest state level funder of civil legal services - representing from 12% to 60% of the Funding Alliance program budgets. Every state across the nation has an IOLA or IOLTA Fund that generates funding for civil legal assistance by pooling interest earned on lawyers accounts that hold funds in escrow for such short periods of time or is an amount so minimal that the individual interest earned is negligible.  Every IOLTA fund in the United States has been impacted by the exceedingly low federal funds rate (currently .25%) that has hovered near zero since December of 2008. 

We are exceedingly grateful to Chief Judge Johnathan Lippman for being willing to help our community weather the  storm that financial crisis has levied on our state’s IOLA Fund.  However, we want to be clear; this $15 million is not “new” money.  It’s replacement money that will simply avert what would amount to massive service cuts and layoffs in the civil legal services system by allowing the IOLA fund to maintain funding at or close to the previous two year’s levels.
 
Therefore, while we are relieved to see OCA’s inclusion of $15 million in  emergency funding to avoid substantial reductions for IOLA grantees,  we are dismayed at the elimination of all of our state funding.  

• For civil legal services providers to simply stand still this year and maintain staffing and services at what is in many cases, an already reduced level, BOTH the $15 million and the $13.2 million must be  restored. 

More about the IOLA Crisis:

The IOLA Board allocates civil legal services funding on a calendar year basis. In December 2008, IOLA made State-wide grants to civil legal services providers over a 15-month period which were equivalent to $24.8 million annualized over 12 months, the approximate level of the 2008 calendar year IOLA funding. However, primarily as a result of the drop in interest rates as well as the drying up of economic activity when the downturn began, the IOLA Fund’s program revenue is projected to drop to approximately $6.5 million for the period April 1, 2010 through December 31, 2010. This $6.5 million revenue level for the first 9 months of the State fiscal year that begins on April 1, 2010 and runs through March 31, 2011 is in comparison to $18.6 million which had previously been the proportionate level for a 9-month period.
 
These substantial losses are expected to continue during calendar year 2011 through the last quarter of the State’s  2010 – 2011 fiscal year and thereafter into the 2011 – 2012 state fiscal year. Based on these projected losses, the 12-month IOLA grants received by civil legal services providers will be decimated.
 
Even without any of the additional proposed cuts in funding, Legal Services Funding Alliance providers have already had to reduce staff, cut back on the types of representation provided, curb the number of new clients and geographic regions they are able to serve. From a survey of Funding Alliance partners in late 2009, we can report a few examples of what is already happening in the field:

• One program has reduced staff by 13% over the course of the past year. The number of new clients they serve is down approximately 20%. 
• At least three programs will be forced to reduce the amount of services provided to victims of domestic violence due to funding reductions. 
• At least two providers have had to cut back on the number of eviction defense clients they represent.
• At least two providers have had to curb the geographic reach of their services.

Short-Sighted Cuts will Increase Social Services Costs to the State:

In many cases, civil legal services are able to save the state money in the current budget year by averting immediate and long term costs.

Averting Costs Associated with Homeless Shelter Stays:

Civil legal services programs are incredibly effective at working with families to keep them in their homes by avoiding eviction or foreclosure – many of whom would have had nowhere to turn but a local homeless shelter.

In New York City it is estimated that the average cost of housing a homeless family with children is estimated at $33,000 per family based on the estimated cost of representation, we can project that for each family in New York City that avoids eviction as a result of civil legal services representation, $31,215 in savings is generated in the current budget year. Similar savings would be found in every county across the state.
 
Foster Care Savings and Child Support Revenues:

Another way in which civil legal services programs provide substantial and immediate  savings to state and local government is by working with families to stabilize their circumstances. Child Welfare Watch estimates the cost of care in foster boarding homes at $16,200 per year. City data show that kids entering the system for the first time stay, on average, less than a full year, but those who have been in care multiple times stay much longer. These data also show that 40 percent of all children in care at any given time are longtime foster children. For kids that have been in care for more than three years, the current estimated total cost is a minimum of $48,600 per child - and this does not account for far more expensive therapeutic care.

Based on the most recent data available, then, we can estimate that, for every child a legal services program is able help keep out of the system, government will save an average of 16,200, at bare minimum.  For many children, the savings would be much higher - as much as  $48,600 for children without special needs, and much more for those who have disabilities or need therapeutic care.

In 2006, IOLA funded legal services programs generated a total of $12,391,387 in child support payments to clients, helping to provide critical ongoing financial support and resources to low income parents and children. Every child support dollar that flows into the pockets of these families immediately helping to reduce potential costs to government by increasing family resources and thus decreasing the need for publicly funded benefits including public assistance and child care subsidies.

Bringing Federally Funded Food Stamp Dollars into Local Economies:

At the local level legal services programs work with clients to identify and remove barriers to obtaining federally funded Food Stamps, thus increasing resources for low income households on a case by case basis.  The impact of securing Food Stamp Benefits for a family is substantial.  For every family of three who receives Food Stamps, as much as $5,556 in federal dollars is generated in nutritional support and subsequent expenditure in the local economy.

Conclusion:

Clearly the civil legal services community can sustain no further cuts without facing further job loss, reduction of services and subsequently increasing costs for the state.  To allow legal services providers to simply stay still, we urge you to:

    1)  Restore all Assembly and Senate funding allocations – totaling $12.2 million.
    2)  Support the Chief Judge’s $15 million to allow IOLA to maintain 2010 grants at the same level as 2009.