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Empire Justice Center Testimony on the Governor's Proposed Deficit Reduction Plan

The Senate Standing Committee on Finance

November 5, 2009


Prepared by:

Anne Erickson

Kristin Brown

Presented by:

Anne Erickson, President & CEO 

Greenburgh Public Library
300 Tarrytown Road
Elmsford, New York


Thank you for the opportunity to testify today.  My name is Anne Erickson and I am President and CEO of the Empire Justice Center. We are a statewide legal services organization with offices in Albany, Rochester, White Plains and Central Islip (Long Island).  We provide support and training to legal services and other community-based organizations, undertake policy research and analysis, and engage in legislative and administrative advocacy.  We also represent low-income individuals, as well as classes of New Yorkers, in a wide range of poverty law areas.  Here in Westchester County, our two bi-lingual attorneys (soon to be three) provide free legal assistance to low income immigrants – many of whom are victims of crimes including domestic violence.  We have offices on the campus at Pace Law School and a small outstation office in Mt. Vernon.

Before I comment on the Deficit Reduction Plan, I would like to take the opportunity to thank you for the unprecedented step the Senate Democrats took this year in joining with the Assembly Majority to provide general funding for civil legal services for the poor. As a member of the Legal Services Funding Alliance, the 20 legal services programs outside New York City, we were proud to work with you and your Senate colleagues to take this next step toward an institutionalized state commitment to providing fair access to the courts and to legal assistance for those who cannot afford it. 

In the Governor’s proposed Deficit Reduction Plan (DRP), several funding streams, including some specialized programs that provide legal assistance to the poor are slated for substantial cuts that will not only undermine your commitment and the Assembly’s commitment to legal assistance, but will also result in INCREASED costs to the state.  Furthermore there are a number of other funding reductions enumerated below that we believe would be particularly painful for the most vulnerable New Yorkers. 
We urge you to reject Deficit Reduction Plan in its entirety and work with the Assembly and the Governor to identify savings and revenue streams that will not impact those who have been hurt the most by the downturn in the economy.

Governor’s Deficit Reduction Plan Threatens Access to Justice

Given the Senate Majority’s commitment to providing funding for the provision of civil legal services in what was your first negotiated budget as the Majority, it is clear that you know how important the delivery of civil legal services is in helping our clients – and your constituents -- stabilize and even transform their lives. 

Even while the recession seems to be easing, jobless rates continue to rise, the number of available jobs continues to decline, and civil legal services providers are still seeing countless numbers of New Yorkers who have never needed our services before at our doors with a full range of legal problems.  They need legal assistance to access their Unemployment Insurance Benefits, to stave off an eviction or foreclosure, to secure desperately needed Food Stamps, public assistance, or Medicaid.  For many of these new clients, they are encountering these extremely complex legal systems for the very first time.  And meeting the legal needs of this new clientele comes on top of the already pressing need that the service delivery system has never been able to meet. 

The Deficit Reduction Plan’s proposed cuts to civil legal services are extremely short sighted – they will result in increased costs to the state at the very moment the state needs to be guarding against unnecessary – and avoidable -  increases in expenditures. More fundamentally, the proposed cuts  undermine our county’s underlying principle of “equality before the law”. 

Should these mid-year cuts that target legal services be implemented they will compound what is expected to be at least a 44% reduction in Interest on Lawyers Account (IOLA) Fund grants in the coming year (see attached chart).  IOLA is the largest state level funder of CLS – representing from 12% to 60% of the Funding Alliance program budgets.  The Department of State funding which is slated for 14% reduction is another critical piece of the community’s core funding.  Clearly all of these funding reductions combined will result in dramatic reductions in staffing and in services to low income New Yorkers –leaving them without access to legal assistance at the very time they are most in need.

Associated DRP Cuts to Civil Legal Services Funding Streams:

  1. DOS- Civil legal services – ($595,000) – general funding for civil legal services.
  2. DCJS – Domestic violence legal services – ($1,000 in each of two appropriations) – this funding allows legal services providers to help victims of domestic violence obtain orders of protection, negotiate child custody and deal with the legal aspects of separating from an abuser.   
  3. OTDA – Legal Advocates for the Disabled – otherwise known as the Disability Advocacy Program – ($73,000) – assists low income New Yorkers with obtaining federal disability benefits. 
  4. OTDA - Homelessness Intervention Program and Homeless Prevention Programs –($196,000 and $236,000 respectively) – work with clients to avoid eviction and homelessness. 
  5. SOFA – Managed Care Consumer Assistance Program –($ 83,000) – this program helps connect elderly New Yorkers with the Medicare Part D prescription drug program and provides assistance with appeals when they are denied benefits.  The program is already down $300,000 from the 2008 level.  A further reduction will erode the savings generated by making sure that Seniors are receiving all the federally funded prescription drug assistance they are eligible for.
  6. DOH – Legal Services HIV/AIDS – ($3,000) – provides New Yorkers living with HIV and AIDS access to an attorney to assist them various legal problems.

Short Sighted Cuts Will Cost More to Implement than they Will Save

Small reductions in funding to providers will cost more money than they will save and will result in disproportionate loss of services as civil legal services providers are forced to undertake the time consuming contract modification process (some proposed cuts are as minimal as $1,000 in the case of legal services for victims of domestic violence). This process will also require state agencies to utilize staff time to process these modifications at a time when staffing levels are already at a reduced level.  Furthermore, when contracts have to be amended, it slows down payment to providers even further.  Most civil legal services providers budgets are so tight that they are periodically forced to use lines of credit to make payroll.  The state contracting process which has always been slow has been particularly sluggish over the past year and a half.  Any further delays could prove devastating to small programs that do not have available credit and could result in additional costs to the non profit as they rack up interest. 

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 costs.
1) Making Money for the State and Creating Financial Security for Disabled New Yorkers  (OTDA – Legal Advocates for the Disabled - $73,000)

Through the Disability Advocacy Program (DAP), legal services programs in every region of the state provide low income disabled New Yorkers with legal assistance when their SSI/SSD applications have been denied or their benefits terminated.  Many of the clients represented receive welfare benefits while they await a decision about their application.  For each successful case, the Social Security Administration provides a retroactive award to the client for benefits they would have received, beginning from the time of initial application and reimbursement to state and local governments for the benefits provided. With a success rate of 83% in 2007, the DAP program consistently generates federal reimbursement money for the state that exceeds the state funding used to provide the services.

In 2008 DAP advocates generated $26,586,009 in retroactive awards for their clients and $8,213,843 in interim assistance for benefits provided for the State.  The program also generates significant ongoing cost avoidance by avoiding long term benefit costs for the state.  According to the Office of Temporary and Disability Assistance’s most recent Biennial Report to the Legislature, it is estimated that in 2007 DAP generated $8.5 million in pubic assistance cost reduction, resulting in a net gain of $9.97 million for the state and localities, more than twice the initial investment.  Flat funded for years, this program was cut by 8% in 2009 and has had to increasingly turn clients and thus potential savings for state and local government away due to lack of resources.  Without any increases in funding over the past several years, DAP’s ability to serve clients has already eroded (see attached chart). An additional funding reduction would only serve to reduce the ability to generate savings.
2) Averting Costs Associated with Homeless Shelter Stays (OTDA - Homelessness Intervention Program and Homeless Prevention Programs -  $196,000 and $236,000 respectively)

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.

3) 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.

4) Bringing Federal 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.

The Looming IOLA Crisis

In the coming year, civil legal services providers face a devastating reduction in the primary state level funding source, the IOLA Fund.  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 totaling over $31 million covering a 15-month period. This 15-month funding level is equivalent to $24.8 million annualized over 12 months, which is 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 April 1, 2010 – March 31, 2011 fiscal year and thereafter into the April 1, 2011 – March 31, 2012 fiscal year. Based on these projected losses, the 12-month IOLA grants received by civil legal services providers will be decimated. 

Even without any additional 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. We are only beginning to pull together the impact of various funding reductions sustained over the past year and a half, but a few examples include:

  • 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.

Other States Have Responded to the IOLA Crisis, New York Has Not

Across the country states have acted in direct response to the dramatic losses in the IOLA/IOLTA grant making ability to ensure ongoing access to legal assistance for their poorest individuals and families.  Below is a sampling of the responses we have been able to pull together.

  • Pennsylvania Supreme Court approved a $25 increase in the attorney registration fee, with the proceeds going to IOLTA for legal services.
  • Connecticut Filing Fees for Legal Aid.  The Connecticut legislature and governor have approved an increase in court filing fees, with revenues dedicated to legal aid funding.  The fees are expected to generate $7.7 million each year to help make up for declines in IOLTA revenue.
  • The Texas legislature has provided $20 million over two years in funding for civil legal aid.  By combining state funds with new sources of funding, the Texas Access to Justice Foundation has recovered $26 million of a budget shortfall caused by a disastrous decline in IOLTA revenue.
  • The Minnesota State Bar Association has passed a resolution to support a $25 increase in the attorney registration fee to benefit civil legal services and has petitioned the state supreme court for such a change in its lawyer registration rules.
  • In June, the New Jersey Senate voted to impose a temporary $300 fee on lenders each time they foreclose on a property.  Proceeds would go to Legal Services of New Jersey.  The fee is an effort to offset an anticipated $37 million decline in IOLTA revenue.

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.  We urge the Senate Finance Committee and the Senate Majority to work with your colleagues in the Assembly to reject the cuts in the DRP and to follow in the footsteps of other states who have acted to craft a solution to the IOLA crisis.

Other DRP Funding Reductions Will Harm Vulnerable New Yorkers

1) Cuts to Medicaid

We are alarmed by the DRP’s deep, across the board cuts to Medicaid.   The DRP estimates a total savings from this program of $287 million.  However, when we take into account the fact that state Medicaid cuts automatically trigger the loss of matching Federal funds, a much larger loss to our Medicaid program becomes apparent.  Under the Federal stimulus bill the Federal contribution through the end of 2010 is 60.19% of every dollar spent.  Thus, if enacted, the total cuts to the Medicaid program in the DRP will amount to more than $720 million.

We acknowledge and appreciate that none of these savings are achieved through reducing benefits or eligibility levels for Medicaid consumers.  However, we fear that Medicaid cuts of this magnitude, spread out across all provider types, are likely to mean a significant loss of services for consumers nonetheless, particularly the essential services they receive from safety net and community providers.   Although rate reform in recent sessions has begun to address Medicaid’s historical over-reliance on hospital and institutional care, efforts to reduce the deficit must be similarly strategic, or we will bankrupt the community providers whose services make it possible for low-income Medicaid consumers to avoid expensive institutional care.

More than four million New Yorkers rely on Medicaid for essential health care services – all of them living on extremely limited incomes or facing the challenges associated with debilitating illness or injury.  In many communities Medicaid providers are scarce, and community health centers and other safety net providers form the backbone of health care access, particularly for the large percentage of Medicaid enrollees who experience gaps in coverage.  Much like civil legal services, these clinics are mission driven, and characterized by dedicated staff but very low operating margins.  Some upstate community health centers have already approached private sources for emergency funding.  Put simply, we fear communities will lose access to non-institutional care altogether if deep cuts to our safety net providers are not revisited. 

Similarly, we urge the Senate to reject the amount of savings realized in the home care sector.  Increasing numbers of elderly and disabled Medicaid recipients are choosing to receive home care in their communities rather than move into nursing homes.  State spending allocations support the assertion that these program shifts are resulting in savings to New York. [1]   But again, providers of home care services are few and far between in too many low-income communities, particularly in upstate regions.  Those that are operating have difficulty retaining staff and keeping their doors open.  If the Governor’s proposed cuts to home care go through, we fear that Medicaid consumers will again be left without options other than expensive, institutional care. 

2) Reduction in the State Supplement for Social Security Income (SSI) Recipients 

The Governor’s DRP proposes to generate $11,369,000 in “savings” through a reduction in the state supplement paid to SSI recipients.  If enacted, the result will have a substantial impact on the state’s neediest and most vulnerable citizens, its poor, elderly and disabled in a year in which they will receive no increase in benefits because there will be no annual cost of living adjustment (COLA) for 2010. 

The cut would impact recipients living every community across our state and would result in an estimated to $14/month reduction for those living alone and $9/ month for those living with others. Benefit levels were already well below the federal poverty level. 

To take money out of the pockets of SSI recipients to close the state’s budget gap is simply unconscionable. New York’s SSI recipients are the poorest of the poor, and asking them to forego any precious dollars will cause each of these elderly or disabled recipients increased pain and suffering they can ill afford.  This proposal must be rejected.

3) Additional Cuts of Particular Concern to Struggling New Yorkers:

  • Hunger Prevention and Nutrition Assistance Program (DOH) – provides funding to Emergency food programs – a critical component of the safety net that continues to see increasing demand for food.
  • Nutrition Outreach Education Program (NOEP) (DOH) – helps connect eligible families and individuals with federally funded Food Stamps.
  • Childhood lead poisoning prevention programs (DOH) – this series of programs helps target the regions in which there are still high levels of childhood lead poisoning – with an ultimate goal of stopping children from being poisoned.  The effects of lead poisoning have been shown to result in increased special education and healthcare costs, increased juvenile detention and prison costs and loss in income tax revenue down the road.


Thank you once again for taking the time to solicit input on the Governor’s Deficit Reduction Plan.  We urge you to do all you can to reject all of the proposed cuts and to continue to protect the needs of struggling New Yorkers. Please feel free to contact me with any questions.

End Notes:
[1] The 2009 United Hospital Fund report on Long Term Care in New York reports that 67% of long term care enrollment in 2007 was in community based service and only 33% was in nursing homes.  Yet spending for the same period (FFY 2007) was only 47% on community-based services and 53% on institutional care.


Supporting Documents:

2004-2008 DAP Case Closings and Awards