Skip to Main Content
Printer Friendly

 

Legal Services Funding Alliance Testimony at the Public Protection Budget Hearing for 2009-2010



January 27, 2009

 

Prepared by:

Kristin Brown



Presented by:

Kristn Brown Lilley 


 

Legislative Public Hearings on
2009 - 10 Executive Budget Proposal – Public Protection


 
Good Afternoon.  My name is Kristin Brown Lilley and I am Director of Legislative Advocacy for Empire Justice Center, the back up center for civil legal services programs outside of New York City.  I also coordinate the Legal Services Funding Alliance, a coalition of the twenty civil legal services providers outside of New York City.  It is in that capacity that I testify today.  The Alliance was formed to allow our members to speak with one voice in advocating for state funding for our services.  We are also a member of the Statewide Campaign for Legal Services, which brings the New York City and Rest of State providers together with the same goal. Attached to this testimony is a map that outlines Alliance members and their service areas.

The Legal Services Funding Alliance members help low income New Yorkers with their pressing legal needs in every Senate and Assembly district upstate and on Long Island. Our members work with the families of overseas veterans in Watertown, elderly couples in Buffalo, struggling farmers in Washington County, exploited farmworkers in central New York, victims of domestic violence in Rochester, children of immigrants on Long Island and jobless parents in the Hudson Valley. 

Every day, low income families and individuals come to the doors of our programs seeking legal advice and representation.  Every day, we are forced to turn many more away than we are able to serve.  Nationally, it is estimated that due to lack of resources only one in five [1] legal needs of low income households are met.  Here in New York, in a recent snapshot survey conducted by Funding Alliance Members, during one cold and snowy week in December, members were forced to turn away an estimated 55 people every hour that our programs were open.  As a result, there were approximately 143 unaddressed legal problems [2] each hour in the regions outside New York City. 

Unfortunately, the current economic crisis only intensifies the need for legal assistance – from difficulties accessing unemployment and other benefits to increased numbers of foreclosures due to job loss.  This combined with waning Interest on Lawyers Account (IOLA) and foundation revenues, fundraising difficulties, and proposed cuts in state funding for civil legal services make it all too likely that this number will only increase substantially.

Background and History of State Funding

Core Funding - In order to meet the legal needs of poor and low income populations, legal aid programs across the country rely on three core funding streams: federal funding, Interest on Lawyer Account (IOLA) funds, and state funding.  In New York, those funding streams include:

  • Federal Legal Services Corporation (LSC) – federal funding received by seven (7) LSC grantees in New York State.  Launched in the 1960s, the federal Legal Services Corporation (LSC) is the national construct for funding civil legal services. These funds are distributed on a per-poor-person basis and support the general delivery of legal services based on local needs assessments.  
  • Interest on Lawyers Account (IOLA) – received by many legal services organizations, but not all.  Modeled after programs in Canada and Australia, IOLA is now a model of funding used throughout the country to tap into what had been non-interest bearing accounts held in escrow by attorneys and law firms.  Seventy-five percent (75%) of the annual funding must be designated for the direct delivery of services to individuals, while 25% are designated for efforts to advance the Administration of Justice.  
  • State Funding -  the 2007-08 State budget provided funding for legal services through the Office of Court Administration (OCA), the Department of State (DOS), and the Division of Criminal Justice Services (DCJS) as part of the Legal Services Assistance Fund (LSAF) – the 2008-08 State budget included funding through each of these sources EXCEPT OCA. Again, not all programs receive funding from all of the state funding streams.

Combined, these funding streams support a full range of services needed to ensure a vibrant civil legal services delivery system. 

The Current National Context

In 2008, eight states increased state funding for civil legal services, five, including New York decreased their support. Two states provided new appropriations for state funding bringing the total number of states that provide no funding for civil legal assistance down to just three.  Nationwide, the total amount of state funding made available for civil legal assistance increased. 

In the neighboring states of Pennsylvania, Massachusetts and New Jersey state funding has increased in recent years – all provide at least $11 million in funding and each has over a million fewer people living in poverty than New York.  As a result, these three states provide an estimated $9.89, $19.29, and $29.14 in state funding per poor person in comparison to New York’s 2008 state funding of $2.68 per poor person.  Under the current proposed funding level New York would provide $0.37 in state funding per poor person. (See attached chart)

All three of these states have maintained a strong commitment to funding civil legal services using a combination of general fund and filing or other fee-generated dollars.  However, some have begun to respond to the IOLA (called IOLTA in other states) revenue crisis by providing additional appropriations to offset losses in an effort to avoid layoffs and loss of essential services.  In fact, just this past October, New Jersey Governor Corzine provided a $9 million supplemental appropriation to help maintain access to legal assistance in spite of substantial funding reductions as a result of reduced IOLTA earnings in the current funding cycle and into 2010.

State Funding for Legal Services in New York

Civil legal services have been funded in the state budget as a statewide initiative since 1993. For fourteen years, civil legal services have been funded annually through the efforts of the Assembly Majority.  Finally in 2007, recognizing the state’s responsibility to provide low income New Yorkers with access to these critical services, Governor Spitzer provided funding for civil legal in his first Executive Budget joining with Chief Judge Judith Kaye who had also included funding in the OCA budget for the first time.  Total funding for civil legal services in 2007 amounted to $15.85 million. 

In 2008, funding was once again included in the Executive Budget, but at a nominal level, in expectation of a substantial increase in Interest on Lawyers Account (IOLA) Fund resources that never materialized.  Total Funding in 2008, after being subject to reductions in the August Special Session was $7.2 million. This year, the Executive Budget initially included no funding for civil legal services, once again anticipating an increase in IOLA funding that will not materialize. Indeed in a New York Law Journal article published on December 26th, 2008, IOLA Fund Executive Director, Lorna Blake notes that IOLA grant making remained flat from 2008 to 2009.  Ms. Blake goes on to warn that IOLA revenue could be down as much as 70% in 2010.

New York’s IOLA Fund Revenue

In recognition of this new information, Governor Paterson restored $1 million in funding for civil legal services in his recent 30 amendments.  Given that the need for civil legal services is expected to increase exponentially as a result of the economic downturn and IOLA funding is expected to be down dramatically, we urge both the Senate and the Assembly to work with the Governor to bring total funding for civil legal services up to $11.4 million in this year’s budget as outlined in the chart below. This represents approximately 75% of the 2007 funding level.

There are a number of ways to provide the needed funding to restore legal services funding to an appropriate level.  Recognizing the state’s financial crisis, we are urging that funding be restored to approximately 70% of the 2007-08 levels. 

We are also urging the new Senate Majority to become partners with the Assembly Majority and with Governor Paterson in securing funding for civil legal services in this year’s budget.  By using either general funds through the Department of State or by setting aside a portion of the Legal Services Assistance funding in the Division of Criminal Justice Services (DCJS), the Senate has an opportunity to help address the need for civil legal services across the state.

Not Just a Matter of Justice – Civil Legal Services Save and Generate Money for the State

Civil legal services programs play a critical role in our state’s justice system by helping to ensure that access to justice is not based on one’s ability to afford an attorney.  Indeed, as the economy worsens, fewer New Yorkers will be able to afford a private attorney at the very time they are more likely to need one.  When that happens, civil legal services programs are there helping to connect low income, struggling New Yorkers with benefits such as disability and unemployment, we are helping single parents navigate the child support system, we are helping  domestic violence victims obtain orders of protection, we are helping people avoid homelessness by staying evictions and avoiding foreclosure.   We are there, that is, to the extent that we have the financial resources to be there.  

While our own missions involve helping low income and marginalized people assert their rights, we also provide an incredibly cost effective service to the state.  As a result, providing funding for civil legal services is not just the right thing to do, it’s an economically sound investment that generates economic activity and helps state and local governments avoid substantial costs.  As our state and local economies continue to falter, the likelihood that low income New Yorkers will encounter issues that they need legal assistance with increases exponentially.  So does the potential for cost avoidance and cost savings generated by ensuring that legal services programs have the capacity to respond this increased demand for services. 

A substantial investment in civil legal services would get the state a double bang for its buck – leveraging both cost savings and pumping additional federal and private dollars in the pockets of low income New Yorkers by helping our clients access SSI/SSD payments, food stamps and increasing child support payments. 

As is well acknowledged, providing dollars to lower income individuals is a sure way to ensure that the money is spent expediently on necessities and in local economies and local businesses.  As Peter R. Orzag, Congressional Budget Office Director, notes: “To boost cost-effectiveness further, policymakers would need to focus on lower-income households and those with difficulty borrowing. The studies of the 2001 tax rebate suggest that such lower-income and credit-constrained recipients increased their spending substantially more than the typical recipient. “

And in his testimony before the House Budget Committee, in January, 2008, Federal Reserve Chairman Ben Bernanke testified that the greatest economic effect of the stimulus would come from people with lower incomes.  ”If you're somebody who has lots of financial assets and you receive an extra dollar, you may not change your spending much because you can simply either put the dollar in your bank account or take out a dollar as you need it. If you're somebody who lives paycheck to paycheck, you're more likely to spend that extra dollar," Mr. Bernanke said.

By working with low income households to secure income supports, legal services helps drive funding into the overall economy.

The Cost Effectiveness of Legal Services

Here’s how civil legal services save the state money and drive dollars into local economies:

  • We avert costly “crisis” services such as emergency and homeless shelter stays.  
  • We offset state costs by helping families and individuals secure federally funded benefits such as Supplemental Security Income, Veteran’s Benefits and Food Stamps.  
  • We help stabilize families and thus avoid foster care costs.
  • We help increase economic security by maximizing child support benefits for low income parents and children and securing unemployment benefits for those who are wrongly denied this support. 
  • Finally, we leverage private and federal funds that bring dollars and jobs to every region of the state where a legal services program is located. 

According to the IOLA Fund, in 2006, IOLA grantees helped win $131 million in benefits for their clients.  This includes over $88 million in Social Security and SSI payments, over $12 million in child support payments, approximately $3.5 million in Unemployment Compensation and over $23 million in federal and other benefits.  In 2007, the Legal Services Funding Alliance members alone generated over $103 million in client benefits, including over $9.4 million in child support payments. 

And this is in the context of our on-going inability to meet the full needs of those who seek legal assistance.  Imagine the impact the legal services delivery system could have if it was more fully funded.

Indeed, in their 2001 Grantee Activity Report, the IOLA Fund used a standard economic activity multiplier to estimate that in 1999 IOLA grantees generated an estimated $635 million in new economic activity and 10,793 jobs resulted from both the benefits generated for clients and federal funding secured by grantees to provide services. 

Taking into account total funding allocated to IOLA grantees from all sources, civil legal services generate over $9,000 in client benefits for every $10,000 invested, a return of 93 cents on the dollar.  The impact of these client benefits on local economies cannot be understated.  Low income families primarily spend their resources on subsistence items – from utility and grocery bills to paying for child care or transportation to and from work.  As a result, the majority of the benefits flow almost immediately into state and local economies resulting in sales tax revenues and business income to state and local businesses.  

Conclusion – Legal Services is a Critical Investment for the State

Whether to honor the belief that everyone deserves some measure of access to justice or to make the prudent investment in services that generate increased economic activity in the state or to ensure the state’s own interest in drawing in federal benefits is met to the greatest extent possible, we urge the Legislature to ensure that a minimum of $11.4 million is invested in delivery of legal services in this year’s budget.
We look forward to working with all of you – and in particular with the members of the new Senate Majority – to ensure that these critical investments are made in this year’s budget.

Thank you.

End Notes:

[1] Documenting the Justice Gap in America, A report of the Legal Services Corporation, September 2005.  hereinafter The Justice Gap; www.lsc.gov 
[2] Based on an estimated 2.6 legal needs per household, estimated by averaging the  number of legal needs in preceding year per low-income household in states that conducted legal needs studies as reported in Chart 5, New York Legal Needs Study, NYBA Committee on Legal Aid, revised 1993.

 

Supporting Documents:

2009 Human Services Testimony- CLS Funding Restoration Chart