The Florida Bar and its sections talk money

first_img February 15, 2005 Senior Editor Regular News The Florida Bar and its sections talk money The Florida Bar and its sections talk money At issue is the complex way revenues are handled and sections are supported by the bar Gary Blankenship Senior Editor The touchy topic of the financial relationship between The Florida Bar and its sections got a thorough airing at the Board of Governors January 28 meeting, ending with a promise to make a final decision on changes at its next meeting.At issue is the complex way revenues are handled and sections are supported by the Bar, and whether the existing arrangement, which has been in place for about 15 years, is fair.The process began about two years ago with a special task force appointed by then-President Miles McGrane. That action came as the Bar was losing large amounts of money supporting the sections, most of which were making money.Although the situation has improved, Bar leaders are still concerned while section officials have been sensitive to changes that could cost them money or members.“In my opinion, no change is not an option,” said Bar President Kelly Overstreet Johnson. “We have to do something. The question is how we do it. There is a lot of erroneous information out there and a lot of misunderstanding. I don’t think there is any real problem with subsidizing sections to a certain level; but the real problem comes when you’ve had the big losses we’ve had.”She added, “This [task force] was not designed to shove anything down anyone’s throat. This has been going on for two years. That said, we have to bring this to a close.”The president said the January meeting was to bring the issues and background to the board for discussion, with the goal of having the board make a decision at its April 8 meeting in Tallahassee.As for the sections, “the level of animosity is unbelievable,” said board member Gary Leppla.CLE programs are one aspect of the financial arrangements. Budget Committee Chair Jerald Beer, who served on the special task force studying the issue, noted that sections get 12.5 to 20 percent of the gross revenue from CLE and the Bar gets the rest and pays all of the expenses. In some recent years, the sections overall made hundreds of thousands of dollars from CLE, while the Bar lost upwards of $250,000.Continued improvements in CLE operation in the past two years produced a profit for the Bar, but there are other costs.The Bar gets up to $12.50 of each section member’s dues to pay its administrative and support expenses, but that has not proven to be nearly enough.The Bar has lost money on administrative costs (providing section coordinators and other direct support costs) in an increasing amount, going from $367,458 four years ago to $528,396 last year. Over the same period, general administrative costs (known as G&A) which include computer, personnel, accounting, and other services, have increased from $311,808 to $360,322.According to Bar figures, the Bar lost almost $641,000 (including $250,000 on CLE programs) supporting section operations for the fiscal year that ended June 30, 2002, although that declined to a bit over $250,000 for the fiscal year that ended June 30, 2004.Beer noted that about 29,000 Bar members hold 50,000 memberships in the various sections (those figures, along with the fiscal numbers, do not include the Young Lawyers Division, which has a separate financial arrangement with the Bar). That means, he said, that the 46,000 Bar members who do not belong to the sections are subsidizing section operations.The task force has looked at several options, including increasing section dues with the Bar getting up to $16.50 a member, ending a discount that sections get for using Bar internal services­— such as printing — or charging the sections more for administrative services if those exceed CLE profits by a certain amount, Beer said. But sections rejected those proposals.Council of Sections Chair Marsha Rydberg said she looked at various solutions — including a cap on administrative expenses — but at the council’s January 22 meeting, the sections voted to advocate no change.Rydberg said the sections have several reservations. One is that while the Bar is concerned about the administrative costs, those are entirely under the Bar’s control, with the Bar hiring and paying section coordinators and deciding how much computer, accounting, and other services are worth.Sections are also worried, she said, that the Bar sees their aggregate of $2.5 million of reserves as a potential source of Bar income.And Rydberg questioned whether it was fair to allocate G&A costs to sections since many other Bar operations, such as meetings and conventions and lawyer regulation, don’t pay their G&A costs out of income, and those costs are then subsidized with members’ dues.Calculating G&A can also be unfair, she said. Sections that hire lobbyists and are active in other ways have bigger budgets, and hence are assessed a larger portion of G&A. Often donations that sections get fund extra activities, which are also counted in the allocation. Such practices, Rydberg said, actually offer a financial incentive for sections to be less active and not to seek outside sponsorships.Another difficulty is a few sections actually are profitable for the Bar, with CLE revenues more than offsetting CLE, administrative, and G&A costs, Rydberg said. Those sections would be unhappy with a section dues increase or other levy and such an action could pit section against section, she warned.Profitable sections might also be encouraged to leave the Bar and operate as an outside independent group if they saw themselves victimized, Rydberg said.But board members said they want to protect Bar finances from a spike of expenses similar to two years ago.“I want to see a plan that is going to make The Florida Bar whole,” said board member David Rothman. “I don’t care how you do it, just put together a plan. . . and get the sections to vote. The Bar shouldn’t be losing money when the sections are making money.”Board member Gwynne Young said she was in support of continuing some Bar subsidy of sections, but stated a reexamination was in order because it had been around 15 years since the issue was looked at.“The time has come to see if we’re still subsidizing at the right level,” she said.Young also said she liked the idea of crediting Bar profits from section CLEs against section G&A costs, adding, “If they do their job on CLE, there would be no [additional] assessment to them.”Board member Jesse Diner said he was concerned that the sections don’t want any changes to prevent another year like 2002, when the Bar, besides its administrative subsidies, lost $250,000 on section CLE operations, while sections made a $359,000 profit. “They want the profits and the Bar to pick up the losses,” he said.President Johnson said, “The key is that we communicate with our sections. We are not trying to do anything bad to them. We are simply trying to make this equitable. A lot of the problem is from a lack of understanding or misinformation.”Beer said the board will get a variety of options at its April meeting, and Johnson urged board members to discuss this issue with sections, but also added it’s time to resolve the issue.“It would be my intent that we decide this in April,” she said. “Two years [working on the issue] is long enough.”last_img

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