Bar News - July 18, 2008
New Hampshire Bar Association Budget Q & A
How is the budget created and approved?
The Associationís finance committee reviews projections of continued, new, changed or discontinued programming and services and, in conjunction with staff, develops a budget draft for presentation to the elected Board of Governors for review. Once the Finance Committee has incorporated all Board input, a final proposed budget is presented to the full Board of Governors for approval. The approved budget is presented to the membership through publication in Bar News, and a separate information session for members is held at the Bar Center.
This year, from February through May, members of the Finance Committee, chaired by the President-Elect (Ellen Arnold, who took over as NHBA President at the end of June) and the Board of Governors met numerous times, including spending a full day at a "budget work session" to become familiar with the Associationís budget details and the choices to be made in this challenging budget environment. (See additional reporting on the process in the April 18, May 9, May 20 and June 6 issues of Bar News.)
This yearís budget information session will be scheduled later in the summer Ė watch Bar News and the weekly e-Bulletins for the date.
What is the size of the budget? What are the major components?
See the accompanying charts below.
The largest areas of the budget in most service-intensive organizations, including this one, are personnel and space:
Virtually all activities of the NHBA are service-related; hence the single largest expense in the budget is staffing to carry out those services. Of the 34 full-time and two part-time positions in the Association budget, nine are funded in whole or in part by grants. Health insurance premiums continue to climb, but changes to the plan have been implemented over the past few years that have helped to keep the increases in this cost within budgeted levels.
Space costs per square foot were significantly reduced in the move to the leased office space at 2 Pillsbury Street. While the amount of square footage, and therefore occupancy costs, increased in the move, more than one-half of the Bar Centerís square footage is now dedicated to member use.
Were there any increases in NH Bar Association dues this year?
Sensitive to the fact that these are difficult economic times for many members, a dues increase was a last option, not a first option, considered by members of the Finance Committee and the Board of Governors. However, these volunteer Association leaders were also aware that the responsibilities to serve the membership, the public and the justice system are more important than ever. After making a number of adjustments to planning and programming, the members of the Finance Committee and Board of Governors decided any further cuts would cause ill-advised elimination of services and programs valued by the membership.
Therefore, the new budget (for the fiscal year that started June 1, 2008) included a total increase of $30 in membership dues ($25 plus a previously anticipated $5 increase, the third of five planned annual $5 increases offsetting additional occupancy costs).
What is the difference between Association membership dues and Court fees?
For efficiency, as the official keeper of bar membership records in New Hampshire the Association bills, collects and tracks payment of the mandatory NH Supreme Court fees. A separate statement is mailed with the Association dues bill, and members return the Court Fees (and forms) with the Association dues payment.
For the 2008-2009 year, the NH Supreme Court Professional Conduct Committee fee remained unchanged.
Last year, due in part to a proposal made by Bar leadership, the Court reduced the Public Protection Fund (PPF) assessment, and the PPF fee remained at that reduced amount this year. (A portion of the PPF fee funds an independent, staffed Lawyers Assistance Program established by the Court last year to offer a diversion option for attorneys to reduce potential future claims against the fund.)
The Courtís NHMCLE fee, established to offset some of the operational costs of a simplified NHMCLE record access system and reporting process, also remains at last yearís level of $10 for all attorneys subject to the NHMCLE rule.
How do Association membership dues compare nationally?
The majority of the Associationís revenue (almost 60 percent) is generated from non-dues sources, and non-dues revenue opportunities are continually sought to minimize the impact on dues. According to information collected by the American Bar Association, NHBA membership dues are in the average range nationally; ranking 14th out of 34 unified state bars. (New Hampshireís highest dues category rate of $300 should not be confused with the above-mentioned Supreme Court fees, which the Bar collects for the efficiency and convenience of the Court and the members.)
Why does the Association make money on Continuing Legal Education (CLE)
The Bar Associationís CLE program (not to be confused with the Courtís NHMCLE Rule and its administration) is committed to offering high-quality continuing legal education, specific to New Hampshire law, in a variety of formats and covering a wide range of subject and experience levels to meet member needs Ė while generating non-dues revenue for the Association. The pricing of the programs is well below market cost, and participant evaluations indicate consistently high quality and value. The positive revenue operation of NHBA-CLE enables the program to extend special pricing for programs or individual situations that require it and to afford production of some programs that are deemed necessary but are not likely to "break-even." When a (steeply discounted) cost of Bar News advertising is taken into account, the Associationís CLE program actually clears a minimal "profit."
How did we get hereÖdonít dues go up every year?
Since 2002-2003, a five-year look back shows:
Dues increased by $10 in 03-04 and in 06-07, with the first and second installments of the $5 for five years building cost plan being added in 06-07 and 07-08.
The increased dues revenue since 2002-2003 ($244,842) has covered only about 1/3 of the increased operating cost of the organization during that time ($623,902).
The other 2/3 has been covered by non-dues revenue earning, grant-seeking, fundraising, and better operations (higher revenues, lower expenses) than anticipated in the annual budgeting process.
Also during that time, dues revenue from new members has amounted to approximately $50,000 annually.
Better-than-anticipated fiscal performance on an annual basis has resulted in reserves not being drawn upon for a number of years as anticipated in the initial budget process for each year, and new programs and services being established without related dues increases.
What are Reserve Funds, and how do they work?
Reserve Funds are recommended for most not-for-profit organizations, and are used most often to set aside funds to ensure an organizationís long-term viability in the case of unforeseen events, as well as to build funds to pay for future significant capital expenditures or other special projects. This yearís budget anticipates drawing funds from reserves to replace outdated equipment and reduce the amount of the dues increase.
Finding the appropriate amount and mix of services and activities to meet the needs of the mandatory membership in the most effective and efficient way possible is an ongoing challenge and responsibility of the Associationís volunteers and elected leaders.
During an "operational survey" conducted by the American Bar Association last fall, the ABA noted that "Over the last ten-years, the NHBA has engaged in a number of goal setting, strategy exploration, and visioning sessions." A main recommendation of the survey was to "integrate all of the various research, brainstorming, ranking, assessment, and program initiatives, and evaluations [that have been previously conducted] into a comprehensive strategic, operational, and financial plan."
At the conclusion of the budget process for 2008-2009, the Board of Governors pledged to take up this recommendation. A Strategic Planning and Operations Task Force will work to prioritize the Associationís goals and programming to help inform Board decisions about essential Association activities and to support long-term strategic planning.
View the 2009 NHBA budget (PDF)