Bar News - July 17, 2009
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 yearís Budget Information Session is scheduled for Wednesday, August 12 starting at 4:00 PM.
This year, from February through May, the Finance Committee, chaired by President-Elect Jim Tenn (who took over as NHBA President at the end of June) met numerous times to become familiar with details of the Associationís budget, and the choices to be made in this challenging budget environment.
What is the size of the budget? What are the major components?
See the accompanying charts.
The largest segments 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 32 full-time and 5 part-time positions in the Association budget, 12 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 office condominium 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. To further stabilize ongoing occupancy costs, the Association is exercising its option to purchase its office condominium and seminar room space. The purchase is expected to reap at least $70,000 in savings annually, compared to scheduled rent increases, and this is reflected in the budget starting with the 2009-2010 fiscal year.
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, 2009) included a $20 dues increase for Inactive Members (those not currently authorized to practice law in New Hampshire) along with the fourth of five planned annual $5 increases to Active members for the purpose of offsetting the additional occupancy costs resulting from our move to the current location.
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 2009-2010 year, the NH Supreme Court Professional Conduct Committee fee remained unchanged.
♦ The NH Supreme Court Public Protection Fee also remained unchanged for the 2009-2010 year, although the portion of the PPF fee designated to fund an independent, staffed Lawyers Assistance Program (established by the Court in 2007 to reduce potential future claims against the fund) was reduced, resulting in more of the total fee going toward the client indemnity portion of the Fund.
♦ The Courtís $10 NHMCLE filing fee, established to offset some of the operational costs of a simplified NHMCLE record access system and reporting process, was suspended for the 2009-2010 year.
How do Association membership dues compare nationally?
The majority of the Associationís revenue (54 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 $305 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 the (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 2004-2005, a five-year look-back shows:
♦ Active Member Dues increased by $15 in 06-07, including the first of five scheduled annual $5 occupancy cost adjustments. A $30 increase in 08-09 also included the $5 planned adjustment, while in 07-08 and 09-10 the only increase was for the $5 occupancy adjustment. After experiencing no increases since 01-02, dues for Inactive Members, who are offered most of the benefits available to Active members, were increased by $10 in 08-09 and by $20 in 09-10.
♦ The increased dues revenues cover only about 1/3 of the increased operating cost of the organization. The other 2/3 has been covered by non-dues revenue, 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 an outdated membership software system and some older equipment, and to partially offset the increased occupancy expenses resulting from our move to the current location.
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. A Strategic Planning and Operations Task Force will continue prioritizing the Associationís goals and programming to help inform Board decisions about essential Association activities and to support long-term strategic planning.
PDF version of Budget Chart