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Bar News - July 16, 2010


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 4:00 p.m. on Thursday, July 29, 2010.

This year, from February through May, members of the Finance Committee, chaired by the President-Elect (Marilyn McNamara, who took over as NHBA President at the end of June) met several times to become familiar with the Associationís budget details and the choices to be made in this challenging budget environment.

What is the size of the budget? What are the major components?

Please see the accompanying charts.

The 2010-2011 Association budget is balanced, and reflects an anticipated 6 percent revenue growth and 12 percent decrease in overhead expenses, enabling the Association to absorb 11 percent growth in personnel expense and 8 percent growth in programming expenses (including restoration of a full-time LRE coordinator position, increased health insurance and printing costs and the resources to establish some additional programming, particularly in the areas of leadership skill/interest development (Leadership Academy) and outreach to rural areas for more diverse participation (video-conferencing pilot).

The largest areas of the budget in most service-intensive organizations, including the NHBA, 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 35 full-time and five 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, and all the space is occupied at a lower per- square-foot cost than at the former Bar Center. To further stabilize ongoing occupancy costs, the Association exercised the option to purchase the office condominium and seminar room space in July 2009.
Were there any increases in NH Bar Association dues this year?

Highest Association Dues /
Court Fees Membership Category
 
NH SUPREME COURT
 
 
 
PCC Fee
PPF (CIF/
LAP)
MCLE Fee
Total Court Fees
NH Bar Dues
Total Dues & Fees
2009-2010 $195 $35 suspended $230 $305 $535
2010-2011 $195 $15 suspended $210 $310 $520
Change $0 ($20) $0 ($20) $5 ($15)
 
The 2010-2011 approved budget includes the last installment of the Boardís planned five years of $5 Association dues increases to facilitate the purchase of the Bar Center. Because the Supreme Court has granted the Bar Associationís request to temporarily lower or suspend certain Court fees*, the net impact on this yearís mandatory fees for members at the highest dues/fees category will be a $15 reduction (see chart).

*The client indemnity portion of the Public Protection Fund fee and the NHMCLE filing fee for 2010-2011; the Court also lowered the Lawyers Assistance Program fee by $5 and held the PCC fee level.

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 2010-2011 year, the NH Supreme Court Professional Conduct Committee fee remained unchanged.
     
  • 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 again suspended for the 2010-2011 year.
     
  • The NH Supreme Court Public Protection Fee was reduced for the 2010-2011 year; only 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 assessed by the NH Supreme Court.
     
  • The above Court fee structure means a temporary reduction in the mandatory cost to practice of $10-15 (for "Active" status members depending on years of practice).
How do Association membership dues compare nationally?

The majority of the Associationís revenue (53 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 Hampshire Bar Association dues 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 hereÖdo 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, 09-10 and 10-11 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, by $20 in 09-10 to "catch up" on the occupancy adjustments, and by the $5 occupancy adjustment in 10-11.
     
  • 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 earning, grant-seeking, fundraising, and better operations (higher revenues, lower expenses) than anticipated in the annual budgeting process.
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 finalize replacement of an outdated membership software system, to partially offset the increased occupancy expenses resulting from our move to the current location, and to offset the loss of some IOLTA grant funding for the Pro Bono program due to lower IOLTA revenues.

Click for a printable version of the chart shown below.

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