Bar gives Committee OK to consider dues increase

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“We believe … that a dues increase will be necessary for fiscal year ’05. Michelle Behnke President-elect

The State Bar Board of Governors has told the Finance Committee that it can consider a dues increase when developing the budget for its next fiscal year. The board’s vote set up the possibility of the first dues increase in five years.

The Board of Governors last approved a dues increase for fiscal year (FY) 2000. The State Bar is currently in FY 2004 and will be developing a budget for FY 2005 in the coming months. The current dues for lawyers licensed to practice in Wisconsin are $210 annually.

Earlier in its Nov. 14 meeting, the board listened to the Long Range Financial Report from Finance Director Lynda Tanner and Treasurer Dean R. Dietrich, which predicted that maintaining the status quo with operations and revenue sources would lead to a budget deficit in each of the next three years. The report indicated an $800 surplus in the current budget year.

Future Deficit

Moving forward into FY 2005, the State Bar would face a $194,012 deficit for the nearly $10 million budget. That deficit would grow to a projected $275,352 in FY 2006 and $301,547 in FY 2007.

During that same time period, the report indicated the revenue from dues would go from $3.7 million in FY 2004 to more than $4 million in FY 2007. Those dues projections were based solely on increases in the number of lawyers licensed in Wisconsin, not on any dues increase. The increases were considered in the figures used to determine the projected deficits.

President-elect Michelle Behnke chaired the Revenue Review Committee, which was developed to look at revenue sources and consider the possible need for a dues increase.

“The question that was put to us was ‘Do we need a dues increase for fiscal year ’05?’” Behnke told the board. She noted that the more important question it considered might be “How do we decide when we need a dues increase? And how do we go about that process?”

Review Process

The Revenue Review Committee looked at economic conditions and forecasts, membership projections, the net worth of the bar, potential program changes to meet strategic goals, considered a revenue analysis and expense analysis.

“We believe, having gone through that exercise, that a dues increase will be necessary for fiscal year ’05,” said Behnke, a solo practitioner in Madison.

She noted that part of the budget process involves asking committees what they want to do in the coming year. Given the prospect of a $194,000 deficit, she said, the Finance Committee could not truthfully go out to committees to ask what they want to do without the possibility of another revenue source. If the board decided against a dues increase, then they would go out to committees and simply ask them what they would be willing to cut in the coming year.

“If that is the decision that this body makes, that’s fine,” Behnke said early in the discussion. “But that’s the direction that we are looking for.”

Dietrich, of Ruder Ware & Michler in Wausau, echoed the desire to receive some direction from the board regarding whether the Finance Committee could consider a dues increase when developing the budget. He stressed the need for making a dues increase an option.

“If not, I’ll have to use something else but it will be far more devastating,” he said.

Why Now?

Gov. G. Jeffrey George, of Moen Sheehan Meyer Ltd. in La Crosse, noted that a dues increase was something that the board had seen coming for the past three years. However, George said he was upset at having to make a decision about a dues increase at the Nov. 14 meeting without being able to discuss it with his constituents.

“I don’t have any problem going out there and defending to my members that we need a dues increase, but I need the opportunity to do it,” George said. “I can’t go out and say that on seven days notice I had to vote for a dues increase.”

He asked that the issue be carried over until the January meeting.

Behnke responded by noting that it was a reported item at the September meeting. She acknowledged that at that point, they did not know what the committee’s recommendation would be, but the board was aware that a dues increase was being considered.

“We thought that we were doing the right thing by coming earlier,” Behnke said. In the past, she observed that dues increases were presented once the budget was completed.

“At that moment, having gone through the entire budget process … then you were told either you had to vote for a dues increase or all this work that we did months ago was for naught. We thought putting the question this early in the process we could be honest both with you and with the committees as we move forward through the budgeting process.”

Behnke also explained that during the budgeting process for this year, the State Bar cut $750,000 from what was originally considered. She noted that was a combination of removing about $450,000 in wish list items from the budget, as well as making about $300,000 in real cuts.

Opposition to Increase

Gov. Robert R. Goepel, a Racine lawyer, indicated that he believed the State Bar could eliminate even more expenses and find additional revenue sources. He related the dissatisfaction of his constituents at the idea of a dues increase. He also expressed a belief that the bar operated more efficiently years ago with fewer staff members.

During the Revenue Review Committee report, Behnke explained that the bar has 83 full time equivalent staff members this year. That figure is down from 87.5 three years ago. She also noted that personnel expenses account for 51 percent of the total budget.

Twenty percent of those staff members directly support the educational books and seminars, which the bar produces. Another 20 percent of the staff indirectly support books and seminars. CLE books and seminars are among the top revenue sources for the organization.

Both President R. George Burnett and Executive Director George Brown noted the challenges that the bar faces from competing CLE providers. Brown explained that there are nearly 900 providers of CLE making the market very competitive. At the same time, he said, the bar is trying to remain a low-cost provider, rarely breaking the $200 mark for programs.

Gov. Michael R. Christopher maintained that he did not believe a dues increase was necessary at this time. He added that a potential $194,000 deficit on a $10 million budget was not that significant.

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“A dues increase indicates that there is a crisis,” said Christopher, of DeWitt Ross & Stevens S.C. in Madison. “This is not a crisis.”

He raised the idea of tinkering with only a portion of the dues — the possible elimination of the new lawyer discount. He noted that the bar could increase the money from dues by adjusting what lawyers at either end of the age spectrum are paying.

Under SCR 10.03, lawyers over the age of 70 have emeritus status and are exempt from paying dues. New lawyers in their first three years of practice pay half dues.

Behnke explained that since the discounts for new and emeritus lawyers were part of the Supreme Court Rules, the bar would have to approach the justices about any changes to those rules. Right now, there would not be enough time to petition the Supreme Court for a rules change, hold the hearing and get a response in time for preparation of the dues statements.

On a voice vote, the majority of board members supported the motion to allow the Finance Committee to consider a dues increase during its budget planning process.

Tanner indicated that the issue of a dues increase amount would have to be decided at the March 2004 Board of Governors meeting in order to prepare the dues statements for next year. The board is expected to approve the final FY 2005 budget at its May 2004 meeting.

Tony Anderson can be reached by email.