Following is a State of Legal Aid Report, describing the significant activity undertaken by the Pennsylvania Legal Aid Network in the past fiscal year.

Legal Aid Programs Produced an Impressive amount of Case Activity in the 2008-9 Fiscal Year.

In fiscal year 2008-9, there was a dramatic reduction in funding from the prior year, due to the declining IOLTA revenues, attached to lower interest rates. Despite this, the programs of the Pennsylvania Legal Aid Network were actually able to produce a higher number of cases than were produced in the prior fiscal year. In 2008-9, there were 1,166 additional cases handled, for a 1.2% increase over the prior year. It is interesting to note that even the data for the opening of new cases increased, at the higher rate of 2.1%. This is surprising, since it indicates that the increased case handling occurred not just for cases already in the pipeline at the start of the year, but it also indicates that more cases continued to be taken on during the course of the fiscal year.

We attribute this increase to two factors. First, the programs utilized a large portion of their accrued net assets in the 2008-9 fiscal year, to try to maintain offices and staffing to the greatest extent possible. Accordingly, some of the blow of reduced funding was softened. But with a reduction in IOLTA revenues of about $10 million, it was clear that the use of net assets would not alone be sufficient to maintain services.
With regard to net assets, governance of any non profit requires sound fiscal policies. United Ways recommend that non-profits maintain between three and six months of reserves, to anticipate cash flow needs and budgetary uncertainty.

In the 2008-9 fiscal year, programs spent down over two million dollars of their net assets, reducing them from about $16 million to about $14 million, an amount falling well short of even the three month reserve level. Some programs cut their assets by as much as 50%. Most net assets held by the programs are restricted to a particular purpose and are not generally available to fund program activities. Obviously, this use of net assets cannot repeat in the next fiscal year, or programs would place themselves into even further crisis, particularly since they would not have the flexibility to dedicate restricted net assets to general program activities.

The second factor contributing to the increase in cases is that staff simply worked harder. This is especially evidenced by the fact that even within the case data, one can observe there was a higher proportion of extended representation cases than brief services, as compared to the prior year. While this fiscal year initially witnessed an increase in staffing, by year end, staffing had declined, as evidenced in the analysis at the end of this report; yet more cases were produced.

It may come as no surprise that one particular area of growth was in the employment representation area, where representation increased by 28.5% over the prior fiscal year. This is due in part to the increased number of clients who are out of work or have lost jobs, and who need help with unemployment compensation claims or with efforts to improve their job qualifications, such as by expungement of criminal records.

The graphic below shows where the increases occurred, by comparing data from fiscal year 2007-8 to 2008-9. While this data shows nearly 100,000 cases handled by the PLAN programs, there were actually more than 100,000 cases, when including data of Philadelphia Legal Assistance

Case Activity in the Employment Area was Particularly Impressive.

The number of closed employment cases makes up about 7.5% of total closed cases, compared to 5.6% last year, showing a much greater increase in activity for this subject area than the overall caseload increase of 1.2%.

New cases were particularly concentrated in the areas of pardons, expungements and correction of child abuse records, where we help qualify clients for work.

Unemployment Compensation case activity increased by 27% over last year, by a total increase of 819 cases (from 2,213 to 3,032). The increase here is a sign of the current times, and our response to client needs, where claims for unemployment compensation are a natural consequence of the stagnant economy and the high unemployment rate. The increase here is side by side with the significant increase in job qualifier types of cases, mentioned above.

There have been Real Consequences of the Reduced Legal Services Funding.

The challenges faced by programs occur at a time they report increased need for services. (One program reported a 23% increase in requests for service and all reported increases.) Mortgage foreclosures continue to be on the rise. Unemployment is up, causing more people to be eligible and more legal problems for families losing their income. Healthcare has become more complex. And even family crises, such as domestic violence incidences, are also on the rise. A newly released report of the Legal Services Corporation documents the extent to which eligible clients have been denied services, because of lack of financial resources and staffing of legal aid programs. This report is found at: http://www.lsc.gov/pdfs/documenting_the_justice_gap_in_america_2009.pdf

Year-end reports from Pennsylvania Legal Aid Network programs reveal the following impact so far, from reduced funding. More consequences will be felt in the 2009-10 fiscal year, particularly because of more limited availability of funding and net assets, but they began to play out in the past fiscal year.

• Layoffs at some programs and hiring freezes at nearly every program have already resulted in downsizing of 32 full time positions within the PLAN. Programs anticipate more losses of positions in the 2009-10 fiscal year and had held off taking further action until the recent budget process concluded.
   
• Even for staff that remain, nearly every program has implemented salary freezes, with no COLA or any other increases.
   
• One program has implemented a mandatory furlough; requiring all staff to take one unpaid day off per month; in effect a 4.6% pay cut.
   
• Many programs have stopped their limited contributions to employee retirement accounts and have scaled back the quality of employee health care benefits.
   
• Nonessential travel has been eliminated, resulting in the curtailment of training and of key opportunities to have impacts on client concerns.
   
• Programs are having difficulty making up for funding cuts through other sources because they find that local sources and foundations have also cut back, due to decreased contributions and decreased interest rates.

Results of the 2009-10 Budget Process Fell Short but were Encouraging.

This state of Legal aid Report is a report of the 2008-9 fiscal year. Normally, the budget for the following fiscal year is concluded by the end of the preceding one. Even though the state budget for 2009-10 was not concluded until 101 days into the new fiscal year, it is relevant to this report to recap the results of that budget process.

While there was great hope that a temporary filing fee provision for legal services, passed by the House at a level of $8 million annually for two years, would ultimately be the one adopted, the final version of the temporary fee, producing about $2.8 million annually for legal services, still makes up for a portion of the $10 million IOLTA shortfall. The Commonwealth appropriation fell $108,000 below that appropriated last fiscal year (but virtually as last year’s actual level, considering that $100,000 of legal services funding was frozen during the fiscal year, because of reduced revenues).

Supporters of legal services worked hard to improve funding to legal services. In the end, funding was in fact increased, even in a year when many services were cut or eliminated. While we did not accomplish the full goal of making up for the IOLTA cuts through a temporary filing fee increase, few would have predicted last Spring that legal services would realize an overall increase in funding for the 2009-10 fiscal year.