ACLU Is Among Groups Suffering From Lack of Funds

By Gabe Friedman
Daily Journal Staff Writer

LOS ANGELES - Layoffs, salary cuts and furloughs are hitting California groups that provide free legal aid to the poor, sick and elderly, as the worst funding crisis in decades takes hold.

Organizations that operate in the state's largest cities as well as its most rural areas - from the American Civil Liberties Union of Southern California to the Legal Services Corporation of Northern California - are feeling the pain.

The crisis has bloomed as the downturn in the stock market spooks loyal donors. More importantly, some say, a state bar fund designed to support legal non-profits is quickly running out of money. The state bar staff is proposing the bar's Board of Governors tap the fund's entire reserve to distribute a slightly-reduced budget for the upcoming year, with the understanding that catastrophic cuts loom in 2010.

Among those hit hard is the American Civil Liberties Union of Southern California, which is confronting the worst budget crisis in at least three decades. For the first time ever in January, it laid off two staff members - an organizer and a fund raiser - according to Ramona Ripston, its executive director since 1972.

Ripston said the group's senior management team of about seven people took salary cuts of five to 10 percent for the first time since 1979. Staff members, who previously received full health coverage at no cost, have also agreed to begin paying $50 per month for their insurance, she added.

"People come to me on a daily basis and say, 'Will I have a job next week?'" Ripston said. "I just don't know."

The organization, which does not receive government funding, hopes to close its deficit, but the funding shortage is arriving at a time when the organization's lawyers are litigating a series of high-profile cases that are costly to undertake; challenging government policies on immigrant detention, prisoner rights, unlawful surveillance and church and state separation. The shortfall worries Ripston who pointed out that even in flush times the opposing counsels try to capitalize on the group's relatively scarce resources by drawing out the cases and making them more expensive.

Nearly 100 of the state's legal nonprofits depend on the state bar's fund for their work. Known as IOLTA (Interest on Lawyers Trust Accounts), the fund receives its money from interest accrued in client trust accounts. Those funds have been depleted because the interest rate is loosely tied to the federal fund target rate, which has essentially dropped to zero in recent months.

The Legal Services Corp. of Northern California in Sacramento, which serves rural poor in the state's 23 northern counties and relies significantly on IOLTA funds for its operation, laid off 12 advocates and clerical workers in January. They monitored physical and financial abuse of elderly people in nursing homes and long-term care. Executive Director Gary Smith said the cuts were necessary because in October, Gov. Arnold Schwarzenegger vetoed approximately $310,000 in funding that had been earmarked for the federally mandated elderly care program. Smith said he also lost $225,000 for a hot line that fields calls about elderly abuse.

He characterized the situation as a serious retrenching as groups prepare for the looming IOLTA cuts in the 2010-11 fiscal year.

"The projections in terms of 2010 are really troubling, just in terms of catastrophic drops," Smith said. "We're all holding our breath, because it's difficult predicting, with any degree of certainty, what will happen."

Under the state bar's normal formula, IOLTA distributions this year would drop to their lowest level ever, about $3 million, compared with $14.6 million last year. Stephanie Choy, managing director of the state bar's Legal Services Trust Fund Program in San Francisco, said the bar's staff is proposing to tap $10.2 million from an IOLTA reserve account this year. That way, total funding in the current year would only be cut by 10 percent. The state bar Board of Governors votes on that proposal in March.

Last week, the staff union at Bay Area Legal Aid in Oakland agreed to implement mandatory five-day furloughs and to forgo retirement contributions as the first step toward closing an $850,000 budget deficit, or nearly 10 percent of its total operating costs. But Ramon P. Arias, the group's executive director, said it is only the initial round of cuts, and his organization still needs to find an additional $350,000 by this summer to avoid layoffs or more cuts.

"We're going to weather the storm," Arias said. "But as I say that, I look out and it's raining."

At the Western Center on Law & Poverty in Los Angeles, Pegine Grayson, co-interim executive Director, confirmed the group has laid off one or two employees and has held six positions vacant.

Still, other groups are finding other means to raise funds, or have already made adjustments to position themselves for the downturn. To replace the decline in state bar funds, some pro bono lawyers have begun seeking contributions from individuals and foundations.

Smith, of Legal Services Corp. of Northern California, spent the stormy Friday before President's Day hauling bottled water around Sacramento to prepare for a charity run, the Race for Justice, to raise money. Despite the inclement weather, Smith said registrations for the race increased this year, and he hoped to beat last year's total of $70,000. Meanwhile, Jim Preis, executive director of Mental Health Advocacy Services in Los Angeles, said his organization raised about $60,000 through a cocktail party hosted by Gibson, Dunn & Crutcher.

Two other smaller legal organizations, Centro Legal de la Raza in Oakland, and the Harriet Buhai Center for Family Law in Los Angeles, spent last year in a serious reorganization, according to their executive directors.

Betty Nordwind, executive director at Harriet Buhai in Los Angeles, said her organization was insulated from some of the downturn's impact because it has relied for core support on family law firms, whose business is less cyclical.

Bianca Sierra, executive director of Centro Legal, voiced similar sentiments. "We're now at a level where we're at a bare minimum," she said. "Now it's just a matter of thinking outside the box and finding new ways to raise the funding that we need."

Yet one perpetual problem for legal service organizations is that demand for services increases when the economy hits a rough patch, but that is also when it is most difficult to raise funds.

"Ultimately, the world needs to understand that if we have to downsize, we will have to reduce our services," said Arias.