Low Interest Rates Equal Legal Aid Woes
An July 7, 2008 article in the Pennsylvania Law Weekly discussed the serious shortfalls in budgets of Pennsylvania legal service organizations across the state, including Legal Aid of Southeastern Pennsylvania (LASP). Co-Executive Directors Harvey Strauss and Elizabeth Wood Fritsch comment in the article on the projected shortfall of $460,000, 11% of its $4.5 million budget, that LASP is facing due to the national drop in interest rates that has reduced funding available from the Pennsylvania Interest on Lawyer Trust Accounts (IOLTA) program. According to Samuel Milkes, Executive Director of the Pennsylvania Legal Aid Network, the statewide coordinating organization for 10 regional legal services programs and six specialized legal resource programs, "This is, I have to say, the most precipitous and dramatic drop in IOLTA rates and interest rates that we've experienced in the history of IOLTA funds".
According to the article,
"The last time interest rates dropped and IOLTA grants also dropped, a $10 surcharge was added to every civil filing in the commonwealth, $2 of which benefited legal services. That surcharge helped legal organizations weather the last economic downturn, according to interviews. But in a downturn with the "Access to Justice" surcharge, Elizabeth Wood Fritsch...co-executive director of Legal Aid of Southeastern Pennsylvania, said that other annual fund-raising events - the fourth annual run recently held in Chester County that raised $18,000, a silent auction that will be held in the fall in Chester County and another race that will be held in Bucks County September 24 - will help chip away at her organization's IOLTA shortfall.
Fritsch said that as 'more and more people slip into poverty, more and more people become eligible for our services...When you can expect the demand to go up, our resources are going down. The law firms that support us, and the foundations and corporations that support us, their interest rates are all going down'.
Legal Aid is not planning on making any cutbacks in its staff of 55, including 30 lawyers and eight paralegals, or its services to about 10,000 people a year, (Harvey)Strauss said. Instead, Legal Aid will rely on some of its savings, try to operate as leanly as possible and hope for economic improvements, Fritsch and Strauss said.
'Maybe foolishly we're going to pray for interest rates to go up. We're going to try to raise money. We're going to try to operate...a tight ship,' Strauss said. Most of the organization's budget goes to pay staff, so if people are cut, then services have to be cut, he said."
Excerpted from Low Interest Rates Equal Legal Aid Woes: Legal services nonprofits tighten budgets and hope for upturn by Amaris Elliott-Engel, Pennsylvania Law Weekly, July 7, 2008.