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2021 Adopted Budget

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2021 Adopted Budget Title of Report: 2021 Adopted Final Budget Statutory Citation: Business and Professions Code section 6140.1 Date of Report: February 26, 2021 The State Bar of California has submitted a report to the Legislature in accordance with Business and Professions Code section 6140.1, which requires the State Bar to submit a final budget to the Legislature by February 28 of each year. This summary is provided pursuant to Government Code section 9795. The fiscal impacts of COVID-19 on the State Bar’s budget have been significant and include reductions in tenant lease revenue, increased janitorial and cleaning costs, and interest rate reductions resulting in millions of dollars in lost interest revenue. These conditions are expected to continue well into 2021, with commercial and retail lease revenues particularly hard hit. The 2021 budget anticipates revenues of $206.9 million and expenses of $194.7 million. The vast majority of State Bar revenue is derived from the annual attorney licensing fee. The 2021 fee bill authorized $463 in mandatory fees per attorney, a 6.8 percent reduction from the 2020 level as follows: • General Fund fees reduced by $3 per active attorney, reflecting the elimination of a one-time boost to increase the General Fund reserve. • Client Security Fund fee reduced from $80 back to $40 following a one-time increase to reduce backlog. • Lawyer Assistance Program (LAP) fees returned to $10, after a one-year reduction to $1 in 2020 to draw down reserves in the LAP Fund. Overall budgeted expenses of $194.7 million represent a net decrease of over 20 percent compared to the 2020 budget; general fund budgeted expenses represent a decrease of 4 percent compared to the 2020 budget. Key changes include: • Grants to legal services are reduced by nearly $39 million, due to the significantly reduced earnings on IOLTA accounts. The reduction also includes a reduction in distribution of bank grants, reflecting the fact that a significant portion of those grant funds have already been allocated. • Client Security Fund payouts have been reduced back to prior levels, reflecting the elimination of the one-time $40 increase to that fund. In addition, the budget highlights significant progress the State Bar has made toward the goals outlined in its 2017–2022 Strategic Plan. The 2021 Adopted Final Budget can be accessed at: http://www.calbar.ca.gov/About-Us/Our- Mission/Protecting-the-Public/Reports. A printed copy of the report may be obtained by calling 415-538-2000 San Francisco Office www.calbar.ca.gov Los Angeles Office 180 Howard Street 845 S. Figueroa Street San Francisco, CA 94105 Los Angeles, CA 90017 8 2021 Adopted Budget Prepared by the Office of Finance February 26, 2021 Table of Contents EXECUTIVE DIRECTOR’S BUDGET MESSAGE ................................................................................... 4 STATE BAR BACKGROUND ............................................................................................................. 17 HISTORY .................................................................................................................................. 17 BOARD OF TRUSTEES .............................................................................................................. 17 ORGANIZATIONAL STRUCTURE ............................................................................................... 18 LICENSEES ................................................................................................................................ 18 FISCAL 2021 BUDGET OVERVIEW .................................................................................................. 19 SOURCES OF FUNDS ................................................................................................................ 19 USE OF FUNDS ......................................................................................................................... 21 BUDGET ASSUMPTIONS .......................................................................................................... 26 BUDGET CALENDAR ................................................................................................................ 30 BUDGET DEVELOPMENT ......................................................................................................... 30 BUDGET MANAGEMENT ......................................................................................................... 30 BUDGET VARIANCES AND ADJUSTMENTS .............................................................................. 31 FUND STRUCTURE AND FINANCIAL POLICIES ............................................................................... 31 FUND STRUCTURE ................................................................................................................... 31 ACCRUAL BASIS ACCOUNTING ................................................................................................ 32 RESERVES ................................................................................................................................ 32 PROCUREMENT ....................................................................................................................... 33 INVESTMENT POLICY ............................................................................................................... 33 CASH RECEIPTS POLICY ........................................................................................................... 34 STATE BAR OPERATIONS BUDGET DETAIL ..................................................................................... 35 OPERATING AREA PROFILES.................................................................................................... 35 OFFICE OF THE EXECUTIVE DIRECTOR ........................................................................................... 36 ....................................................................................................................................................... 38 OFFICE OF STRATEGIC COMMUNICATIONS & STAKEHOLDER ENGAGEMENT ................................ 40 OFFICE OF GENERAL COUNSEL ....................................................................................................... 42 OFFICE OF CHIEF TRIAL COUNSEL ................................................................................................... 45 STATE BAR COURT .......................................................................................................................... 49 ....................................................................................................................................................... 51 MISSION ADVANCEMENT & ACCOUNTABILITY DIVISION ................................................... 53 PROGRAMS DIVISION.......................................................................................................... 57 OFFICE OF ADMISSIONS ................................................................................................................. 60 OFFICE OF ATTORNEY REGULATION & CONSUMER RESOURCES................................................... 67 OFFICE OF ACCESS & INCLUSION ................................................................................................... 70 OFFICE OF PROFESSIONAL COMPETENCE ...................................................................................... 77 OFFICE OF PROFESSIONAL SUPPORT & CLIENT PROTECTION ....................................................... 71 ADMINISTRATIVE DIVISION ................................................................................................ 79 OFFICE OF GENERAL SERVICES ....................................................................................................... 82 OFFICE OF HUMAN RESOURCES .................................................................................................... 84 OFFICE OF RECRUITMENT & RETENTION ....................................................................................... 85 OFFICE OF INFORMATION TECHNOLOGY ...................................................................................... 86 OFFICE OF FINANCE ............................................................................................................ 88 State Bar-wide Budget .................................................................................................................. 92 Budget-by Fund ............................................................................................................................. 94 Projected Reserve Balance by Fund............................................................................................ 107 Budget-by Cost Center ................................................................................................................ 108 EXECUTIVE DIRECTOR’S BUDGET MESSAGE Although this message introduces the State Bar of California’s 2021 budget, in this year of all years we cannot look ahead without reflecting back. The State Bar realized an important milestone in 2019 when it secured its first licensing fee increase since 1998. That new and critically needed revenue first became available to the State Bar in January 2020. A few short months later, the COVID-19 pandemic struck, accompanied by its dramatic economic impacts, forcing rapid changes in all government sectors and requiring us, like others, to rethink how business gets done and what really matters. For the State Bar, that meant prioritizing the health, safety, and wellbeing of our staff, many of whom were personally affected
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