The recession will hit The Florida Bar’s 2008-09 budget, turning an expected balanced fiscal plan into one that will produce a deficit — even though Bar expenditures are running below projections.
And the Board of Governors has been warned that the 2009-10 budget will likely be in the red, although with a smaller loss than expected for the current fiscal year. But the red ink is not expected to produce a hike in the Bar’s annual membership fees.
The board got that sobering news at its recent meeting in Tallahassee.
“As you know, last year we worked very hard to propose a balanced budget for this year,” Budget Committee Chair Gwynne Young told the board. “We are projected now to run a deficit this year, in part because we’ve had a substantial drop off in investment income, and we have had impacts in other areas of the budget. I don’t think it’s anything we can’t handle.”
Jake Schickel, of Coker, Schickel, Sorenson & Posgay and the Bar’s 2009-10 Budget Committee chair, said the board will get next year’s budget for approval at its April 3 meeting in Coral Gables and gave a preliminary report.
“There will not be a dues increase; we will not have to worry about that,” said Schickel.
He said the Bar is holding down expenses and a smaller deficit is expected than for the current year, but he gave no figures. (Typically, final budget figures are not reached until just before the budget is presented to the board for approval.)
Schickel said the budget will address several issues, including increasing money for technology, including the Bar’s Web site, because the Bar is increasingly using technology to reach and provide services for its members.
The budget will also address the Bar’s three large annual gatherings (the Program Evaluation Committee is considering whether that should be reduced to two), Bar publications including the continuation of the annual Journal directory issue, the Bar’s Law Office Management Assistance Service, advertising rules (the Supreme Court has asked the Bar for a fresh study on attorney advertising), and the Clients’ Security Fund. (The Bar’s strategic plan noted that CSF is underfunded and is expected to receive an increasing number of claims.)
Schickel said the Budget Committee completed a preliminary review of next year’s budget just before the January 30 meeting, and will finish it prior to the April 3 meeting.
Investment Committee Chair Ian Comisky reported on Bar investments, which are impacting the budgets. The Bar maintains a conservative investment portfolio with 60 percent in stocks and 40 percent in bonds, he said, and consequently those investments have much less volatility than the overall market.
As an example, he noted the Standard and Poors Index of the 500 largest companies was down 35 to 37 percent for 2008, while the Bar’s portfolio was down only 13.61 percent.
The Bar’s investment advisors had said this is the second worst investment environment, surpassed only by the Great Depression, Comisky reported, adding, “It’s a unique environment almost since the ’30s. There hasn’t been a safe place to put our funds.”
Despite the losses, “There are plenty of liquid assets and plenty of funds in the short-term fund. We don’t have to sell any long-term investments to put money in that,” said Comisky.
As for this year, the Bar’s advisors predicted that “this year we’re not going to be in much better shape. We’re going into a deep recession, but they do expect a small investment return for 2009,” he said.
The investment committee looked at six different economic scenarios presented by the advisors and “the consensus of the advisors was there is a 60 percent chance of a deep recession” and only a slight chance of milder alternatives, Comisky said.
— Courtesy Florida Bar News