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Testimony Before the House Appropriations Subcommittee on Commerce, Justice, Science and Related Agencies by LSC Interim President Victor M. Fortuno, February 24, 2010

Chairman Mollohan, Congressman Wolf, and Members of the Subcommittee, thank you for holding this hearing and for giving me the opportunity to testify on the Fiscal Year 2011 Budget Request of the Legal Services Corporation. I also want to convey my deep appreciation to the Subcommittee for the bipartisan support provided to LSC and its mission.

The Corporation greatly appreciates the $30 million funding increase in Fiscal Year 2010. The $420 million appropriation came at a time when increasing numbers of families were falling into poverty and when many needed assistance with pressing civil legal aid problems. It also has helped offset funding cutbacks at the state and local levels and helped most legal aid programs avoid large-scale layoffs of attorneys and paralegals that serve the poor.

Mr. Chairman, please be assured that the legal aid community understands the difficult funding choices the Subcommittee faces in this tough budget environment. The legal aid community also is profoundly grateful for your steadfast support through the years, especially your leadership last year in achieving a higher appropriation for LSC.

The "justice gap," however, is still a harsh reality in this country. There are at least 54 million Americans who are eligible for free civil legal assistance, and 18.5 million of them are children. The distance between the promise of equal justice for all and the reality of an inadequate supply of legal services is what the nation's judges see in their courtrooms every day.

The Corporation today confronts the same key challenges we brought before you a year ago -- a weak economy and inadequate resources for legal aid programs. I want to assure you that the nonprofit legal aid programs out there, on the ground, in our communities, are delivering legal services to people in need, to people who have exhausted most, if not all, of their options and come to us as a last resort. LSC, for its part, will continue to focus on the indigent and how we can better support our programs as they strive to meet the needs of our nation's poor and most vulnerable.

Today, requests for help with foreclosures, unemployment benefits and consumer issues are on the rise at many LSC programs. The programs also report that their non-federal resources are shrinking. Most states have experienced revenue shortfalls because of the economic slowdown and cannot be counted on to support legal aid at the same levels as in the past. In particular, funding from Interest on Lawyers' Trust Accounts (IOLTA), a significant source of income for many programs, is plummeting. Donors also will be unlikely to contribute as much to legal aid as in the past because of the weak economy. Bar association contributions to LSC programs dropped by more than half from 2007 to 2008, and, according to surveys, charitable donations are declining nationwide.

For low-income Americans, legal aid greatly improves their chances of keeping their homes rather than moving into a shelter, holding jobs rather than going onto public assistance, retaining custody and support of their children rather than losing them to foster care, receiving early medical care rather than costly hospitalizations, and escaping an abusive relationship rather than suffering further injury or even death.

In these times of high unemployment and uncertain economic conditions, the work of LSC and its programs is more critical than ever before. Legal aid programs ensure that the poor are properly represented in the civil legal system. That greatly improves their chances of keeping or securing basic necessities -- food, shelter and income -- and helps breathe life into our society's commitment to fair and impartial treatment for all who enter our courts.

Impact of Weak Economy on Legal Aid Services

Legal aid programs continually seek new grants, increases in state funding and higher levels of support from the organized bar and other sources. As noted above, however, the economic downturn has placed an even greater strain on the resources that support legal services. Almost all programs are concerned about their financial prospects for 2010 and 2011.

IOLTA, for example, is an important source of non-federal funding for legal aid programs. While IOLTA funding varies by state and grant cycle, making it difficult for LSC to forecast how much support grantees will receive, we do know that many programs expect to see sharp drops in their IOLTA grants, in large part because shortterm interest rates remain near zero. For 2009, the National Association of IOLTA Programs estimated funding nationwide was about $93 million, a 67 percent decline from 2008.

Because of the nation's weak economy, many LSC programs this year have expressed uncertainty about their funding. The Legal Aid Foundation of Los Angeles, North Mississippi Rural Legal Services, Legal Services of Greater Miami and numerous other legal aid programs anticipate significant cuts in IOLTA funding.

For many smaller legal aid programs, IOLTA funding is critical. North Mississippi Rural Legal Services saw its IOLTA funding drop from $700,000 in the 2008-2009 fiscal year to $80,000 in the 2009-2010 fiscal year. That caused program reorganization and the layoffs of 10 staff members, including attorneys. The program, which at its height in the 1980s had 118 employees, today has a staff of only 30.

Against this bleak backdrop, demand for services by low-income people is increasing at North Mississippi and at other LSC programs, including those in large states such as California, Florida, Ohio and New York. In one category -- foreclosures -- LSC estimates that its programs, because of inadequate resources, turned away more than 21,000 lowincome applicants seeking help in 2009.

LSC programs, in these troubled economic times, facilitate solutions and help clients who have nowhere else to turn. Last year, Legal Services NYC helped a tenant in Brooklyn, who had rented an apartment for 13 years, in a dispute with her landlord. At the same time that she was being sued in housing court, she was laid off from work. The tenant found her way to Legal Services NYC, which took her case, challenged an affidavit submitted in the case, and won a judge's ruling that stopped her eviction.

"If I had not found out about Legal Services, I am certain that my family would have become homeless. I would never have been able to understand the court process and I would never have been able to find out, let alone raise, the defense that won my case," she said in testimony for the New York State Senate hearings on the funding crisis facing legal aid programs.

Like Legal Services NYC and other LSC programs, the Legal Aid Foundation of Los Angeles sees clients who have been severely impacted by job loss and the weak economy. Program officials report an increase in individuals seeking assistance with unemployment issues, such as wage claims involving their last paycheck, and staff attorneys increasingly help with applications for benefits and answer general questions. The program's eviction practice also is changing because an increasing number of cases involve nonpayment of rent, leading the program to create a homeless prevention project to help individuals pay their rent.

Blue Ridge Legal Services in Virginia last year helped a family who sought assistance after the husband had been out of work for several months. He was laid off from his job and, at about that time, became ill and had to seek medical care. His health problems stemmed from an accident from several years earlier, when he was run over by a bulldozer and suffered back injuries and continuous problems with blood clots, leading to large medical bills. Even though he received unemployment compensation and his wife worked full time, they began falling behind on their bills. Creditors, usually seeking payment for medical bills, issued garnishments against the wife's wages, making it more difficult for the family to get out of debt. At times, they had no money for food and relied on food stamps. After determining the family's legal needs and eligibility, Blue Ridge Legal Services was able to refer the family to a volunteer attorney participating in its Pro Bono Referral Program. With the help of a pro bono lawyer who donated his time, the couple filed for bankruptcy protection to get a fresh start. The husband's health improved and he has returned to work, and the family now has health insurance through the wife's employer. They are rebuilding their lives and those of their two young children.

Other programs, such as Legal Services Alabama, Legal Aid Bureau of Maryland, Legal Services of Greater Miami, Neighborhood Legal Services Association in Pittsburgh and Rhode Island Legal Services, report increased demand for legal assistance because of unemployment and foreclosures. Legal Services of Greater Miami, for example, reports a 15 percent increase in demand for services because of high unemployment and foreclosures.

Even before the 2008 recession and the high unemployment rates that marked 2009 and the start of this year, LSC programs were confronting a "justice gap" -- the difference between the level of civil legal assistance available to low-income Americans and the level that is necessary to meet their needs. In 2005, the Corporation released a report on the justice gap that found LSC programs serve only half of those seeking legal assistance. That finding was reaffirmed in last year's justice gap study.

In preparing the justice gap reports, LSC collected data on the number of people seeking help from LSC programs who cannot be served because of insufficient program resources. The data shows that LSC programs are turning away about one million poor Americans each year.

In a very real sense, the need for civil legal services is too large to measure. Survey-based studies conducted in seven states since 2005 found that only a small fraction of the legal problems experienced by the poor -- less than one in five -- is addressed with the assistance of a private or legal aid lawyer.

The data cited earlier -- that approximately 54 million Americans are eligible for assistance from our legal aid programs -- was collected by the U.S. Census Bureau in 2008 and is the most recent official count. For 2010, LSC staff estimates the clienteligible population will be 21 percent greater than it was in 2008 -- an additional 11.5 million people.

Numbers alone do not fully describe those in need of legal assistance. The clients of LSC-funded programs are of all races and ethnicities, young and old, the working poor, people with disabilities, military veterans and victims of domestic violence. Seventythree percent of the people served are women, many of whom are struggling to keep their families together. The clients of LSC programs live at or below 125 percent of the federal poverty level -- an income of $27,563 for a family of four.

To better serve the poor, LSC programs work in partnerships with community and state organizations and provide a framework so that pro bono services may be effectively delivered by private lawyers. Legal Aid of West Virginia, for example, recently helped a mother and two children escape from her abusive husband, a father who essentially held his family as hostages and tormented them by using home appliances to let natural gas leak into their house. A legal aid attorney helped the woman obtain a divorce and Supplemental Security Income (SSI) on the grounds that she suffered Post-Traumatic Stress Disorder. The client came to Legal Aid of West Virginia through a referral from the West Virginia Works Legal Support Project, which focuses on supporting people in their move from public assistance to self-sufficiency. In this particular case, some of the abuse came after the divorce. Pro bono lawyers worked with the client twice in filing for emergency protective orders and legal aid attorneys subsequently filed for two more orders before the abuse finally stopped.

Until the nation's economy fully recovers and unemployment rates come down, millions of Americans are at risk of falling deeper into poverty or slipping into poverty for the first time. Congressional appropriations to LSC represent the largest, single source of funding for civil legal services to the poor of our nation. Sustained federal funding for LSC's mission has never been more critical.

Fiscal Year 2011 Budget Request

For Fiscal Year 2011, the LSC Board of Directors voted to request $484,900,000 for basic field grants, part of a four-year plan approved by the Board for closing the justice gap. The requested increase will fall far short of what is needed to make up for the anticipated loss of non-federal dollars and the projected increase in the client-eligible population. It is crucial for the Congress to fund, as fully as reasonably possible, civil legal services across the country at a time when poor Americans are at risk of losing jobs, homes and health insurance.

The following chart shows LSC's FY 2009 and FY 2010 appropriations and the funding request for FY 2011.

LSC's FY 2011 Budget Request

In addition to recommending increased funding for basic field grants, LSC also requests:

  • $6,800,000 for Technology Initiative Grants (TIG). With this funding, TIG would expand the use of automated statewide court forms, which help low-income Americans who do not have a lawyer; develop online intake systems, which reduce the time spent by programs on assessing requests for legal assistance, and create web-based systems to help low-income Americans find information and solutions to their legal problems. TIG also will continue to oversee the creation of a national website that will provide information and online tools designed to address specific civil legal needs of veterans, military personnel and individuals with a military connection, such as family members. TIG funding also helps grantee programs use technology to improve their operations and accountability.
  • $1,000,000 for the Corporation's Loan Repayment Assistance Program (LRAP). Legal aid salaries have failed to keep pace with other public service salaries, and LSC programs have found that helping lawyers reduce their student debt substantially increases the likelihood that they will stay with their programs. It also makes it easier for programs to recruit new attorneys.
  • $19,500,000 for Management and Grants Oversight (MGO). This proposed increase would permit LSC to increase the number of oversight visits to programs by 17 percent, from an estimated 76 in 2010 to a projected 89 in 2011. Training is a crucial component of oversight, and the MGO request proposes a training initiative for 2011. The MGO request represents an administrative cost of less than 4 percent when compared to the total request, in line with our 4 percent average in recent years.

The Office of Inspector General request of $4,350,000 is included in the LSC total, but made separately by the Inspector General through the LSC Board of Directors.

2011 Training Initiative

This MGO initiative will focus on creating a capacity within the Corporation to produce and deliver training on compliance, fiscal operations and best practices. The initiative's projected cost for FY 2011 is $500,000.

Four primary goals of the initiative are to:

  • Enhance local board governance and program oversight by local boards.
  • Improve the ability of LSC programs to meet LSC requirements and comply with LSC restrictions.
  • Enhance the engagement of private attorneys in providing legal services.
  • Encourage best use and leveraging of technology to deliver services to those who seek self-help options.

In FY 2011, LSC would hire two staff members to create the core of a training unit within LSC, expand training provided to local board members, expand staff training at programs on fiscal oversight and management best practices and address other training needs.

Update on Attorneys' Fees

Since FY 1996, Congress has included a number of funding restrictions in our appropriations. Last year, at the initiative of this Subcommittee, Congress removed the statutory restriction on funding programs that claimed, collected and retained such fees.

Shortly after President Obama signed the Fiscal Year 2010 appropriations bill that included LSC funding, the LSC Board of Directors suspended enforcement of the regulatory restriction on claiming, collecting and retaining attorneys' fees, pending action to revise or repeal the regulation. LSC had promulgated regulations in 1996 and 1997 that implemented the statutory attorneys' fees restriction. In keeping with the intent of Congress, at its January meeting, the LSC Board approved the publication of an Interim Final Rule, effective March 15, repealing the Corporation's regulatory prohibition on attorneys' fees.

As of the effective date of the regulation, grant recipients will be permitted to make claims for attorneys' fees in any case in which the award of fees is permitted by law. LSC grant recipients also will be permitted to collect and retain attorneys' fees whenever such fees are awarded to them. The Corporation will collect information on this revenue and report it as non-LSC funding as we do with other sources of income.

Conclusion

Through these efforts, Mr. Chairman, and with the continued support of this Subcommittee, LSC will work to provide civil legal services to our nation's poor and ensure the effective use of grant funds by our programs.

During a time when the nation's economy is weak and unemployment is high, the support of Congress and this Subcommittee's appropriation is even more vital. Legal aid saves lives, legal aid makes a meaningful difference in the lives of clients, and legal aid underscores the nation's commitment to equal justice for all.

The Chairman and the Members of this Subcommittee have provided critical support for legal aid in past years, and all of us at LSC and in LSC-funded programs are deeply grateful to you for that support. For Fiscal 2011, we urge the Subcommittee to help us close the justice gap by approving the LSC Board's request for $516,550,000. This request is the result of a determined effort to help eliminate the justice gap within four years by the Corporation's bipartisan Board of Directors. Still, this requested increase would fall short of what is needed to make up for the anticipated loss of non-federal dollars and the projected increase in the client-eligible population. We come to you with this request because we feel that it is crucial when poor Americans are at greater risk of losing jobs, homes and health care.

Thank you very much.