Legal Services Corporation
America's Partner For Equal Justice



John N. Erlenborn

Board of Directors
Douglas S. Eakeley
Roseland, NJ

LaVeeda M. Battle
Birmingham, AL
Vice Chair

Hulett H. Askew
Atlanta, GA

John T. Broderick, Jr.
Manchester, NH

John N. Erlenborn
Issue, MD

Edna Fairbanks-Williams
Fairhaven, VT

F. Wm. McCalpin
St. Louis, MO

Maria Luisa Mercado
Galveston, TX

Nancy H. Rogers
Columbus, OH

Thomas F. Smegal, Jr.
San Francisco, CA

Ernestine P. Watlington
Harrisburg, PA

TO: LSC Program Directors

FROM: Randi Youells, Vice President for Programs

DATE: July 10, 2002


Advance Understanding for Waiver of Excess Fund Balance for Programs Experiencing Significant Reduction in Funding Due to Implementation of the 2000 Census

             As you know, the 2000 Census figures are out and will result in a significant reallocation of funding among Legal Services Corporation programs.  Pending some final adjustments, the total computed national poverty population increase is around the 5.6% range.  Assuming a constant level of LSC appropriations, a program whose poverty population remains the same, will lose approximately 5.6% of its funding.   Thus, programs whose service areas experience a decrease in poverty population will suffer a significant reduction in funding because of the implementation of the new Census figures in 2003.   

The relationship between poverty population loss/gain and funding will not be exact, for several reasons, including the impact of Migrant funding and statistical effects of the computation of percentages.  To give programs an idea of the likely funding changes, a program that has a 2.4% decrease in poverty population would experience a funding lose in the neighborhood of 8%.  Meanwhile, a program that has a poverty population increase of 7% would receive a funding increase in the neighborhood of 1.4%.  

Where available, 2002 carryover fund balances are one source of resources to ameliorate the transition to lower funding levels for such programs. Accordingly, LSC will view a reduction in Basic Field – General service area poverty population to be a “special circumstance” under 45 CFR 1628.4, supporting a waiver of excess fund balances up to 25% of LSC support.    Thus, any program that loses poverty population in its Basic Field service area may plan to accumulate its LSC support in an amount over 10% and up to 25% and will receive a waiver upon request if the request cites a loss of poverty population in its service area. 

Programs that have a fund balance in excess of 10% of LSC support as shown in their 2002 audit must still submit a waiver request under 45 CFR 1628.  However, as discussed above, the fact of a loss of poverty population in their Basic Field service area will be considered sufficient basis for granting the waiver.  Programs will still be required to comply with the other provisions of 45 CFR 1628, including those regarding accounting for the funds for which they received a waiver and expending these funds during 2003. 

If a merger or reconfiguration combines two or more service areas where some lost and some gained poverty population, a waiver will still be allowed for the amount of the cumulative excess fund balance that is derived from a carryover of more than 10% and less than 25% in the service area(s) that experienced a loss of poverty population. 


750 First Street, NE 11th Floor
Washington, DC 20002-4250
Phone 202.336.8800 
Fax 202.336.8959


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