A PHP Error was encountered

Severity: Notice

Message: Undefined variable: entry_id

Filename: abajournal_utility_library/class_magazine.php

Line Number: 150

A PHP Error was encountered

Severity: Notice

Message: Undefined variable: field_id_158

Filename: abajournal_utility_library/class_magazine.php

Line Number: 153

A PHP Error was encountered

Severity: Notice

Message: Undefined variable: field_id_51

Filename: abajournal_utility_library/class_magazine.php

Line Number: 157

A PHP Error was encountered

Severity: Notice

Message: Undefined variable: url_title

Filename: abajournal_utility_library/class_magazine.php

Line Number: 159

A PHP Error was encountered

Severity: Notice

Message: Undefined variable: field_id_20

Filename: abajournal_utility_library/class_magazine.php

Line Number: 161


Treasurer's Report

ABA Treasurer’s Report


I am pleased to report on the financial state of the American Bar Association (“ABA” or “Association”) for the fiscal year ended August 31, 2006. In addition, this includes a status report on some of the remarkable programs funded by the Association.

The Association continued the positive financial growth seen over the last few years, enabling the Board of Governors, Section leadership and management the opportunity to focus on enhancing programs that provide member support, ensure equal access to the justice system for all and spread the rule of law internationally.

A lot has happened in the past year. We did not say “good-bye,” but wished Bob Stein continued success, as he wrapped up his final years as our ABA Executive Director and returned to academia. We look forward to Bob’s leadership on the international front, as well as in the ABA, at the volunteer level, as Professor Stein is able to get even more involved in working on Rule of Law issues. We welcomed our new Executive Director, Hank White, in October as he hit the ground running and immediately immersed himself in the ongoing activities of the ABA.

Financial Results for the Fiscal Year Ended August 31, 2006

Thanks to sound planning, excellent oversight and attentive management, the Association completed another successful year. Consolidated net assets of the Association, which include General Operations, Sections, programs and grant accounts totaled $285 million as of August 31, 2006, 71% of which is cash, cash equivalents and long-term liquid investments.

The Association continues to be financially healthy and able to provide support for all specialties of law through Association initiatives, domestically and internationally. The Association’s financial strength provides the foundation upon which we are able to build programs that serve both the public and our profession. In Fiscal Year 2006, operating activities for the entire Association increased net assets by almost $13 million. The Association achieved operating revenues of $201 million from a variety of sources and programs. Our largest revenue source continues to be dues with Association dues revenue at $62.8 million and Section dues revenue at $14.9 million.

Figure 1 below illustrates the mix of revenue sources for fiscal year 2006.

The revenues, as illustrated above, covered $189 million in operating expenses for General Operations, Section activities, grant funded activities, the James O. Broadhead Corporation and the Museum. The majority of expenses go to salary, benefits and facilities. These expenses encompass a wide variety of member services, educational programs and law-related charitable projects of which we can all be proud.

Figure 2 breaks out the expenses in two different ways: by the type of expense and by the expense for various programs.

General Operating Activities

Positive revenue results along with tight management of General Operations’ expenses produced for the ‘06 fiscal year revenue of $4 million in excess of expenses. This has been transferred to the Dues Warehouse Fund for use in future years and to potentially mitigate the need for a dues increase in 2010. In addition, $500 thousand has been set aside for the new Enterprise Fund established by the Board of Governors at its October, 2006 meeting. This Enterprise Fund will be used to provide financial incentives to the Association’s Sections, Divisions, Forums and other entities to work collaboratively in the development and enhancement of new programs or initiatives to further achieve goals of the ABA Strategic Plan as adopted by the Board in June, 2006.

Section Activities

Sections also experienced another successful year adding over $6.3 million, in aggregate, to total net assets held by Sections. Revenue of more than $50 million represented a 3% increase over the prior fiscal year. In aggregate, only 30% of the revenue for Sections came from dues while more than 36% of the revenue was generated from meeting fees.

The two charts in Figure 3 below highlight the difference in revenue streams for General Operating activities and Section activities.

Non-Operating Activities

Non-Operating activities also increased the Association’s net assets this year. In addition to the $3 million of investment activity used for operations, there was an additional $4.6 million of increased market value realized on our long-term investments. The Association’s liability for the defined benefit plan was reduced by $13.9 million due to increasing discount rates, thereby increasing the Association’s net assets. Over the last several years, this pension liability has changed dramatically from year to year, producing fluctuations in the Association’s net assets. These “revenues” increased our total net assets this year but next year, with the new accounting rules that have just been adopted, there will be another large increase in the Association’s pension liability that will further reduce our net assets.

More than a Membership Association

The ABA is so much more than a membership association. There are countless Association programs addressing law related issues. Each year the ABA’s Fund for Justice and Education (FJE) receives between $11 and $13 million of the Association’s unrestricted general revenue. This is made possible, in part, by a generous grant from the American Bar Endowment (“ABE”). This grant was $3.8 million in Fiscal Year 2006 and will be $3.68 million in this fiscal year. The ABE continues to be the ABA’s largest outside contributor.

In addition to the generous support of the ABE, our programs are supported through unrestricted general revenues and contributions from ABA members, many of whom also contribute a significant amount of volunteer time to the implementation of these programs. We also receive approximately $40 million in grant money from government and private organizations. The Association provides a wide variety of initiatives which strengthen our legal system and increase access to justice both domestically and internationally.

As your Treasurer, I was pleased to attend the recent ABE Board Meeting in November where Krista Kauper, the Director of the Office of the FJE, gave a brief description to the ABE Board of some FJE programs which were made possible, in part, through ABE’s financial contributions. While many of the public service and educational programs are ongoing, new programs and initiatives are created and implemented every year as well. To name just a few of these Association programs:

• The Commission on Women in the Profession working to secure the full and equal participation of women in the ABA, the legal profession and the justice system. In 2004, the Commission embarked upon a groundbreaking research initiative to look at what attracts women of color to the legal profession and, more importantly, why women attorneys of color change practice areas and organizations, or leave the profession at an alarming rate?

Visible Invisibility: Women of Color in Law Firms released this fall, presents the findings of the survey and focus group research. The report concludes with specific recommendations focused primarily on what law firms, as institutions, can do to increase the presence and success of women of color in their attorney ranks.

The Association provided more than $500 thousand of General Operating revenue support to the Commission and their important work last year and is doing so again in the current fiscal year.

• The Standing Committee on Legal Aid and Indigent Defendants (SCLAID) examines issues relating to the delivery of civil legal services to the poor and criminal defense services to indigent persons accused of crimes.

In 1961 the ABA first adopted standards for the operation of civil legal aid programs which were last revised in 1986. At the 2006 Annual Meeting in Hawaii, the ABA House of Delegates adopted the newly revised Standards for the Provision of Civil Legal Aid. The Association provided more than $600 thousand last year to these efforts and will do so again this year.

• The Special Committee on Death Penalty Representation addresses the national crisis in representation for post conviction capital appeals. The Association supported these efforts with more than $310 thousand last year and committed an equal amount in the budget this year.

• The Young Lawyers Division (YLD) focuses the energy and attention of its members on one particular area of public service each year. This year, the Young Lawyers Division’s public service project is: Choose Law: A Profession for All, which encourages individuals of color to become attorneys. This project includes the use of a new video, a written curriculum, a website and young attorney volunteers.

Last year the Association provided more than $750 thousand to fund the Young Lawyer’s Division thereby allowing our Young Lawyers to use their energy and talents toward improving our Association and the public we are dedicated to serve, now and in the future.

Overall, Fiscal Year ’06 was a very good year, financially as well as programmatically. And so far, Fiscal Year ’07 is shaping up to be another successful year for the Association with continued strong management and budgetary discipline. I have been honored to work closely with Jim Baird, Finance Committee Chair, and Mark Agrast, Program and Planning Committee Chair, on the creation and funding of the Association’s new Enterprise Fund. These efforts resulted in unanimous approval of this Enterprise Fund by our Board of Governors and we are optimistic that significant benefits will accrue to the Association as a result.

While the ABA currently enjoys a healthy level of financial strength as reported above, we should not become too comfortable or complacent about our fiscal responsibilities. For example, recent changes in accounting standards for the Association’s defined benefit pension plan will translate to a decrease in our unrestricted net assets next fiscal year that may well exceed $20 million.

Previous:
In Line to Lead

Next:
Don’t be an Evidence Cop


We welcome your comments, but please adhere to our comment policy. Flag comment for moderator.

Commenting is not available in this channel entry.