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Statement of the Executive Director of the City Bar Justice Center Opposing IOLA Diversion and the Undermining of Complementary Public Service Programs

by Kurt Denk, Esq. April 19, 2024

The City Bar Justice Center strongly opposes the inclusion in the FY2024-25 New York State budget of an eleventh-hour proposal from Governor Kathy Hochul to sweep $55 million of non-taxpayer dollars from the Interest on Lawyers Account Fund (IOLA). This sweep – soundly opposed by IOLA, state and local representatives of the legal profession, and the civil legal aid community – blatantly disregards earlier collective and sustained opposition from these broad constituencies, and places IOLA grantees like the Justice Center and our allies in the position of having to advocate for measures to protect IOLA from this sort of misuse in the future. While assurances have been made in some circles that this year’s IOLA sweep will be a one-time occurrence, that is cold comfort given the sweep was hurriedly proposed, reversed, and ultimately reinstated in a matter of weeks and absent meaningful notice – and, it must be emphasized, is an action no governor of either political party has ever taken in IOLA’s forty-one-year history. This absolutely cannot and should not happen again.

As noted by our affiliated New York City Bar Association, Governor Hochul’s initial executive budget had proposed sweeping $100 million from IOLA to New York’s General Fund, and that proposal was rescinded on February 15 following widespread protest from legal aid advocates, other nonprofit leaders, and a diverse cross-section of the private bar. Even if the swept funds are now being directed towards the worthy and previously independently funded Homeowner Protection Program (HOPP) and Emergency Rental Assistance Program (ERAP), as a policy matter the sudden revival of this proposal is deeply troubling and sets a dangerous precedent for all the reasons identified in IOLA’s April 17, 2024 Statement opposing the sweep. Moreover, as a political matter, it is profoundly discouraging that Governor Hochul revived this ill-considered proposal during the wee hours of final budget negotiations, leaving little time for public input.

Of further concern is the fact that this sweep of IOLA funds, which by law are to be used to provide civil legal aid to the most vulnerable of New Yorkers of very limited means, appears to be cover for underfunding complementary but unique legal aid and housing stability programs – IOLA, HOPP, and ERAP, respectively – that help vulnerable New Yorkers secure services and maintain resources for essential shelter and sustenance. The Justice Center has seen scenarios where more than one of these three programs together could be qualifying funding sources to address myriad and interwoven legal and essential life needs, and the implicit assumption that IOLA can be robbed to pay for HOPP and ERAP blindly overlooks that fact at a time when poverty is rising across New York and many thousands more are at risk of falling into poverty or losing their homes. Seasoned legal services and other nonprofit providers have the expertise to address complex legal and essential life needs, but require stable and reliable funding to accomplish that objective. The decision to sweep IOLA funds ostensibly to support HOPP and ERAP, which previously had been independently funded, poses an existential threat to a consistent funding stream for civil legal services in New York that heretofore was exclusively subject to a robust, accountable, and efficient grant-making process protected by the IOLA Board’s fiduciary duties.

Jeopardizing IOLA funding while simultaneously tying it to the ongoing viability of previously independent programs like HOPP and ERAP also leaves organizations, like our own, that are IOLA and HOPP grantees and have advised clients on ERAP eligibility, wondering if services to one set of deserving clients will have to be sacrificed ostensibly in the interests of another set of deserving clients. Given the vast resources that the New York State budget allocates to any range of special interests as well as profound needs, this is as unnecessary as it is unwise. The better course would have been for New York’s political leaders, starting with the governor, to affirm the principle that IOLA, HOPP, and ERAP are complementary but unique legal aid and housing stability programs, each of which helps vulnerable New Yorkers secure services and maintain resources for essential shelter and sustenance, and each of which accordingly should be preserved as stand-alone programs, with independent and fully funded budgets.

The City Bar Justice Center – the largest division of the New York City Bar Association’s charitable affiliate, the City Bar Fund – furthers access to justice by addressing unmet civil legal needs of New Yorkers struggling with poverty and other systemic socioeconomic barriers. The Justice Center mobilizes law firms, corporate legal departments, and other legal institutions to provide pro bono legal services; educates the public on pertinent legal issues; fosters strategic community relationships; and impacts public policy. The Justice Center’s dozen civil justice projects, including the most comprehensive civil legal hotline in New York, are led by a staff of dedicated attorneys and professionals who provide high-quality civil legal services through brief advice and information, referrals, and both limited scope and extended representation that benefit more than 25,000 New Yorkers each year.

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