Maryland’s legal services safety net imperiled by looming sunset of filing fee increase
February 5, 2013, Baltimore, MD – The Maryland Legal Services Corporation (MLSC), which funds more than 30 civil legal services programs that help low-income Marylanders, told its grantees that if MLSC is unable to secure additional funding, they can expect a five percent reduction in grant funding for fiscal year 2014, beginning July 1, 2013.
This directive, which comes on the heels of a 5 percent funding cut last year, assumes that MLSC will be successful in its efforts in the Maryland legislature this year to repeal a law that would result in a 40 percent loss in MLSC’s revenue.
At its annual Grant Informational Meeting, MLSC Executive Director Susan Erlichman told current grantees, as well as other interested applicants, that MLSC continues to face significant funding shortages. Revenue from the Interest on Lawyer Trust Accounts (IOLTA) program, MLSC’s original primary funding source, continues to decline and has decreased 74 percent since 2008 when interest rates plummeted to near-zero. IOLTA now accounts for only 12 percent of MLSC funding. An increase in court filing fee surcharges enacted in 2010 by the Maryland General Assembly to address the IOLTA shortfall averted a significant crisis in the state’s legal services delivery system at that time, but fell short of projected revenues.
The 2010 legislation contained a three-year “sunset” provision which is scheduled to take effect June 30, 2013. “The sunset has left MLSC teetering at the edge of a fiscal cliff,” Erlichman said. “Should the provision take effect, MLSC would face a catastrophic loss of approximately $6 million, representing 40 percent of its revenue.”
Erlichman told its grantees that MLSC is seeking repeal of the sunset, noting that “such a loss would decimate our ability to address the legal needs of low-income Marylanders at a time of unprecedented need.”
Programs such as the House of Ruth, the Legal Aid Bureau, the Maryland Disability Law Center, the Maryland Volunteer Lawyers Service, the Homeless Persons Representation Project and county and regional programs throughout Maryland rely on MLSC to fund programs that provide legal assistance to Marylanders struggling with mortgage foreclosures, food stamp applications, veterans’ benefits, domestic violence, and other serious legal issues.
“We face real and immediate challenges as we seek to maintain essential services,” said Chairman Glenn F. Ivey. “We’ll be working closely and tirelessly with our many partners to make sure we hold onto current funding, and pursue increased resources to avoid the need for further cuts and help meet the increasing demand.”
MLSC was established by the Maryland General Assembly in 1982 to receive and distribute funds to nonprofit organizations that provide civil legal assistance to low-income persons. It is governed by a nine-member Board of Directors appointed by the Governor and confirmed by the Senate. From its inception, MLSC has made grants totaling over $182 million to help provide services to nearly 2 million low-income Marylanders needing help with issues involving family, housing, consumer, employment, health care and other civil legal matters.