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August 15, 2017
Bar’s investments perform well

‘This board needs to be mindful of what we’re spending for any new programs that we add’

Both good and cautionary news on Florida Bar fiscal operations were presented to the Board of Governors at its July 21 meeting in Miami.

The good news came from Investment Committee Chair Ian Comisky, who reported that, for the fiscal year that ended June 30, the Bar’s long-term portfolio earned $5.531 million, a return of 9.54 percent.

Ian Comisky “It’s not the best year we’ve ever had, but it’s up there,” Comisky said.

For the first two weeks of July, the fund was up a whopping $750,000 he said, quickly adding that pace of earnings was unlikely to continue for long.

The cautionary words came from Budget Committee Chair Steve Davis, who gave a review of Bar fiscal operations in recent years.

He reported that after producing small-to- modest surpluses from 2010 to 2013, since the 2013-14 fiscal year “we have started a trend where the Bar is spending more money than it takes in on an annual basis, excluding the investment [income].” (Counting investment income, the Bar has had a surplus for some of those years.)

Davis added, “We as a Bar need to be very careful as we add programs to make sure that we are spending money wisely and not creating an unnecessary deficit for The Florida Bar.”

Steve Davis He noted the board established a standing board policy that the Bar’s operating reserve should not exceed 67 percent or fall below 33 percent of the annual operating expenditure budget.

“As of June 30 of 2017, we’re at the very top end of that reserve requirement,” Davis said, noting the undesignated reserve stands around $29.7 million. “This year’s budget, just operations and not counting investments, is expected to have a $1.4 million deficit. This trend is projected to continue over the next five years until 2021-22. Based on our projections of where we expect things to go, losses will continue [not counting investment income] and, based on our own standards, we would be in a position where we are looking to find another source of revenue by 2021-22. One of them would be looking at a possible dues increase.”

That’s actually an improvement from just a few months ago, Davis said, because projections then were annual membership fees might have to be increased in the 2020-21 budget.

“This board needs to be mindful of what we’re spending for any new programs that we add,” he concluded. “That’s the Budget Committee’s message to all of you, to spend our money wisely.”

Davis said changes in the assumptions underlying the budget analysis could alter the projections. The last raise in annual membership fees was 2001, and, at the time, it was projected that another increase would be needed in eight to 10 years.

[Revised: 07-17-2018]