IOTA collections top $45 million in FY 2022-23

Murray Silverstein
The Florida Bar Foundation received $45,547,390.93 in Interest on Trust Accounts (IOTA) collections during fiscal year 2022-23, its second year under new rules set by the Florida Supreme Court.
Buoyed by higher interest rates, that’s $36 million more than the $9.5 million the IOTA program generated in the previous fiscal year.
“The Foundation is dedicated to being a responsible, effective steward of IOTA funds and looks forward to seeing the impact this funding will have on the unmet civil legal needs of so many in our state,” said Murray Silverstein, the Foundation’s president.
In accordance with Bar Rule 5.1-1(g)(8), the Foundation will, on or before December 31, distribute to one or more qualified grantee organizations all IOTA funds collected during the fiscal year except for direct expenses required to administer the IOTA funds, funds required to fund the Loan Repayment Assistance Program, and an additional reserve amount if requested by the Foundation and approved by the Florida Supreme Court.
The Foundation developed a work plan that includes a matrix that calculates how IOTA funds are distributed to qualified grantee organizations. The work plan may be viewed here.
In 2021, the Florida Supreme Court imposed overhead limits and disbursement time deadlines for IOTA funds received and distributed by the Foundation and said the funds should be used primarily for providing or enhancing direct legal services to low-income residents.
On May 15, a new Bar rule approved by the Supreme Court kicked in requiring lawyers keep their trust accounts in institutions that tie interest rates for IOTA accounts to specific indexed rate points. Specifically, the new language provides: “When the Wall Street Journal Prime Rate (‘indexed rate’) is between 325 and 499 basis points (3.25% and 4.99%), the yield must be no less than 300 basis points (3.00%) below the indexed rate in effect on the first business day of each month. When the indexed rate is 500 basis points (5.00%) or above, the yield must be no less than 40% of the indexed rate in effect on the first business day of each month.”
The Florida Bankers Association has raised concerns about the new rule saying it’s too costly for its members. The Board of Governors at its recent meeting in Sarasota voted to negotiate with the Florida Bankers Association about potential revisions to the new IOTA rule. But with the rule expected to generate millions more in revenue for legal aid organizations after years of near-zero interest rates on trust accounts, board members cautioned the bankers to temper their expectations.
“The amount of money the banks are still able to make on these deposits is more than fair and equitable. It’s 5%,” said board member Joshua Chilson, who also serves on The Florida Bar Foundation. “I’m not oppose to talking to the Bankers Association, but I don’t see a lot of room for movement.”
Earlier, Bank of Tampa President and CEO Corey Neil told the board that banks are facing a 2,000% increase in interest paid on IOTA accounts since the new rule went into effect and hinted that banks’ voluntary participation in the IOTA program may suffer.
The FBA values its relationship with The Florida Bar and The Florida Bar Foundation and supports the benefits legal aid brings to low and middle-income Floridians, Neil stressed.
But, he added, “Anything that goes up by 2,000% requires someone in my position to start making different decisions about how we manage our business.”