Scott frees up some money for the courts
Scott frees up some money for the courts
( Editor’s Note: On April 6, after this News went to press,
Chief Justice Charles Canady and Gov. Rick Scott’s Office reached an agreement to provide the state judicial branch with a loan that will fill a budget shortfall that otherwise would have required furloughs and curtailing certain court services statewide through the end of May. The remaining shortfall for June will be covered through a supplemental appropriation that was not part of the chief justice’s request to the governor. The state courts will begin operating under a new budget on July 1. The amount of the loan is $19,487,027. The loan will be paid back by June 30 using funds provided in the supplemental appropriation for June. The shortfall began in March and was caused by 2009 legislation that made courts heavily reliant on filing fees. When foreclosure filings fees suddenly plummeted in the last few months, court funding quickly fell to a projected deficit of about $72 million through the end of June, according to Craig Waters, the Supreme Court’s public information officer)
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Gary Blankenship
Senior Editors
Saying he needs to better understand how the crisis happened, Gov. Rick Scott did not approve the whole fix for the courts’ cash flow emergency caused by plummeting foreclosure filing fees — just enough to ward off staff furloughs through the end of this month.
Instead of the $42.48 million Chief Justice Charles Canady asked for — agreed upon by the Senate and the House — to finance the courts through this fiscal year ending June 30, the governor approved only $14 million in temporary transfers of cash from the Mediation Arbitration Trust Fund and Court Education Trust Fund.
Asking for more information, including the courts’ recommendations to prevent a similar crisis in the future, the governor declined to approve the courts’ request for $28.5 million to be transferred from “other funds.”
That news was delivered to Canady in a March 22 letter from Jerry McDaniel, director of the Governor’s Office of Policy and Budget.
Three days later, at The Florida Bar Board of Governors meeting in Orlando, Chief Justice Canady said: “I’m cautiously optimistic that we are going to see the governor authorize the additional funds we requested. I pray for that result. I ask you to pray for that result.”
If those prayers are not answered, and the governor decides not to authorize the $28.5 million, Canady said: “We would be in the position of then being faced with significant furloughs. I’m talking very significant. This would be a very large hole in our budget for the rest of the year.”
Another alternative, Canady said, would be to immediately seek a special appropriation from the Legislature.
“But given the environment we’re in, we understand it’s a difficult time for the Legislature to reach out and find money for anything. So we have worked hard to make our contribution and do the best we can to conserve resources.. . . That’s a very heavy lift in the middle of the legislative session,” Canady said. “I’m hopeful we don’t have to go there. But that is obviously at the very top of my agenda.”
The courts reacted to the dramatic downturn in foreclosure filings — even before the Art. V Revenue Estimating Conference on February 18 released the official cash flow shortfall for the courts at $72.3 million — with hard hiring and operational budget freezes, along with the review of local emergency plans to keep the courts open for essential hearings in the event of mass furloughs of court staff.
“This is not a problem that we created. Far from it. This is totally a revenue problem. It’s not an expenditure problem. It’s totally a problem of the revenues coming in declining, because of the downturn in foreclosure filings,” Canady stressed.
Driven by the paperwork quagmire and robo-signing scandals, the plummeting foreclosure filings hit the court budget hard:
Of the $462 million current total court system budget, $370 million is funded from the State Courts Revenue Trust Fund. Of that $370 million, $293.6 million, or 79 percent, was projected to come from real property/mortgage foreclosure filing fees this year.
In a three-page letter, plus pie chart and graph, to McDaniel on March 25, State Courts Administrator Lisa Goodner detailed how last year’s Legislature reduced the state court system’s general revenue budget by $88.5 million and transferred those costs to the State Court Revenue Trust Fund, based on official revenue projections of the Art. V Revenue Estimating Conference issued on February 10, 2010.
“It is important to understand that if the $88.5 million had been appropriated from general revenue, rather than from the SCRTF, the court system would not currently be facing this deficit,” Goodner explained.
Because of that $88.5 million cost shift, the courts’ statewide budget — for trial and appellate courts and the Supreme Court — “became almost entirely dependent on the SCRTF to support court operations.”
Goodner’s chart shows that while foreclosure filings represent only 8 percent of the total work load of the courts, 79 percent of the revenue to the SCRTF is generated from just those filings.
“Without adequate revenue in the trust fund, case processing would be affected for all types of cases in the trial courts and all cases on appeal,” she continued.
The second factor causing the current shortfall, Goodner said, is the “unanticipated and continuing” decline in mortgage foreclosure filings beginning in October 2010.
“Total revenue into the SCRTF, including fees generated from mortgage foreclosure filings, was projected to be $379.8 million. The most recent projection was adjusted downward to $216.7 million.”
Once the $72.3 million shortfall for the last four months of the current fiscal year ending June 30 became official, Goodner described how Chief Justice Canady proposed a plan to the Legislative Budget Commission.
“After much legislative consultation resulting in the concurrence from both House and Senate Appropriations Committee leadership, the plan proposed by the courts was deemed to be appropriate, and that plan was filed on March 17,” Goodner wrote.
“I believe through these communications with the Legislature that they understand that the courts did not cause the deficit, that we have not overspent or mismanaged these funds in any way, and that a shutdown of the courts throughout the state between now and the end of the fiscal year would cause disruption to Florida citizens and businesses that would be very detrimental.”
To answer Gov. Scott’s inquiry on how to prevent future cash-flow crises, Goodner reiterated:
“We are working with the Legislature to reduce the court system’s reliance on real property/mortgage foreclosure filing fees to avoid shortfalls in the future. The court system is projected for FY 2010/11 to generate $888 million in revenue for state government, which is distributed to general revenue and into various state trust funds. Only $370 million of that total revenue is budgeted through the SCRTF for the court system,” Goodner wrote.
“We are working on a plan for consideration that would redistribute the filing fees currently distributed between the general revenue fund and the trust fund, so that fluctuations in mortgage foreclosure revenues can be more easily absorbed in that much larger fund. Additionally, in implementing bill language proposed by the Senate, a provision has been included that would allow the courts to access supplemental revenue whenever revenues coming into the trust fund equal 98 percent or less of the official revenue estimate.”
At the board meeting, Canady thanked the Board of Governors and Steve Metz, the Bar’s chief legislative counsel, for their continuing efforts to speak up on behalf of adequately funding the courts.
“The budget for the courts is something that is of great importance to the people of this state. This is not just about judges,” Canady said.
“This is not just about institutions. It’s not about a branch of government. It is about justice for the people of Florida, for the men, women, and children who come to the courts of this state seeking justice. And they should not be short-changed.”
