July 2002

Understanding the License-Fee Process

by Dale L. Carlisle, WSBA President

Setting the annual license fees is a task the Board of Governors (BOG) recently finished after a six-month process. The process starts with the Budget and Audit Committee, which annually reviews and recommends the Bar's budget for its next fiscal year. The BOG has passed a resolution recommending a two percent license-fee increase each year in 2004, 2005 and 2006 (license fees for 2003 were set several years ago). This increase, plus increases in the number of members and in non-license-fee income, is estimated to allow the WSBA to meet expected expense increases outlined below.

As part of the fee-setting process, a review of projected WSBA expenses for the next several years was completed, and constraints on the growth of expenses have been implemented. The BOG concluded it could reasonably estimate expenses for the years 2004-2006. This continues our 10-year practice of setting license fees for three years at a time. With the license-fee resolution the BOG has adopted, we believe the WSBA can continue to upgrade member programs, continue to meet our discipline obligation, and expand existing member programs as necessary. Through attrition, a reduction of approximately six percent of Bar staff has been under way over the past two years, and should level out by the end of 2003. Overall salaries will not go down, however, because of the need to keep employee compensation and benefits at competitive levels. Staff salary increases in 2004-2006 will average approximately the yearly cost-of-living increase. The WSBA estimates other expenses to increase at an average of four percent per year for the 2004-2006 term.

By the end of 2003, the WSBA expects to be at its recommended reserve level of eight percent of its annual expenses. By the end of the 2006 license-fee cycle, we expect to have additional reserves which may be needed when the current lease expires. With this modest increase in license fees and constraints on expense growth, the WSBA can maintain financial stability through 2006 and provide a solid foundation for the future.

The budget for next year and the license-fee resolution for 2004-2006 have come from the hard work of our Budget and Audit Committee: Treasurer Brooke Taylor (Port Angeles); President-elect Dick Manning (Seattle); and Governors Robert Boggs (Yakima), Ken Davidson (Kirkland) and Bryce Dille (Puyallup). WSBA staff primarily responsible for this year's effort include Executive Director Jan Michels, Director of Finance and Administration Pat Dieken, and Accounting Manager Shirley Naccarato.

As with all board actions, the bylaws set forth a referendum process. This would require the filing of a petition by August 10 with signatures of five percent of our active members (approximately 1,500).

The license-fee resolution will be delivered to the Supreme Court for approval in September 2002. Much effort and careful consideration went into this recommendation, and we think it deserves your support.