New York County Lawyers Association Executive Committee Issues Statement Opposing Transfer of $100 Million from the IOLA Fund to the General Fund

The New York County Lawyers Association (“NYCLA”) was concerned to learn that Governor Hochul’s Governor’s FY25 Executive Budget seeks a transfer of $100 million from the IOLA Fund to the State General Fund.  NYCLA believes that such a transfer is inconsistent with the mission statement and legislative history of the IOLA Fund. We therefore respectfully urge the Governor to reconsider this proposed transfer and issue a 30-Day Amendment eliminating it.

The New York State Legislature created the IOLA Fund in 1983, pursuant to New York State Finance Law (§ 97-v), to be held in the custody of the State Comptroller and administered by an appointed Board of Trustees.  The mandate of the Board of Trustees is explicit:

“It shall distribute funds as grants and contracts to not-for-profit tax-exempt entities for the purpose of delivering civil legal services to the poor and for purposes related to the improvement of the administration of justice, including, but not limited to, the provision of civil legal services to groups currently underserved by legal services, such as the elderly and the disabled, and the enhancement of civil legal services to the poor through innovative and cost-effective means, such as volunteer lawyer programs and support and training services.” (New York State Finance Law (§ 97-v(3)(a))

The administration of the IOLA Fund has been a crucial source of support for New Yorkers in need of civil legal services for over 40 years. In just the 2023 reporting period, IOLA grantees closed over 307,000 client cases, benefiting over 639,000 low-income New Yorkers. NYCLA is proud to be one of currently 81 non-profit legal organizations funded by the IOLA Fund.

This proposed transfer is problematic for several reasons:

1. The IOLA Fund was created for the sole purpose of funding civil legal services.

The legislative intent portion of the bill which created the IOLA Fund states that the “purpose of this act is to provide funding for providers of civil legal services” and “the beneficial interest” in the revenue generated by from the IOLA accounts “will be held by the IOLA Fund exclusively for charitable purposes.” (L 1983, ch 659, §1) (emphasis added) The Governor’s budget proposal would contravene this 40-year-old legislation, without demonstrated need.

2. Civil Legal Services Programs need more support—not less.

NYCLA appreciates that the Governor’s budget proposes a one-time grant increase of $10 million to civil legal service providers in FY 2025. However, addressing the justice gap requires long-term sustainable solutions, rather than short-term fixes. The Permanent Commission on Access to Justice’s 2023 Report to the Chief Judge of the State of New York has noted that funding of up to $1 billion would be needed to close the justice gap—in addition to existing funding. Furthermore, pay parity at civil legal institutions is long overdue. As NYCLA led the charge in New York City in successfully increasing assigned counsel rates (an increase that was subsequently implemented statewide), we understand the need to fully support those on the front lines of addressing the justice gap. The proposed funds to be transferred would help address these issues.

3. The Proposed Transfer Would Affect IOLA’s Long-term Financial Planning to Provide Stable Financial Support to its Grantees.

The positive performance of the IOLA Fund over the last couple of years has created a reserve fund that can be used to avoid cuts in funding during periods where interest rates are low. And through sound financial management, the IOLA Fund also recently announced the launch of its multi-year Justice Infrastructure Project to improve would increase coordination, innovation, and capacity in the civil legal aid sector. The proposed transfer would negatively affect, if not gut, the long-term sound financial management of the Board of Trustees to protect against interest rate fluctuations.

4. It is Not Clear That the Governor’s Budget Proposal Would Result in Net Budgetary Savings

New York has been among the nation’s leaders in recent years in the funding of civil legal services.  Examples include the increased provision of counsel to litigants who cannot otherwise afford it in Housing and Family Court, among others. It has been to Governor Hochul’s credit that she has supported the expansion of such programs.  Some of NYCLA’s IOLA-funded programs are designed to meet these needs, as are many of our sister grantee organizations.

Taking money from the IOLA Fund for the General State Fund may increase the amount of general state funding required to support existing and planned “civil Gideon” programs, now and in the future, by leaving less IOLA funding available to support them.  As a result, the State’s commitment to a policy of expanding “civil Gideon” may be adversely impacted.  We do not believe that would be a sound decision, especially so early in the State’s ongoing process of expanding access to civil legal services for the poor. 

We urge the Governor to reconsider the proposal and issue a 30-day Amendment, eliminating the transfer $100 million from the IOLA Fund to the General State Fund.

About the New York County Lawyers Association

The New York County Lawyers Association (www.nycla.org) was founded in 1908 as one of the first major bar associations in the country that admitted members without regard to race, ethnicity, religion, or gender. Since its inception, it has pioneered some of the most far-reaching and tangible reforms in American jurisprudence and has continuously played an active role in legal developments and public policy.

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