Memorandum of Support: S9130 – Payments from IOLA Fund Without Appropriation By Law

Memorandum of Support:S9130

Date: May 15, 2024

By: Senator Ryan
Senate Committee: Senate Finance Committee
Effective Date: Immediately

AN ACT to amend the state finance law, in relation to allowing certain payments from the IOLA fund to be made without appropriation by law.

LAW AND SECTIONS REFERRED TO: Amends paragraph h of subdivision 3 of section 97-
v of the State Finance Law by allowing IOLA appropriations to occur outside of the budget
process.

The New York County Lawyers Association (NYCLA) expresses strong support for S9130,
which amends the New York State Finance Law to ensure that the IOLA Fund’s Board of
Trustees is able to act on its authority to make appropriations and fund grants to non-profit
organizations that serve low-income New Yorkers across a variety of civil legal needs.
NYCLA has a long history of supporting adequate and appropriate funding for civil legal aid.
Since its creation in 1984, the IOLA Fund has funded crucial civil legal aid programs throughout the state, through a transparent and competitive request for proposal (RFP) process.

The IOLA Fund’s founding legislation pledges that IOLA’s non-taxpayer funds are reserved for specified statutory purposes, including indigent legal services and improvements to the
administration of justice, under the authority and control of the IOLA Trustees. For that reason, NYCLA opposed, including by Board resolution, any transfer out of the IOLA Fund. In NYCLA’s view, any such transfer would (i) contravene the explicitly stated purpose of the IOLA Fund’s creation, and (ii) potentially harm not only those on the front lines of civil legal service delivery, but also the hundreds of thousands of New Yorkers who receive those services.

Nonetheless, for the first time in IOLA’s 40-year history, $55 million was transferred out of the IOLA account to be used for purposes not determined by IOLA’s Board of Trustees and outside of the stated intent of the IOLA Fund’s founding legislation. Despite assurances that this was a one-time occurrence, this sets a dangerous precedent.*

For the above reasons, the New York County Lawyers Association SUPPORTS this legislation.php light=”true”]dangerous precedent>1[/php]

*Notably, the original FY2025 Budget proposed a $100 million transfer out of the IOLA Fund account, which was removed following strong opposition from the legal community and public for the very same reasons outlined in this memorandum. The $55 million transfer resurfaced on the eve of budget passage, and represented a reversal of the assurances that the money would not be transferred out of the IOLA Fund.