HB 362-EXTEND BOARD OF GOVERNORS OF AK BAR ASSN  MS. DEBORAH O'REGAN, Alaska Bar Association, informed members that an audit of the Alaska Bar Association (ABA) by the Legislative Budget and Audit (LBA) division last year found the ABA meets the public need in an effective and economical manner. The ABA deals with licensing of attorneys. HB 362 reflects the recommendation of the LBA to extend the Board of Governors for another four years. MR. STEVE VAN GOOR, Alaska Bar Association, said he was available to answer any questions about the audit. MS. AMY ERICKSON, staff to Representative Murkowski, sponsor of HB 362, agreed the legislation extends the sunset date of the Board of Governors to June 30, 2006. The Board of Governors was established in 1955 to ensure that only qualified members of the legal profession of good moral character are allowed to practice law in the state. She urged members to support the legislation. VICE-CHAIR DONLEY noted a conflict of interest as he is a member of the Alaska Bar Association. He then noted the ABA is running a deficit this year and expressed concern about the cost of ABA dues as that cost is one of the highest in the nation. He questioned what plan the ABA has to bring down the cost of membership. MS. O'REGAN said, unfortunately, one of the things that affected the ABA's budget last year was an Alaska Supreme Court mandate that the ABA provide a voluntary CLE program. It encouraged attorneys to report a minimum of 12 hours of CLE credits each year. ABA's budget deficit was due to the increased cost of temporary staff, data processing, computer programming, and discounts taken by lawyers. Another large expenditure in 2001 was for an ABA convention held in Ketchikan, the first in 22 years. She noted the convention will be held in Anchorage this year so it will not be quite as expensive. She said that membership in only half of the bar associations across the country is mandatory; membership in Alaska's is mandatory. She pointed out the ABA last increased its dues in 1992; the prior increase occurred in 1981. VICE-CHAIR DONLEY remarked that there was a virtual revolution within the California Bar Association over dues. He strongly encouraged Ms. O'Regan to do everything possible to keep the costs down. He then noted with no further testimony, he would set HB 362 aside. HB 362-EXTEND BOARD OF GOVERNORS OF AK BAR ASSN  SENATOR THERRIAULT expressed concern about the fact that the Board of Governors of the Alaska Bar Association (ABA) has amassed a sizeable fund, about $1 million, from attorney fees. He said he questions its operations as it is completely off budget. He noted there are dueling legal opinions as to whether "that is being done right or wrong." He noted that other licensing boards have state oversight to make sure that members are not being over-assessed. He questioned whether the Board of Governors cannot cover its annual costs and is living off of that fund, and whether that fund prevents the state and members from knowing what the legitimate annual expenses are. MR. STEVE VAN GOOR, ABA counsel, said he has been employed by the ABA since 1983 and, while his responsibilities are primarily on the disciplinary side, he is aware that since 1983 the Board of Governors has been very concerned about the expenses it has incurred and that it fulfill its statutory requirements for the addition and character examination of attorneys, discipline of attorneys, and continuing legal education. During the 1970s and early 1980s, the ABA's dues were $165. The early 1980s were a time of high inflation and economic instability so the Board, with the input of the membership, decided that in order to continue to provide services mandated by the court and statutorily, it must raise fees to $310. The Board expected the dues increase to last three or four years during the high inflationary period. He said Board members are very concerned about the cost and expenses; the annual budget is the topic of the October board meeting. Regarding accountability, the board's budget is available for member review and the Legislative Budget and Audit division has the opportunity to look over the ABA's shoulder every four years. LBA has determined the ABA's fiscal management is appropriate. VICE-CHAIR DONLEY commented that, typically, LBA does not go into the nuts and bolts of how the ABA spends its money. It does an overview of the ABA' public policies. The fact that LBA recommended extending the board does not necessarily mean it agreed with how the board operates. SENATOR THERRIAULT stated, having dealt with the budgets of other licensed professions, there is a connection between the level of expenditures by the boards that is felt immediately in membership fee increases because other boards are not allowed to amass funds over a couple of years. He maintained the ABA says its large fund balance will enable the board to cover increased operational costs. He questioned whether those increased costs are inflationary or whether they are for activities the members might not approve of or know of until fees increase again. He commented that there is no immediate connection between the fees members pay and what the board spends the money on that year and that concerns him. VICE-CHAIR DONLEY said that if some of the fee increases resulted from mandates by the judicial branch, the ABA could develop a bifurcated rate with a higher rate for judges' licensing fees. SENATOR COWDERY moved to amend HB 362 to change the board's extension to June 30, 2004 rather than 2006. VICE-CHAIR DONLEY noted that, without objection, the amendment was adopted. SENATOR COWDERY moved SCS HB 362(JUD) from committee with individual recommendations. VICE-CHAIR DONLEY announced that without objection, the motion carried. He then announced the committee would take a short recess.