A major funder of legal services for the poor will shave its grants by at least 5 percent across Maryland — even after dipping into its reserves.
The 34 agencies that receive money from the Maryland Legal Services Corp. have been told to submit requests for grants next month that are 5 percent below current amounts because it is facing a "significant" funding shortfall, said executive director Susan M. Ehrlichman. And the cuts may be deeper the following year.
The nonprofit organization's two main funding sources — the surcharge on court filing fees for civil cases and the interest paid on short-term bank accounts for lawyers' clients — have been hit by the economy.
The number of new civil cases has plummeted. In district courts, the number of cases in which fees were paid went from 243,000 in 2009 to 195,000 in 2011. Each one provides $8 for legal help for the poor. The numbers tumbled in circuit courts, where the surcharge is $30. In Baltimore City alone, the 2009 figure was about 22,000 but fell to about 18,000 in 2011.
Ehrlichman said the fees have fallen more than $1 million short of the $6.1 million in projected income. The numbers keep falling — and the surcharge was supposed to make up for the drop in interest rates. With few small exceptions, interest rates are hovering near zero, and no movement is expected for two years.
The organization expects to dip into its reserves for $1.3 million in the fiscal year that closes at the end of June and to do the same in the coming year, even with the 5 percent cuts in grants.
The cuts come as demand for help in foreclosures, unemployment benefits and other non-criminal issues is rising.
One of the groups that receives a grant, the Maryland Legal Aid Bureau, provides the lion's share of legal services to the poor statewide. It has seen its new-case numbers grow from about 41,200 in 2007 to almost 70,000 in 2011.
"We are economizing. Some openings are not being filled immediately," said Joseph Surkiewicz, spokesman for the bureau.
It will lose about $550,000 from the $11 million it received this year from the MLSC — on top of the $650,000 in federal funding that is being cut. It has an overall budget of $24 million.
Maryland Disability Law Center executive director Virginia Knowlton said that the $700,000 the center receives from the MLSC is the largest grant in its $3 million budget and that 5 percent of the grant is about half of one employee salary. The center is also trying to figure out how to keep two lawyers paid as other grants are about to end.