1. AMERICAN JUDGES ASSOCIATION LAHAINA, HAWAII SEPTEMBER 2008 RICHARD VAN DUIZEND PRINCIPAL COURT MANAGEMENT CONSULTANT NATIONAL CENTER FOR STATE COURTS WWW.NCSCONLINE.ORG Court Funding: Lessons From the Last Recession

2. Questions to Consider WWW.NCSCONLINE.ORG How bad were court budget deficits in the last recession? How did budget cutbacks affect judicial services to the public? What are the budget forecasts through 2010? What did we learn from the last recession that might help courts develop strategies be to address this next round of budget shortages?

3. Where Did Increased State Spending Occur in the 1990s? WWW.NCSCONLINE.ORG Source: Donald J. Boyd, Nelson A. Rockefeller Institute of Government Note: This is measured per capita. Figures are adjusted for inflation and population growth

4. What did the financial picture look like from FY 2001-2004? WWW.NCSCONLINE.ORG 26 states had less revenue than estimated in 2003 45 states expected budget deficits in 2004 39 states exceeded budget spending levels for FY 2003 Most states had budget deficits equivalent to 11 percent of total expenditures Council of State Governments, State Fiscal Crisis: Critical information for State Decision Makers, April 2003

5. What caused the fiscal crisis in the last recession? WWW.NCSCONLINE.ORG Spending Increases Occurred at the Same Time as Tax Cuts Were Enacted How could states cut taxes while increasing spending and still maintain balanced budgets? Sales taxes increased as consumer spending increased State income taxes increased as peoples incomes increased States enacted permanent tax decreases Stock Market losses September 11 Per capita increase in state spending Council of State Governments, State Fiscal Crisis: Critical information for State Decision Makers, April 2003

6. WWW.NCSCONLINE.ORG Adequacy of State Judicial Branch Current Appropriations, As Rated by Court Administrators FY 2001 Note: N = 38.

7. WWW.NCSCONLINE.ORG Adequacy of State Judicial Branch Current Appropriations, As Rated by Court Administrators FY 2003 (Note: N = 32)

8. WWW.NCSCONLINE.ORG 92% of These States Took Actions to Curb Spending Because of Funding Restrictions During 2003.

9. WWW.NCSCONLINE.ORG Nearly half of the responding states reported budget restrictions for FY 2003

10. Virtually every state reported significant public impact from the crisis. WWW.NCSCONLINE.ORG Alabama: 475 court positions cut in 2004 California: early release of prisoners47,000 from Los Angeles alone New Hampshire: suspended jury trials for a month Oregon: closed courts to the public on Fridays Minnesota cut funding to crisis centers meaning less help to victims of domestic violence New York: cuts to Rochester Public Interest Laws Office meant 200 people would receive no legal help

11. WWW.NCSCONLINE.ORG WHAT IS IN STORE FOR STATE BUDGETS THROUGH 2010?

12. WWW.NCSCONLINE.ORG 12 Source: Pew Center on the States

13. 14 State Courts Systems Face 0 to 10% Budget Reduction in FY 2008-09. NCSC survey of State Court Administrators, May 2008, forty-two states responding WWW.NCSCONLINE.ORG

14. What's Causing State Budget Woes This Time? WWW.NCSCONLINE.ORG Bursting of the housing market Sales tax revenues decline Property tax revenues, Local governments will be looking to states for relief Past policies have left states vulnerable Unaffordable past tax reductions Tax cuts being phased in over next few years Structural budget imbalance Use of one-time revenue and budget gimmicks Inadequate rainy-day funds

15. What Tactics and Strategies Did State Courts Implement Last Time? WWW.NCSCONLINE.ORG

16. State Strategies WWW.NCSCONLINE.ORG

17. Most Frequent Short-Term Actions to Curtail Court Expenses (2003) WWW.NCSCONLINE.ORG 1. Hiring delay or freeze (27 states) 2. Permanent layoffs (7) 3. Delay pay raises (10) 4. Reduce training (18) 5. Travel restrictions – out state (24) 6. More use of electronic communications (22) 7. Reduce capital expenditures (28) 8. Cut funding to problem solving courts (10) 9. Enhancement of revenue streams (14) 10. Invest in automation (12)

18. Things May Be Worse This Time WWW.NCSCONLINE.ORG Property taxes, sales taxes and income tax could all be hit Many states filled the budget shortfall last time by raising fees; there is little room left for new increases May need to radically redesign services to continue to provide adequate access to the public

19. Examples of Service Redesign WWW.NCSCONLINE.ORG Court Servicesprioritization, consolidation and elimination of services Process Efficienciescentralize and streamline services Technologyredesign services around IT

20. State Courts Systems Considering Steps to Adjust Expenditures in FY 2008-09 NCSC survey of State Court Administrators, May 2008, forty-two states responding WWW.NCSCONLINE.ORG

21. What Is NCSC Doing? WWW.NCSCONLINE.ORG Templates for re-designing services Survey the depth of the cuts Track solutions Budget Resource Center Toolkit