District 2 Governor Karen Bauer speaks during the State Bar of Wisconsin’s Board of Governor’s discussion on the proposed FY 2025 budget on Friday, April 12.

April 12, 2024 – The State Bar of Wisconsin’s 52-member Board of Governors approved the fiscal year 2025 (July 1, 2024 to June 30, 2025) budget at its meeting on Friday, April 12.

Paul Marshall, the State Bar’s chief financial officer, said that the initial submission of the FY 2025 budget revealed that the State Bar faced a budget gap of about $760,000 (operational revenue minus operational expenses).

Before taking the proposed budget to the Finance Committee in December, State Bar staff fine-tuned their budget proposals. That resulted in $180,000 of adjustments.

State Bar staff then worked with the Finance Committee and the Joint Review Committee, with the Joint Review Committee reviewing all State Bar activities for prioritization and relevance and ensuring alignment between the budget and strategic operational plans.

The Finance Committee at its December and January meetings proposed the following to further reach a break-even budget:

• count on the historically sound and predictable forms of investment income – interest and dividends ($200,000); and

• plan on submission of a grant request to the Wisconsin Bar Stewardship Trust (WBST) in FY 2025, although not guaranteed, to help support the State Bar ethics program ($200,000).

Marshall said that if for some reason the WBST did not approve the State Bar’s grant application, the State Bar would need to either manage to the lesser amount of available funding and/or dip into the State Bar’s reserves.

The approved budget, which was recommended unanimously by both the State Bar’s Finance Committee and the State Bar’s Executive Committee, includes a 3.1% raise in member dues, less than the average rate of inflation in calendar year 2023, or $9.

The increase will raise dues from $287 to $296. The dues increase would then close the remaining $180,000 gap, Marshall said.

District 16 Governor Lawrence Wiesneske speaks during the State Bar’s Board of Governor’s meeting on Friday, April 12.

The board approved the motion after defeating a motion by District 2 Gov. Nick Zales (Milwaukee) to avoid a dues increase and instead request $400,000 from the WBST.

“More and more of our members are not happy with it,” Zales said, referring to annual dues increases. He was one of just two board members to oppose the budget.

During the debate on his motion, Zales reiterated his criticism that the State Bar had “given away” $5 million dollars when it created and funded the WBST last year.

But that was a mischaracterization, said Patrick Puyleart (Wausau), one of the board’s Wisconsin Supreme Court appointees.

“We did not give away $5 million when we established the special purpose trust,” Puyleart said. “We moved the money into trust status for the purpose of protecting those funds for future use, and we’re exercising our right to petition that trust for the funds needed to balance the budget this year.”

The stated purposes of the trust and the stated purposes of the State Bar mirror one another. The trust’s Board of Trustees and Trust Protectors will need to ultimately decide the merits of a grant award in fulfillment of a commonly shared purpose.

Membership dues account for approximately 45 percent of the State Bar’s annual revenue. Registrations and sales of State Bar of Wisconsin PINNACLE^® books, seminars, and other products represent approximately 37 percent of State Bar revenues, with the remaining revenue from advertising and sponsorship sales, Lawyer Referral and Information (LRIS) registrations, and other miscellaneous sources.

Marshall reiterated that small incremental dues increases to keep pace with inflation are advisable, and the use of reserves to fund operational expenses is not a good business practice. Using reserves is a temporary fix, he said, and investment income is lost.

District 2 Governor Randall Brotherhood chaired the State Bar of Wisconsin’s Board of Governor’s meeting on Friday, April 12.

Keller Dues Reduction Amount Set

The board also set at $11 the amount that members will be able to deduct from their dues under the U.S. Supreme Court’s ruling in Keller v. State Bar of California, 496 U.S. 1 (1990).

Under Keller and Wisconsin Supreme Court Rule 10.03(5)(b)1, the State Bar may not use compulsory dues of objecting members for activities that are “not necessarily or reasonably related to the purposes of regulating the legal profession or improving the quality of legal services.”

The State Bar must annually publish notice setting forth each member’s pro rata portion of dues that are not necessarily or reasonably related to these dual purposes. Members may elect to withhold the pro rata portion of nonchargeable dues on dues statements.

All direct state and federal lobbying activity falls within the Keller rebate calculation, even lobbying activity deemed germane to regulating the legal profession or improving the quality of legal services.

In the past, members have challenged the State Bar’s use of mandatory dues for any direct lobbying activity on First Amendment and other grounds. Those challenges have consistently failed under Keller and subsequent rulings.

The board’s decision in 2018 to include all direct lobbying activity in the rebate amount, as a State Bar policy, recognized and continues to recognize the concerns of members who object to the use of mandatory dues for any direct lobbying activity, regardless of what Keller permits.

The Keller rebate amount includes all lobbying activity, and other activities determined by the Executive Committee to be non-chargeable to membership dues given the State Bar’s well-established and highly regarded Keller process.

Marshall told the board that activities and amounts from the fiscal year ending June 30, 2023 (the most recently audited fiscal year, FY23) were used as the baseline period for calculating the amount of the dues reduction for FY25.

State Bar President-elect Jane Bucher resigned her position at the end of the Board of Governor’s meeting on Friday, April 12, to accept an appointment to the Green County Circuit Court.

New Reserve Policy Proposal

The board also discussed, but took no action on, a new proposed reserve fund policy.

Under the new policy, the State Bar will maintain a single multi-purpose “operational reserve” fund.

The operational reserve fund will no longer be earmarked for individual purposes. Instead, the purpose of the operational reserve fund will be:

• to sustain the State Bar in case of an unexpected financial crisis;

• to provide money for both the anticipated and unanticipated purchase of real estate and fixed assets; and

• to take advantage of opportunities that fall outside the budgeting process but align well with the State Bar’s purpose of serving members, the Supreme Court, and the public.

The State Bar Executive Director will advise the board on events that require the use of operational reserve funds. The board may release funds from the operational reserve by a majority vote.

However, the Executive Director may use operational reserve funds without action by the board if he or she is faced with a situation where the State Bar would be harmed if the action were to be delayed, as long as he or she subsequently informs the board (the board can then restore the money to the operational reserve).

The preferred level for the operational reserve is six months of operating expenses plus:

• $1.5 million for future building and equipment needs;

• $1.5 million for potential business opportunities; and

• 100% of the section carry-forward reserve.

The maximum level for the operational reserve will be capped at nine months of operating expenses plus:

• $4 million for future building and equipment needs;

• $4 million for potential business opportunities; and

• 100% of section carry-forward reserve.

Governor Patrick Puyleart, one of the Wisconsin Supreme Court’s appointees to the State Bar’s Board of Governors, speaks during a debate on the proposed FY 2025 budget during the board’s April 12 meeting.

Board Fills District 6 Vacancy

In other business, the board elected Sarah Guenther to a District 6 vacancy. The vacancy was created by the resignation of District 6 Gov. Latrice Knighton on Feb. 6, 2024. Guenther will serve the remainder of Knighton’s term, which ends on June 30, 2025.

Other Business

The board discussed, but took no action, on a report from the CLE Committee regarding last year’s denial by the Wisconsin Supreme Court of the State Bar’s petition to create a voluntary Diversity, Equity, Inclusion, and Access (DEIA) CLE credit.

Doug Swanson, CLE Committee chair, told the board that the committee recommended that the State Bar file another petition with the Supreme Court to create a voluntary DEIA CLE credit, with programming focused on cultural competency and the elimination of bias in the legal profession and the practice of law.

“We want to create incentives for attorney to attend courses so that they reach their goal of better serving the rapidly growing diverse populations and working with increasingly diverse lawyers,” Swanson said.

District 9 Gov. Mitch recommended using “recognition and reduction of bias” instead of “elimination of bias” in describing the types of programming the rule would cover.

President Dean Dietrich told the board that he intended to bring a new petition to the board for its approval at the June Annual Meeting and Conference (AMC).

“We are very excited about the opportunity to present this to the court as soon as we can and get it on their calendar for discussion and, hopefully, action in the fall,” Dietrich said.

ABA To Hold Democracy Listening Session at State Bar

The State Bar of Wisconsin will host an ABA American Democracy Task Force listening session on July 9, 2024. Former State Bar President Michelle Behnke updated the board on the initiative.

Attorney Michele Behnke, incoming president of the American Bar Association (ABA), told members of the State Bar of Wisconsin’s Board of Governors that the ABA plans to hold a listening session on democracy at the State Bar Center on Tuesday, July 9.

Behnke, who served as the State Bar president from 2004-05, spoke at the board’s meeting on Friday, April 12.

She said the ABA plans to partner with other groups to hold listening sessions in all 50 states. But she said the first listening sessions are scheduled for Arizona, Georgia, Michigan, North Carolina, and Pennsylvania, in addition to Wisconsin.

The listening sessions will be organized by the ABA’s Task Force on Democracy. Behnke said the listening sessions aim to:

• educate Americans about democracy and the rule of law;

• bolster confidence in elections by safeguarding the nonpartisan administration of elections and protecting election workers and officials; and

• suggest ideas for strengthening democracy and elections.

Local host committees will plan the listening sessions, Behnke said.

For the Wisconsin listening session, Behnke said she’s contacted the Madison chapter of the Federalist Society, the Wisconsin Institute for Law and Liberty (WILL), both the state’s law schools, and other organizations.

Behnke said that current ABA President Mary Smith was compelled to create the ABA Task Force on Democracy after learning that a recent survey showed that 46% of respondents were open to living under a different form of government, including authoritarian rule.

“We expect to extend invitations to both lawyers and the public, to have a good cross-section of people to talk about this process and everyone’s role in ensuring our democracy,” Behnke said.

“We want to encourage people to build listening circles, so that people with different perspectives can discuss issues and model civil discussion and understand their role in our democracy.”