MLSC Projects Funding Loss of Nearly $10 Million

Maryland Legal Services Corporation, the state’s largest funder of civil legal aid, announced today a critical funding situation for fiscal year 2021 that may require significant cuts to current grants. MLSC currently projects revenue for the fiscal year that began July 1 to be $9.8 million lower than the prior year. These projected funding losses ballooned by approximately $5 million between June and September as the impact of the pandemic continued.

Funding cuts would have a disastrous impact on Maryland’s civil legal aid delivery system. Low-income Marylanders rely on nonprofit civil legal aid providers for help with vital needs, including eviction prevention, child custody, protection from domestic violence, unemployment insurance, food stamps, hard-earned veterans’ benefits and more. MLSC’s 36 grantees served more than 200,000 people across Maryland last year – people who otherwise might have no place to turn.

“As the pandemic has exacerbated existing civil legal problems and created new ones, at the same time it has gutted the funding needed to address those problems,” said Susan Erlichman, MLSC’s executive director.

MLSC’s two major funding sources are surcharges on certain court filing fees and the interest on lawyer trust accounts (IOLTA) program. Even though the courts have resumed operations after months of closures, filings have remained low. MLSC revenue from filing fee surcharges in July and August 2020 were approximately half of what they were in the same months in 2019. MLSC projects filing fee revenue will be down approximately $4.8 million this fiscal year as compared with pre-pandemic levels. The uncertainty surrounding the COVID-19 crisis means that this funding source could be volatile for some time.

Meanwhile, the IOLTA program is heavily dependent on interest rates, which now hover near 0% and are expected to remain rock-bottom for the foreseeable future. These rate cuts now translate to projected IOLTA losses of nearly $5 million this year – a drop of 78% from fiscal year 2020.

Due to the severity of these ongoing funding losses, unless MLSC can find significant replacement funds soon, the organization will likely need to institute grant reductions in the current year. These cuts would come on top of an overall 9% reduction in funding introduced at the start of the fiscal year that began July 1 and would be accompanied by digging even deeper into dwindling MLSC reserves.

“These reductions in grants and depletion of MLSC reserves will jeopardize the continued services of these programs at a time when the need is more critical than ever,” said Natalie McSherry, MLSC board chair.

MLSC’s mission is to ensure low-income Marylanders have access to stable, efficient and effective civil legal assistance through the distribution of funds to nonprofit legal services organizations. Since the Maryland General Assembly established the organization in 1982, MLSC has made grants totaling over $312 million. MLSC grantees have provided services in more than 3.5 million legal matters concerning family, housing, employment and other civil legal issues. For more information, visit