California’s New Budget Could Harm Nonprofits – Unless Jerry Brown Steps In

Legislation on Gov. Jerry Brown’s desk threatens an important source of funding for nonprofits in California. The governor should heed a coalition of nonprofit organizations that oppose it, and use his veto pen.

Under current law, judges distribute money from settlements in class action lawsuits that goes unclaimed to nonprofit organizations that do work that is relevant to the cases. The theory is that the money, while not going to victims of whatever wrong is addressed in the litigation, will help prevent some future harm.

But as part of this year’s budget, legislators added a provision to a trailer bill that would take half of the unclaimed funds and earmark it for indigent legal services and collaborative courts such as those established for veterans or mentally ill people who run afoul of the law.

As it is, those services compete for that money with other nonprofits. Indigent services and collaborative courts are important, and deserve to be funded and expanded, but not at the expense of other worthy nonprofit organizations.

The American Civil Liberties Union backed the provision, contending that legal aid services have suffered an 80 percent reduction in state funding during the last decade, while the need for those services has increased.

While poor people ought to have access to legal aid, consider some of the nonprofits that could end up losing.

One is the Housing and Economic Rights Advocates, based in Oakland, which in 2014 and 2016 received a total of $130,000. It used that money to provide financial literacy workshops to low-income residents. A Rose Foundation report said the Oakland organization’s efforts helped eliminate almost $1.7 million in its clients’ high interest debt, clearly a worthy undertaking.

In 2015, the California Healthy Nail Salon Collaborative received $50,000, which it used to educate mainly low-income Asian immigrant nail salon workers about their worker safety rights. The Utility Reform Network, based in San Francisco, received $60,000 in 2015 for work to protect the privacy rights of mobile phone users.

The issue of earmarking the payments for indigent legal aid services and collaborative courts was raised during budget hearings. However, the provision was added to the trailer bill, Assembly Bill 103, late in the budget process.

The effort to alter the payment process, known as cy-pres, is part of a disturbing practice in which lawmakers and governors, including Jerry Brown and his predecessors, approve policy without subjecting it to full legislative review.

Trailer bills ought to be used to implement specific aspects of the budget, not create significant policy that bypasses full legislative review.

The Legislature and the Judicial Council, which oversees the court system but wasn’t consulted on the issue, should address any shortcomings with how money from class action lawsuits has been distributed. Short of that, the Legislature should leave to judges the responsibility for overseeing how money unclaimed from class action suits is allocated.

While they’re at it, Brown and lawmakers should make sure there’s sufficient funding for indigent legal aid and collaborative courts.

Read more here: