In a policy change, the Legal Services Corp. is moving to cut off funds, at least temporarily, to 26 legal aid programs that have more than $10 million sitting in the bank.
Clint Lyons, acting vice president of the LSC, said yesterday monthly checks to the programs will be withheld until local officials explain why they have not spent funds equaling more than half their annual grant. "We are sending out a fairly clear message that in these economic times there has to be some rational approach and these unused funds can't lay around indefinitely," he said. If the groups do not have a good explanation, he said, the funds that were withheld will be reallocated to other LSC offices around the country.
In May, after the balances became an issue again, Lyons sent a memo to acting LSC President Gerald M. Caplan saying no action was needed. "For the most part, reasonable fund balances in programs are appropriate and are not a current cause for concern or for corporation intervention."
He noted that there were logical explanations for why most of the money was unspent, ranging from unfilled vacancies in newer programs to some hoarding of funds to continue aid in case of expected budget cuts by the Reagan administration.
Caplan said that the policy shift is necessary because "there are great unmet legal needs for the poor in this country and some programs are sitting on funds that seem excessive . . . . The program isn't fat, it's starving, emaciated" and the money is needed, he said.
Jody Smith, an official of the National Legal Aid and Defender Association, which represents many of the 300 local legal aid programs that the LSC supports, agreed the proposed cutoff seems necessary.
"It's a balanced position that responds to the legitimate needs of local programs and clients and a fiscal and management policy that can win respect and credibility on the (LSC) board and Congress," he said.
Some legal aid proponents have been embarrassed by the unspent funds at a time when the administration has been trying to abolish the corporation and Congress has cut its funds by one-fourth, to $240 million, over the past year.
According to an Aug. 19 memo from Lyons to Caplan, the 26 programs with "fund balances" exceeding 50 percent of their annual grant could be joined by another 64 local programs that have failed to spend funds totaling more that 25 percent of their annual grant. These programs would then have to file plans explaining how they will spend the money. The memo said the LSC board will be asked to approve a new policy requiring that a local program get specific approval to carry over more than 10 percent of its yearly allocation. Officials with some of the local programs involved expressed surprise yesterday at the action. Jack Harris, head of the Virginia Poverty Law Center in Richmond, said his office has been drawing on the $137,000 it carried over to make up for recent budget cuts under a plan approved by LSC headquarters. "It's unfortunate we will only be able to present our side against a presumption that we be defunded." Willie Mann, executive director of the Birmingham Area Legal Services office in Alabama, said the $859,000 his group carried over is earmarked for a headquarters and equipment.