Gov. Hochul’s plan to divert escrow funds risks essential legal aid for needy New Yorkers

April 19, 2024 Robert Abruzzese, Courthouse Editor

New York Gov. Kathy Hochul speaks at a press conference regarding the proliferation of illegal cannabis stores, Wednesday, Feb. 28, 2024, in New York. Unable to reign in illegal cannabis shops in New York, the state's governor is asking digital mapping and search companies to hide or relabel the many illegal shops.  (AP Photo/Stefan Jeremiah)

Gov. Kathy Hochul faces criticism for her proposal to divert $55 million from the IOLA Fund, designated for civil legal services for low-income New Yorkers, as part of the state budget. The New York State Bar Association has expressed strong opposition, urging a reassessment of the plan that threatens essential legal aid resources. Photo: Stefan Jeremiah/AP

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In a controversial move within the state budget agreement, $55 million that was previously designated for civil legal services for low-income New Yorkers is proposed to be rerouted, drawing severe criticism from the New York State Bar Association (NYSBA).

Richard Lewis, president of the NYSBA, voiced the organization’s strong opposition to this reallocation, originally included in Governor Kathy Hochul’s executive budget proposal.

“The New York State Bar Association strenuously objects to the transfer of $55 million from the IOLA Fund to pay for other state programs,” Lewis said. “When Gov. Kathy Hochul originally proposed in her executive budget to remove $100 million from the IOLA Fund and place it in the state’s general fund, we and many other legal advocates protested. When the governor withdrew the proposal, we commended her. We are now distressed that this ill-conceived plan has been resurrected, and strongly urge the governor and Legislature to reconsider.”

The NYSBA had previously put pressure on Gov. Hochul when she had previously proposed such an idea. When she relented and withdrew an earlier proposal to divert $100 million from the same fund, the State Bar Association praised her.

However, the association is now deeply concerned by the revival of what it considers an “ill-conceived plan.” Lewis urged both the governor and the legislature to reassess this decision, respecting the legal stipulations that safeguard these funds for their intended purpose.

“The IOLA Fund supports 81 nonprofit legal services organizations that help New Yorkers in their time of greatest need,” Lewis said. “The law simply does not allow the state to improperly divert this money — which comes from escrow on attorney accounts and not from the taxpayers — to other state programs. The New York State Bar Association supports the IOLA Board of Trustees in its unanimous opposition to this use of money that was set aside by law to aid low-income New Yorkers.”

The NYSBA continues to stand with the IOLA Board of Trustees, who have unanimously condemned this proposed financial redirection, reaffirming its commitment to uphold the rights and needs of the state’s most vulnerable populations.