Budgetary Planning – Don’t Get Caught by Surprise:

Every spring, LDF releases the rate letters for the coming fiscal year. By now, most of the member associations should have already received theirs.

Although this year the LDF trustees voted to not raise rates on an overall basis, our “experience rating” model results in a different rate for each fiscal year. Specifically, for those associations who participate in Plans 1 or 3 (civil, criminal, and administrative coverage), you have rates which are “experience rated,” meaning that the monthly, per member, amount is adjusted upward or downward based primarily upon the amount of LDF benefits which were paid on behalf of your members throughout the preceding year.

In other words, your association’s rates will either be increased or decreased in direct proportion to the number of benefits used. Obviously, this will be good news for some and more difficult news for others.

Unfortunately, many associations are caught by surprise when they receive their rate letter, having not anticipated the potential for an increase in dues. This year may be particularly difficult, given the great uncertainty in the economy, and the tight financial situations that the associations find themselves in.

Some associations set their budgets based upon the calendar year, while others use the fiscal year. Either way, it is important to keep in mind the potential for rate increases and plan budgets accordingly.

While we always wish that our rates will decrease, we must remain mindful that LDF is a non-profit trust and does its best to keep rates low for all of our members. Reality shows, however, that there are times when association members face more than just your run-of-the-mill minor disciplinary cases.

Sometimes, a member faces significant criminal charges, or LDF may be summoned to provide a highly aggressive defense to a politically motivated and unwarranted disciplinary action. Accordingly, those associations may see a portion of those costs causing an increase in their monthly dues.

Please remember, associations should do their best to assess their LDF usage while contemplating their next year’s budgetary planning. Try not to get caught off guard. To accomplish this, the legal administrator’s office is always available to assist each member association throughout the year by providing some comparison information on the amounts spent.

Remember, when doing your budgetary planning, it may be advisable to plan for the worst and hope for the best. It is much easier to wind up adjusting a budget to account for a lower than expected LDF rate, than the opposite circumstance. Don’t get caught by surprise.