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    February 17, 2016

    Court Funding: Circuit Courts Increasingly Pinched

    The judicial branch will soon begin the biennial process of requesting taxpayer dollars to help fund the court system. In this article, learn why counties are increasingly pinched on funding their circuit courts, with local and national perspectives on court funding.

    Joe Forward

    penny pinchingFeb. 17, 2016 – Every two years, the legislative and executive branches decide how much taxpayer money should be used to fund the judicial branch. The process will begin this year and culminate in a biennial state budget for approval in June 2017.

    Attorneys and judges generally understand the importance of a fully functional court system that allows the administration of justice to move efficiently – it helps individuals, businesses, and other parties obtain timely and just resolutions to their cases.

    But 70 percent of respondents to a recent State Bar of Wisconsin survey on court funding said current levels of funding are less than adequate in their counties, which leads to inefficiencies in the form of delays and congested court calendars.

    It also leads to court security risks, as noted in a recent Wisconsin Lawyer article, “Court Funding: Security at Risk.” Security is a major concern in Wisconsin courthouses, especially when parties often bring highly charged emotions to court.

    Efficient and safe justice, though, requires proper funding, including investment in new and advancing technologies. And the counties, which share funding responsibilities with the state, continue to shoulder an increased burden to fund court operations.

    This article addresses how courts are generally funded in Wisconsin. Future articles on court funding will dive deeper into the advantages of fully funding and investing in the state court system, and the disadvantages of failing to adequately support the courts.

    Drop in the Bucket

    The Wisconsin Court System is funded by three main sources: state revenue, county revenue, and the revenue generated from court fees, fines, forfeitures and surcharges.1

    What the state currently pays towards the Wisconsin Court System – about $131 million of approximately $15.75 billion (0.83 percent) in annual tax revenue that goes to a general purpose fund – means less than a penny of every tax dollar goes to the courts.2

    The state funds the state supreme and appeals courts – with seven justices, 16 appeals court judges, and court staff and other appellate court costs. 

    General purpose revenue also pays for circuit court judges and court reporters, as well as the Director of State Courts Office, which administers the court’s budget and maintains court information and technology systems, including the Wisconsin Circuit Court Access website.3

    Although the Wisconsin Supreme Court has authority over the Board of Bar Examiners, the Office of Lawyer Regulation, and the State Bar of Wisconsin, no state funding is used to operate those entities, which are supported by fees, dues, and assessments.

    The state currently pays around $73 million annually in salary and benefits for 249 circuit court judges and more than 250 court reporters.4

    The state also pays circuit courts about $25 million per year toward “circuit court support payments” and guardian ad litem and court interpreter reimbursements.5

    But counties pay the rest: payroll for circuit court clerks, court commissioners, registers in probate, court security officers, and other support and clerical staff. They must also pay for courthouses, including the technologies to support direct court services, and other court operation costs.6

    Current circuit court expenditures hover around $200 million per year, according to Sarah Diedrick-Kasdorf, deputy director of government affairs at the Wisconsin Counties Association. And counties are increasingly squeezed to meet court budgets.

    Diedrick-Kasdorf says a recent budget report shows counties must come up with an additional $117 million to fund circuit court operations. Counties look to local revenue sources, namely the county’s property and sales taxes, to meet the circuit court budget.

    From 2008 to 2013, the counties’ share of circuit court expenditures increased by almost 10 percent, the counties currently funding close to 60 percent of circuit court expenditures.7 Diedrick-Kasdorf said levy limits make it difficult to bridge that gap.

    “Raising additional revenue is rather difficult at this point in time for one main reason: our county governments are subject to levy limits that are tied to growth in new construction within the county,” she said. “And for any little bit of revenue that we are able to raise, the circuit courts are up against competing interests at the county level.”

    Court Support Services Surcharge

    What is particularly frustrating, Diedrick-Kasdorf says, is that a specific surcharge is in place to offset the county’s circuit court expenditures, but much of that fee is not coming back.

    Joe ForwardJoe Forward, Saint Louis Univ. School of Law 2010, is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by email or by phone at (608) 250-6161.

    Diedrick-Kasdorf said counties used the “court support services surcharge” – imposed on most civil actions beginning in the 1990s under Wis. Stat. section 814.85 – to offset portions of circuit court costs that counties could not cover through their own budgets.

    For instance, the layered surcharge starts at $68 in civil cases. Parties pay another $169 if seeking the recovery of $10,000 or more. Those seeking $10,000 or less, including those who file claims in small claims court, pay an additional $51.

    The circuit courts must send all surcharge amounts collected to the state’s general fund. But not all of it is returned to the circuit courts, as was originally intended. In fact, the amount of collected support fees returned to counties has reduced in recent years.8

    “That fee that was created and designated specifically to fund county circuit court operations, and as of fiscal year 2013, not even half of that fee is being returned to counties, so more local revenue must be used to support the court system,” she said.

    Specifically, Diedrick-Kasdorf said that in fiscal year 2013, the latest year that data is available, the court support services surcharge generated about $43 million that went into the state’s general fund. But only about $21 million was returned to the counties.

    The state also collects other fees. Circuit courts pay specific amounts or percentages to the state, and can retain the remainder for use by the county. For instance, of the $163 fee that criminal defendants must pay on conviction, 94 percent goes to the state for deposit in the general fund. 

    The state also takes all or portions of fees generated in civil actions, as well as amounts from more than 120 surcharges that go to specific funds.

    However, as Diedrick-Kasdorf noted, not all court fees, forfeitures, and surcharges go back into the court system. The state retains most of those for other uses.

    And what is retained by the county gets allocated according to county budgets – not all of it goes back into the county’s circuit court but can be used for other county purposes.

    In calendar year 2013, based on information reported to the Wisconsin Department of Revenue (DOR), counties spent approximately $192 million on circuit court operations and generated $52.5 million in revenue from fees that counties had authority to retain.9

    In the 2013-14 fiscal year, based on information reported to the Department of Administration (DOA), the state generated approximately $108 million in revenue from court fees, fines, forfeitures, and surcharges that went to the general fund.10

    These numbers indicate that the state keeps about 70 percent of the approximately $160.5 million in annual fees, fines, and surcharges generated by circuit courts.

    Increasing Fees not an Option, Not Advisable

    As noted, counties keep some court fees, but county boards decide whether those fees will be used for their courts. Counties cannot unilaterally impose additional court fees, but Diedrick-Kasdorf says counties may not want to even if they had the authority to do so.

    “Often times, as you increase court fees, the ability of circuit courts to collect the fees gets tougher and tougher,” she said. “If we have higher fees, individuals are less likely or less able to pay. They may be more likely to default as fees increase.”

    In addition, allowing counties or municipalities to unilaterally increase fees on their own to cover court operations may lead to other problems, according to Bill Raftery, an analyst at the National Center for State Courts who follows court funding issues.

    “Before the recession, there was the notion that courts should probably generate enough revenue to sustain themselves, and if they don’t, then the state should dip into the general fund because courts are part of the basic services that the government should provide. That was the push-pull before the Great Recession.”

    “After the Great Recession there were instances where municipal courts in particular, but state courts as well, were looking to courts as revenue generators,” he said.

    Last year, for instance, the U.S. Department of Justice released an investigation report on the Ferguson Police Department in Missouri. It noted that law enforcement efforts were more focused on generating revenue than public safety. That led to aggressive law enforcement and may have contributed to eroded public trust and confidence.

    On the civil side in Alabama, Raftery said counties were allowed to assess optional court fees, which led to huge disparities in court fees across counties.

    “Your cost for a civil case could be anywhere from 50 to 100 percent more depending on which county you filed in,” Raftery said. “There was no consistency even when talking about a state court system. At that point you are talking about 50 to 75 different court systems setting the fees or having them set by local government.”

    “Courts should be funded from general revenue funds,” he said. “They should not be expected to be revenue generating centers in order to pay for themselves.”

    Courts Need Strong Messages

    In the coming months, as Wisconsin’s legal community tries different ways to “make the case” on court funding, Raftery says courts will continue an uphill battle.

    “The judicial branch is treated even worse than an agency in some of these budget conflicts because there is nothing to horse trade,” he said. “The chief justice can’t walk in and trade votes for funding. For better or worse, that’s how the legislative process works. But courts don’t operate like that.”

    Raftery says performance measures that show how increased or consistent court funding can create more cost savings down the road will draw more attention, as well as messages from business leaders and other groups that see the value of a strong and thriving court system. And Diedrick-Kasdorf hopes counties will be at the table when it comes to court funding in the next cycle.

    “One of the first things we would like to see happen is having a larger percentage of the court support services surcharge revenue returned back to the counties,” she said.

    “I think there are number of efficiencies and technological advances that we could be moving forward with in the court system if we had the revenue to do so.”

    Endnotes

    1 John Voelker, A Three-Legged Stool: What Does the Future Hold for Wisconsin Court Funding? Wisconsin Lawyer (June 2014).

    2 Wisconsin Court System, Court-Related Items in the 2015-2017 Biennial Budget (August 2015).

    3 Christina Carmichael, Wisconsin Court System, Wisconsin Legislative Fiscal Bureau: Informational Paper 58 (January 2015).

    4 Wisconsin Court System, Court-Related Items in the 2015-2017 Biennial Budget (August 2015).

    5 Id.

    6 Carmichael, supra note 3.

    7 Christina Carmichael, Wisconsin Court System, Wisconsin Legislative Fiscal Bureau: Informational Paper 58 (January 2015).

    8 Voelker, supra note 1.

    9 Carmichael, supra note 3.

    10 Carmichael, supra note 3.



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