LSAC Responds to Balkinization Post

Brian Tamanaha

The Chair of the LSAC Board of Trustees sent out a mass email today with a pointed response to my recent post raising questions about LSAC's priorities. In fairness to LSAC, I will post his response (with a few comments).

It is true that fees for the LSAT are scheduled to go up by about 15% next year and the total cost of the test and admissions reports for an applicant who applies to six schools will be about $450. Considered against the total cost of a legal education, this is a very modest sum – about 0.3% of total law school costs. This percentage has been going down over the past decade and, at the same time, the LSAC has expanded its efforts to enable low-income students to avoid the costs entirely (see below). Compared to other professional graduate tests, the cost of the LSAT is quite low – 66% of the cost of the tests for students planning to attend business or medical school.

My criticisms were that this is a bad time to raise fees and $450 is a lot of money for students. To tell us that this sum is a fraction of the cost of legal education and cheaper than applications to B-school, while true, does not respond to the concerns I raised.

It is also true that the LSAC has a large reserve. Years ago, the Board tried to estimate the number of students who would take the test each year and adjust its price accordingly – lower if we expected lots of students and higher if we expected fewer students. This resulted in large year-to-year swings in our prices (and it turned out to be very difficult to predict how many students would take the test each year). Then, about 20 years ago, we decided to implement a policy of steadier increases which would permit us to build up a reserve when lots of students happened to be applying to law school and to call on that reserve when the numbers went down. (We are an organization with large fixed costs; for example, the cost to produce the test is about the same whether 1,000 or 100,000 students take the test.) Then, for several years (especially in later years up to 2009-2010), many students took the test and we ran surpluses. Now fewer students are taking the test. Next year, we project a deficit in our annual operating budget of about $7.5 million and it looks like we’ll see deficits for several years to come. So we’re now calling on the reserve we’ve prudently built up during the flush years instead of hitting students with huge price spikes.

My criticism was that LSAC, a non-profit organization, is raising fees when it has $170,000,000 on hand in cash and securities, which provides it a huge reserve. At a time of declining demand, rather than raising fees, another way to go is draw down on the reserve and cut expenses. This is the rainy day they have been preparing for.

The operating budget deficit is the product of the many things the LSAC does for law students and law schools. More than half of the deficit last year – $3.4 million of it – was caused by the LSAC’s fee waiver program. To do its part to help law schools become more diversified socioeconomically, the LSAC waived its test and application-processing fees for over 9,000 low-income students last year. When the recession hit, the LSAC also increased its direct subsidies to schools to help them weather the storm; for example, the LSAC began to pay more of the costs for admissions staff to attend candidate forums and the annual professional meeting. Finally, the LSAC provides generous support for a variety of diversity initiatives. For example, it probably provides more support than anyone in legal education for diversity pipeline efforts.

The fee waivers for low income students should be applauded. Nevertheless, the fee increase will be felt by many people who do not qualify for a waiver.

Some bloggers complain that the compensation for certain LSAC employees is too high. Our employees are well-compensated, but they are not excessively compensated, especially in view of the difficulty and technical complexity of their work. The LSAC Board scrutinizes salaries very closely and regularly commissions professional salary surveys to assess the fairness of our compensation structure. What we pay is fair in the market – not too much or too little.

I pointed out that in 2009 the President earned $624,000 (which is nearly $200,000 more than his predecessor earned just two years earlier), and that the officers earned salaries of $375,707, $322,827, etc.--plus supplemental payments ranging from $75,000 to $100,000 in 2008. The LSAC administers a testing and application service that holds a monopoly position. It's not obvious that the handsomely compensated high officers, including their general counsel, are engaged in work of great technical complexity (the current President is a former law school dean).

Some bloggers claim that the LSAC spends $1 million per year on lobbying expenses. That is just plain wrong. Over the last three years (which were typical), the LSAC’s lobbying expenses have been less than $25,000 per year.

I took the $1 million dollar figure from LSAC's 990 form, under the category "Lobbying Expenditures During 4-Year Averaging Period," #2a "Lobbying non-taxable amount:" 2007--$1,000,000; 2008--$1,000,000; 2009--$1,000,000. If I spoke in error, I stand corrected.

There are those who think the LSAC should confirm each school’s reported LSAT and UGPA scores, and who claim it would be easy to do. The LSAC is in discussions with the ABA to see if it can do this. But it is very wrong to think it will be an easy task. It turns out that the LSAC is missing a crucial piece of information to do this – it doesn’t know which students go to which schools until well after the reporting period and, even then, the LSAC knows only what the schools report. It also turns out that an unknown number of schools – those with variances from ABA Standard 503 – have an unknown number of students who are completely off the LSAC’s radar screen. And many students can legitimately be counted as attending more than one school under current ABA standards. Yes, the LSAC should try to help make this reporting more reliable; the LSAC has already said it will do that if it can solve these problems and do the task well. We’re working on it, but it is a very complicated task.

It is great to hear that LSAC is working on confirming the LSAT/GPA medians reported by law schools. This is a welcome change from the LSAC President's statement in the National Law Journal suggesting that LSAC would not do this: “That’s just not something we have done historically, and I don’t see why we would. We are not in the reporting business.” Given recent news of false reporting by two law schools (after years of rumors about false reporting), this will go a long way toward restoring the reliability of these numbers. Whatever difficulties this will pose for LSAC are minor by comparison.

Here is the Chair's closing paragraph:

The LSAC is by no means perfect. It relies on the hard work and insights of its outstanding staff and of hundreds of volunteers from its member schools who all do their very best to make the LSAC a valuable and responsive organization. It’s a tough environment right now for law schools and affiliated organizations like the LSAC, AALS, and ABA. There is great value in constructive criticism and new ideas, and we welcome them from any and all sources. On the other hand, poorly considered and uninformed complaints are not helpful to the LSAC, law students, or law schools.

That last line was directed at me. Readers of the original post--and the Chair's response--can decide for themselves whether the concerns I raised are "poorly considered and uninformed complaints." More important, it is nice to see that LSAC recognizes that it must be responsive to concerns raised about its operation.

The original post.
Posted 3:55 PM by Brian Tamanaha [link]