On November 20, 2004, the House of Representatives and the Senate both passed the Consolidated Appropriations Act 2005 (H.R. 4818), which allocates $335,282,000 to LSC for fiscal year 2005. This is the amount contained in the appropriations bill passed by the House in July, 2004 is higher than the amount contained in the appropriations bill passed by the Senate in September, 2004. The $335,282,000 allocated in the conference version of the bill is the same amount allocated by Congress for LSC in fiscal year 2004. However, due to an across-the-board cut of .8 percent for almost all non-defense programs and an across-the-board cut of .54 percent in the Commerce/Justice/State/Judiciary portion of the bill, LSC will ultimately receive approximately $330,789,221. The Consolidated Appropriations Act includes House language allowing LSC to use $1 million, initially allocated to the LSC Office of Inspector General in FY 2004, for a student loan repayment pilot program. LSC has now formed an advisory committee to determine how best to use the funding for the program. In addition, the bill incorporates Senate language that allocates $1,833,000 to ten states that suffered the most from funding reductions due to the 2000 census reallocations. In order to finance this allocation, the bill redirected a portion of the funds from the LSC Office of the Inspector General, LSC management and LSC administration, and LSC client self-help/technology functions, rather than reducing the amount slated for basic field programs as the Senate had recommended.

On the same day the House and Senate passed the bill, Senator Jon Corzine (D-NJ) inserted a statement into the Congressional Record calling for Congress to amend the "private money restriction" that currently bars LSC grantees from using any private funds to engage in a range of activities (also prohibited with federal LSC funds), including representing certain legal immigrants and bringing class actions to protect elderly homeowners from predatory lenders. LSC grantees may only use their non-LSC funds to finance the restricted activities only if they first establish a physically separate office with separate staff and equipment. Senator Corzine stated: "Wasting scarce private resources on duplicate staff and offices adds significant costs and results in fewer families being served." He suggested that Congress fix this problem by amending the LSC appropriations bill to require that privately funded activities of legal aid non-profits be treated the same as those of other non-profits, including groups that receive funding under the President's Faith-Based Initiative. These rules authorize non-profits that receive Federal funds to engage in privately funded activities, including faith-based activities, without requiring them to maintain physically separate entities with separate staff and equipment. Senator Corzine added: "Under this alternative approach, the restrictions on Federal LSC funds would still apply, whether one agrees with them or not, but they would allow local providers and donors to use private money to serve their communities as they see fit. I hope that in future discussions about the [LSC] Appropriations bill, we can consider this alternative approach to the problems that this bill will create for America's families and service providers."

Status of the Consolidated Appropriations Act, H.R. 4818, ABA LSC Update, Nov. 24, 2004; H. Conf. Rep. No. 108-792, at 28, 240 (2004); 150 Cong. Rec. 211740-04 (daily ed. Nov. 20, 2004) (statement of Sen. Corzine); also based on original reporting by Brennan Center staff.