Government of the District of Columbia Executive Office of the Mayor Subcommittee on the District of Columbia Committee on Appropriations United States Senate
FY 2005 Budget and Financial Plan: “Education, Public Safety and Opportunity for All”
Testimony of Anthony A. Williams Mayor District of Columbia
Wednesday, May 19, 2004 138 Dirksen Senate Office Building 10 a.m.
Good Morning. Chairman DeWine, Ranking Minority Member Landrieu, and other distinguished members of this subcommittee, I would like to thank you for the opportunity to testify before you today in support of the District of Columbia’s FY 2005 budget and financial plan. It has been particularly rewarding to work with you, Chairman, and this committee over the past year. The strength of state and local government experience you bring to your oversight responsibilities, along with your dedication to the District of Columbia, provide this panel with an opportunity to make a difference in the lives of citizens of the District of Columbia and make our nation’s capital an even more rewarding place to reside, work, and visit. My remarks this morning will focus on three main goals we have for working with this subcommittee:
• promoting the fiscal strength of the District despite a difficult national economy and a long-term structural imbalance caused by federal restrictions;
• passing a local funds budget that provides for citizen priorities; and
• seeking critical federal investments relating to services for our residents and our special status as the nation’s capital.
I will begin by discussing our efforts to overcome fiscal challenges.
Overcoming Fiscal Challenges
The District has worked hard to overcome many fiscal challenges over the past decade. Some have been of our own making, others have been a matter of circumstance, affecting states and localities across the country, and others have been imposed by the federal government. Under my leadership, along with the legislative stewardship of our Council, led by Chairman Linda Cropp, and the fiscal guidance of Natwar Gandhi, Chief Financial Officer, there are few states or localities that have accomplished more in such a short period of time.
Fiscal year 2003 marked the District’s seventh consecutive balanced budget. In April, the District received a two-notch upgrade in our bond rating from Moody’s Investor Service and now all three rating agencies rate the District as grade A investment material. Over the last four years, as states and cities have weathered the deepest financial crisis in 60 years, the District has continued produce balanced budgets and has managed to increase our cash reserves, which totaled over $250 million at the beginning of this fiscal year. Our steady accumulation of reserves despite difficult times is due in no small part to the diligence of Senator Hutchison, who has advocated for robust and secure reserve funds. These reserves have the served the District well and have contributed to our string of ratings upgrades. I would also like to thank the senator for considering our proposal to restructure our cash reserves this year and hope that she and this subcommittee will support our proposal. This proposal, which is part of our budget request, would reduce our overall reserve requirement from 7 percent of total expenditures to 6 percent and extend the period over which the District can replenish the reserve from one year to two years. Even with these modifications, the District will have sound and stable cash reserves when compared to states across the country.
We have also achieved these accomplishments despite a long-term structural imbalance estimated by the General Accounting Office to be between $470 million and $1.1 billion per year. The GAO cites multiple factors causing this imbalance: the high cost of providing services in the DC metropolitan area, the relative poverty of our population, and federal restrictions on our revenue collection authority.
So what explains this apparent paradox? How can the District achieve remarkable financial performance, yet still face this structural imbalance? The answer is twofold. One, our residents are among the most heavily taxed in the nation, and two, the District is deferring massive investments in critical services and infrastructure. This is perhaps the most important point in my testimony today, Mr. Chairman and members of the committee, so I believe it bears repeating. In order to balance our budgets and fund our reserves, the District is deferring massive investments in critical services and infrastructure.
What is the magnitude of this deferral? Approximately $2.5 billion of infrastructure has been deferred, including renovating crumbling schools, repairing the sewer overflow, fixing roads, and putting into place the needed security systems to keep District residents and visitors safe.
As we seek solutions to address the structural imbalance and address our long-standing problems, it is clear that taxing our residents more or providing fewer services are not viable alternatives. Though the GAO report noted areas where the District needs to improve management efficiencies, the report is quite clear that this deficit would exist under any management structure and even if operational efficiencies were improved even more. One option proposed by the GAO is a change in federal policy to expand the District’s tax base or to provide additional financial support.
Earlier this month, at the request of this committee I submitted a report to you that laid out a comprehensive plan for addressing structural imbalance in the District of Columbia. This report presented several alternatives for addressing the imbalance and highlighted one very promising vehicle, a bill recently introduced by Representative Eleanor Holmes Norton, the “District of Columbia Fair Federal Compensation Act of 2004”. This bill would provide the District with an annual dedicated federal payment of $800 million a year dedicated to transportation projects, debt service payments, public school facilities, or information technology investments. This approach to redressing the District’s structural imbalance would allow the federal government to invest in infrastructure that benefits the federal government itself, the Washington metropolitan area, as well as the District of Columbia. Mr. Chairman, I very much appreciate your commitment to find a workable solution to this problem that threatens our long-term fiscal viability. In addition to addressing the federal contribution to our budget, we also need to repair the federal process for reviewing our budget. As you know, last year the Senate unanimously passed a budget autonomy act for the District. This legislation, besides being a well-deserved boost for us Home Rule advocates, would significantly streamline and rationalize our budget process by allowing the city to better align local funds with oftentimes unpredictable and shifting needs. This legislation would put a permanent end to long delays where the District budgets resources to respond to new service needs, but those dollars are tied up in seemingly endless continuing resolutions. This bill would also allow the District to better align our fiscal year with the federal grant cycle and school year, as are most local jurisdictions. This would eliminate a massive number of administrative burdens. Therefore, we are hopeful that the House of Representatives will follow the Senate and pass the same bill. Without the support of Chairman DeWine and Senator Landrieu, as well as Senators Ted Stevens and Robert Byrd, this historic legislation would not have been possible, so I offer special thanks to you all. Having set the context, I will now discuss the Fiscal Year 2005 budget for the District.
Funding Citizen Priorities
Over the past year our citizens have articulated their priorities in citizen summits and town hall meetings across the city, and this budget is the manifestation of those discussions. Our residents are calling for better education, public safety, health care and housing, and this budget makes critical investments to improve services in these areas. As a result, the growth of funding in this budget is focused on improving critical services, perhaps the most important of which is public education.
As I’m sure you noted, local leadership had a very robust debate in formulating this budget, and one of the topics discussed was the appropriate level of expenditure growth. After a healthy debate the Council approved a budget that funds the operations of government.
While growth in the budget appears dramatic at first glance, the true story is much less severe. Almost half of the growth in the budget funds one-time investments such as fulfilling court orders, paying for debt service from prior-year investments, and funding Medicaid cost increases. To manage the growth of Medicaid expenses we have new leadership in place, which includes a new Medicaid director and a director of our new Office of Medicaid Operations Reform. Our new leadership has led an effort to bring expertise and accountability to the District’s Medicaid office and public provider agencies. We are implementing the recommendations from our prior-year Medicaid audits, we have made significant improvements to our Medicaid budget development process, and we have improved our approach for billing for Medicaid services. In the following discussion I will discuss key initiatives included in this budget.
Education
Since my first budget as Mayor, I have increased the funding for public education by almost sixty percent. In addition to stabilizing funding for District of Columbia Public Schools despite continuing decline in enrollments, our FY 2005 budget provides record funding for charter schools. Despite these investments, I continue to be concerned with the quality of education we are providing to our children, and I am particularly concerned with how DCPS has managed its budget. To address these concerns, I have introduced legislation that would streamline the accountability and governance of our public schools by creating a chancellor position that reports directly to the Mayor with oversight from our City Council. Based on feedback from Council members and the general public, I am refining that proposal to also create an elected state board of education that would have considerable state-level powers. I am encouraged by the increasing number of Council members who voted against the status quo at yesterday’s legislative session. This indicates momentum in the direction of meaningful change. I look forward to continuing to work with the Council to reach agreement on a new governance structure soon. I hope we can rely on expedited consideration by the Congress of any legislation passed by the Council that would require a change in our Home Rule Charter. My efforts to recruit the best chancellor possible and strengthen the accountability structures around that new position are just part of my effort to improve the educational opportunities available to our children.
In addition, the city remains extremely proud of its robust charter school movement, which educates approximately 20 percent of the school-age children in the city. Under my leadership, the local facilities allowance for public charter schools has increased by almost 400 percent, from $617 per student in 2000 to over $2,400 per student in the proposed budget before you. We have also been working closely with this subcommittee and the charter school community to launch the exciting City Build initiative, which was funded by this subcommittee and will provide five charter schools with $1 million for their facilities in the coming months. Senator Landrieu deserves tremendous credit for her work on this program, and on charter schools in general.
In summary, the FY 2005 budget includes several new education initiatives, including:
• expansion of early childhood education,
• expansion of after-school and out-of-school activities for children and youth,
• creation of 5 new transformation schools in the DC Public School system,
• creation of 8 new public charter schools, and an
• upgrade of school security
In addition, the District’s new federally-funded scholarship program is unfolding quite well and has received approximately 1,500 applications from eligible families. Over 40 schools have submitted school commitment forms to participate in this program and more are expected to join. Based on these rough numbers we anticipate that will be able to meet our goal of serving approximately 1,700 students. The Washington Scholarship Fund, which is administering the program, is currently working with the program evaluation team, and the Department of Education to assess the number of slots and eligible participants to determine whether a lottery will be necessary for specific grade levels. I am confident that if such a lottery process is employed it will be consistent with the intent and priorities identified in the legislation.
Public Safety
On May 3, our city suffered the tragic death of 8-year-old Chelsea Cromartie. Chelsea’s murder was a senseless cowardly act of violence and unfortunately, it was not an isolated event. This year, 13 more of our children have been victims to senseless murders. The District’s response has been aggressive: we continue to fund 3,800 officers, we have conducted a new Patrol Service Area plan to enhance police deployment in our neighborhoods, and we have established the Office of Unified Communications to coordinate our emergency responses, and we have just launched a major new effort to concentrate resources from across the government on crime “hot spots” in order to make fundamental change. Recently I also introduced legislation at the end of last year to reform the District’s juvenile justice system. This legislation includes key legislative changes that would make the District safer for residents and victims of crime while providing improved rehabilitation services for our youth. Through these initiatives the District will make great strides to provide a safe and secure city for those who live, visit, and work here.
Opportunity for All
The city is also devoting its efforts to improving services for the District’s most vulnerable. At the Youth Services Administration, I have put in place transitional leadership that has already delivered improvements in the areas of security, treatment, staffing, administration, and licensing. We have also developed a comprehensive plan to best serve our youth and comply with and ultimately exit the current outstanding class action litigation. The plan also lays the groundwork for replacing the current Oak Hill facility with a smaller, state-of-the-art youth facility.
In addition, this budget includes the following enhancements:
• expanded coverage for traditional Medicaid clients,
• full funding for the Health Care Alliance,
• expanded treatment for the elderly, mentally challenged, and HIV/AIDS patients, and
• facility upgrades at community clinics and “Medical Homes”.
Priority Federal Funding for Critical Projects
Our budget includes several requests for funding projects in partnership with the federal government and I welcome this Committee’s partnership with the District to invest available federal resources in the city’s top priorities.
The President’s budget includes funding for several of my top priorities, including education funding for public schools, charter schools and private school scholarships; funding for the Combined Sewer Overflow project, which is part of a long-term effort to clean up and revitalize the Anacostia River; and funding for important public safety investments such as the Unified Communications Center and the Fire Department’s command center. Our budget also includes funding requests for several projects at a higher level than the President’s mark and for other projects that are not included in the President’s budget but are worthy of congressional attention. I would like to emphasize several of them here today:
• Tuition Assistance Grant Program. This program will allow 4,000 students to pursue higher education this year – either at public institutions and private historically black colleges around the country as well as local private colleges and universities. This high participation rate, along with rising tuition costs, means that the District will need to restrict payments to students or make the program needs based for students applying to the program for the 2004/2005 school year unless Congress takes action to fund the program at a higher level. This would have a devastating impact on the program which has had such a profound impact on opening up college opportunities to many families for the first time, as well as providing an incentive for middle class families to remain in or relocate to the city. Our budget contains a request to fully fund this program at a level of $25.6 million above the President’s mark of $17 million. Otherwise we will have to curtail this very successful program.
• Bioterrorism and Forensics Laboratory. Every city in the nation has access to such a facility as provided by the state, and major cities have their own. These laboratories are critical to tracing evidence that leads to convicting and incarcerating offenders in cases involving homicide, rape, and other serious offenses. Although the District is given some access to the laboratory managed by the FBI, the available capacity is woefully inadequate, and therefore the District faces a large crime rate without the tools needed to address it.
This laboratory is also essential for assessing, detecting, and addressing bioterrorism attacks. As we have seen with the events of September 11, the anthrax attack, and the ricin scare, the federal government is a natural target for terrorists and the public safety infrastructure of the District of Columbia is the first line of defense. This laboratory would significantly enhance our ability to detect and respond effectively to such threats Toward this end, we are requesting the $9 million for the planning and design phase of a bioterrorism and forensics lab.
• WMATA Operating Payments. The District’s contribution to WMATA operations will consume $208.5 of the city’s local budget in FY 05. Because the District is the core of the Washington metropolitan area and the center of federal operations, this investment not only benefits District residents, but it benefits the entire region. Last year, for the first time, Congress contributed $3 million towards this subsidy. This year, we are asking for full funding for our WMATA subsidy. This support is justified because federal stations, federal workers, and visitors to the federal government constitution a significant amount of the WMATA activity subsidized by the District. Federal support is also justified because mass transit costs are typically funded at the state level; Maryland funds 100 percent of its localities’ operating subsidy and Virginia funds half for its jurisdictions. I would argue that inherently unfair allocation of operating expenses allocated among Maryland, Virginia, and the District is a striking example of the structural imbalance and a logical opportunity for the federal government to craft an immediate, partial solution.
• Downtown Circulator. The Downtown Circulator project will provide the 22 million visitors to Washington, DC with an inexpensive and easy way to move around the Monumental Core. The service will connect several of the District’s most popular destinations for residents, tourists and even federal employees. In the future, the system could also be adopted by federal agencies as cost-saving replacement for private vehicle fleets and shuttle services. The federal government provided half a million dollars for this project in FY 2004 and the District is requesting an additional $1 million in FY 2005, which the District will match with local funds on a one-to-one basis on top of considerable support from the city’s tourism and business sectors.
• Public Safety Event Fund. This fund was established to fund local costs incurred in response to major federal events, but this year it was seriously under-funded by the President and should be raised to $25 million in FY 05. The proposed level of $15 million would barely cover reimbursement for the District’s costs associated with relatively predictable events such as anti-war protests, IMF and World Bank events, and high alert details. It does not account for any cost associated with the presidential inauguration, including payment for officers from outside jurisdictions, the overtime costs of our own police officers, and the additional services from other agencies such as the Fire Department, WMATA, and WASA. In the post-9/11 security environments, total costs will cost well over the extra $10 million that we are requesting.
• Public School Security. In the wake of the tragic shooting at Ballou Senior High School on February 2, 2004, we need to redouble our efforts in this area. The approach of city leadership recognizes the critical importance of school principals and school staff in creating a climate of safety and the importance of providing our staff the necessary tools and training. There is currently legislation before Council to transfer the responsibility for school security to the Metropolitan Police Department. While the District is planning on funding the significant operating costs of this initiative, I am requesting federal funding of $15 million to assist with the one-time start up costs.
• Adult/Family Literacy Initiative. This initiative, which was launched by this subcommittee, continues to address a gaping hole in the city’s educational infrastructure. The District has leveraged over $1 million in private assistance with federal appropriations to date and we have used this funding to fund literacy services to 872 adults who otherwise would not have received assistance. We have also recruited, hired, placed and provided professional development for 20 Lifelong Learning Coaches. I am requesting an additional $2 million to continue our efforts and focus additional efforts on the areas where we have identified significant disparities between the need for literacy services and the availability of those services.
Democracy for the Nation’s Capital
Having presented the District’s FY 2005 budget and federal request, I would like to close with a discussion of something that is beyond price, and that is the democratic rights of our citizens. The Senate has already signaled its interest in expanding Home Rule and democracy in the District by passing budget autonomy. I would like to ask for your individual support to take the next crucial steps. The District is the capital of the world’s greatest democracy, and it is the ultimate hypocrisy that its citizens suffer from the exact disenfranchisement this nation was founded to end. The United States is continuing to sacrifice hundreds of lives and billions of dollars to provide Iraqis with freedom and democracy, yet denies full democracy to more than a half a million people at its very heart. I urge you to end this injustice and provide the city with full voting representation in the Congress. Anything short of full democracy for our residents should be at the level of personal outrage for all Americans. This concludes my remarks today. Thank you for the opportunity to testify before you today and I look forward to answering any questions you may have.
