NA Testimony On FY 2011 Gap Closing Plan (11 30 10)

Government of the District of Columbia
Office of the City Administrator
Testimony of
Neil O. Albert
City Administrator
Mayor’s Fiscal Year 2011 Budget

Gap-Closing Plan
Council of the District of Columbia

Committee of the Whole
The Honorable Vincent C. Gray, Chairman
November 30, 2010
Room 500
John A. Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC 20004
Testimony of Neil O. Albert, City Administrator
On the Mayor’s Fiscal Year 2011 Budget Gap-Closing Plan
Before the Committee of the Whole, The Honorable Vincent C. Gray, Chairman
November 30, 2010
Good afternoon, Chairman Gray and members of the Council. My name is

Neil O. Albert and I am the City Administrator of the District of Columbia.
Thank you for this opportunity to provide testimony on the Mayor’s Fiscal
Year 2011 Budget Gap-Closing Plan. While the District, like the rest of the
nation, finds itself in a difficult economic situation, the Administration has
prepared a gap-closing plan that addresses a projected $188 million budget
shortfall while preserving all key functions of the government’s operations
and without raising taxes on District residents.
I would like to begin my testimony by providing a brief background on how

the budget gap arose and the efforts of the Administration to develop a gap-
closing proposal. On September 27, 2010, the Office of the Chief Financial
Officer (OCFO) identified a Fiscal Year 2011 budget gap of $175 million.
The gap consisted of a $100 million shortfall in estimated revenue and
$75 million in projected spending pressures. The estimated revenue shortfall
results from a decline in District sales and income tax revenue due to the
economic recession.
The projected spending pressures include $31.7 million within the D.C.
Public Schools (DCPS) special education program, $7 million in the
Disability Compensation Fund, $35 million due to lower-than-anticipated
Federal Medical Assistance Percentage (FMAP) matching funds, and
$3 million to repay the contingency reserve for certain expenditures related
to the Not-For-Profit Hospital Corporation. Following the initial forecast,
the OCFO revised the total project budget shortfall to $188.4 million. The
causes of the increased shortfall include an additional $3 million spending
pressure in the Disability Compensation Fund and a $10.1 million spending
pressure in special education transportation.
The Fenty Administration immediately took action to close the shortfall in

early October by issuing a Mayor’s Order requiring agencies to reduce non-
personnel spending by 10 percent and by freezing hiring, training, and travel
expenditures. However, while this methodology was used as the starting
point for the gap-closing plan, it was not a blueprint for specific cuts.
Instead, each agency, with the guidance of the Office of the City
Administrator, developed agency-specific spending cuts and each agency’s
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November 30, 2010
plan took into account the special needs and considerations of the agency
and the impact of cuts on District residents.
In developing the gap-closing plan, the Administration reached the budget

target by delaying the implementation of new programs such as the Healthy
Schools Act and the Small Business Streetscape Impact Fund, eliminating
120 positions, further utilizing existing revenue sources, increasing
employee contributions for health care benefits, and aligning the District’s
TANF funding for long-term recipients more closely with the standards of
the federal government and other states, while remaining focused on funding
the District government’s core missions and policy objectives.
Overall, the plan reduces spending by $161.2 million and includes

$27.4 million in revenue items.
Major elements of the spending reductions include the following:
- Using stimulus dollars from the federal Education Jobs Fund to

support full per-pupil funding for DCPS and Public Charter students.
The estimated local savings from this use of federal funds is
$17.8 million.
- Streamlining telecommunications equipment use by disconnecting

unused cell phones, removing unused wireless insurance,
renegotiating wireless contracts, disconnecting unused pagers, and
cracking down on third party billing errors. The estimated savings
from this initiative is $3 million.
- An estimated $6 million in savings from decreased short-term

borrowing costs due to favorable interest rates.
- An increase in the District government employee health-care

contribution from 25% to 28%, resulting in savings of $5 million.
This initiative brings the District government’s health care
contributions for employees in line with the federal government’s
contribution level.
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November 30, 2010
- Delayed implementation of the Healthy Schools Act and the Small

Business Streetscape Act, resulting in savings of approximately
$12 million. The programs established by both of these acts would
have begun for the first time in Fiscal Year 2011.
- Aligning the Fiscal Year 2011 budgets for non-public tuition and child
care subsidies with the Fiscal Year 2010 actual expenditures, for a
savings of approximately $25 million.
- Updating the budget for the automated traffic enforcement program to

adjust for actual contract costs and deferring upgrades to the P25
public safety radio system, resulting in savings of approximately
$5 million.
The revenue proposals include the following:
- The recognition of approximately $5 million in revenue from

previously uncertified sources, including the Washington Center on
Aging Services account and lease income from the JB Johnson
Nursing Center.
- Transferring $9.5 million in surplus from the tobacco settlement and

ballpark funds.
- The generation of approximately $1.2 million in new revenue through

the United States Department of Treasury Offset Program.
The revised budget also includes a new payment structure for individuals
who have been receiving TANF benefits for more than 5 years. The new
payment structure reduces cash benefits for these long-term recipients by
20% and more closely aligns District practice with federal policy. Currently
the District is one of the few states that does not have time restrictions on
TANF benefits, providing little incentive for recipients to transition from
welfare to work. The Administration has committed to overhauling the
TANF employment program to provide TANF residents with opportunities
to gain the skills they need to become self-sufficient. The overhaul process
has been informed by roundtable discussions with diverse stakeholders and
is expected to be completed this summer. The new program will allow
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November 30, 2010
TANF recipients to be placed in employment and skills development

programs designed to meet the unique needs of each person. In addition, the
new program will provide a performance-based vendor component that will
allow the District to hold vendors accountable for the success of participants.
Reforming the TANF program and reducing payments to long-term TANF
recipients will help move even more District residents into the workforce.
Clearly, difficult decisions had to be made in order to close the nearly

$200 million budget gap. This gap-closing plan, however, minimizes
negative impacts on District residents and businesses, fully funds core
services, and protects the financial health of the District of Columbia.
Thank you for the opportunity to testify today. I am available to answer any
questions that you may have.
Page 4

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Government of the District of Columbia

Office of the City Administrator

Mayor’s Fiscal Year 2011 Budget

Council of the District of Columbia

November 30, 2010

Good afternoon, Chairman Gray and members of the Council. My name is

I would like to begin my testimony by providing a brief background on how

The Fenty Administration immediately took action to close the shortfall in

In developing the gap-closing plan, the Administration reached the budget

Overall, the plan reduces spending by $161.2 million and includes

Major elements of the spending reductions include the following:

- Using stimulus dollars from the federal Education Jobs Fund to

- Streamlining telecommunications equipment use by disconnecting

- An estimated $6 million in savings from decreased short-term

- An increase in the District government employee health-care

- Delayed implementation of the Healthy Schools Act and the Small

- Updating the budget for the automated traffic enforcement program to

The revenue proposals include the following:

- The recognition of approximately $5 million in revenue from

- Transferring $9.5 million in surplus from the tobacco settlement and

- The generation of approximately $1.2 million in new revenue through

TANF recipients to be placed in employment and skills development

Clearly, difficult decisions had to be made in order to close the nearly

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